De Beira Goldfield (DBGF) - Description of business
De Beira Goldfields Inc. (“ De Beira ”) is a Nevada corporation that was incorporated on May 28, 2004.
Since June 2006, De Beira has had its office at 30 Ledgar Road, Balcatta, Western Australia, 6021. The telephone number at this office is 011-61-89-240-2836. De Beira uses this office space under an arrangement whereby an entity related to the president and director of the Company and chairman of the Company provides office administration, accounting and corporate secretarial services to the Company for a fee based on time and hourly charge rates. De Beira maintains its statutory registered agent’s office at 2470 St. Rose Parkway, Henderson, Nevada, 89075.
De Beira is an exploration stage company engaged in the acquisition and exploration of mineral properties. De Beira’s plan of operations is to conduct mineral exploration activities on the mineral properties in order to assess whether these claims possess commercially exploitable mineral deposits. De Beira’s exploration program is designed to explore for commercially viable deposits of base and precious minerals, such as gold, silver, lead, barium, mercury, copper, and zinc minerals. See “Business of De Beira” and “Management’s Discussion and Analysis or Plan of Operations” below for more information.
On May 9, 2006, De Beira signed a letter of understanding to acquire up to a 70% interest in the Titiribi Gold / Copper project in Colombia, South America (the “ Colombia Property ”). See Exhibit 10.2 - Letter of Understanding for more details.
Also, on June 15, 2006, De Beira entered into an agreement to acquire an 80% interest in Minanca Minera Nanguipa, Compañía Anónima (“ Minanca ”), subject to certain conditions. Minanca owns certain mineral exploration property, including plant and equipment, in Ecuador, South America (the “ Ecuador Property ”). See Exhibit 10.4 - Share Sale Agreement for more details.
On July 5, 2006, De Beira entered into agreements with the Goldplata Group to acquire an interest of up to 70% in the Condoroma and Suyckutambo Projects in Peru, South America (the “ Peru Property ”), which are prospective for gold and silver.
De Beira has an authorized capital of 75,000,000 shares of common stock with a par value of $0.001 per share with 39,559,285 shares of common stock currently issued and outstanding.
De Beira has not been involved in any bankruptcy, receivership or similar proceedings. There have been no material reclassifications, mergers, consolidations or purchases or sales of a significant amount of assets not in the ordinary course of De Beira’s business.
Business of De Beira
De Beira is an Exploration Stage Company, as defined by Statement of Financial Accounting Standard (“SFAS”) No.7 “ Accounting and Reporting for Development Stage Enterprises ”. De Beira’s principal business is the acquisition and exploration of mineral resources. De Beira has not presently determined whether the properties it intends to acquire contain mineral reserves that are economically recoverable.
De Beira is a start-up, development stage company, which has not generated any revenues from its mineral exploration activities.
During the next 12 months, De Beira will continue to identify and assess new projects for acquisition purposes, but will also focus on exploring and adding value to the project interests acquired over the last few months. De Beira will continue to identify and assess undervalued mineral properties in South America for eventual acquisition. Management will also focus on progressing exploration activities on the project interests that De Beira has secured thus far.
In the quarter ended February 28, 2006, De Beira announced its intentions to acquire a portfolio of undervalued mineral properties in South America, prospective for gold, silver and copper.
The following is a summary of De Beira’s principal property interests, segregated by the operations on De Beira’s claims. De Beira does not have any assets or mineral properties that are currently in production or contain a reserve.
A. De Beira 1 Mineral Claim
During the year ended August 31, 2005, De Beira staked the De Beira 1 mineral claim, located in British Columbia, Canada. The claim was registered in the name of Michele Fronzo, the former president of De Beira, who executed a trust agreement whereby Mr. Fronzo agreed to hold the claim in trust on behalf of De Beira.
During the year ended August 31, 2006, De Beira relinquished ownership of the De Beira 1 mineral claim as it was not considered sufficiently prospective and turned its attention to other opportunities.
B. Titiribi Gold/Copper Project - Colombia Property
De Beira entered into an agreement with Goldplata Corporation Limited, Goldplata Resources Inc. and Goldplata Resources Sucursal Colombia (the “ Goldplata Group ”) dated May 6, 2006, whereby De Beira was granted an option to acquire up to a 70% interest in the Titiribi Gold/Copper project in Colombia, South America (the “ Colombia Property ”). The agreement allows De Beira to acquire an initial interest of 65% by sole funding $8 million in exploration expenditures within a 3 year period (the “ Option Period ”). The Option Period commenced on June 9, 2006. After acquiring 65% interest, De Beira has 60 days to elect to sole fund further expenditures in order to acquire another 5%, giving it a total interest of 70%. See Exhibit 10.2 - Letter of Understanding for more details.
The additional interest is to be acquired upon the earlier of completing a bankable feasibility study or spending a further $12 million, both within a period of no more than 3 years from the time of the election. De Beira may not withdraw from the agreement after the start of the Option Period until it either incurs $1 million in exploration expenditure or pays $1 million to the Goldplata Group. $130,000 was incurred in exploration expenditures during the year-ended August 31, 2006, with a total of $860,000 incurred in exploration expenditures up to the date of this report.
Colombia is divided into four geographic regions: the Andean highlands, consisting of the three Andean ranges and intervening valley lowlands; the Caribbean lowlands coastal region; the Pacific lowlands coastal region, separated from the Caribbean lowlands by swamps at the base of the Isthmus of Panama; and eastern Colombia, the great plain that lies to the east of the Andes Mountains.
Location and Access
The Titiribi mining district, population of approximately 15,000 people, is located ca. 70 kilometers southwest of Medellín in the Department of Antioquia, on the northwestern margin of Colombia’s Central Cordillera. Access is by well-maintained paved road from Medellín to the historic town of Titiribi. From Titiribi to the project area access is by fair gravel roads, and the use of 4WD is required due to the road being steep in places.
The general land use of Titiribi is mixed agricultural principally, coffee, sugarcane and dairy cattle. Artisanal mining, including precious metals and coal continues and forms a limited section of the regional economy.
Climate and Geomorphology
The Titiribi Town and project area is situated along the latitude of approx 6 0 north, and lies in an altitude range of between 1,500m and 2,200m above sea level. Generally the area is considered to have a moderately wet but cool tropical climate. The area was once covered in jungle though now long since cleared to make way for coffee and cattle.
Geology and Mineralization
Titiribi is a historic multi-million ounce Gold and base metal mining district set in the Mid Northern region of Colombia approximately 70 kilometers southwest of the city of Medellín. Recorded mining activity commenced in 1794, and more or less continuous production, at differing scales, has been observed since that time. In the 1800's and early 1900's Au-Ag (Zn-Pb-Cu) production came from at least 14 principle-mining areas within a three-kilometer radius of the town of Titiribi. Activity from approximately 1942 to present can be classified as minimal and strictly artisanal. Peak production activity dates from the period 1885 through 1930.
This gold district is similar to other gold producing areas in the Colombian Cordilleras, and is made up of a series of high-grade polymetallic veins, which are associated with a porphyry style intrusive system. Mineralization is associated with Miocene porphyry intrusives, and is hosted in a variety of distinct litho-structural settings. Historic mineralisation was mined from high-grade Au-Ag replacement mantos and fault-controlled veins hosted within Paleozoic schist and Oligocene continental-marine sedimentary rocks. Low-grade mineralisation is widespread and occurs as disseminations and replacements within the sedimentary rocks, and as porphyry-style disseminations and stockwork within hypabyssal intrusions.
Murial Mining S.A (South America), ("Murial"), initiated modern exploration work in 1992, focusing upon the Otra Mina - Cateadores - Chisperos - Muriel - Cerro Veta sectors of the Titiribi district. Numerous adits and drives were re-opened, cleaned, advanced and sampled. In 1998, based on results from the Murial/Ace exploration, Goldfields Ltd of South Africa conducted additional geophysics and soil geochemistry, resulting in a 2,500-metre diamond-drilling program in and around the Cerro Veta target area.
This drilling led to the discovery of the Cerro Veta porphyry considered as a potentially bulk-minable Au-Cu, (Gold-Copper) resource, located two kilometers west of the Titiribi town. The Cerro Veta porphyry system is a well defined, zoned, although fault disrupted, poly-phase Au-Cu (Ag, Mo) porphyry system measuring some 725 meters N-S by 550 meters E-W.
From the current interpretation of the limited historical drill data and the local geology, it seems that considerable potential exists at Titiribi to delineate a resource relatively quickly with additional drilling. Mineralization is open along strike and at depth.
At the Titiribi Project, De Beira uses the Goldplata Group to manage and implement exploration programs. The programs are prepared by De Beira and De Beira supervises the implementation of the programs by the Goldplata Group. The current emphasis of the exploration program is to carry out approximately 6,000 metres of diamond drilling. The objective of the current drill program is to expand the zones of mineralization and to provide a better understanding of the structural geology.
C. Minanca Project - Ecuador Property
On June 15, 2006, De Beira entered into an agreement with Emco Corporation (“ Emco ”) whereby De Beira was granted an option to acquire an 80% interest in Minanca Minera Nanguipa, Compania Anonima (“ Minanca ”), which owns mineral exploration property in Ecuador (the “ Ecuador Property ”), for an aggregate purchase price of $30,400,000 comprised of 10 million restricted common shares of De Beira at an issue price of $3 per common share and a cash payment of $400,000. See Exhibit 10.4 - Share Sale Agreement for more details.
On June 16, 2006, De Beira paid $400,000 as per the terms of the agreement and provided a loan advance of $100,000 to Minanca.
Under the terms of the acquisition agreement and following settlement of the acquisition, De Beira is obligated to advance loan amounts of $7,000,000 to Minanca as follows:
$1,500,000 within 15 days of settlement of the acquisition transaction for upgrade expenditures on the Property (paid in full by the date of this Report);
$400,000 by July 31, 2006 for upgrades to the Property (paid in full by the date of this Report);
$1,375,000 by October 2, 2006 to be paid for existing debt owed by Minanca (paid in full by the date of this Report); and
The balance of $3,725,000 for exploration expenditures on the Property to be paid equally over a period of 5 months beginning September 1, 2006 with the final payment due on January 1, 2007 (four installments of $745,000 each have been paid by the date of this Report.)
Minanca is to undertake to grant a mortgage over all its assets to De Beira as security against the loan amounts noted above. The loan is due on demand, however the loan is to be repaid only from cash surpluses generated from production by Minanca. Repayment of the loan ranks in priority ahead of any dividend or distribution payments to shareholders of Minanca. The loan does not have a stated rate of interest.
Minanca is to appoint De Beira as the joint operator of the Property and the Company is to be responsible for keeping the Property and all permits in good standing during the term of the formal agreement.
A formal agreement was executed by both parties on July 10, 2006 and in conjunction with the signing of the agreement, De Beira provided Emco with a $100,000 deposit. The issue of 10,000,000 restricted common shares has not been completed at the date of this report and the acquisition agreement remains unconsummated. See Exhibit 10.4 - Share Sale Agreement for more details.
Minanca is a private company, registered under the laws of Ecuador. Minanca’s head office is located at the town of Portovelo.
Minanca is an exploration stage company in Ecuador, primarily active since its inception in the feasibility stage for gold in the southern area of the country, specifically in the El Oro Province. Minanca has small scale gold production from underground workings. Mine management and all mining activities are sub-contracted to a third party mining operator.
Location and Access
The 45 hectare Minanca Project is located in the highly productive Portovelo-Zaruma gold belt in the El Oro province of Ecuador. The Portovelo region is host to a 15 km long system of poly metallic epithermal veins. Locally the vein system covers an area approximately 7 km long by 1 km wide, with mineralisation hosted in highly fractured host rocks with quartz and carbonate filling.
The Minanca property has been continuously mined since 1845 and mining in the region dates back to the 1600’s. Mineralisation on the Minanca property includes gold, silver, copper, zinc and lead occurring in quartz calcite veins within an andesite host rock. The mine has 3 principal veins, varying in widths from 0.6m to 5m and length between 500m and 800m, of which only the Abundancia vein is the focus of current mining activity. This vein system is postulated as originating from dilatational fissure openings resulting from the strike slip fault movements associated with the Portovelo Caldera. Numerous stockwork veinlets separate the major veins, and these stockworks are currently undergoing evaluation for an open pit-mining scenario.
Recent sampling of the underground workings and surface grab and trench samples has confirmed the stock work and the porphyry system to host significant gold, silver and zinc mineralisation. As a result of the encouraging sampling results, Minanca is currently drilling to test the size and grade potential of the hosting Andesitic lithologies.
The dominant feature of the region is the Portovelo Caldera. This structure is considered to be Tertiary to Pleistocene in age and has a diameter of 10-12 kilometres. Mineralization is associated quartz-carbonate veins within a seven km N-S orientated fault envelope. The fault envelope is interpreted as a mega tension gash system formed within the 6.5 kilometre gap separating the NW-SE trending Puente Busa Fault located to the north of Zaruma and the Pinas-Portovelo fault located south of Portovelo. Within this envelope are a series of enechelon faults, which cut through a highly weathered grey porphyritic andesite and felsic porphyry.
Principal vein systems, which contain the majority of the mineralization, have a northerly orientation and are visible at a surface as weathered gullies across the mountainside. The vein system covers an area approximately seven kilometres in length and one kilometre wide. The vein systems are postulated as being formed as a result of fissure openings created by strike-slip fault movements along regional faults, which control the caldera’s location. The Minanca project contains a series of these veins.
Within the project there is also a NE trending mineralised zone of approximately 600 metres in length by 135 metres in width, currently identified as the Magner Filon. This zone is characterised hydrothermal alteration resulting in elevated levels of silica and pyrite content. Recent surface outcrop sampling, in a highly leached environment, resulted in values up to 7.8 g/t gold.
The mining operation at Minanca follows the major Abundancia vein and other sub parallel veins, which have been mapped and mined for a number of years. Between these large veins is a stockwork of quartz veins, seen at excavations previously carried out on the upper slopes of the concession. The excavations are designed to expose and sample the weathered portion of the porphyry noted on the property in order to assess the feasibility of an open pit operation.
Presently, Minanca is carrying out exploration programs including drilling that are designed to provide a better understanding of structural geology, and extend the zones of mineralization. Minanca’s medium to long term objective is to define resources outside the present mining zones of sufficient tonnages and grades that may eventually permit the company to engage in open pit mining.
D. Condoroma and Suyckutambo Projects - Peru Property
On July 5, 2006, De Beira entered into agreements with the Goldplata Group to acquire an interest of up to 70% in the Condoroma and Suyckutambo Projects in Peru, which are prospective for gold and silver. De Beira was granted an option to acquire up to 70% interest in each of these two projects on identical terms. The agreements allow De Beira to acquire an initial interest of 65% by sole funding $4 million in exploration expenditures within a 3 year period (the “ Option Period ”). The Option Period commenced on August 4, 2006. After acquiring 65%, De Beira has 60 days to elect to sole fund further expenditures in order to acquire another 5%, giving it a total interest of 70%. The additional interest is to be acquired upon the earlier of completing a bankable feasibility study or spending a further $6 million, both within a period of no more than 3 years from the time of the election. De Beira may not withdraw from the agreement after the start of the Option Period until it either incurs $500,000 in exploration expenditures or pays $500,000 to the Goldplata Group. $45,000 was incurred in exploration expenditures during the year ended August 31, 2006, with a total of $205,000 incurred in exploration expenditures up to the date of this report.
Location and Access to Sucuytambo
The Sucuytambo Project area is accessed via road and is located approximately 20km from the town of Caylloma in the district and province of Caylloma. Caylloma is approximately 220 kilometres from the large regional centre of Arequipa, in Southern Peru and approximately 150 kilometres from the border with Bolivia.
The Suyckutambo Project area has had a history of mining dating back to colonial times. Recent activity saw mining of the area by Cia De Minas del Peru (MHC) between 1945 and 1965 with a 150 Tpd plant through which 1M tonnes was treated for 9.03M ounces of silver and 125,400 ounces of gold. The grades vary during the mine life of this time and eventually water inflow stopped the mine.
The regional geological setting for the Caylloma district is dominated by a NE trending southeast dipping vein system that lies within the lower-Miocene age Tacaza Group of interbedded Andesites and Andesitic pyroclastic units. The district occurs in a triangular area averaging several km in width between the N-S right lateral Cuchillades fault and NW trending left lateral Trinidad fault that set up a tensional environment for the formation of the vein sets.
The 11.4 million year old Chonta Caldera occurs to the northeast and the large and younger, 2.5 million year old Caylloma Caldera occurs to the east.
Locally at Suyckutambo the prominent Santa Ursula Vein is the host of the gold and silver.
The Condoroma Project area is accessed via road and is located approximately 205km from Arequipa and 15km from the town of Caylloma in the district and province of Caylloma (approximately 5kms from the Sucuytambo Project area).
Several veins are visible within the Condoroma property though the historical mining focus was on 4 main vein systems, The Bononanza Vein, Ramil Vein and Santa Rita-Mercedes. The principal elements are silver with associated minor gold, and lead and zinc. The veins strike approximately N35-45 degrees west with a 60 to 90 degree southerly dip. The NE striking Santa Rita Vein intersects the Mercedes vein in an area De Beira is confident will host significant mineralisation. The numerous stock work veinlets within the system were tested with limited sampling by previous workers and show the veinlets to also be mineralised.
Mineralisation is hosted in volcanic intrusives of the Tacaza Group. Mineralisation style is epithermal veins of quartz-calcite-siderite-rhodochrosite gangue and pyrite-galena-sphalerite sulphides with manganese oxides and minor gold and electrum.
The exploration activity at present on the Condoroma and Suyckutambo Project areas is focused on literature search, data review, mapping, and surveying. De Beira has applied for permission to commence drilling. Drill targets have been provisionally identified and, upon granting of permission, it is anticipated that a 3,000 metre drill program will commence at Condoroma. Thereafter, and, subject to results, a similar sized drill program will be undertaken at Suyckutambo.
De Beira competes with other mining and exploration companies possessing greater financial resources and technical facilities than De Beira in connection with the acquisition of mineral exploration claims and in connection with the recruitment and retention of qualified personnel. Many of De Beira’s competitors have a very diverse portfolio and have not confined their market to one mineral or property, but explore a wide array of minerals and mineral exploration properties. Some of these competitors have been in business for longer than De Beira and may have established more strategic partnerships and relationships than De Beira.
Management believes that it will have a competitive advantage over its competitors due to its network of contacts, which will enable it to identify and acquire prospective mineral properties more quickly and efficiently than many of its competitors.
Government Controls and Regulations
De Beira’s exploration and development activities are subject to various levels of federal and state laws and regulations relating to protection of the environment, including requirements for closure and reclamation of mineral exploration properties. These laws are continually changing and, as a general matter, are becoming more restrictive. De Beira’s policy is to conduct business in a way that safeguards public health and the environment. De Beira believes that its mineral exploration activities are conducted in compliance with applicable laws and regulations.
The various levels of government controls and regulations address, among other things, the environmental impact of mineral exploration and mineral processing operations and establish requirements for decommissioning of mineral exploration properties after operations have ceased. With respect to the regulation of mineral exploration and processing, legislation and regulations in various jurisdictions establish performance standards, air and water quality emission standards and other design or operational requirements for various components of operations, including health and safety standards. Legislation and regulations also establish requirements for decommissioning, reclamation and rehabilitation of mineral exploration properties following the cessation of operations, and may require that some former mineral exploration properties be managed for long periods of time.
Any existing or probable governmental controls or regulations will not materially affect De Beira’s current business, including any applicable environmental laws.
De Beira will be required to obtain work permits for any exploration work that results in a physical disturbance to the mineral claims. De Beira will be required to obtain a work permit if it proceeds with the subsequent phases of its proposed miner