Summary:
The Project can be classified as sedimentary – metamorphic. During late Precambrian age, pelites and carbon were deposited at the same time. Later in early Cambrian age, orogenic movements transformed these sediments to high grade metamorphic rocks, and these movements transformed the carbon and the hosted rock to gneiss with graphite (this type of mineralization with the different metamorphic minerals is known as the Kinzigite Complex).
The mineralization was shifted by a regional fault, which dictated alignment of the host rock (gneisses and paragneisses) and coupled with the soft nature of the graphite, made the association of such strike and fold (anticlines) changes to host mineralized zones and thicker lenses. Several deposits, including the Santa Cruz Graphite Project, are hosted in this regional area that covers over 25,000km². The region is known to produce high-quality natural flake graphite, which occurs as flat, plate-like particles with either hexagonal or angular edges. The graphite is derived from carbon rich sediments and is generally disseminated throughout the mineralized zones, but often with periodic lens-shaped pockets of higher-grade materials.
Flake size has a strong impact on demand and as a result pricing, with larger flake sizes generally being higher in value. Natural flake graphite is generally classified in the industry by flake size as follows:
1.) Jumbo: +50 mesh (0.3 mm)
2.) Large: –50 mesh to +80 mesh (0.18mm)
3.) Medium: –80 mesh + 140 mesh (0.105 mm)
4.) Small: –140 mesh.
The Project is located within a region where mineralized deposits are hosted in paragneisses with higher degrees of metamorphism between amphibolite and granulite with intense anatexis. In general, the mineralization is structurally controlled by the shearing zone along the regional fault and the presence of softer materials.
The Project has disseminated mineralization that is easily identified visually with +65% of flake size +80 mesh (large flake) including ~35% +50 mesh (jumbo flake), important to note both numbers are for final concentrates, hence one can assume run of mine ore has an even bigger amount of +80# flakes. Moreover, the mineralization is present in massive stratus layers found in strong association with the main structure control.
Initially, the mineralization appeared to be quite simple, and was thought to be sedimentary in nature, but after further field investigations, drilling, mapping and literature review, it is now believed that the mineralization is structurally controlled and is hosted in the many folds, shearing zones and mylonitic gneisses.
In general, the larger flake size appears to be associated with the higher degrees of metamorphism, while large volumes of high-grade mineralized material are often concentrated in the many folds.
The mineralized zone in the main target areas of São Rubens and São Manual is in the friable upper layers close to surface. There is approximately 8 km long continuous strike with widths varying from 30 to 200 m, with some depositional areas much wider because of the presence of significant folds. Mineralization is oriented sub vertical to vertical with some holes having more than approximately 80 meters of mineralization. The ore body is open at depth and along strike. There is also the presence of disseminated mineralization in several of the channel samples taken from rock outcrops in the São Rubens target as well as in various road cuts throughout the region. São Manuel target shows foliated gneisses with Az 330°/ 90° to Az 350°/80° East strike. To the south, the bedding changes from being 90° to 65° East.
There are various secondary targets near the main target area that are also promising:
• Paula target is located to the east of property. It is characterized by banded and disseminated mineralization in the gneisses that strike Az 290°/ 90°. 49 rotary holes were drilled in this target intercepting a mineralized zone that is 490meters long and 20 meters wide with a general E-W strike. The samples display strong flakes with high carbon grade (but these samples have not been considered in the resource calculation because they presented a series of inconsistencies in their collection). This area was affected by post – mineralized faults.
• Luz target is located toward the west of Paula and is composed of graphitic gneisses with a N-S/60° E strike. This zone has been less explored.
• Altai target is located to the south west of Luz target and shows strong graphite mineralization with thick flakes. The zone has been less explored.
• Ida´s target is located towards the south of Altai and shows strong graphite mineralization and thick flakes striking N-S/90°. In this area 27 Rotary holes were drilled with 11 of them showing thick and medium flakes. These were not included in the resources because they were done during the earliest phase of exploration and were not subject to standardized sampling methods.
• Lucy target is located to the west of the San Manuel target. There are 47 Rotary Drilling holes in this area with three of them showing encouraging results: FTB-004 with 3.4 meters @ 4.67% Cg; FTB-005 with 6.2 meters @ 3.4% Cg and FTB-015 with 3 meters @ 3.42% Cg. These holes display thick to medium flakes. This target area is 900 meters long and 20 meters wide. It is located to the west of São Manuel.
• Gloria target is located between the San Manuel and the Lucy target with a 350°/90° strike. It appears to be part of the São Manuel´s antiform. The area is 280 m long by 25 m wide. The outcrops display thick flakes. The initial exploration results are encouraging but it is currently not part of the resource calculation.
• Other interesting targets are located towards the north of São Manuel and are hosted along the regional master fault. It is important to note that all these targets have positive exploratory holes with encouraging assay results demonstrating significant resource upside potential.