nilam_8ka-ex1001.htm


    EXHIBIT
      10.1

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    DEPOSIT
      MODEL

    


    LLIPA
      PROYECT

    Ancash
      Department- Peru

    MRC1
      Exploraciones E.I.R.L.

    


    


    Geologic
      Atmosphere. - The existing mineral formation in Llipa prospectus
      supposes a supergene atmosphere. Hidrothermal activity gave origin to primary
      in
      depth deposits generating surface processes like: leaching, oxidation and re
      deposit that generate a mineralogical oxide association: hematite, malachite
      favored by geological agents.

    


    Type
      of deposit. -. This type of deposit belongs to polymetallic vein system
      of Cu, Pb, Zn and Au-Ag like in by-product. The deposit belongs to polymetallic
      mineral structures.

    


    Favorable
      inserted rocks. - The polymetallic
      veins are associated to volcanic rocks of the Calipuy Group.

    


    Mineralization
      control. - The structures are controlled by faults, fractures and
      jointments systems, product of the Andean tectonic activity.

    


    Mineralogy.- The
      present minerals are: galena, sphalerite, chalcopyrite, bornita and pyrite;
      and malachite and limonite in the oxidized zone.

    


    Predominant
      alteration. - Silicification appears towards rocks boxes
      structures (veins), also argilization towards andesítics rocks.

    


    Laws.
      - On the geologic sampling appears: mine entrance (5,30 % Cu, 1,098
      g
      Au/TM),  breccias veins with galena and sphfalerite (17,96% Pb and
      5,70% Zn); left and collapsed mine entrance (14,08 % Cu, and 2,06 g Au/TM).
      Values of up to 9 Oz Ag/TM exists.

     

    
      
        	
                PHOTO.
                  - Sulphide structure found; it
                  has reported 17,96% Pb and 5,70% 
                  of
                  Zn (sample LL - 03).

              	
                

              


      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXECUTIVE
        SUMMARY

      


      LLIPA
        PROJECT

      Department
        Ancash - PERU

      MRC1
        Exploraciones E.I.R.L.

       

      


      MRC1
        Exploraciones E.I.R.L. visited the Llipa Project on April 2004. The zone
        has
        been little explored according to reports of the area settlers, for that
        reason
        the corresponding work of inspection of field and complementary sampling
        was
        made. Geology exposes volcanic rocks of the Calipuy Group composed by andesitics
        lava, tuffs; breaches structures. The mineralization belongs to a polymetallic
        mesothermal deposit: bornite, chalcopyrite, galena (Cu, Pb) like main minerals
        and Au-Ag like by-product.

      


      Location.
        - Llipa prospectus is located in the center of Peru, in Llipa
        district, Ocros province, Ancash department; 380 km of Lima city. It is
        constituted by two mining concessions: The Prospera mine of 133,86 has of
        surface and La Prospera XXI of 1000 has, effective to the date according
        to the
        General Law of Mining before the National Institute of Mining Concessions
        of
        Peru. The area is located in the Carta Nacional de Tantará (21-i) on scale
        1:100000, datum PSAD56, zone 18.

      


      Geology.
        - The geology of the area where the mining
        workings of Llipa mine are located is formed by volcanic rocks of the Calipuy
        Group (andesíticas lava).

      


      Alteration.
        - The alteration related to this type of structure appears limited
        in
        the structure, declaring argilization (breaches) and silicification (to both
        sides of the main structures).

      


      Mineralización.
        - Sample LL-01 has laws of 5,30 % Cu, 1,098 g Au/TM. Sample LL -
        03 is
        a breccias vein with galena and sphalerita with high law of 17,96% Pb and
        5,70%
        Zn; most of the samples have been taken on mineralized structures in the
        Llipa
        mine sector. Sample LL-04 was taken from a left and collapsed mine entrance,
        that the Millotingo company made with a the purpose of looking for new reserves,
        where obtains laws of 14,08 % Cu, and 2,06 g Au/TM. The Ag values, in some
        samples of up to 9 ounces (Sample LL-01 and LL-03 respectively).

      


      Conclusions.
        –

      


      
        	
                1.  

              	
                The
                  type of mineralization found in the area of the Llipa mine and
                  surroundings are bodies and systems of vein forms structures associated
                  to
                  intense fracture zones and fort jointments, where it is deduced
                  that the
                  mineralization belongs to a secondary
                  enrichment.

              


      

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      REPORT

      PRELIMINARY
        GEOLOGIC RECOGNITION OF

      LLIPA
        PROJECT

      -
        LLIPA MINE –

      ANCASH
        -PERU

       

       

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      INDEX

      


       

      
        	
                
                  s

                

              	
                ANTECEDENTS

              


      

      


      
        	
                
                  s

                

              	
                LOCATION
                  AND ACCESS

              


      

      


      
        	
                
                  s

                

              	
                MINING
                  PROPERTIES

              


      

      


      
        	
                
                  s

                

              	
                RESOURCES

              


      

      


      
        	
                o  
                    

              	
                WATER

              


      

      
        	
                o  
                    

              	
                ELECTRIFICATION

              


      

      
        	
                o  
                    

              	
                MANUAL
                  LABOR

              


      

      
        	
                o  
                    

              	
                COMBUSTIBLE
                  (FUEL)

              


      

      
        	
                o  
                    

              	
                MERCHANDISES

              


      

      


      
        	
                
                  s

                

              	
                GENERAL
                  GEOLOGY

              


      

      


      
        	
                
                  s

                

              	
                MINING
                  ACTIVITY

              


      

      


      
        	
                
                  s

                

              	
                ALTERATION

              


      

      


      
        	
                
                  s

                

              	
                MINERALIZATION

              


      

      


      
        	
                
                  s

                

              	
                POSSIBILITIES

              


      

      


      
        	
                
                  s

                

              	
                CONCLUSIONS
                  AND RECOMMENDATIONS

              


      

      


      
        	
                
                  s

                

              	
                MAPS

              


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                
                  s

                

              	
                ANTECEDENTS

              


      

      


      By
        order
        of Mr. Moisés Rosales Castillo, the subscribed one, made the evaluation and
        inspection of Llipa mine zone, an old mine left more than 20 years ago
        besides to the exploration of the surroundings when demonstrating according
        to
        previous reports vein structures with important laws of: Zn, Pb, Cu; as well
        as
        a structural relation associated of district character with the
        mineralization.

      


      The
        zone
        has been little explored according to the settlers of the area reports, besides
        of being the zone covered by quaternary cover, reviewing mainly the outcrops
        in
        hills crests and the old workings in the area. By such reason, the subscribed
        one compiled the information necessary and made the corresponding work of
        field
        inspection and complementary area sampling on the recommended zones, in a
        term
        of 14 days, between 03 to 16 of April of 2004.

      


      The
        visit
        to the Llipa Mine consisted of three stages, tailing sampling, location of
        camping points with mine entrances and geologic exploration
        locations.

      


      
        	
                
                  s

                

              	
                LOCATION
                  AND ACCESS

              


      

      


      Llipa
        mine, is located in the jurisdiction of the Llipa district, in the Ocros
        province, Ancash department, approx. to 380 km of Lima city, to the Northeast
        of
        Pativilca. It is located within following coordinates UTM.

       

      
        	
                E         254,000

                E         257,000

              	
                N         8’853,000

                N         8’855,000

              


      

      


      The
        average height varies between 3.600 to 4.200 m.a.s.l. They are accessible
        from
        Lima city according to the following Itinerary.

      


      ACCESSIBILITY
        PICTURE

       

      
        	
                WAY

              	
                KM

              	
                WAY ́S
                  STATE

              
	
                Lima
                  – Cruce de Huaraz

              	
                207

              	
                Asphalt
                  in good condition

              
	
                Cruce
                  de Huaraz – Conococha

              	
                120

              	
                Asphalt
                  in good condition

              
	
                Conococha
                  – Ticllos

              	
                24

              	
                Asphalt
                  in regular-good condition

              
	
                Ticllos
                  – Corpanqui

              	
                10

              	
                Asphalt
                  in regular-good condition

              
	
                Corpanqui
                  – Cajamarquilla

              	
                19

              	
                Asphalt
                  in regular-good condition

              
	
                Cajamarquilla
                  – Mina Llipa

              	
                9

              	
                Asphalt
                  in regular-good condition

              
	
                TOTAL

              	
                379

              	 


      

      


      Another
        Alternate Route

      


      
        	
                WAY

              	
                KM

              	
                WAY ́S
                  STATE

              
	
                Lima
                  – Cruce de Huaraz

              	
                207

              	
                Asphalt
                  in good condition

              
	
                Cruce
                  de Huaraz – Conococha

              	
                120

              	
                Asphalt
                  in good condition

              
	
                Conococha
                  – Cruce de Ocros

              	
                45

              	
                Asphalt
                  in good condition

              
	
                Cruce
                  de Ocros – Mina Llipa

              	
                23

              	
                Asphalt
                  in good condition

              
	
                TOTAL

              	
                395

              	 


      

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


      According
        to the Carta Nacional del IGN, the area is located in Chiquián eaf (21-f) on
        scale 1/100,000.

      


      
        	
                
                  
                    s

                  

                

              	
                MINING
                  PROPERTIES

              


      

       

      
        	
                MINIGN
                  RIGHT

              	
                TITULAR

              	
                HECTARE

              	
                DEPARTMENT

              
	
                La
                  Mina Prospera

              	
                Elmer
                  Moisés Rosales Castillo

              	
                133.86

              	
                Ancash

              
	
                La
                  Prospera XXI

              	
                Elmer
                  Moisés Rosales Castillo

              	
                1000.0

              	
                Ancash

              
	
                TOTAL

              	 	
                1133.86

              	 


      

      


      


      
        	
                
                  
                    s

                  

                

              	
                RESOURCES

              


      

      


      
        	
                v  

              	
                Water:

              


      

      


      For
        metallurgical mining operations and human consumption we could take advantage
        of
        the attraction that  Millotingo Company had, that is, to canalize
        waters of the Quebrada Orcorán and by pipe it would take to the campings
        together to  the metallurgical plant, to a distance of 800 meters.
        This water would be recommendable since the main source is a puquial called
        Cachir, in Llipa heights.

      


      
        	
                v  

              	
                Electrification:

              


      

      


      For
        the
        mining hydroelectric operations we could take advantage of Quebrda Shinbacocha
        waters and put an electrification generator and do a small hydroelectric
        power
        station. Considering that the Llipa district has a generator that is used
        in
        small proportion, another alternative could be to use this plant, but increasing
        the capacity of the generators.

      


      
        	
                v  

              	
                Manual
                  labor:

              


      

      


      Semi
        qualified could be recruited on a first stage of the district of LLipa district,
        Rajan and Cajamarquilla. On the other hand the qualified manual labor could
        be
        recruited of Huaraz or otherwise in Lima city.

      


      
        	
                v  

              	
                Fuel:

              


      

      


      
        	
                 

              	
                Petroleum,
                  gasoline and others can be obtained in Ocros, Huaraz provinces
                  and of Lima
                  city.

              


      

      


      
        	
                v  

              	
                Merchandises:

              


      

      


      Merchandises
        and other products can be obtained in Lima city.

      


      
        	
                
                  
                    s

                  

                

              	
                GENERAL
                  GEOLOGY

              


      

      


      Corresponds
        mainly to volcanic rocks of Grupo Calipuy of the cenozoic age. Andesitic
        lava
        was identified that predominate in the zone and arise in hills in cliffs
        form.
        The breaches mineralized with oxides of Cu and Fe are those that are pronounced
        in this zone. The breaches in some cases appear argilized and with oxides
        like:
        limonites and jarosite. Also tourmaline (Shorlo) crystallized has been
        recognized.

      


      The
        mineralogy alloy includes: bornite, chalcopyrite, chrisocola, tourmaline,
        limonites, jarosite and crystallized quartz. The mineralization of Llipa
        mine
        has appeared mainly in mineral bodies  (main body of operated
        minerals), that are controlled by intense cracks and faults. Ther are also
        veins
        containing galena of high law of Pb (Sample LL-03) in the
        environs.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                
                  
                    s

                  

                

              	
                MINING
                  ACTIVITY

              


      

       

      Millotingo
        company worked on the zone, its operation were underground with a mineralized
        body of 120 x 45 x 70 ms, until 1986 were operated. Cause of social reasons,
        this mine was paralyzed.

      


      Looking
        for reserves, Millotingo company made geologic exploration works, cutting
        granitic rocks obtaining oxides of Cu like crisocola and malachite, the
        mineralization is of secondary enrichment being considered that in depth
        they
        are the primary Cu sulfides having as bases the mineralization of Cu oxides.
        Sample (LL-04).

      


      
        	
                
                  
                    s

                  

                

              	
                ALTERATION

              


      

      


      The
        alteration related to this type of structure that appears limited, few
        centimeters from the structure, declaring presence of argilization in the
        breaches and low silicification in tuffs, to both sides of the main structures,
        the receiving rocks or boxes are andesites of the Calipuy
        volcanics.

      


      Most
        of
        the reviewed outcrops are fresh rock and some Intemperizada, since
        in this type of deposits always the alteration is restricted

      


      
        	
                
                  s

                

              	
                MINERALIZATION

              


      

      


      The
        geochemistry analyses of the exploration samples indicate the
        following:

       

      
 

      The
        shown
        table above indicates the obtained values of the analyses of type ICP in
        laboratories SGS of Peru. A direct relation of the values of Cu, Pb, Zn,
        and
        Au exists, since its relation in this type of deposits is
        common.

      


      
        	
                ▪   

              	
                Sample
                  LL - 01 is a sample that was taken in the surface of the mine entrance
                  near level 1070, this was prepared by the Millotingo Company with
                  the
                  purpose of making an Open pit, where it is possible to be observed
                  the
                  predominance of malachite , crisocola and Cu sulfides like bornita
                  and
                  chalcopyrite. Giving a law of 5,30 % Cu, 1,098 g Au/TM like
                  by-product.

              


      

      


      
        	
                
                  ▪   
   

              	
                Sample
                  LL - 03 is a breached vein galena and sphalerite with high law
                  of 17,96%
                  Pb and 5,70% Zn; most of the samples have been taken on mineralized
                  structures in the sector of Llipa mine. This vein has an azimuth
                  of N 145
                  ° and a dip of 34°.

              


      

      


      
        	
                
                  ▪   
   

              	
                Sample
                  LL-04 was taken from a left and collapsed mine entrance, that the
                  Millotingo company made with a the purpose of looking for new reserves,
                  where laws of 14,08 % Cu, and 2,06 g Au/TM are
                  obtained.

              


        	 	 


        	▪   	
                The
                  values of Ag, are in some samples of up to 9 ounces (Sample LL-01
                  and
                  LL-03 respectively).

              


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                
                  ▪   

                

              	
                By
                  all this favorable laws in the first sampling of recognition on
                  the
                  structures of the sampling of exploration of the Llipa mine were
                  obtained.

              


      

      


      
        	
                
                  
                    s

                  

                

              	
                POSSIBILITIES

              


      

      


      Considering
        the geologic characteristics of Llipa prospect, these present possibilities
        solely limited the structures. This type of deposit is of a mesothermal
        polymetallic body system with contents of Cu, Zn, Pb like main minerals and
        Au-Ag like by-product; the obtained laws are a good indicative to plan a
        systematic sampling with the purpose of knowing the true magnitude of the
        deposit, the main structure continuity, secondary structures, laws and on
        its
        basis make reserves estimation.

      


      CONCLUSIONS
        AND RECOMMENDATIONS

      


      
        	
                1.  

              	
                The
                  mineralization type found in the area of Llipa mine and surrounding
                  areas
                  are bodies and systems like veins structures associated to intense
                  zones
                  of breakings and strong jointments, where it is deduced that the
                  mineralization belongs to a secondary enrichment, in the surface the
                  zone of oxides of Cu and Fe can be
                  observed.

              


      

      


      
        	
                2.  

              	
                The
                  topographic levels of the Llipa mine are between the 3.600 to 4.200
                  m.a.s.l. it is recommended to continue exploring by the surrounding
                  areas
                  since the obtained samples indicate us mineralization of Cu, Pb,
                  Zn and
                  Au-Ag like by-product.

              


      

      


      
        	
                3.  

              	
                It
                  is known by references of the settlers that Millotingo company
                  did not
                  manage to operate all the mineralization since the mine was paralyzed
                  by
                  social problems. It is recommended to obtain more
                  information  of the same company, to be able to continue with
                  the respective works.

              


      

      


      
        	
                4.  

              	
                It
                  is recommended to make a geologic map of all the structures such
                  as:
                  systems of faults and diaclasas, with the purpose of knowing the
                  structural and mineralogy control the
                  zone.

              


      

      


      
        	
                5.  

              	
                It
                  is recommended to make a systematic sampling inside the old workings
                  as
                  well as new geologic map with the objective to consider better
                  the
                  economic potential of the bodies and mineralized
                  structures.

              


      

      


      
        	
                6.  

              	
                To
                  make a complementary exploratory sampling in the area of the main
                  outcrops
                  with mineralization to project the dimensions of the mineralized
                  structures and to follow them within the
                  property.

              


      

      


      
        	
                7.  

              	
                For
                  the geologic map it is recommended to make it on scale 1: 500,
                  as much in
                  inner mine as in surface.

              


      

      


      
        	
                8.  

              	
                The
                  final laws obtained by laboratory SGS of Peru, justify to make
                  greater
                  works in the Llipa area, with the objective to find new structures
                  and the
                  possibility of finding bodies mineralized in
                  depth.