| Valuation Commentary: Lucky Minerals Inc. (TSX-V: LKY) (US Listing: LKMNF) (Frankfurt: LKY) has what exploration geologists in-the-know describe as an amazingproperty, highly prospective for major copper and gold discovery, at its 100%-owned royalty-free 550km2 (55,000 Ha, or 136,000 Acres) Fortuna Project in Ecuador, located in prolific mineral belts ~40km from Lundin Gold's Fruta del Norte (9.48 M oz Au I+Inf) deposit and the Mirador (2.7 M oz Au and 5.9 B lbs Cu M+I) deposit. So impressive is the Fortuna project that one of the world's largest copper producers, First Quantum Minerals, has agreed to pay Lucky Minerals C$1,000,000 for the right to drill copper targets on the property and Lucky receives a free-ride 30% carried interest through to feasibility on any copper finds. Lucky gets access to all exploration data, and can focus its efforts on gold targets 100% for its benefit. Lucky's 2020 exploration program is the first time that anyone has been on Fortuna for over 1.5 years and is the first time its exploration team is focusing on something other than the mineralized El Buitre Cu-Au porphyry system (on Fortuna concession #3), which was discovered in 2018 shortly after acquiring the property. Lucky's Fortuna concessions were acquired from a private company that essentially sat on coveted prime ground for well over a decade as discoveries were made surrounding it. The project is ripe for discovery of significance having received (prior to Lucky) no modern exploration or drilling; geological interpretation and historical sampling (up to 10.5 g/t Au + numerous Cu anomalies in stream sediment) suggest potential for massive Gold & Copper system beneath. Two major NNE-trending geological structures laden with calderas cut through Lucky's Fortuna Project, similar NNE-trending structures intersect neighboring Fruta del Notre, Mirador, Loma Larga, and others. The share price of LKY.V is apt to rise as positive news flows from the 2020 exploration efforts of both Lucky Minerals (targeting gold) and First Quantum (on copper targets, at no cost to Lucky). The current market cap of LKY.V relative to the immense potential appears disproportionate and poised for upside revaluation; the El Buitre Cu-Au porphyry system alone, now being advanced by First Quantum, is highly prospective for major (possibly Tier-1) discovery. Additionally, the involvement of Palisades Goldcorp taking a major equities stake in Lucky Minerals affirms the understanding among professionals familiar with the latent potential of the project in Ecuador. Palisades Goldcorp is a resource merchant bank that capitalizes on deep value disconnect between the broader commodities market and junior resource equities. | | Figure 1 (above left) Location maps show Fortuna proximal multi-million oz neighbors, superimposed orange color represents geological NNE-trending structures. -
The Property is located in the South-Central part of the Ecuadorian Cordillera about 40 km northwest of the Fruta del Norte gold deposit. -
The Property lies approximately 120 km in a straight line to the deep-sea port of Bolivar in the city of Machala, and approximately 60 km north to the city of Cuenca. -
The Fortuna Property is located in the Inter Andean Depression near the western foothills of the Cordillera Real. Topography and vegetation are typical of the Andean highlands or altiplano. -
The topography ranges from approximately 3,800 meters elevation at the Culebrillas peak (on Fortuna 3), to less than 1,600 meters in the south of the property on Fortuna 6. Driest months are between September through January. -
Easy access from Cuenca to the village of Nabon. 14 km from the Village of Nabon to the Fortuna 3 Concession, then by a 7 km gravel road followed by trails. -
El Buitre area lies at approximately 3,400 meters average elevation in a plateau like topography. Figure 1 (above right) Landsat image interpretation for sections of Fortuna concessions showing domal/circular features, faults & stratigraphy. Volcanic domes are dotted all around Lucky Mineral's Fortuna project. The image above shows the location of volcanic domes on Fortuna (seen as circles). The volcanic structures provided the heat source for the hydrothermal fluids that mobilize metal concentrates (e.g. copper and gold). The property has multiple faults converging, and different rock types (some acting as a sponge for Cu-Au precipitate), the project has immense latent potential. The neighboring El Mozo gold deposit is spatially and temporally related to volcanic structures. Hydrothermal cells responsible for gold mineralization appear to be controlled by high-angle faults which appear to influence the emplacement of volcanic domes. Exploration activity on Fortuna should be viewed in two categories; 1) the efforts of Lucky Minerals' geologists zeroing on gold targets, and 2) the efforts of First Quantum on copper targets. Lucky Minerals zeroing in on Gold targets with large upside discovery potential: Currently Lucky's geological team has boots on the ground to assess known areas with the highest potential for the occurrence of gold mineralization and into areas that have never previously been explored by the Company. Work will include surface geological mapping and srecently observed gold mineralization in the Sampling. This work will focus on mapping areas of alteration and taking rock samples. The objective being, to locate the source of the hincata River regions, to review known areas with anomalous gold and define new areas. This work will define areas for follow-up ground geophysics, trenching and ultimately drill targets. Lucky Minerals will be concentrating its 2020 exploration efforts on the NW epithermal gold concessions 8, 9, and 10 (Tertiary volcanics), and the two southern concessions 11 and 12, which are highly prospective for orogenic gold mineralization (in Paleozoic rock that is of similar type and age as prolific areas of neighboring Peru). Of significance is the occurrence of historical placer gold operations along river gravel and sand beds which drain from the Fortuna 11 and 12 concessions. Figure 2 (below) Rock sample (one of many) from Fortuna 9 concession gathered this 2020, it shows Lucky's exploration team is in the right area for a discovery of significance. Assay pending. This rock shows the the vuggy (large pores that are commonly lined with mineral precipitates) texture with quartz. Higher concentrations of gold mineralization are often found in this type of rock: Assay pending The above siliceous hand specimen was taken from outcrop, is typical of epithermal gold systems, and has vuggy silica, breccia fragments and alteration minerals such as, jarosite, alunite and limonite clusters. The breccia matrix is composed of mainly silica. Geology of Fortuna Figure 3. (above) Geological belts of Fortuna -- The Property spans the contact between Paleozoic and Mesozoic basement rocks to the east, and Tertiary volcanics to the west of the Fortuna concessions. Northeast trending and structurally controlled (fault bound) geological belts are found within the concessions. -
The westernmost belt is comprised of Tertiary volcanics and has potential for hosting epithermal gold mineralization (Fortuna 8, 9 and 10). -
The middle belt is mainly of Triassic age rocks and appears to have been pierced by Miocene age intrusions and volcanics. Within this belt (Fortuna 3), the El Buitre porphyry target is located. A caldera-like feature which overlaps the Fortuna 1 and 3 concession surrounds Lake Tulpas and contains volcanic breccias and stockwork quartz veins with extensive phyllic alteration. -
The Fortuna 2, 6, 7, 11 and 12 concessions lie within a belt of mainly Paleozoic rocks (ideal for orogenic gold potential). | ------ ------ ------ ------ ------ ------ ------ ------ ------ Large upside potential at Lucky's El Buitre Cu-Au Prophyry System being advanced by First Quantum -
The El Buitre Porphyry and Breccia Zone consists of a phyllic altered stockwork & breccia zone with anomalous copper, gold and moly. -
Lucky has a memorandum of understanding on Fortuna with First Quantum Minerals Ltd. (“First Quantum”) whereby First Quantum is able to earn up to 70% of copper targets. First Quantum is a multi-billion dollar market-cap copper producer (among top 10 producers in the world). You start to understand just how big Fortuna can be and what attracted First Quantum once you overlay the myriad of indicators; the size of the sample footprint at surface, the copper at surface, the gold at surface, the Mo and Bi values (a good indicator of mineralization under cover), with the topography, and understanding of the geological genesis, and ageing. The age of the porphyry is key, Lucky Minerals has had strontium iridium aging of the porphyry intrusion pegging it as Miocene age, which is smack dab in the middle of where it should be fore some of the biggest porphyries in that zone of the Andes. Cu-Au El Buitre Porphyry System Overview Figure 4. (above) - Image of the peak at El Buitre on Fortuna 3, El Buitre is an enormous high priority Cu-Au porphyry target for First Quantum. A caldera-like feature overlaps the Fortuna 1 and 3 concession, it contains volcanic breccias and stockwork quartz veins with extensive phyllic alteration. Figure 5. (above left) Location map highlighting Fortuna 3, (above right) Alteration Map (Terra-Spec analysis). El Buitre is a major porphyry system. Field work to date has shown a phyllic alteration area of approximately 3 x 2 km, not yet constrained, which could be indicative of a large hydrothermal/magmatic cell. The host rocks are a granodiorite porphyry and an “S” type meta-granite. Two main vein types have been observed. Quartz-molybdenite veins (“B” veins) and pyrite-sericite-silica (“D” veins). | Figure 6a. (above) Quartz ,pyrite and molybdenite veinlet; “B” type veins with quartz-molybdenite are associated with a micro granite porphyry intrusion. | Figure 6b. (above) Stockwork of quartz-pyrite veinlets; Pyrite-sericite-silica “D” type veins are dominant and cut all stages of the system. “D” veins cut “B” veins. | The widespread phyllic alteration, as well as the “D” and “B” veinlets confirm the presence of a porphyry-style system of large size. Geological teams have also identified significant areas of mineralized breccias within the system. | Figure 6c. (above) Sample 18736: Quartz & Molybdenite vein | Figure 6d. (above) Sample 18888: Quartz, Pyrite & Molybdenite Vein | The presence of “B” veins and porphyry intrusions on surface, suggests the erosion level is on the center of the phyllic alteration, just above the potassic center, which is favorable for increasing the success in outlining considerable mineralization by drilling. This vein type is common in Chilean and Peruvian Deposits. | Figure 6e. (above) Sample 18917: Pyrite, Sericite and Silica Vein Typically found in the phyllic alteration zone in most Cu porphyries. | Figure 6d. (above) Sample 18488: Pyrite, Sericite and Silica vein |
El Buitre Porphyry lies at the contact between the basement rocks of the Chaguinda Formation and the Tres Lagunas granite on a Suture Zone. Considerable potential to find additional Porphyry clusters do exist along this Suture zone. Indicators point to a prime (potentially Tier-1) discovery in the making at El Buitre Figure 6. (above left) Typified diagram showing geochemical zonation in a porphyry system, (above right) Minor elements distribution at El Buitre (for illustration purposes, not to scale). Anomalies and indicators allow the geological team to estimate where the erosion level of El Buitre is and logically deduce where the potassic core of the porphyry is expected to be. Figure 7. (above) Probable erosion level at El Buitre Porphyry is shown, First Quantum would not have paid $1,000,000 to have the right explore here if they did not see the enormous potential for a major find. Figure 8. (above) Access to El Buitre Sample data in support of anomalies pointing to possible proximity of potassic core of the porphyry at El Buitre: | EL BUITRE PORPHYRY Cu-Mo-Bi rock sample anomaly locations Click image to enlarge [PDF] Figure 9. (above) -- Map with anomalous Cu-Mo-Bi sample locations, Bi anomalies may indicate proximity to a potassic core within a porphyry system. | EL BUITRE PORPHYRY Au-As rock sample anomaly locations Click image to enlarge [PDF] Figure 10. (above) -- Map with anomalous Au-As sample locations. This map & the previous one have coincidental anomalies. This may indicate a Cu-Au-Mo type porphyry of the Gaby-Papa Grande deposit type which contains 166 MT with 0.12% Cu, 0.025% Mo, 0.73 g/t Au and 1.75 g/t Ag. | Preliminary Geochemical Plots for El Buitre
Figure 11. (above) Preliminary Geochemical Plots for El Buitre -- The green polygon is an area with anomalous Cu and Mo, with a Bi halo that would suggest a good exposure level in a porphyry context. The red polygons are potential epithermal targets (As, Sb). Plots based on a batch of 50 rock samples.
Preliminary SR/Y & Radiometric Age Testing at El Buitre: -
Significant Strontium/Yttrium Ratios (Sr/Y) values have been found within the El Buitre Porphyry system with anomalies up to 271, averaging 80. These results corroborate the presence of a significant porphyry system. -
Almost all Y values are under 18 ppm with MgO values all under 2% -
Initial U-Pb ages on zircons have yielded a Miocene age of 17.36 ±0.33 Ma for the granodioritic porphyry, and Re-Os dating gave a Model age of 18 ± 0.08 Ma for a molybdenite veinlet cutting the microgranite porphyry. Strontium/Yttrium Ratios at the Intrusions of El Buitre Porphyry
Figure 12. (above) Strontium/Yttrium Ratios at the Intrusions of El Buitre Porphyry -
The low Y and high Sr/Y ratio suggests a deep hydrous source which has the potential to form large porphyry deposits. -
Intrusives at El Buitre fall within the Adakite-like magmas. -
Cale-alkaline arc rocks that share these distinct trace-element signatures are known as ‘adakite-like’. Adakitic signatures and are commonly associated with economic porphyry-style Cu-Au-Mo ore deposits. Rock Hand Specimens at El Buitre
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A closer look at gold potential of the Fortuna Concessions
Figure 17. (above) Gold Anomalies on the Fortuna Property -
Four regional gold anomalies have been identified on the Fortuna Property.
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Epithermal gold mineralization – in Fortuna 8 to 10, adjacent to the El Mozo gold project. This area lies within a Miocene volcanic belt that trends NE. Rock alteration includes areas of silicification, clay, alunite and jarosite; within a quartz stockwork system, with vuggy, colloform and banded quartz textures.
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Porphyry gold and copper – within the El Buitre porphyry (Fortuna 3). Several rock chip samples have returned anomalous gold.
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Intrusive related gold stock – along a NE trending Paleozoic belt comprised of quartzites, slate and phyllites. These rocks have been intruded by Triassic granitic stocks which carry gold.
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Orogenic gold potential – Rock chip sampling within this Paleozoic belt (Fortuna 2, 6, 7, 11 and 12) have returned anomalous gold. A similar Paleozoic belt in the Peruvian side , hosts known orogenic gold deposits. No exploration for potential Orogenic type gold mineralization has been done in Ecuador along this Paleozoic belt.
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It is also known that historic gold placer mining occurred along the Shincata creek which lies between the Fortuna 9 and 4 concessions. Lucky's planned work will use this historic evidence of gold to target drilling. Synopsis of Rock Chip Samples Figure 18. (above) View of NW concessions and location of samples. -
Anomalous Gold - Silver rock chip sample locations along a Miocene volcanic belt (Fortuna 4, 8, 9 and 10). This area hosts excellent potential for epithermal gold mineralization.
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The El Mozo Epithermal gold deposit lies adjacent and south of the Fortuna 10 concession along the same volcanic belt.
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Several volcanic domes and silicified areas have been identified within Lucky’s concessions. These areas will be a focus of exploration during 2020. |