Gran Colombia Gold (also referred to as GCM Mining and a predecessor to Aris Mining Corporation) acquired the Zancudo Project in 2010 and later optioned it to IAMGOLD Corporation in 2017. IAMGOLD carried out an exploration program until 2022 as part of their earn-in under the option agreement.

Denarius Metals acquired Zancudo Metals and the rights to the Zancudo Project from Gran Colombia Gold in 2021. After IAMGOLD advised the Company in 2022 that they would not complete their earn-in under the option agreement due to factors unrelated to the project, Zancudo Metals retained a 100% interest in the Zancudo Project and charted the course to develop the project.

In 2022, and then updated in 2023, Denarius Metals quantified a Mineral Resource estimate (“MRE”) for the Zancudo Project, based on the results from a total of 40,100 meters of historical diamond drilling in 149 holes, including 33 underground holes drilled in the Independencia Mine, that was carried out by Gran Colombia Gold and IAMGOLD over the period from 2011 through 2021. The current MRE for the Zancudo Project comprises 4.1 million tonnes grading 6.5 g/t gold and 107 g/t silver totaling 860,000 ounces of gold and 14.1 million ounces of silver. At a gold equivalent grade of 8.1 g/t, the current MRE represents a total of 1,060,000 gold equivalent ounces.

Denarius Metals then prepared a Preliminary Economic Assessment (“PEA”), effective as of October 24, 2023 and summarized in a Technical report dated December 14, 2023, that outlines its vision for the mining operation that is currently being constructed at the Zancudo Project.

Zancudo Metals has partnered with an experienced local contract miner who will be responsible for mine development and mineral extraction at the Zancudo Project, taking advantage of the extensive historical underground mine workings in the Independencia Mine. Zancudo Metals has refurbished the former plant site and installed a new crushing plant. A new 1,000 tonnes per day processing plant that will produce high-grade gold-silver concentrates has been ordered and will be installed and commence operation later this year. The Zancudo Project, which is about 190 km from the Port of Buenaventura, is also being connected to a major highway to Medellin by a 4 km bypass road that is currently under construction.

The Zancudo Project is expected to provide economic revival to the Municipality of Titiribí and surrounding area. Zancudo Metals is working closely with the local community to incorporate its ESG programs as part of the development of this project.

Geology and Exploration

The Zancudo Project is located on the western side of the Central Cordillera of the Colombian Andes, which is separated from the Western Cordillera to the west by the Cauca River. The Zancudo deposit lies within the Romeral terrane, an oceanic terrane comprising metamorphosed mafic to ultramafic complexes, ophiolite sequences and oceanic sediments of probable Late Jurassic to Early Cretaceous age. The Romeral terrane is partially covered by continental sediments of the Oligocene to Lower Miocene age called the Amagá Formation, comprising conglomerates, sandstones, shales, and coal seams. The Titiribí porphyry of Late Miocene age intrudes the Arquía Complex schists and Amagá Formation sedimentary rocks. Gold mineralization is related to the emplacement of porphyry stocks.

The host rocks to gold mineralization are schists of the Arquía Complex, sedimentary rocks of the Amagá Formation, and the Late Miocene andesite porphyry intrusions. The sediments have been folded into several synclines cut by high angle reverse faults with a strike of N10-20°W and a steep dip of 50 to 70° east.

Mineralization at Zancudo occurs in multiple stacked mantos and steeper structures exploited over a strike length of 3,500 meters (m). The known vertical extent of mineralization is approximately 400 m.

Structure formation is related to WNW to NW-SE oriented compression that reactivated earlier fault and probable thrust imbricate structures as sinistral transpressional shear zones. Low angle stacked mantos formed as reverse faults in the footwall of the Santa Catalina structure.
The structures have early-stage base metal sulfides (pyrite, sphalerite, galena, arsenopyrite) infilled by quartz or quartz-carbonate gangue, with banded textures that are typical of epithermal veins. The structure minerals, in order of decreasing abundance, are pyrite, galena, arsenopyrite, sphalerite, silver-sulfosalts, bournonite, boulangerite and jamesonite, with minor chalcopyrite, pyrrhotite, native gold or electrum, and native silver. The gangue minerals are quartz, calcite and clay minerals. The clay minerals identified are kaolinite, muscovite and sericite. Wall rock alteration is sericite, carbonate and disseminated sulfides.

Between 2011 and 2022, Gran Colombia Gold and IAMGOLD completed multi-staged exploration programs on the Zancudo Project including, geological mapping, rock chip sampling, underground sampling, geophysical surveys, thin section analyses, preliminary metallurgical studies, and DD.

Zancudo Metals is preparing to carry out a 10,000 meters drilling campaign in 2024 split between infill drilling and step-out drilling aimed to extend the current mineralization in the northern and central areas of the deposit.