Red Hill Copper-Zinc-Silver-Gold VMS Property
Location and Access
The Red Hill property is a copper-zinc-silver-gold volcanogenic massive sulphide (“VMS”) prospect located approximately 80 km west of Kamloops, B.C. and 20 km south of the town of Cache Creek. The property consists of 11 claims covering a total area of 6080 acres. It is easily accessed via the Trans Canada Highway#1 that runs along the full 15 km length of the property.
Ownership
Avalon can earn a 100% interest in the Red Hill property from Teck Cominco Limited by incurring expenditures totaling $1,200,000 by December 31, 2008. Expenditures to date total approximately $620,000. Teck Cominco would retain a 2% NSR royalty interest and certain back-in rights to re-acquire up to a 70% interest in the property first by funding 2.5 times Avalon’s expenditures to earn a 51% interest, then by completing a feasibility study on the property at its sole cost to earn an additional 14% interest. Finally, Teck Cominco can earn an additional 5% interest, to bring its ultimate interest to 70%, by arranging all production financing.
Regional Geology
The Red Hill property covers a bi-modal sequence of mafic and felsic volcanic rocks and associated volcano-sedimentary and intrusive rocks known as the Nicola Group, that have recently been interpreted to be chemically analogous and age-equivalent to the Permo-Triassic age Kutcho Assemblage in northern British Columbia. It is also interpreted to be a classic island arc type shallow, subaqueous volcanic assemblage of the type which frequently host copper-zinc-silver-gold VMS deposits. The Nicola group rocks are exposed in a 5km wide NNW-striking thrust slice over a distance of at least 20-30km.
The Kutcho Creek assemblage hosts the Kutcho Creek Cu-Pb-Zn-Ag VMS deposit, which is located 90 km east of Dease Lake in remote northern B.C. This deposit reportedly hosts measured and indicated resources (using a 0.5% copper cut-off) of 13.1 million tonnes grading 1.94% copper, 2.59% zinc, 33.7g/t silver and 0.41 g/t gold in one zone and an indicated resource of 2.1 million tonnes grading 3.3% copper, 5.8% zinc, 75.7 g/t silver and 0.71 g/t gold in a second zone, as reported by Western Keltic Mines Inc.
Previous Work
The Red Hill property has been intermittently explored by many companies for copper-zinc-silver-gold VMS deposits over the past 40-50 years. The prominent gossans and readily observable copper showings undoubtedly attracted the attention of prospectors traveling along the Thompson River in the early part of the 20th century. Most of the modern exploration was carried out by Noranda, Rea Gold, BP Selco and Teck Corp.
Teck staked the property in 1997 and carried out geological, geochemical and geophysical surveys and diamond drilling totaling 4392 metres in 22 holes to explore three separate target areas in two phases in 1998 and again in 2001. Prior to Teck’s involvement, the property had been tested by some 73 percussion and diamond drill holes totaling 9062 metres dating back to 1962 by various companies. The best historical drill intercept was an interval of stringer sulphide mineralization grading 2.54% Cu, 2.78% Zn and 77.0g/t Ag over 7.75 metres drilled by BP Selco in 1983 in the “Main Zone” on the Feedlot Grid.
Previous work on the Red Hill grid on the northeast part of the property identified widespread disseminated, stringer and locally semi-massive sulphide mineralization that was drill tested in 1984 and 1985 by BP Selco and again in 1998 by Teck Cominco. The best drill results are from hole 84-la which returned 0.59% Cu, 1.60% Zn, 1.91g/t Ag and 0.39g/t Au over 2.58m in laminated pyritic massive sulphides within a thicker, 18.4m envelope of lower grade sulphide mineralization. Classic “feeder pipe” stringer copper style mineralization in strong black chlorite alteration is well exposed near this drill hole.
2005-07 Work Program
In 2005, Avalon carried out an initial $250,000 work program involving a compilation of historical work, detailed geological mapping and 1279m of diamond drilling. The drilling was based on a new structural model developed by the Company’s geological consultant Jean-Philippe Desrochers, Ph.D, P.Geo. Dr. Desrochers concluded that the host volcanic rocks were folded and that many of the previous drill holes were oriented unfavourably to test for massive sulphide deposits which would likely be concentrated along fold hinges and would have a shallow-plunging, “ruler-shaped” geometry.
The drilling program tested this theory with three holes in each of the two main target areas on the Feedlot grid and on the Red Hill grid. The most encouraging assays were obtained from one hole drilled on the Red Hill grid which intersected two narrow bands of massive sulphide mineralization assaying 2.08% copper, 7.5 g/t silver over 1.35 metres and 0.56% copper, 0.79g/t silver over 2.95 metres. This was followed up in 2006 with borehole Pulse EM surveys and further drilling totaling 1120m in 4 holes, which resulted in the discovery of additional high grade copper-zinc massive sulphide mineralization assaying 10.15% copper, 5.45% zinc, 1.41 g/t gold and >30ppm silver over 1.74m. Down-hole surveys in the 2006 holes produced another large off-hole EM response warranting follow-up drilling.
Overall, the results of the 2005-06 drilling and geological mapping programs confirmed the validity of the Company’s structural model and demonstrated excellent potential for economic copper-zinc-silver VMS deposits on the Red Hill grid.
In 2007, an airborne electro-magnetic survey was carried out over the entire property using the AEROTEM III system of Aeroquest Limited. Strong conductors were detected in the Red Hill sector peripheral to the area drilled in 2006 and in the southern sector which has never been drilled. Some further modelling and interpretation is planned for this new data in early 2008, which will be followed by additional drilling later in the year.
The Company is considering attracting a partner to this project so that it may focus its efforts on its priority rare metals projects.
