Tristar Gold Inc. press release
Management's Discussion & Analysis For the Three and Six Months Ended June 30, 2015 and 2014 As of August 25, 2015
TSXV - TSX Venture Exchange · Gold · United States
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(via Thenewswire.ca)
Vancouver, British Columbia / TheNewswire / August 25, 2015- The following discussion of the results of operations of TriStar Gold, Inc. ("TriStar" or "the Company") for the three and six months periods ended June 30, 2015 and 2014 should be read in conjunction with the unaudited condensed interim consolidated financial statements ("interim financial statements") and notes thereto for the periods ended June 30, 2015 and 2014, and with the audited annual consolidated financial statements and notes thereto of the Company for the periods ended December 31, 2014 and 2013 and the Management Discussion and Analysis for those years.
The consolidated financial statements referred above are available for review under the Company's profile on the System for Electronic Document Analysis and Retrieval ("SEDAR") atwww.sedar.com, and the Company's website at www.tristarau.com
The Management's Discussion and Analysis ("MD&A) is prepared in conformity with NI 51-102F1 and has been approved by the Board of Directors prior to its release.
Forward-Looking Statements
Certain statements in the following MD&A constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions; competition within the minerals industry to acquire properties of merit, and competition from other companies possessing greater technical and financial resources; success of operating initiatives; the success (or lack thereof) with respect to the Company's exploration and development operations on its properties; the Company's ability to raise capital and the terms thereof; the acquisition of additional mineral properties; changes in business strategy or development plans; exploration and other property write downs; the continuity, experience and quality of the Company's management; changes in or failure to comply with government regulations or the lack of government authorization to continue certain projects; the outcome of litigation matters, and other factors referenced from time to time in the Company's filings with securities regulators. The use in the following Management's Discussion and Analysis of such words as "believes", "plans", "anticipates", "expects", "intends" and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. The success of the Company is dependent on the efforts of the Company, its employees and many other factors including, primarily, its ability to raise additional capital and establishing the economic viability of any of its exploration properties.
When relying on the forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by the Company or on behalf of the Company, except as required by law.
Business Overview and Summary
The Company was incorporated under the British ColumbiaBusiness Corporations Act ("BCBCA") under the name of TriStar Gold Inc., on May 21, 2010.
TriStar was created to hold certain existing Brazauro assets as a result of an Arrangement Agreement (the "Arrangement") between Brazauro Resources Corporation ("Brazauro") and Eldorado Gold Corporation ("Eldorado").
The completion of the Arrangement occurred on July 20, 2010.
TriStar's primary business focus is the acquisition, exploration and development of precious and base metal prospects, including the further exploration of the Castelo de Sonhos and Bom Jardim properties in the Tapajos Gold District of Brazil's northerly Para State. The Company is concentrating its current acquisitions and exploration efforts on those properties which the Company believes may have large scale gold potential.
The Tapajos Gold District has a rich history of alluvial gold production. During the 1970's and 1980's, the Tapajos area annually produced approximately 30% to 40% of Brazil's total gold output. Geologically, the Tapajos region is situated within the gold-productive, Archaean to Middle Proterozoic-aged Brazilian Shield that extends from Brazil through Guyana and into Venezuela. In the immediate area of the Company's projects, meta-sediments and granitic basement rocks are intruded by subvolcanic andesitic and rhyolitic bodies, all of lower Proterozoic age. The widespread alluvial gold deposits point to the area's strong bedrock exploration potential.
The Company's current properties are in the exploration stage and have not been proven to be commercially developable to date. The Company's existing properties are gold prospects in Brazil which were acquired between fiscal years 2007 and 2011. The Company defers and capitalizes expenditures associated with the direct acquisition, evaluation and exploration of mineral properties. When an area is disproved or abandoned, the acquisition costs and related deferred expenditures are written-off. The net capitalized cost of each mineral property is periodically compared to management's estimation of the net realizable value and a write-down is recorded if the net realizable value is less than the cumulative net capitalized costs.
The Company is subject to regulation by the Federal Mines Departmentin Brazil, the Departamento Nacional de Producao Mineral ("DNPM"). The Company holds exploration licenses or applications for exploration licenses granted by the DNPM for the Castelo de Sonhos property ("CDS"). Certain licenses for the Castelo de Sonhos Properties are subject to requirements to maintain rights over the properties. With respect to the core exploration license on the CDS property, the Company was required to file a report by August, 2014 demonstrating sufficient exploration work has been conducted to determine the existence of a deposit, as defined by Brazilian regulations. The Company filed the mentioned report at the end of July 2014. If the report is approved by the DNPM, the Company will have twelve (12) months from the date of that approval to file an application for a mining concession. If the DNPM determines insufficient exploration work has been completed it could result in forfeiture of the core license by the Company.
Since its inception, the Company has had limited revenues from operations other than interest income on invested cash balances. The company relies on the sale of securities to fund its operations and the company's cash position is currently insufficient to maintain its operations for a full year. There can be no assurance that the Company will be able to raise any, or sufficient funds.
Company Dissolution
On January 15, 2014 the Company decided to dissolve its wholly-owned British Virgin Islands subsidiary, Brazauro Holdings (BVI) Ltd. ("BHL"). The Company considers it has no need to maintain the existence of BHL and there are costs associated with BHL's maintenance. At time of dissolution BHL had no assets or liabilities. The legal process was completed during the second quarter of 2014.
Properties
Castelo de Sonhos (Brazil)
Castelo de Sonhos consists of 32,031 hectares of mineral rights located approximately 15 kilometers ("km") east of the Cuiaba-Santarem road. The host rocks for the property's gold mineralization are quartzites, meta-arenites and metaconglomerates of the Early Proterozoic (+2 Ga years) Castelo de Sonhos Formation. Geologically, the property shows strong similarities with Tarkwa in Ghana and Jacobina in Brazil. The property encompasses a 15 km by 12 km plateau with an average elevation of 300 meters above the surrounding ground. The main creeks and drainages that flow from the plateau were extensively mined for alluvial gold from 1987 to 1992 and the historic gold output from these artisanal mining operations has been estimated at 250,000 to 320,000 ounces.
Barrick Gold Corp. conducted significant exploration at Castelo de Sonhos from June 1995 to November 1996 for which TriStar has recovered the exploration data, consisting of 509 stream sediment samples; 3,093 soil samples; 1,472 rock samples; 2,313 trench samples and 23 diamond drill holes for a total of 2,027 meters. All these activities led to the definition of two large strong gold in-soil anomalies each of which extends for more than 2.5 km as well as positive gold intercepts in trench and drill core samples.
The soil anomalies as identified by Barrick were in the Esperanca South target and the Esperanca Center target. Esperanca South anomaly was 2.5 km long and 0.8 km wide with gold assays higher than 100 ppb ("parts per billion") gold. The soil anomaly in the Esperanca Center target was also 2.5 km long and 0.8 km wide but with gold assays higher than 250 ppb. These two anomalies both run north-south and are located in the same trend, being split only by the existence of a narrow valley between them. Most of the Barrick trenches and drill-holes (22 holes) were located in the Esperanca South target, and only one (1) hole was drilled in Esperanca Center. Of the 23 holes drilled, 11 are vertical and 16 have an average depth of about 50 meters.
TriStar's initial exploration program included a review of all Barrick's results, followed by a more detailed soil sampling program over the two main soil anomalies, soil sampling over areas that Barrick did not cover, geological mapping, an airborne geophysical survey and diamond drilling.
From December 2010 through June 2014, the Company completed the construction of a camp, worked at Esperanca Center, Esperanca South and other targets involving the collection and assaying of 7,529 soil samples, conducted geological mapping over 4,016 points with geological descriptions, completed an airborne geophysical survey and completed 16,213.20 meters of core drilling in 144 drill holes. The geochemical soil sampling was conducted to confirm Barrick's results, to identify new targets and to prepare sites for the drilling campaign which the Company started in September, 2011. In 2011, an airborne geophysical survey (magnetometry and radiometry), was flown by Fugro-Lasa Brasil, covering a total of 7,019 linear kilometers in two contiguous blocks encompassing the entire mineral rights area.
The soil geochemistry sampling program performed by the Company at Castelo de Sonhos confirmed the previous results obtained by Barrick in 1995-1996 and has not only extended the anomalous zones, but also identified new anomalous zones with the discoveries of the Esperanca East and West anomalies. The Esperanca East anomaly has been identified to the East of Esperanca Center and is 2,000 meters long by 800 meters wide (gold assays higher than100 ppb and with a maximum value of 1,617 ppb). Also, a narrower soil anomaly, which was only suggested by Barrick's sampling survey, has been better defined with the continuation of the soil sampling being carried out. This anomaly, named Esperanca West, extends for approximately 4,000 meters with an average width of 400-500 meters and highest gold assays between 250 ppb and 422 ppb. At Castelo de Sonhos, the main conglomerate package, which is the host for the gold mineralization, has a horseshoe shape and extends for approximately 14 kilometers. The continuing exploration performed by TriStar has expanded the gold-in-soil anomalies to a total length of approximately 18 kilometers coincident with the outcropping conglomerates.
The Company contracted Layne-Christensen do Brasil Ltda. to conduct a three phase drilling program with a minimum of 16,213 meters of core drilling to cover: the Esperanca Center and Esperanca South geochemical anomalies along with the newly discovered Esperanca East and Esperanca West targets. The first drilling campaign (33 holes for 5,662.65 meters) started in September 2011 and was completed on February 2012. The second phase drilling campaign (60 holes for 6,440.40 meters) started in July 2012 and was completed in November 2012. The third phase drilling campaign (51 holes for 4,110.15 meters) started in April 2014 and was completed in June 2014. Total drilling in the three campaigns amounted to 16,213.20 meters distributed as follow:
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Esperanca South target; 103 holes; 9,565.40 meters
Esperanca Center target; 34 holes; 5,666.65 meters
Esperanca East target; 5 holes; 587.50 meters
Esperanca West target; 2 holes; 393.65 meters
The significant assays for all holes have been disclosed in the news releases of February 27, 2012; April 10, 2012; October 02, 2012, November 13, 2012; January 07, 2013; June 11, 2014 and July 09, 2014.
The principal goals for the drilling at the Esperanca South and Esperanca Center targets were to add more drill holes in previously drilled sections and to fill in and extend the drilling grid in these target areas. The drill holes at Esperanca East and Esperanca West were the first investigative holes in these targets.
At Esperanca South, the drilling was focused on extending the known mineralization along strike as well down dip. At this target, the Company has already drilled 103 holes along a 2,800 meters long drilling line which follows the strike of the soil anomaly and the open cuts worked by the local garimpeiros. Mineralization at Esperanca South is still open to the South and to the North, where the known mineralization has a strike length of 2,800 meters inside a soil geochemistry anomaly that extends for over 5,500 meters. The current spacing between the traverse drilling lines, range from 50 meters to 100 meters.
At the Esperanca Center target, 34 holes have been drilled to date to investigate a 2,500 meters long by 800 meters wide soil anomaly, the drilling campaigns were designed to fill in the grid, which has drilling lines spaced from 200 meters to 400 meters and also in a fence-like pattern, to follow mineralization along the cross-sections. At Esperanca Center, the current results enhance the previous drilling results, and a mineralized zone of approximately 1,000 meters has now been defined at this target. The strong geochemical anomaly continues further north for at least another 1,500 meters and further drilling will be planned for this area.
The new anomaly named Esperanca East (to the East of Esperanca Center) is 2,000 meters long by 800 meters wide (100 ppb curve) and its gold assays range from 100 ppb to 1,617 ppb. At this target the initial drilling results on five holes are encouraging and additional drilling is needed to better define the mineralization. At Esperanca West, the drilling aims to investigate its soil anomaly as well a magnetic high anomaly identified by the airborne survey and one of the two holes drilled shows positive results.
During the second quarter of 2014 the Company completed a total of 4,110 meters of infill drilling as part of a campaign designed to demonstrate sufficient economic potential for converting one of its exploration licenses to an exploitation license. Due to the success of the drill program, the Company filed a positive report with the DNPM in Brazil on July 31, 2014.
On August 18, 2014, the Company announced the results of a maiden NI 43-101 Resource Estimate, later filed on October 1, 2014, completed by RBM Consultoria Mineral Ltda. of Saquarema, Brazil which calculated a contained resource of 182,000 Indicatedand 98,000 Inferredounces of gold in the EsperancaSouth and EsperancaCenter zonesas set out in the table below.
| Castelo de Sonhos Mineral Resource Statement at 0.40 g/t cut-off grade | | | | | | | | | Indicated | Inferred | | | | | | Target | K tonnes | Au(g/t) | Au(KOz) | K tonnes | Au(g/t) | Au(KOz) | | Esperanca Sul | 2,788 | 2.03 | 182 | 769 | 2.41 | 60 | | Esperanca Centro | | | | 661 | 1.81 | 38 | | Total | 2,788 | 2.03 | 182 | 1,430 | 2.13 | 98 |
| Castelo de Sonhos Resources at Various Gold cut-off grades | | | | | | | | | Indicated | Inferred | | | | | | Cut-off grade (Aug/t) | K tonnes | Au(g/t) | Au(KOz) | K tonnes | Au(g/t) | Au(KOz) | | 0.3 | 2,895 | 1.96 | 182.7 | 1,515 | 2.03 | 99.1 | | 0.6 | 2,527 | 2.18 | 177.3 | 1,245 | 2.38 | 95.2 | | 0.8 | 2,231 | 2.38 | 170.6 | 1,112 | 2.58 | 92.3 |
The resource estimate was calculated to an average vertical depth of only 70 meters and the area covering the resource estimate represents only approximately 4 linear kilometers of the 16 linear kilometers of the gold anomaly area which is currently under exploration.
The resource is hosted in conglomerate horizons along the shallow dipping (30?) east flank of a 10 km basin with a maximum width of 7km. The same conglomerate horizon varying in width from 100 to 200m at surface, outcrops along the East, North and West flanks of this basin and are in all instances associated with strong gold in soil anomalies along the 16km strike length.
Preliminary metallurgical testing indicates promising high recovery rates. The testing shows gravity recoveries of 73% and 88.6% for size fractions of respectively 80% passing 150 microns (100 mesh) and 80% passing 53 microns (270 mesh). Through cyanidation of the gravity rejects, the recovery was increased to 95.9% and 99.6% respectively for the two size fractions. Another test was performed on column cyanide leaching on 2 mm crushed samples with an average recovery of 78.7% which could indicate the possibility of recovery by heap leaching or vat leaching.
During 2014 the Company surrendered five areas totaling 49,320 hectares as described below:
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Relinquishment of two claimed areas totaling 19,328 hectares.
Filing of final negative exploration reports for three areas totaling 29,992 hectares.
The surrendered areas were considered to be of no interest and surround the main areas which cover the gold fertile rock units of the Castelo de Sonhos formation, which the Company has kept in good standing.
For further details on the current status of the Castelo de Sonhos property, please refer to the Company press releases on SEDAR atwww.sedar.com, and the Company's website at www.tristarau.com.
Bom Jardim (Brazil)
The Bom Jardim area is located approximately 30 km north-east of the Crepori river mouth along the Tapajos river. Bom Jardim is a circular structure suggesting a large volcanic caldera. The geology of the area is composed of intermediate-acid volcanic rocks of the Uatuma Tectono-Magmatic event (1,900-1,882 Ma). The volcanic rocks are rhyodacites and latites of the Bom Jardim Formation and dacites and rhyolites of the Salustiano Formation.
In this area TriStar Gold explored for deposits related to epithermal and porphyry copper and gold systems like those existent in the Phanerozoic mountain belts. This model is supported by the discovery made by Rio Tinto Exploration do Brasil (1998) of the oldest Au-epithermal system preserved in the world, the V3-Botica. The porphyry model was also proven by Rio Tinto in 1998 with the discovery of the V6 Cu-Mo property located some kilometers north of V3-Botica. Like Bom Jardim, the mineralized volcanic rocks at V3-Botica and at V6 have also evolved during the Uatuma Tectono-Magmatic in the early Proterozoic. Both prospects, V3 and V6 have not been explored by any other company as a National Forest was created over this area and, regulations for exploration and mining in that national Forest have not been established yet by the Brazilian government.
TriStar Gold has retained one exploration license for the Bom Jardim area measuring a total of 8,829 hectares.
A magnetic and radiometric airborne survey, completed in May 2008 by the Company, totaling 4,353 linear kilometers, with flight lines spaced 200 meters, highlighted several exploration targets.
The combined interpretation of the airborne survey and remote sensing images led to the definition of ten targets which were followed up from October 2008 to July 2009. The exploration program was carried out along two fronts. One front had teams walking all the creeks draining the caldera in search of rock float and out-cropping rocks which could eventually indicate hydrothermalism and mineralization. At the same time these crews collected pan concentrate samples for gold analysis and fine sediments for ICP multi-element analysis. Along the other front, crews carried out grid soil sampling for gold and base metals over the pre-defined targets.