Sila

Overview

The 12,185 hectare Silasselka project area is located 38 km NW of Agnico Eagle’s 4.7 million ounce Kittila Gold Mine. The Silasselkä project area was previously explored during the 1960’s by Finnish state entity Otanmäki Oy and during regional base metal exploration they were successful in outlining four vanadium-iron-titanium deposits by completing 46 drillholes totalling 5700 m. Dragon Mining Oy (Dragon) acquired the property in 2010 by staking.

Access to the property is very good, with forestry roads extending from paved highways providing access to the otherwise forested and undeveloped property areas. A regional airport with daily flights to and from Helsinki is located in Kittila. Topography is low and characterized by generally rolling hills with relief of less than 150 m.

Geology and Mineralization

The Silasselkä property is underlain by metavolcanic and metasedimentary rocks that are intruded by substantial volumes of younger monzonite, granodiorite and gabbro bodies. Upper greenschist to amphibolite grade metamorphism marks the central metasedimentary and metavolcanic zones of the Silasselka property and greenschist facies assemblages occur along its eastern limit. Banded sedimentary iron formation units occur within the metasedimentary section, along with a distinctive sequence of variably textured, layered amphibolites containing multiple, laterally continuous magnetite rich layers that host economically significant levels of vanadium (V) in association with titanium (Ti) and iron (Fe). Highest vanadium values typically occur where massive to sub-massive concentrations of magnetite or ilmeno-magnetite are present. The magnetite-rich units are recognizable in airborne magnetometer survey results and four target areas along a 15 km north-south positive aeromagnetic trend were drilled by Otanmaki OY in the 1960’s. The following mineral resource estimates are based on results of that drilling.

Silasselka Property Historic Mineral Resource Estimates - Non NI43-101 Compliant

DepositCategoryLower Cutoff Value (V%)Tonnes (Mt)V%V2SO5%
PyhajarviProven0.32.20.350.62
 Probable0.35.030.350.62
 Possible0.36.00.350.62
KuusilaanivaaraProbable0.30.250.400.71
SilasselksProbable0.30.850.300.53
PesosjarviNS 0.700.220.39

Note: All estimates were prepared by Otanmaki OY in 1968 and compiled for Dragon in Hanes (2013).

All estimates presented above are historic in nature and not compliant with NI 43-101. A Qualified Person has not done sufficient work to classify them and Aurion is not treating these estimates as current mineral resource estimates. They should therefore not be relied upon.

The vanadium mineralization defined to date on the Silasselka property occurs in distinct and correlatable layers within the amphibolite sequence, the protolith of which may have been a mafic intrusive system such as a sill that was emplaced concordantly into the host volcano-sedimentary sequence. This interpretation was favoured by Hanes (2013) in an assessment carried out for Dragon. Iron-titanium-vanadium rich magnetite-ilmenite deposits are often associated with anorogenic anorthosite-gabbro-norite-monzonite-charnokite-granite (AMCG) suites but can also be related to island arc magmatism that is followed by orogenic compression (Gross et al., 1998). Both of these tectonic settings have additional potential for occurrence of magmatic sulphide deposits of Ni-Cu or PGE association and the latter setting is one in which orogenic gold deposits could also be expected to occur. The vanadium grades of the Silasselka area deposits are higher than average for many such magmatic accumulations, but the relatively thin mineralized intervals are separated by thick, non-mineralized zones that negatively affect deposit economics. However, the drilling conducted to date is typically < 100 m depth and the mineralization remains open.

While the deposits of Fe-Ti-V mineralisation are significant and still under-explored, Aurion’s primary interest in Silasselka is in the gold and PGE potential. The geological setting has the potential to host magmatic nickel-copper-PGE and orogenic gold mineralisation. The Silasselkä Project area covers a 16 km long interpreted northern strike extension of the HSZ. The HSZ which lies west of and parallel to the Kiistala shear zone which is host to Agnico Eagle’s Kittila Gold Mine (4.7 million ounces), hosts several gold occurrences which have reported drill intersections of 4.5 g/t Au over 11.7 m and 5.9 g/t Au over 7.5 m (Dragon website).

Aside from compilation and reconnaissance mapping by Dragon no exploration activities have been performed on the property since the 1960’s.

2014 Exploration

Aurion conducted limited reconnaissance prospecting the fall 2014 and consequently high grade gold in angular quartz boulders was discovered. Assays from 56 rock samples ranged from nil to 219 g/t Au. A 10 cm wide, seemingly barren, quartz vein collected from a 3 m by 5 m outcrop submerged in a shallow stream 40 m west and upstream of the high grade boulder assayed 2.2 g/t Au. Many of the samples were also anomalous in arsenic (As), with samples assaying from nil to 5410 ppm (parts per million). These samples were collected over a 6.5 km distance along the northern strike extension of the Hanhimaa Shear Zone (HSZ). The area is completely covered by glacial till with virtually no exposed bedrock except locally or in stream beds.

Aurion’s discovery of high grade gold and anomalous As in numerous rock samples along the northern projection of the HSZ demonstrates the gold potential and the analog to Hanhimaa and the Kittila deposit where gold mineralization is associated with As-bearing sulphides.

Agreement

Under terms of the agreement, Aurion can earn a 100% interest in the Kutuvuoma and Silasselka properties through payment of 6 million common shares of Aurion, and expending €1,000,000 (Euros) over the three year agreement period. Dragon will retain a 3% Net Smelter Return (NSR) royalty for both properties and Aurion’s interest is conditionally assignable. The entire NSR can be purchased at any time on or before the sixth anniversary of the purchase agreement through a single payment of €4,000,000 to Dragon, or 1% after the 10th anniversary for the same amount.