VMS deposits often occur in clusters, along
linear trends following volcanic rifts or in arcuate fashion along caldera margins. Toachi has identified 14 targets along a six-kilometer northeast
trending corridor, which extends from the La Plata deposit to the Bella Vista prospect to the north (Figure 7). Most of these targets correspond
to coincident soil geochemistry (Au, Ag, As, Cu, Mo, Sb, Zn) and geophysics (gravity highs) anomalies (Figure 8). We note that very limited drilling
has been conducted beyond the La Plata deposit itself and that outcrop exposure is scarce (the property is covered by a layer of volcanic ash and
reworked volcanic sediments). Targets of interest include “Guatuza”, 250m northeast of La Plata, (which returned 6.8m @ 7.0% Cu + 1 g/t Au) as
well as a prominent discrete 250m x 250m gravity high 200m to the east of La Plata which has not yet been drilled.
Toachi’s La Plata property is accessible within three-hours by road from Quito, most of it along a
paved two-lane highway (Figure 9). The final 13km stretch to the property is along a well-maintained gravel road to the community of Palo Quemado
(population 1,500). Palo Quemado occurs just outside the western edge of the property boundary and houses the company’s field office and core shed
facilities. A network of gravel roads provides vehicle access from Palo Quemado to the La Plata deposit and other areas on the property. The community
of Palo Quemada is connected to the national hydro grid and a power line transects the property.
The La Plata deposit was mined from 1975 to 1981
by Minera Toachi who extracted 130,000 tonnes of ore at 4.1 g/t Au, 65.1 g/t Ag, 3.6% Cu and 7.1% Zn, from two small open pits as well as from
underground. During our visit we did stop to observe the site of the historic milling/processing facilities (Figure 10). Though the area is overgrown
with vegetation and all equipment has been stripped and removed, the area does remain vacant, and could potentially serve as location for a new
mill site. We also did observe a pile of “unprocessed material” nearby (Figure 11); this sulphide rich material has oxidized and may pose a small
environmental concern. Processing this material as a first step in commissioning a new plant would certainly help curie favor with the locals and
Pending PEA, likely feature small scale with strong economics.
In relatively short order, Toachi has successfully defined a small
but high-grade gold-rich base metal resource at La Plata with metal content of 800Koz AuEq / 782Mlbs ZnEq. We believe that Toachi’s ability
to incrementally expand this resource with further drilling is good. We look forward to the results of the Preliminary Economic Assessment
expected in H1 2018, which will likely contemplate a small but high margin underground mining operation. Beyond La Plata, we believe the 14
targets defined by Toachi on the greater property have merit and may lead to discovery of additional massive sulphide deposits.
Ed Thorose | VP Corporate Development
Derek Macpherson | VP Mining Analysis
Alex Pitcher | Associate
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Toachi Mining Inc. - TSXV:TIM - 1
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