Yeonwha Lead-Zinc Property
The Yeonwha 1 lead-zinc property lies approximately 20km to the south east of Sangdong within the historic Taebaeksan mining district of South Korea.
The Yeonwha 1 Complex consists of three past-producing mines, Taebaek, Bonsan and Dongjeom. These deposits were mined from the early 1960's to the early 1990's and were regarded as the most important mines in the Taebaeksan district.
The deposits are connected by underground development and the ore was hauled underground from the Taebaek and Dongjeom mines to the central processing facility located near the Bonsan mine. Production from Bonsan and Dongjeom reportedly ceased in 1991 and production from Taebaek appears to have ceased in 1993.
Yeonwha I lies approximately 4km to the south west of the Yeonwha II property which is currently being evaluated by a Korean joint venture group headed by KORES.
The deposits are hosted within limestone, dolomites and carbonaceous sediments of the Cambrian Pungchon and Ordovician Myobong Formations. These formations have been intruded by early Triassic lamprophyre stocks and Cretaceous quartz monzonite porphyry dykes.
The mineralization occurs in skarns within the limestone and shale and is hosted within tabular veins and breccia pipes that form discrete mineral bodies within each deposit.
One of the largest of the mineral bodies, Taebaek 1 within the Taebaek deposit, occurs within a sub-vertical tabular vein that attains a maximum thickness of around 9 meters. It has been mined over a strike extent of around 400 to 500m and a vertical extent of approximately 400m. The top of the vein is around 400m below surface.
Detailed "mineral reserves and resources" were documented in a 1991 report by KORES prior to the cessation of mining. The report quotes "reserves" and "resources" as categories that can be translated from Korean as proved and inferred, respectively, which however cannot be assumed to be equivalent to similar terms used under the JORC and NI 43-101 requirements, and therefore the KORES estimates are not compliant and cannot be relied on.
The historical non-compliant resources include total 'proved reserves' for the three deposits of 3.6 million tonnes grading 3.5% lead and 4.8% zinc, of which 96% was contained in the Taebaek deposit, and total 'inferred resources' of 3.6 million tonnes grading 3.4% lead and 4.8% zinc, of which 73% was contained in the Taebaek deposit.
A qualified person has not completed sufficient work in order to classify historical resource estimates prepared by KORES for the Taebaek property as current mineral resources or reserves and the Company is not treating these historical estimates as prepared by KORES or otherwise as current mineral resources or reserves but as historical estimates for informational purposes only that should not be relied upon.
Pursuant to a three-year option agreement dated October 9, 2006, referred to as the "Jangseong Option Agreement," Woulfe Mining issued the required notice to the Vendors to exercise the option on October 9, 2009.
The Jangseong Option comprised two contiguous blocks, referred to as Yeonwha, which comprises five mining titles (Registration #s 76094, 76361, 76499, 76500, 76501); and Taebaek, which comprises three mining titles (Registration #s 76359, 76360, 76505). The Company has since applied for an adjacent mining title and the total area of the titles is 2,133 hectares.
Pursuant to the Option Agreement, Woulfe was required to pay US$50,000 in cash and an additional US$50,000 in cash or common shares of the Company, at the discretion of the Company (at the average closing price of the common shares for the 10 day trading average price prior to the payment date) in order to acquire a 100% interest for both the Yeonwha and Taebaek blocks. Accordingly these payments were made.
Woulfe Mining also must pay a further US$1 million in cash and US$ 1 million in cash or common shares of the Company on development of the project, plus a 2% net smelter revenue royalty to the Vendors. Additionally, in order to keep the option in good standing, the Company must complete a pre-feasibility study on the property within five years of the transfer of title to the company.
The Taebaek and Yeonwha properties form part of the Company's the longer term profile. The Company plans to model and evaluate these properties in the future in order to be determining their rank in the Company's project priority list for longer term development.