Iron Cap Gold Mine Zambia

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25 March 2010

Prepared by Scarab Enterprises, for

Challenger Development Corp.

TECHNICAL REPORT ON IRON CAP GOLD MINE, ZAMBIA

Iron Cap Gold Mine Technical Report – 25 March 2010

Scarab Environmental and Geological Enterprises

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IRON CAP GOLD MINE, ZAMBIA

TECHNICAL REPORT

Prepared by Scarab Enterprises on behalf of:

Challenger Development Corp.

Author/s Mr Nico Scholtz (M.Sc. Geology Pr. Sci. Nat.)

Principal Geologist

Date: 25 March 2010

Job Number: G10/001

Printed copies: 2

Client: 1

Scarab: 1

Signed on this 25th day of March 2010:

……………………………………………………

Nico Scholtz

Principal Geologist for Scarab Enterprises



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TABLE OF CONTENTS

SUMMARY.......................................................................................................................................... vi

1. INTRODUCTION AND TERMS OF REFERENCE ...........................................................................1

1.1 Scope and purpose of the Report...............................................................................................1

1.2 Independence ............................................................................................................................1

1.3 Sources of Information ...............................................................................................................1

1.4 Personal Inspection on Property ................................................................................................2

2. RELIANCE ON OTHER INDUSTRY EXPERTS...............................................................................3

3. PROPERTY DESCRIPTION AND LOCATION.................................................................................4

3.1 Background information on Zambia............................................................................................4

3.2 Property Location .......................................................................................................................5

3.3 Mineral Tenure ...........................................................................................................................6

3.3.1 General conditions imposed upon the holder of a prospecting licence................................6

3.3.2 Surface rights......................................................................................................................7

3.4 Property boundary demarcation .................................................................................................8

3.5 Agreements................................................................................................................................8

3.6 Environmental liabilities and permits ..........................................................................................9

4. LOCAL CLIMATE, PHYSIOGRAPHY, RESOURCES AND INFRASTRUCTURE .......................... 10

4.1 Climate and agriculture ............................................................................................................ 10

4.2 Physiography ........................................................................................................................... 12

Figure 4.3 Zambian physiography showing location of Iron Cap Mine............................................ 12

4.3 Access ..................................................................................................................................... 13

4.4 Vegetation................................................................................................................................ 13

4.5 Zambia resources .................................................................................................................... 13

4.5.1 Gold (Au) .......................................................................................................................... 15

4.5.2 Other commodities............................................................................................................ 16

4.6 Infrastructure and availability of exploration requirements........................................................ 16

4.7 Operating season..................................................................................................................... 16

5. HISTORY ....................................................................................................................................... 17

5.1 Prior ownership ........................................................................................................................ 17

5.2 Previous exploration................................................................................................................. 17

5.3 Historical Mineral Resources and Reserves............................................................................. 18

5.4 Production................................................................................................................................ 18

6. GEOLOGICAL SETTING ............................................................................................................... 19

6.1 Regional Geology..................................................................................................................... 19

6.2 Local geological setting ............................................................................................................ 19

6.2.1 Tectonic Thermal events................................................................................................... 20

6.2.2 Stratigraphic setting .......................................................................................................... 22



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6.2.2.1 Basement .................................................................................................................. 22

6.2.2.2 Muva Supergroup ...................................................................................................... 22

6.2.2.3 Katanga ..................................................................................................................... 22

6.2.2.4 Karoo ......................................................................................................................... 23

6.2.2.5 Cretaceous, Tertiary, Quaternary............................................................................... 24

6.2.3 PML Project Geology ........................................................................................................ 24

7. DEPOSIT TYPE AND MODEL ....................................................................................................... 27

7.1 Model for gold deposits in Zambia............................................................................................ 28

7.1.1 Deposit types .................................................................................................................... 28

7.1.2 Origin of the gold............................................................................................................... 28

7.1.3 Metamorphism .................................................................................................................. 29

7.1.4 Mineralogy ........................................................................................................................ 30

7.1.5 Mineralisation hosts .......................................................................................................... 30

7.1.6 Structural orientation......................................................................................................... 31

7.1.7 Proximity to intrusives ....................................................................................................... 31

7.1.8 Palaeoplacers ................................................................................................................... 31

7.1.9 Summarized geological model for gold in Zambia............................................................. 31

7.2 Exploration techniques ............................................................................................................. 32

7.2.1 General ............................................................................................................................. 32

7.2.2 Geochemistry.................................................................................................................... 33

7.2.3 Biogeochemistry ............................................................................................................... 33

7.2.4 Structural investigations .................................................................................................... 34

7.2.5 Geophysics ....................................................................................................................... 34

8. MINERALIZATION ......................................................................................................................... 35

9. EXPLORATION.............................................................................................................................. 36

9.1 Pit............................................................................................................................................. 37

9.2 Shafts....................................................................................................................................... 39

9.3 Trenches .................................................................................................................................. 39

10. DRILLING..................................................................................................................................... 41

11. SAMPLING METHOD AND APPROACH..................................................................................... 42

11.1 Scarab sampling programme ................................................................................................. 42

11.2 Londoloza Resources / Triple Plate Plc. joint venture sampling programme .......................... 43

12. SAMPLE PREPARATION AND ANALYSES ................................................................................ 44

12.1 Scarab sampling programme ................................................................................................. 44

12.2 Londoloza Resources / Triple Plate Plc. joint venture sampling programme .......................... 44

13. DATA VERIFICATION.................................................................................................................. 45

14. ADJACENT PROPERTIES........................................................................................................... 46

14.1 Luiri Hill (Dunrobin and Matala) .............................................................................................. 46

14.2 Mwomboshi ............................................................................................................................ 48



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15. MINERAL PROCESSING AND METALLURGICAL TESTING ..................................................... 50

16. MINERAL RESOURCE AND RESERVE ESTIMATES................................................................. 51

17. ENVIRONMENTAL AND SOCIAL IMPACTS ............................................................................... 52

17.1 Social implications.................................................................................................................. 52

17.2 Environmental implications..................................................................................................... 53

18. RESULTS AND INTERPRETATIONS.......................................................................................... 55

19. CONCLUSION AND RECOMMENDATIONS ............................................................................... 58

19.1 Conclusion ............................................................................................................................. 58

19.2 Recommendations ................................................................................................................. 58

19.2.1 Stage 1 (Drilling targets) ................................................................................................. 58

19.2.2 Stage 2 (Contemporaneous with end of stage one) (Nature of mineralisation) ............... 58

19.2.3 Stage 3 (Resource definition).......................................................................................... 58

19.3 Exploration programme budget ..............................................................................................58

20. REFERENCES............................................................................................................................. 61

21. DATE AND SIGNATURE PAGE................................................................................................... 64

21.1 Certificate of Qualified Person................................................................................................ 64

21.2 Consent of Qualified Person .................................................................................................. 65

Appendix A – (Licence details) ........................................................................................................... 66

Appendix B – (Chemical assays)........................................................................................................ 68

Appendix C – (Chemical assays)........................................................................................................ 70

Appendix D – (Agreements) ............................................................................................................... 72

LIST OF FIGURES

Figure 3.1 Setting of Zambia in southern central Africa showing location of Iron Cap Gold Mine. ........4

Figure 3.2 Location Of Iron Cap Gold Mine south-east of the town of Kabwe.......................................5

Figure 4.1 Rainfall in Zambia showing location of Iron Cap Mine. ...................................................... 10

Figure 4.2 The main food crops of Zambia showing the location of Iron Cap Mine (From IDL, 2002). 11

Figure 4.3 Zambian physiography showing location of Iron Cap Mine................................................ 12

Figure 4.4 Vegetation of Zambia showing location of Iron Cap Mine (White, 1983)............................ 13

Figure 4.5 Main export and import products for Zambia (From United Nations, 2009)........................ 14

Figure 4.6 Location of different mineral commodities in Zambia......................................................... 15

Figure 4.7 Hydrothermal and alluvial gold (Au) provinces in Zambia. ................................................. 16

Figure 6.1 Location of Zambia with respect to surrounding cratons (From Ministry of Mines and

Mineral Development, 1999). ............................................................................................................. 19

Figure 6.2 Regional geology of Zambia. MSZ – Mwembeshi Shear Zone (From Ministry of Mines and

Mineral Development, 1999). ............................................................................................................. 20

Figure 6.3 Distribution of Irumide Belt showing Mwembeshi dislocation and Iron Cap Mine (From De

Waele et al., 2006). ............................................................................................................................ 21



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Figure 6.4 Section through internal zone of Irumide Belt (cf. Figure 6.3 for section location) (From De

Waele et al., 2006). ............................................................................................................................ 21

Figure 6.5 Local geological setting of Iron Cap Mine (From Kampunzu et al., 2009). ......................... 24

Figure 6.6 Geological setting of Iron Cap Mine showing position of Mwembeshi Shearzone (From

Ministry of Mines and Mineral Development, 1999). ........................................................................... 25

Figure 6.7 Local geological setting of Iron Cap Mine. ......................................................................... 26

Figure 6.8 Ferruginous duricrust in cut trenches and open pit at the Iron Cap Mine. .......................... 26

Figure 7.1 Gold and Copper – Gold occurrences in Zambia (From Morel et al., 2007)....................... 28

Figure 7.2 Location of Iron Cap within Amphibolite to Greenschist facies metamorphic zone (From De

Waele et al., 2006). ............................................................................................................................ 29

Figure 8.1 Ferruginous duricrust on surface of Iron Cap Mine site. .................................................... 35

Figure 9.2 Route followed by Scarab during the field investigation on Iron Cap (Not all trenches

shown)................................................................................................................................................ 36

Figure 9.3 Open Pit at Iron Cap Mine measuring 50 x 15 m (2 m in depth) in extent.......................... 37

Figure 9.4 Ferruginous duricrust in north wall of open pit at Iron Cap Mine. ....................................... 37

Figure 9.5 Quartz vein in Open Pit on Iron Cap Mine. ........................................................................ 38

Figure 9.6 Quartzite, quartz vein fragment and ferruginous duricrust from Iron Cap Mine.................. 38

Figure 9.7 Trench cut into top part of shaft 1 by Londoloza Resources / Triple Plate Plc. joint venture

in 2008. .............................................................................................................................................. 39

Figure 9.8 Historical trench showing only Quaternary sand (no duricrust visible). .............................. 40

Figure 9.9 Massive magnetite in recently cut trench at Iron Cap Mine................................................ 40

Figure 11.1 Position of surface lithological grab sample on Iron Cap (Not all trenches shown). ......... 42

Figure 14.1 Location of Luiri Gold’s Dunrobin and Matala Mines within Matala Dome........................ 46

Figure 14.2 Cross section of old Dunrobin Mine showing trend of mineralisation. .............................. 47

Figure 14.3 Induced Polarization (IP) pilot survey over Luiri Gold’s Dunrobin area (From Luiri Gold

Jan. 2007 News Release). ................................................................................................................. 48

Figure 14.4 Soil sampling results at Zambezi Resources’ Mwomboshi project area southwest of Iron

Cap (Zambezi Resources 2004 Exploration Field Season Update no. 6). .......................................... 49

Figure 17.1 Agricultural activities in central to southern extent of Iron Cap SML. ............................... 52

Figure 17.2 Location of Iron Cap Mine Outside Protected areas in Zambia (Comaco website). ......... 54

Figure 18.1 Gold, silver and iron assays from first pass field investigation completed by Scarab....... 56

LIST OF TABLES

Table 6.1 General stratigraphic column (From Ministry of Mines and Mineral Development, 1999). .. 23

Table 19.1 Two year Exploration Budget............................................................................................ 59



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SUMMARY

Scarab Environmental and Geological Enterprises CC (Scarab) has been commissioned by The

Challenger Development Corp. (Challenger) to prepare a technical report according to the National

Instrument 43-101 (Canadian Standards for disclosure of Mineral Projects) and acquire any additional

information during fieldwork conducted on the Iron Cap Gold Mine in Zambia, southern central Africa.

The Iron Cap Gold Mine is located within the central Province of Zambia, 50 km south-east of the

town of Kabwe. The property is located within an area that receives up to 750 mm of rain per annum

where subsistence farmers grow mostly wheat and sorghum. Most of the Iron Cap area can be

regarded as flat lying averaging in height of no more than 1,100 m above mean sea level with

vegetation comprising moist infertile savannah. The best operating time within the Iron Cap area

should be between May and November (winter).

The Iron Cap Mine is an old prospect that lay dormant for some years until acquired by A.M.

Bensusan in 1953, which is the same year that the mine came into production. The mine was

afterwards registered under the name of Rhodesian Anglo American Limited up to an unknown date,

just before British Independence. After independence gold (Au) exploration was restricted to a

government department called Minex, which was part of ZIMCO (Zambia Industry and Mining

Corporation). Scarab was unable to obtain information pertaining to exploration activities for the time

when ZIMCO was operational in the area to 2008. In 2008, Iron Cap was a 70/30 Joint Venture

between Londoloza Resources Corp. (Londoloza) and Exploration Zambia with Triple Plate Junction

Plc. Work commenced in March 2008 and ended in September 2008 when Triple Plate exhausted

funds and subsequently defaulted and withdrew from the project.

A historical resource/reserve estimate calculated prior to the implementation of NI 43-101 (Feb 2001)

was calculated for only a part of the Iron Cap Mine area. Scarab cannot comment on the geographical

position of the resource/reserve nor the actual historical resource/reserve estimation.

242,880 t ore @ 1.555 g Au / ton (13,322 ounces of Au)

The Iron Cap area is underlain by metasediments and metavolcanics from the Proterozoic Muva

Supergroup. The northern part of the Iron Cap property is underlain by andesitic lave from the Muva

Supergroup, whilst the southern part of the property comprises schist and quartzite from the same

Supergroup. Structurally, the Mine is located within the 550 Ma year old Mwembeshi Shear

Zone/dislocation.

During the first pass field investigation of the Iron Cap area Scarab was able to investigate some of

the trenches cut by Rhodesian Anglo American and more recently by the Triple Plate Plc. Joint



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Venture. Scarab was further able to obtain grab samples from these trenches which were assayed for

Au, silver (Ag) and iron (Fe). An investigation into the distribution patterns of the sample assay results

revealed the following:

Gold (ppm) does not favour any of the lithologies sampled by Scarab and appears to show a

slight increase towards the central and eastern extent of the sampling area.

Silver (ppm) appears to have elevated concentrations within the ferruginous duricrust and

seems to favour this lithotype. Silver values appear to show increases towards the western

extent of the sampling area.

The iron (%) content for the applicable lithotypes are high and shows, similar to Au, an

increase towards the central and eastern extent of the sampling area.

Although the increase in Au and Fe towards the eastern extent of the property and the associated

decrease in Ag towards the west are noticeable, these results are not conclusive due to the small

sampling programme completed by Scarab.

Scarab could not locate any local structural features that might have a controlling effect on Au

mineralisation, similar to the Matala Dome of Luiri Gold. This absence of a domal feature on Iron Cap

does not imply absence of similar grades or thicknesses of Au mineralisation, only that further work is

required on the Iron Cap property to discern similar or site specific parameters that might control

mineralisation.

The anomalous Au values returned for all grab samples (ferruginous duricrust, magnetite-rich

lithologies and quartz veins) retrieved by Scarab might be indicative of a deeper seated Au reef or

vein system situated below the surface duricrust, as delineated by historical reports. In savannah

zones, similar to Iron Cap location, the formation of a duricrust induces a leaching in the upper

horizons and thus develops strongly depleted Au anomalies. As duricrust formation is a very long

process, the dispersion of Au is generally well extended, but shows a low signal on surface. Thus,

duricrust Au deposits in many cases underestimate the potential for deeper-seated Au mineralisation.



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1. INTRODUCTION AND TERMS OF REFERENCE

1.1 Scope and purpose of the Report




information during fieldwork conducted on the Iron Cap Gold Mine (derelict) in Zambia, southern

central Africa.

The compilation of this Technical Report incorporated the following (including aspects as stipulated

within National Instrument and Form 43-101F1):

1. Review of available gold (Au) prospecting and production data for the Iron Cap Mine area

2. Literature review and geological model compilation for Au mineralisation in the Iron Cap

Mine area

3. Field visit to inspect historic Iron Cap Au mining activities

1.2 Independence

Neither Scarab nor the author of this report have or have had any previous material interest in

Challenger or related entities or interests. Our relationship with Challenger is one of professional

association between client and independent consultant. This report is prepared in return for fees

based upon agreed commercial rates and the payment of these fees is not dependent on the results

of this report.

1.3 Sources of Information

Scarab did not receive any documentation from the Zambian Ministry of Mines, which contains proof

of ownership, boundary coordinates or similar. Scarab did receive two general geological reports

(Watts et al., 1991 and Nguni, 2007), which gives geological information on the Iron Cap Mine area.

Other sources of information gathering include the following:

- Sciencedirect peer reviewed scientific publication website www.sciencedirect.com

- High definition satellite imagery from Google Earth® http://earth.google.com/

- Internet Encyclopaedia www.wikipedia.org

- Personal communication with employees actively involved in Au exploration at Iron Cap

- Personal communication with lecturers in Geology at the University of the Free State

(UFS), South Africa (R.S.A.)

- Personal communication with Zambian lecturers in Geology at the University of Namibia,

(UNAM) Windhoek, Namibia



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- Libraries at the University of the Free State and Department Geology at UFS, R.S.A (cf.

Section 20 for References).

1.4 Personal Inspection on Property

Scarab completed a one day field investigation at the Iron Cap area on 7 January 2010.

The field investigation to the Iron Cap Mine area involved the following:

1. Personal communication with previous employees and other important persons

2. Investigate presence of historical mining and exploration activities

3. Investigate and report on infrastructure conditions and availability of exploration requirements

4. General geological, structural and stratigraphical setting (sampling where possible for assay

purposes)

5. Investigate any potential for social and environmental impact associated with possible

forthcoming exploration activities



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2. RELIANCE ON OTHER INDUSTRY EXPERTS

Scarab has prepared this report for The Challenger Development Corp. (Challenger). The information,

conclusions, opinions, and estimates contained herein are based on information available to Scarab

at the time of preparation of this report. For the purpose of this report, Scarab has relied on ownership

information provided by Challenger or its associates. Scarab did not conduct research into property

title or mineral rights for the prospects and expresses no legal opinion as to the ownership status of

these properties.



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3. PROPERTY DESCRIPTION AND LOCATION

3.1 Background information on Zambia

Zambia is a stable and vibrant country straddling central Africa and forming a natural hub for the

subcontinent’s diverse activities. Zambia is a landlocked country bordered by Namibia, Botswana and

Zimbabwe in the south, Mozambique, Malawi and Tanzania in the east, the Democratic Republic of

the Congo on the north and Angola in the west (Figure 3.1). Zambia comprises an area of

approximately 750,000 square kilometers and occupies an important geographical position in

southern central Africa forming a hub for a regional transport network link. The population is estimated

at 11 million of which 1.5 million resides in the capital city of Lusaka (Ministry of Mines and Mineral

Development, 1999).

Figure 3.1 Setting of Zambia in southern central Africa showing location of Iron Cap Gold Mine.

Zambia is a stable multi-party democracy, with relatively low sovereign risk and an established mining

culture. Zambia possesses a well-established transport and communications network and is self

sufficient in terms of its electricity requirements. The roads between major centers are mostly paved

and in good condition, and there is an ongoing programme of rehabilitation for other major roads.



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Important rail links extend from the Zambian Copper Belt south to Livingstone, and then beyond to the

major South African ports of Durban and Cape Town. The Tanzania-Zambia railway provides access

to the Tanzanian port of Dar Es Salaam (Mobbs, 2009).

Hunter-gatherers and migrating tribes have inhabited Zambia for thousands of years. After sporadic

visits by European explorers, starting in the 18th century, Zambia was claimed and occupied by the

British towards the end of the nineteenth century as protectorate of Northern Rhodesia. On 24

October 1964, the protectorate gained independence with the new name of Zambia, derived from the

Zambezi River, which flows through the country. Zambia was governed the single-party rule of

President Kenneth Kaunda, whose 27 years of socialist policies are said to have hurt the economy.

Kaunda acceded to opposition demands for multiparty elections, and in 1991 peacefully relinquished

power. Zambia has been a multiparty democracy since 1991.

3.2 Property Location

The Iron Cap Gold Mine is located within the central Province of Zambia (Figure 3.2) 50 km south-

east of the town of Kabwe and 6 km north-east of the Mulungushi Dam boating club. The property is

reached following the D421 south out of Kabwe.

Figure 3.2 Location Of Iron Cap Gold Mine south-east of the town of Kabwe.



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3.3 Mineral Tenure

Zambia is one of the most stable countries in Southern Africa with a functioning multi-party

democracy. The Zambian Government is a great supporter of mineral exploration and is fully

committed to mine development. The Government has adopted a pragmatic mineral policy, which

have been designed to enhance investment in the mining industry and to ensure the development of a

self-sustaining minerals-based industry. The privatization of many state-owned companies and

especially the copper mining industry, formerly managed under the parastatal umbrella of Zambia

Consolidated Copper Mines Ltd (ZCCM), is a clear demonstration of this intent.

In line with its stated Mining Policy, the Government of Zambia has enacted new legislation - the

Mines and Minerals Act (1995) - which greatly simplifies licensing procedures, places minimum

reasonable constraints on prospecting and mining activities, and creates a favourable investment

environment, whilst allowing international arbitration to be written into development agreements. A

framework for responsible development has also been created through publication of the

Environmental Protection and Pollution Control (Environmental Impact Assessment) Regulations of

1997 (Ministry of Mines and Mineral Development, 1999).

Three types of licences are available to the large-scale operator (Ministry of Mines and Mineral

Development, 1999):

Prospecting Licence: this confers the right to prospect for any mineral over any size of area

for a period of two years renewable.

Retention Licence: this confers the right to retain an area, subject to the Minister’s

agreement, over which feasibility studies have been completed but market conditions are

unfavourable for development of a deposit at that time. Size of the area may be that covered

by a Prospecting Licence or smaller area as redefined by the Licence holder. Duration would

be for three years renewable for another single period of three years.

Large Scale Mining Licence: this confers exclusive rights to carry out mining operations and

other acts reasonably incidental thereto in the area for a maximum of 25 years. The area to be

held should not exceed the area reasonably required to carry out the proposed mining

operations. Applications need to be accompanied by environmental protection plans and by

proposals for the employment and training of citizens of Zambia.

3.3.1 General conditions imposed upon the holder of a prospecting licence

The holder of a prospecting licence has under section 12 of the Mines and Minerals Act (1995),

exclusive rights to carry on prospecting operations in the prospecting area for the minerals specified



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in the licence and to do all such other acts and things as are necessary for or reasonably incidental to

the carrying on of those operations. The licence holder is required for administrative reasons to:

a. Submit a programme for the training of Zambian citizens

b. Erect beacons at corners of tenement area

c. Provide and maintain security in tenement area and ensure than no illegal mining or trading of

minerals takes place in such tenement area

d. Apply for a renewal of the licence no later than 90 days before the expiry of the licence

e. Notify the Director of Mines every time that there is a change in its business address and

contact details

f. Accept additional conditions that may be imposed by the Director of Mines

In addition to the administrative regulations applicable to the prospecting right, a licence holder is

required to:

a. Commence prospecting operations within three months of issue of the licence and to develop

the prospecting area and carry on mining operations with due diligence and in accordance

with the programme of prospecting operations

b. Give notice of the discovery of minerals in the tenement area

c. Expend on prospecting operations not less than the amount prescribed or required by the

terms and conditions of the licence to be expended

d. Submit quarterly reports

e. Comply with any directive given under party IX of the Act regarding the protection of the

environment

f. Not enter into any contracts or agreements and any other operations in the area without the

consent of the Director of Mines, including change of shareholding and directorship of the

company

g. Pay tenement area charges on the grant of the licence and thereafter annually until the

termination of the licence

The Iron Cap property has been issued as a Small Scale Mining Licence (SML 177) to Londoloza

Resources and have been renewed up 2018 by the Zambian Ministry of Mines (cf. Appendix A).

3.3.2 Surface rights

The Zambian Lands Act governs surface rights. Under the lands act, all land is vested in the Zambian

President and held by him “in perpetuity for and on behalf of the people of Zambia”. The land is to be

administered and controlled by the President “for the use or common benefit, direct or indirect, for the

people of Zambia”.



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Where any private leasehold interest exist in an area covered by a mining or prospecting right, the

holder of any licence or permit who requires the exclusive or other use of any portion of the

prospecting or mining area may, in accordance with the laws relating to such acquisition, acquire a

lease thereof, or the right to use the same terms as may be agreed between the licence holder and

the owner of such land.

If any portion of the land over which the tenement exist is under customary land, there may be a

requirement to obtain permission from the local Chief in order to obtain surface rights, which would

require the Chief to give his written consent to the local council for the conversion of that particular

portion of customary land to statutory tenure. Surface rights are not a pre requisite for the exercise of

a mining right although it is necessary to ensure that the authorizations required under the Lands Act

have been procured.

Scarab could not obtain information regarding surface rights of the Iron Cap SML and cannot

comment on ownership details regarding the surface rights of the property.

3.4 Property boundary demarcation

Boundary coordinates were obtained from reports (Watts et al., 1991 and Nguni, 2007) and maps

provided to Scarab prior to onset of fieldwork (cf. Section 1.3). The boundary positions of the Iron Cap

Mine area are “paper marked” and no field markers were sited (cf. Appendix A).

3.5 Agreements

Challenger Development Corporation (Challenger) has entered into an Option Agreement with

Londoloza Mining and Exploration Zambia Limited (Londoloza) to acquire a seventy percent (70%)

equity interest in Zamco (Zambian company). Londoloza is the registered and beneficial owners of

100 % of the issued and outstanding capital stock of Zamco with a 100 % interest in the Iron Cap

Gold (Au) prospect (“Property”) located 50 km southeast of the Zambian town of Kabwe (cf. Figure

3.2) (cf. Appendix D for Option Agreement).

Londoloza has granted Challenger the sole and exclusive option which may be exercised at the sole

discretion of Challenger to directly acquire a 70 % legal and beneficial interest in Zamco, equal to 70

% of all issued and outstanding common shares of Zamco for the full price and consideration of

expenditure to Challenger to the sum of US$ 1,500,000.00 in exploration work on the Property.

Allowable work on the property will include all expenditures, obligations and liabilities spent or

incurred directly or indirectly by Challenger in connection with the evaluation, exploration and

development of the Property and any production therefrom.

Upon the vesting of Zamco interest in Challenger, Challenger and Londoloza shall be deemed to have

entered into a Joint Venture agreement for further exploration and development of the Property and



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any operation of the property as a mine. Until commencement of commercial production, Londoloza’s

interest in the Joint Venture shall be fully carried and Challenger shall be responsible for paying all

Joint Venture costs. The Joint Venture shall be operated through Zamco.

3.6 Environmental liabilities and permits

Scarab understands that the Zambian Ministry of Mines allows exploration and mining within the Iron

Cap area, and is unaware of any current regulations or environmental liabilities that may significantly

restrict access to this area for exploration. Suggestions and recommendations for environmental and

social impacts are provided in Section 17.

Any prospecting work within the Iron Cap mine area will require a prospecting permit from the

Zambian Ministry of Mines (cf. Section 3.3). Scarab did not receive any information which would

indicate that such permits have been issued.



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4. LOCAL CLIMATE, PHYSIOGRAPHY, RESOURCES AND INFRASTRUCTURE

4.1 Climate and agriculture

Zambia enjoys a sunny climate with three distinct seasons: a cool dry season in May to August with

average daytime temperatures of 15 to 27°C; a hot dry season in September to November with

temperatures between 27 and 32°C; and a warm rainy season in the months of December to April

with temperatures between 20 and 27°C. Most of the country can be classified as humid subtropical,

with small patches of semi-arid steppe climate in the south-west. The dry season is subdivided into

the cool dry season (May to August), and the hot dry season (September to October/November). The

modifying influence of altitude gives the country pleasant subtropical weather conditions for most of

the year (Ministry of Mines and Mineral Development, 1999).

Rainfall varies over a range of 500 to 1400 mm per year (most areas fall into the range 700 to 1200

mm). The distinction between rainy and dry seasons is marked, with very little rainfall during the

months of June, July and August (Figure 4.1). Much of the economic, cultural and social life of the

country is dominated by the onset and end of the rainy season, and the amount of rain it brings.

Failure of the rains causes famine from time to time.

Figure 4.1 Rainfall in Zambia showing location of Iron Cap Mine.



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The Iron Cap Mine is located within an area that receives up to 750 mm of rain per annum with most

of this precipitation received between the months of December and April.

Agriculture generates about 25% of Zambia’s Gross Domestic Product (GDP). The livelihood of most

of the rural population depends on subsistence farming. Agricultural pursuits employ the majority of

the country’s labour force. Zambia has a vast land and natural resource base, although only about

one-sixth of the country’s arable land is under cultivation. The main food crops in Zambia are

cassava, maize, millet, groundnuts and sugar cane (Figure 4.2). Cash crops for export are sugarcane,

cotton, tobacco and coffee. Farms range in size from household farms to large commercial farms.

Smallholder farmers use hand hoes and few external inputs, and they mainly produce food crops

such as corn (maize), sorghum, millet, cassava (manioc), and groundnuts (peanuts). Much of

Zambia’s cotton, which is used for the local textile industry as well as for export, is also grown by

smallholders (Rocks for crops, no date). The Iron Cap Mine is located in an area where subsistence

farmers grow mostly wheat and sorghum.

Figure 4.2 The main food crops of Zambia showing the location of Iron Cap Mine (From IDL, 2002).



12

4.2 Physiography

Zambia is a landlocked country in southern Africa, with a tropical climate and consists mostly of high

plateau (900 to 1,500 metres), with some hills and mountains, dissected by river valleys (Figure 4.3).

Major relief features occur where river valleys and rifted troughs, some lake-filled, dissect its surface.

The highest elevations occur in the east, where the Nyika Plateau on the Malawian border is generally

over 1,800 metres, rising to more than 2,100 metres in the Mafinga Hills. The alluvial plains in the

south of the country, with altitudes around 300 m, form the lowest and hottest parts of the country.

Zambia is drained by two major river basins: the Zambezi basin in the south covering about three-

quarters of the country; and the Congo basin in the north covering about one-quarter of the country. A

very small area in the north-east forms part of the internal drainage basin of Lake Rukwa in Tanzania

(Rocks for Crops, no date).

Figure 4.3 Zambian physiography showing location of Iron Cap Mine.

The Iron Cap Mine site is located on the Zambian high plateau. Most of the Iron Cap area can be

regarded as flat lying averaging in height of no more than 1,100 m above mean sea level, with some

minor hills towards the northern extent of the property.



13

4.3 Access

The Iron Cap Gold Mine is located within the central Province of Zambia 50 km south-east of the town

of Kabwe and 6 km north-east of the Mulungushi Dam boating club. The property is reached following

the D421 south out of Kabwe (cf. Figure 3.2).

4.4 Vegetation

The Iron Cap Gold Mine is part of the plateau receiving medium rainfall and according to White (1983)

is located within moist infertile savannah. The moist/infertile savannahs are identifiable by the

predominance of broad-leafed, thornless trees in the families Ceasalpinaceae and Combretaceae.

The most extensive example of this vegetation is the miombo woodlands, dominated by Brachystegia

and Julbernardia species, that occupy a broad belt from Angola to Tanzania (Forest Resource

assessment working paper, 2001).

Figure 4.4 Vegetation of Zambia showing location of Iron Cap Mine (White, 1983).

4.5 Zambia resources

Zambia’s economy is heavily dependent on mining, in particular the mining of copper (Cu) and cobalt

(Co). Reserves of Cu ore at some mines are almost depleted, costs of production have increased,



14

and income has fluctuated depending on the price of the metal on the world market, accentuating the

need for Zambia to broaden its economic base (Figure 4.5). Agriculture is relatively poorly developed,

and major investment in the manufacturing industry did not take place until after independence. There

is consensus throughout the literature (IDL, 2002) that Zambia’s large potential in agriculture remains

unexploited. Out of a total of 7.5 million hectares of land, 4.2 million hectares (58%) are classified as

medium to high potential for agricultural production; 12% is suitable for arable production, with only an

estimated 14% currently cultivated (IDL, 2002).

Some 67,300 square km of Zambia are classified as forest reserves, although the greater part of the

country is wooded but not protected in this way. The main commercial timber areas are on the

Copperbelt, where there have been plantings of exotic softwoods to supply the needs of the mining

industry, and in the southwest, where there are extensive areas of Zambezi teak. Zambia has

relatively rich fisheries based on its many lakes, swamps, and seasonally inundated floodplains. Of

particular importance is the Luapula valley, which supplies the Copperbelt. Lake Tanganyika is

famous for Nile perch and kapenta, a deep-feeding freshwater sardine caught at night using special

lamps to direct its movements. Lusaka is supplied mainly from the Kafue Flats and the Lukanga

Swamp. Of lesser importance is the fishery on the upper Zambezi. There has been a revival of fishing

on Lake Kariba, which was interrupted by the conflict with Zimbabwe during the 1970s.

Figure 4.5 Main export and import products for Zambia (From United Nations, 2009).

Zambia's amazingly wide spectrum of mineral resources spans a range of metals, particularly Cu-Co

and Au, gemstones, a variety of industrial minerals and potential energy resources – uranium (U),

coal and hydrocarbons. Ranging in size from world-class operating mines to small prospects, the

multiplicity and variety of resources demonstrate clearly the opportunities for further exploration and

exploitation. Zambia is currently the world's 11th largest Cu producer. Despite this decline, Cu and



15

cobalt mining still contributes 10% of Zambia's GDP, representing 80% of export earnings. Zambia is

the world's largest Co producer, supplying 20% of the world's cobalt. As the country has no

downstream industry, the Cu is exported as Cu bars to the USA, Japan, France, Malaysia, India, UK,

Belgium, Thailand, Italy and Indonesia.

Figure 4.6 Location of different mineral commodities in Zambia.

4.5.1 Gold (Au)

Zambia has a history of Au mining on a relatively small scale, with the twenty larger deposits having

produced slightly more than 2t of Au since modern mining began in 1902. The largest past producers

are Dunrobin (990 kg gold), Sasare (390 kg), and Matala (225 kg). More than 300 Au occurrences

have been reported throughout the country and some of these are currently being re-evaluated by

different companies (Figure 4.7).



16

Figure 4.7 Hydrothermal and alluvial gold (Au) provinces in Zambia.

4.5.2 Other commodities

The other important metal production has been zinc (Zn) and lead (Pb) from the carbonate-hosted

deposits of Kabwe, which, with a total of 11Mt of ore containing 40% combined Zn and Pb, ranks as

one of the highest grade Zn-Pb deposits of probable Mississippi Valley - type in the world. Similar

styles of mineralization have been recognized over a wide area to the north of Kabwe.

4.6 Infrastructure and availability of exploration requirements

The town of Kabwe, 50 km northwest of the Iron Cap Mine, should be able to supply most of the

exploration requirements for operation. In addition to hotel accommodation at the same town, the

nearby Mulungushi Dam boating club should be able to supply most accommodation requirements.

4.7 Operating season

Zambia’s rainfall seasons (cf. Section 4.1) plays an important role in estimating the ideal operating

season. The best operating time within the Iron Cap area should be between May and November

(winter). Within the rainy season (November to April) many of the gravel roads become impassable

and although work should be able to continue, road use through connecting infrastructure may be

limited.



17

5. HISTORY

5.1 Prior ownership

The Iron Cap Mine is an old prospect that lay dormant for some years until acquired by A.M.

Bensusan in 1953, which is the same year that the mine came into production. The mine was

afterwards registered under the name of Rhodesian Anglo American Limited up to an unknown date,

just before British Independence (Watts et al., 1991 and Nguni, 2007). After independence gold (Au)

exploration was restricted to a government department called Minex, incorporated under ZIMCO

(Zambia Industry and Mining Corporation).

Scarab was unable to obtain information pertaining to exploration activities for the time when ZIMCO

was operational in the area to 2008. In 2008, Iron Cap was a 70/30 Joint Venture between Londoloza

Resources Corp. (Londoloza) and Exploration Zambia with Triple Plate Junction Plc. Work

commenced in March 2008 and ended in September 2008 when Triple Plate exhausted funds and

subsequently defaulted and withdrew from the project. The project reverted back to Londoloza and

Exploration Zambia thereafter both of which is the current owners of Iron Cap small mining licence

177 (SML 177). Boundary coordinates for the Iron Cap SML are provided in Appendix A.

5.2 Previous exploration

Historical figures for Iron Cap have made use of pennyweights per ton (dwt. per ton). One

pennyweight equals 1.555 g per tonne. Scarab has converted all pennyweights to grams and rounded

figures to the nearest 10.

Historical development work carried out by Rhodesian Anglo American Limited consisted of trenching,

by which the deposit was traced for a length of 1.3 km, as well as shaft sinking. One shaft intersected

the Au reef at 14 m where the average Au content was 3.7 g Au / ton. A second shaft was sunk to 16

m where blocks of iron stained quartzite gossan and iron stained clay were found between 13.5 and

15.8 m. According to Nguni (2007) the said .reef was exposed in a surface working due to weathering,

but Scarab was unable to locate the location. It is further stated by the same author that at this point,

the reef dips to the north and is approx. 1.2 m wide. Three historic grab samples at this locality

assayed 1.6, 1.6, 6.2 g Au / ton. At 12 m depth, a small crosscut was driven southwards, intersecting

the main reef consisting of blocks of quartzite in gossan and clay where two historic grab samples

assayed 1.2 and 29.2 g Au / ton. Scarab was unable to investigate the shafts or cross cuts due to no

access into the latter. Scarab can also not confirm the assay results. According to Nguni (2007) the

shallow water table and deep weathering limited prospecting.



18

5.3 Historical Mineral Resources and Reserves

A historical resource/reserve estimate calculated prior to the implementation of NI 43-101 (Feb 2001)

is provided by Nguni (2007) and is based upon an historical report by Reeve (1963). This

resource/reserve was calculated for only a part of the Iron Cap Mine area. Scarab does not have the

report by Reeve (1963) and cannot comment on the geographical position of the resource/reserve nor

the actual historical resource/reserve estimation.


Albeit that the depth below surface of the resource/reserve is not provided, the strike length equals

880 m over an average thickness of 20 m and width of 4.6 m (Nguni, 2007). More detail on this

historical resource/reserve is provided in Section 16.

5.4 Production

Watts et al. (1991) gives historical production figures during 1953 to 1954 at 189 ounces of gold

mined at a grade of 2.2 g Au / t. Nguni (2007) gives production figures in sharp contrast to the former

of a total of 38,431 ounces of Au mined between 1950 and 1961 by Bensusan. Scarab cannot

comment on any of these figures and have not seen and reports from mining and/or exploration

companies active in the area to support these figures.



19

6. GEOLOGICAL SETTING

6.1 Regional Geology

The complex geology and multiplicity of tectono-thermal events reflect Zambia's unique position

effectively located between the Congo -, Zimbabwe-Kaapvaal -, and Tanzania cratons (Figure 6.1).

Differential movements between these stable blocks, together with their buttressing effects, have

played an important role in the geological evolution of the country and hence in the genesis of the

country's mineral and energy resources (Ministry of Mines and Mineral Development, 1999).

Figure 6.1 Location of Zambia with respect to surrounding cratons (From Ministry of Mines and

Mineral Development, 1999).

6.2 Local geological setting

The geology of Zambia comprises the Basement Complex, the Muva Supergroup, the Katanga

Supergroup and the Karoo Supergroup (Figure 6.2). Above the Karoo strata are late Mesozoic,

Tertiary and Quaternary sediments (Schluter, 2006; Mitchell, no date).



20

Figure 6.2 Regional geology of Zambia. MSZ – Mwembeshi Shear Zone (From Ministry of Mines and

Mineral Development, 1999).

6.2.1 Tectonic Thermal events

A number of major tectono-thermal events have affected Zambia and have often contributed directly

to the accumulation of metals, minerals and even energy resources. The earliest recognizable event

in the region was the Ubendian Orogeny (2000 to 1800Ma), which generated the NW-SE-trending fold

belt of high-grade metamorphic rocks that demarcates the north-eastern margin of the Bangweulu

Block (cf. Figure 6.2).

The next major orogenic event was the Irumide Orogeny which resulted in extensive folding and

shearing of Basement - and Muva rocks in central and eastern Zambia during the period 1350 to

1100Ma, broadly synchronous with the Kibaran Orogeny of The Democratic Republic of the Congo

(DRC). The Irumide Belt has been interpreted as a NW-facing, 350km-wide foreland fold and thrust

belt resulting from NW-SE-directed crustal shortening (De Waele et al., 2006). The subsequent

Lomamian and Lufilian Orogenies, the latter broadly equivalent to the continent-wide Pan-African

Orogeny, were represented by a complex series of tectonic and thermal events in the approximate

time interval 950 to 450Ma.



21

Two different domains were generated - the Lufilian Arc and the Zambezi-Mozambique Belts,

separated by the Mwembeshi Shear Zone/dislocation (Figure 6.3 and 6.4). One of the key events in

the formation of these terrains is ENE-directed thrusting contributing to the development of the Kafue

Anticline and other Domes as Basement culminations. Geophysical data indicates that the Lufilian Arc

is probably linked to the NE-trending Damara Belt, but Phanerozoic cover (Kampunzu et al., 2009)

obscures its link with other Pan-African orogens in the west.

Figure 6.3 Distribution of Irumide Belt showing Mwembeshi dislocation and Iron Cap Mine (From De

Waele et al., 2006).

Figure 6.4 Section through internal zone of Irumide Belt (cf. Figure 6.3 for section location) (From De




22

The peak of tectonic activity and associated granite emplacement on the Mwembeshi Shear is

reported to have occurred at about 600 million years. This timing is approximately coincident with the

Pan African tectono-thermal event, which occurred in the approximate time range 500 to 800 Ma

(Morel et al., 2007). The final tectono-thermal event was the Karoo Rifting associated with the break-

up of Gondwanaland during the Permian followed by opening of the proto-Indian Ocean in the

Jurassic; and a final episode of rifting related to the development of the East African Rift system in

late Cretaceous and early Tertiary times (Ministry of Mines and Mineral Development, 1999).

6.2.2 Stratigraphic setting

6.2.2.1 Basement

The Basement Complex comprises the oldest rock system in Zambia and is most extensively

exposed in the eastern and south-eastern part of the country (Table 6.1). The rocks have been folded

and faulted and have undergone repeated episodes of metamorphism, so that their original character

has been completely destroyed. The main rock types are: granites, gneisses, schists, migmatites,

amphibolites, granulites, charnockites, khondalites, phyllites, limestones and metaquartzites. These

rocks are of Paleoproterozoic age. The intrusive and extrusive rocks in the Basement Complex are

granites, syenites, dolerites, granodiorites, pegmatites, quartz veins, aplites, pyroclastics, gabbros,

rhyolites, ultrabasic rocks, andesites and metavolcanic rocks.

6.2.2.2 Muva Supergroup

The Muva Supergroup has a much lower grade of metamorphism compared to Basement Complex. It

is separated from the latter by an unconformity, which probably represents a period of about 1Ga. The

Muva Supergroup is mainly exposed in Central -, Copperbelt -, Southern - and Northern Provinces

and is composed of conglomerates, grit, quartzites, iron-rich sandstone and red mudstone, gneissose

schists and metavolcanic rocks. Intrusive rocks in the Muva Supergroup are granites, granite

porphyry, granodiorite, syenites, dolerites, norites, lamprophyres, carbonatites, pegmatites, quartz

veins, gabbros, basic volcanic and ultrabasic rocks.

6.2.2.3 Katanga Supergroup

The Katanga Supergroup is unconformably located above the Muva Supergroup or the Basement

Complex, and is composed of conglomerates, shales, argillites, quartzites, arkoses, greywackes, iron

formations, dolomites and aeolian sandstones. The Katanga Supergroup rocks are Neoproterozoic to

Cambrian in age. Intrusive rocks in the Katanga Supergroup are granites, dolerites, adamelites,

lamprophyres, gabbros and ultrabasic rocks. On the Copperbelt the Katanga Supergroup has been

divided into the Roan -, Mwasha - and Kundelungu Groups. The lower part of this almost exclusively

sedimentary sequence is the economically important Mine Series Group which hosts the bulk of the

copper-cobalt mineralization of the Copperbelt (Ministry of Mines and Mineral Development, 1999).



23

Table 6.1 General stratigraphic column (From Ministry of Mines and Mineral Development, 1999).

6.2.2.4 Karoo Supergroup

The Karoo Supergroup of upper Carboniferous to Jurassic times is best represented in the rift block

valleys of the eastern and southern parts of Zambia, the valleys of the Luangwa, Lukusashi,

Lunsemfwa, Rufunsa and mid-Zambezi. The oldest part of the sequence is represented by a possible

tillite indicating a glacial phase of upper Carboniferous age.



24

Higher in the sequence, the Karoo Supergroup consists mainly of mudstones, grit and sandstones

with an upper layer of basaltic lava of Jurassic age, the latter representing the first phases of

Gondwana break up and the end of Karoo sedimentation.

6.2.2.5 Cretaceous, Tertiary, Quaternary

Overlying the Karoo Supergroup are sandstones and mudstones of Late Jurassic to Cretaceous age.

The Kalahari Group, consisting of poorly consolidated sandstones and unconsolidated windblown

sands, overlies most of the Western Province of Zambia, together with smaller areas of the

Northwestern -, Central - and Southern Provinces. These sands originated during the later Tertiary

and Pleistocene periods and were deposited during an arid phase, when the limits of the Kalahari

Desert were greatly extended (Ministry of Mines and Mineral Development, 1999; Schluter, 2006;

Mitchell, no date).

6.2.3 PML Project Geology

The Iron Cap area is underlain by metasediments and metavolcanics from the Proterozoic Muva

Supergroup (Figure 6.5) (cf. Section 6.3.1.2 and Table 6.1).

Figure 6.5 Local geological setting of Iron Cap Mine (From Kampunzu et al., 2009).



25

Structurally, the Mine is located within the 550 Ma year old Mwembeshi Shear Zone/dislocation. The

Mwembeshi Shear Zone is a ductile shear zone associated with a sinistral strike slip movement

(Figure 6.6).

Figure 6.6 Geological setting of Iron Cap Mine showing position of Mwembeshi Shearzone (From

Ministry of Mines and Mineral Development, 1999).

The northern part of the Iron Cap property is underlain by andesitic lave from the Muva Supergroup,

whilst the southern part of the property comprises schist and quartzite from the same Supergroup

(Figure 6.7). It is known from the literature that the Muva Supergroup contains granite intrusions (cf.

Section 6.3.1.2). Scarab was unable to locate any surficial granites and could not locate any

reference to nearby similar intrusives from the literature apart from the presence of basement

comprising granite and gneiss immediately south of the Iron Cap SML (Kampunzu et al., 2009). The

only visible lithology was a ferruginous duricrust visible in the trench cutting and open pit on the

property (Figure 6.8).



26

Figure 6.7 Local geological setting of Iron Cap Mine.

Figure 6.8 Ferruginous duricrust in cut trenches and open pit at the Iron Cap Mine.



27

7. DEPOSIT TYPE AND MODEL

The majority of gold (Au) deposits in Zambia are mesothermal lode deposits (veins and more

dispersed occurrences in brittle and brittle-ductile shear zones). Orogenic, or the so-called

mesothermal Au deposits are a distinctive class of mineral deposit that has been the source for much

of world Au production. The ores are widely recognized in both Phanerozoic mobile belts and older

cratonic blocks. Orogenic gold deposits have formed over more than 3 billion years of Earth’s history,

episodically during the Middle Archaean to younger Precambrian, and continuously throughout the

Phanerozoic (Ministry of Mines and Mineral Development, 1999).

Mesothermal Au deposits are characteristically associated with deformed and metamorphosed mid-

crustal blocks, particularly in spatial association with major crustal structures. A consistent spatial and

temporal association with granitoids of a variety of compositions indicates that melts and fluids were

both inherent products of thermal events during orogenesis. Including placer accumulations, which

are commonly intimately associated with this mineral deposit type, recognized production and

resources from economic orogenic-gold deposits are estimated at just over one billion ounces of Au.

Consistent geological characteristics include (Goldfarb et. al., 2001):

1. Deformed and variably metamorphosed host rocks

2. Low sulfide volume;

3. Carbonate–sulfide ± sericite ± chlorite alteration assemblages in greenschist-facies hosts

4. Low salinity, CO2-rich ore fluids

5. Normally, a spatial association with large-scale compressional to transpressional structures

6. The orogenic Au deposits normally consist of abundant quartz-carbonate veins and show

evidence for formation from fluids at supralithostatic pressures

7. The mineralized lodes formed over a uniquely broad range of upper to mid-crustal pressures

and temperatures, between about 200 to 650°C and 1 to 5 kbar.

Most of the Au mineralisation in Zambia is localized within structures related to the Mwembeshi Shear

Zone in central Zambia (cf. Section 6.3.2). This major intra-cratonic shear zone was undoubtedly

trans-crustal in vertical extent and clearly acted as an important conduit for fluid flow and magma

emplacement. It also exhibits a history of multiple reactivation throughout the Lomamian and Lufilian

(Pan-African) Orogenies (c.950 to 450Ma) and was reactivated during Karoo rifting as well.

The Au mineralisation in Zambia show many features that are typical of other Phanerozoic Mobile

Belts around the world, including the existence of numerous granitoids, a predominance of

greenschist facies regional metamorphism, regional scale crustal deformation and the existence of

numerous Au deposits.



28

7.1 Model for gold deposits in Zambia

Known hydrothermal Au occurrences are evident throughout much of central and eastern Zambia

(Nguni, 2007). Although the more than 300 of these Au occurrences recorded are only prospects, the

similarity in geological model between these and other mesothermal Au deposits are significant.

Figure 7.1 Gold and Copper – Gold occurrences in Zambia (From Morel et al., 2007).

7.1.1 Deposit types

The Ministry of Mines and Mineral Development (1999) has identified the most prevalent type of Au

deposit in Zambia to be mesothermal lode deposits associated with brittle and brittle-ductile shear

zones i.e. the the Mwembeshi Shear Zone in central Zambia. The Iron Cap (Nguni, 2007 and Watts et

al., 1991), Dunrobin (Morel et al., 2007) as well as Matala (Morel et al., 2007) prospects have been

classified as a mesothermal Au deposits in Zambia.

7.1.2 Origin of the gold

Gold mineralisation in Zambia is interpreted to be the result of fluid flow during the Lufilian Orogeny (a

Pan African event) which is timed at 650 ± 50 Ma and was probably not a single event but episodic

(cf. Section 6.2.1) (Morel, et al., 2007).



29

Mesothermal Au deposits, which form at temperatures above 350 °C, occur along large breaks or

faults in continental crust. These deposits form at depths of 3 to 5 km below the earth’s surface and

appear to be associated with the upward migration of fluids from the earths mantle (Alida, 2007). Most

lode Au deposits are sourced from metamorphic rocks because it is thought that the majority are

formed by dehydration of basalt during metamorphism. The Au is transported up faults by

hydrothermal waters and deposited when the water cools too much to retain Au in solution.

The near surface lithology investigated by Scarab at Iron Cap has been described as a ferruginous

duricrust. Anomlaous values of Au, within this host are formed from pre-existing Au deposits (possibly

including some placer deposits) during prolonged weathering of the bedrock. Gold is deposited within

iron oxides in the weathered rock or regolith, and may be further enriched by reworking by erosion.

7.1.3 Metamorphism

The best known and historically highest producing Au mines in Zambia are all located within an area

that has been subject to Amphibolite to Greenshist facies metamorphic grade (Figure 7.2).

Figure 7.2 Location of Iron Cap within Amphibolite to Greenschist facies metamorphic zone (From De




30

7.1.4 Mineralogy

Significant hydrothermal Au deposits in Zambia, namely Dunrobin and Matala (Luiri Gold) as well as

the Cheowa and Mwomboshi Au prospects (Zambezi Resources) are associated with hydrothermal

quartz veins and pyrite alteration (Morel et al., 2007). At Dunrobin, the pyrite appears to occur within

an alteration zone associated with the quartz veins which are also pyrite enriched. The gossan

consists primarily of hematite, limonite pyrite and quartz. Drilling has consistently shown that Au

mineralisation is variably distributed within the gossan and the adjacent limestones, and that higher

Au grades are commonly associated with disseminated first generation pyrite in the limestone that

formed during the early sulphidation phase. At Luiri Gold’s Matala mine, Au mineralisation is

characterised by strong stratigraphic disruption (deformation), shearing and the presence of quartz-

dolomite-pyrite-tourmaline-albite-sericite alteration. Apart from the presence of non-visible Au,

chalcopyrite is replaced by chalcocite proximal to and within the ore zones. Studies of primary

mineralisation show that it contains a range of sulphide minerals including pyrite, chalcopyrite,

marcasite, arsenopyrite, galena, sphalerite, covellite, tetrahedrite, digenite and pyrrhotite, as well as

Au which occurs enclosed within pyrite (Brown et al., 2008). Although Scarab could not obtain

significant information on the mineralogy of the Iron Cap Mine, it can be ascertained with a high

degree of certainty that mineralisation at Iron Cap should be associated with similar mineralogical

parameters as discussed above.

7.1.5 Mineralisation hosts

Lode Au deposits are usually hosted in basalt or in sediments known as turbidite, although when in

faults, they may occupy intrusive igneous rocks such as granite. Lode Au deposits are intimately

associated with orogeny and other plate collision events within geologic history.

According to Nguni (2007) the Au bearing reef at Iron Cap consists of granular quartz or quartzite and

ironstone. The country rocks consist of chlorite schist, greenstones and micaceous quartzites, and

talcose and micaceous schists. A review of the available literature on the Au mineralisation at

Dunrobin indicates that there are two principal styles; namely ferruginous gossans within the

dolomites and limestones with associated quartz veining; and quartz veins and quartz vein

stockworks within the quartz-mica schists of the underlying Basement (Brown et al., 2008).

The Au mineralisation at Dunrobin, exploited during open pit mining by Reunion and subsequently by

Caledonian in the period 1997 to 2000 occurs within “gossanised dolomite” in association with a

quartz vein system immediately above the Basement unconformity/disconformity. The gossanised

dolomite appears to reflect the occurrences of a deeply oxidised (weathered) halo of pyrite enriched

dolomite with hematite alteration.



31

7.1.6 Structural orientation

Most of the giant Au deposits in the world are spatially associated with regional first-order structures,

the deposits usually hosted by late-tectonic splay faults or shear zones. The first-order structures may

have acted as major conduits for fluid transport from deep in the crust, while the secondary structures

acted as the loci for mineral deposition with locally reduced fluid pressure. In general, mesothermal

Au provinces are characteristically associated with regional structures. Mesothermal Au deposits are

found in structurally controlled sites within, or adjacent to orogenic belts (Barley & Goldfarb, 1996).

7.1.7 Proximity to intrusives

Although granites typically occupy more than 50% of the exposed Archaean cratons; where they are

in proximity to the greenstone belts they also host significant Au deposits containing over 1 million

ounces (e.g. Buzwagi and North Mara in Tanzania; Renabie in Ontario, Canada; Woodcutters,

Tarmoola and Granny Smith in Western Australia as well as Freda-Rebecca in Zimbabwe). Although

no direct evidence exists, Wright (1985) postulates that proximity to granite intrusions may provide an

additional heat source for remobilisation of the Au. A significant proportion of the Au and Cu-Au

occurrences within southern Zambia are spatially associated with the Hook Granite and thrust faults

related to the Mwembeshi Shear Zone (Morel et al., 2007).

7.1.8 Palaeoplacers

Although the occurrence of Au in vicinity of shear zones is well documented (cf. section 7.1.6), the

possibility of palaeoplacers should also be considered (cf. Section 7.1.1). Alida (2007) states the

paleoplacer type of Au deposits is at further distances away from fault fracture zones than the main

Au deposits. These palaeoplacer Au deposits have an As-Fe-Au association which suggests that

these Au deposits are derived from erosion of mineralised lithologies and fault fracture zones.

7.1.9 Summarized geological model for gold in Zambia

Three factors appear to determine the distribution of the auriferous lodes and primary Au

mineralisation, which preferentially occurs in areas where all three of the following factors are present:

Faults of Pan African age

Granitoid bodies emplaced during the Pan African orogeny

Occurrence of mafic meta volcanic and other meta igneous rocks

Based upon the Geological model for Zambian Au mineralisation, the following factors seem to be

important:

1. The majority of Zambian Au deposits and occurrences are lode-style bodies that appear to be

associated with basement domes, large crustal-scale shear zones and syn-orogenic granite

and syenite intrusions (Morel et al., 2007



32

2. Historically the highest producing Au mines in Zambia are all located within an area that has

been subject to Amphibolite to Greenshist facies metamorphic grade within the Luangwa-

Kariba Metamorphic Zone.

3. Gold mineralisation is characterised by strong stratigraphic disruption (deformation), shearing

and the presence of quartz-dolomite-pyrite-tourmaline-albite-sericite alteration within the

Mwembeshi Shear Zone.

4. A significant proportion of the Au and Cu-Au occurrences within southern Zambia are spatially

associated with the Hook Granite.

7.2 Exploration techniques

Exploration for orogenic Au is mainly preoccupied with defining the footprints of known Au deposits

and with integrating various techniques with geology for their efficient identification and detection. By

virtue of their association with regional structures, these deposits are also located at the boundaries

between contrasted lithologic or age domains within greenstone belts. It is important to realize that

these deposits occur in any type of supracrustal rocks within a mobile or greenstone belt and,

covering stratigraphic positions from lower mafic-ultramafic volcanic to upper clastic sedimentary

stratigraphic levels (Robert et al., 2007).

7.2.1 General

At the local scale, favorable settings for orogenic Au deposits represent a combination of structural

and lithologic factors. Favorable structural settings are linked mainly to the rheologic heterogeneities

in the host sequences. Shear zones and faults, universally present in these deposits, are developed

along lithologic contacts between units of contrasting competencies and along thin incompetent

lithologic units. Along these contacts and along incompetent rocks, deposits will preferentially develop

at bends, and structural intersections. Competent rock units enclosed in less competent favor

fracturing and veining. Common lithologic associations include Fe-rich rocks such as tholeiitic basalts,

differentiated dolerite sills and BIFs, and with competent porphyry stocks of intermediate to felsic

composition, whether they intrude mafic-ultramafic volcanic or clastic sedimentary rocks (Robert et al.,

2007).

A review of the main discovery methods of Au deposits found in the last 10 years indicates that

geological understanding was the key element in the discovery process in both the greenfield and

brownfield environments. Geochemistry in support of geology plays an important role in cases

particularly where deposits are exposed, and geophysics aided discovery in some cases where the

discoveries were concealed. A clear lesson from this analysis is that geology should remain an

important underpinning of future Au exploration programs (Robert et al., 2007).



33

7.2.2 Geochemistry

According to Morel et al. (2007) geochemical data, used in conjunction with trenching, geological

mapping, and historical work has been effective in the delineation of significant Au mineralisation at

Luiri Gold’s Matala project, and has been utilised to define additional drill targets.

Zambezi Resources completed a soil sampling programme on their Mwomboshi licence which aimed

to define the tenor of potential auriferous mineralisation within the Mwomboshi shear system. A 600

metre strike length of the shear was sampled, with Au anomalism indicated over that entire length,

with assays up to 124.16 g/t gold and 58.9 g/t silver. Previous geological mapping indicates that two

or more parallel quartz vein systems occur over a strike length of approximately 12 kilometres. An

orientation soil sampling programme comprising 270 samples was also undertaken over the area of

the known auriferous quartz vein system. Assays up to 106 ppb Au were returned, indicating that soil

sampling will be a useful exploration tool in attempting to locate quartz vein-hosted gold mineralisation

beneath the soil cover. In addition to the rock chip sampling, 154 stream-sediment samples were

collected from streams draining approximately nine kilometres of the Mwomboshi shear system strike.

Gold anomalism was indicated over at least three kilometres of strike, with six samples returning

assays greater than 10 ppb Au, including a high of 4,028 ppb Au.

7.2.3 Biogeochemistry

Termite mound sampling for Au in Senegal (Hansen et al, no date) on the Kenieba-Kedougou window

proved to be successful on a 200 x 50 m grid. Other researchers (Bernier et al., 2006; Kara et al.,

2006) have also proved that sampling of termitaria for uranium (U) is a useful exploration technique.

In Mali the Canadian company North Atlantic Nickel is has made use of termite mound sampling to

explore for Au deposits in the Dalakan and Sinzeni areas. Successes of this project thus far have

been the discovery of three areas of artisanal workings (Lugo, 2003).

In Zimbabwe sampling of termitaria for Au exploration beneath Kalahari sand overburden (West,

1965) resulted in the discovery of a Au anomaly with concentrations of 8 to 25 g/t Au in the Silobela

area. This mine was suitably named Termite Mine (West, 1970). Termitaria sampling survey involving

11,000 samples have been taken in the Roandji goldfields of south-central Central African Republic.

The aim of this investigation was to locate one or more bedrock source for a series of highly

auriferous streams and rivers which drain the priority portion of the goldfields (Bernier, 2006). The

work by West (1965) on bio-prospecting has led to several other discoveries such as the Jwaneng

kimberlite in Botswana (West, 1970), Ramagiri Goldfield in India (Prasad et al., 1987) the auriferous

Liptako region of Niger and numerous deposits in the former Soviet Union (Brooks et al., 1995).



34

7.2.4 Structural investigations

Apart from the application and potential usefulness of geochemical - and biogeochemical methods for

Au exploration in Zambia, mesothermal Au deposits are known to be structurally controlled (cf.

Section 7.1.6). Structural investigations (lineament derivations) have proved to be a useful Au

exploration tool in other mesothermal Au provinces (Alida, 2007; Robert et al., 2007).

7.2.5 Geophysics

It is almost impossible to get a direct geophysical response from Au because of the low grades in

deposits (Doyle, 1986). However, indirect geophysical indications may occur through association of

Au with particular host rocks, marker beds or structures which are, for example, of unusual

magnetization, density, electric polarization, or conductivity/resistivity.

An initial gradient array Induced Polarization (IP) pilot study was undertaken over the nose of the

Matala Dome mineralized structure including the Dunrobin Au Deposit. The programme was designed

to test the use of the IP technique for targeting the potential presence of mineralized zones and/or

changes in the geology. The pilot study area was therefore defined to include known mineralized Au

zones identified from drilling including the Dunrobin Au Deposit, targets from soil geochemical

sampling, and important geological contacts (Luiri Gold, Jan. 2007 News Release).

There are many examples of the gravity technique being used at all scales from the identification of

prospective Au districts to that of gold-related hydrothermal alteration at a local scale. More recently

the development of airborne gravity gradient systems (e.g. BHP Billiton-Falcon, Bell Geospace-Air

FTG), have seen the gravity technique grow in application. Areas are now being flown where ground

access was previously not possible and where rapid acquisition is required. Gravity is an effective

technique for defining the geometry and structure of greenstones belts at a regional scale. Barrick

showed that gravity has also proven effective in mapping intrusions in sedimentary and volcanic

terrains for Carlin, OIR and RIR systems. Structure and alteration can also be mapped, either directly

by gravity in weathered environments or inferred in terrains where geological units of different density

are offset and/or altered (Robert et al., 2007).

Furthermore resistivity patterns may indicate altered rocks which contain mineralization. These

surveys are responsible for identifying resistivity lows caused by graphite and used in structural

mapping in association with magnetometer surveys (Rivera et al., 2009).

Scarab would like to note that the exploration techniques noted in this section may not necessarily be

effective on the Iron Cap Gold Mine area under investigation and should be regarded as potentially

useful exploration tools only.



35

8. MINERALIZATION

According to Nguni (2007) the gold (Au) bearing reef at Iron Cap consists of granular quartz and

ironstone. The country rocks consist of chlorite schist, greenstones and micaceous quartzites as well

as talcose and micaceous schists. The reef lies between walls of the talcose and micaceous schists

along a shear zone. The rocks strike east-west and dip north at 45 to 70 degrees. The same author

further states that, to the west of the Iron Cap deposit, a 410 m in extent quartzite reef, is located

within the ironstone or directly beneath it. The width of the reef is at a maximum of 0.9 m and dips 45

to 50 degrees to the north.

Scarab was unable to locate and observe any of the rock types as mentioned by Nguni (2007) and

cannot comment on the aforementioned Au bearing reef. Scarab was able to investigate most of the

surface geology through a series of historic trenches excavated by Rhodesian Anglo American

Limited and more recent trenches excavated by Londoloza Resources (cf. Section 5.2). This

investigation revealed that most of the surface at Iron Cap is covered by a ferruginous duricrust

(Figure 8.1).

Figure 8.1 Ferruginous duricrust on surface of Iron Cap Mine site.



36

9. EXPLORATION

Apart from the historical exploration activities within the Iron Cap area (cf. Section 5.2) which included

excavation of two shaft and cross cuts as well as the cutting of 36 exploration trenches (26 historic

and 8 recent), Scarab also completed a first pass field investigation in the area (Figure 9.1).

Figure 9.2 Route followed by Scarab during the field investigation on Iron Cap (Not all trenches

shown).

Techniques used during the initial Scarab field investigation included the following:

Identification of geological and structural setting where applicable (cf. Section 18)

First pass geological investigation including lithological sampling (cf. Section 18)

Identify (if any) remains of historical exploration activities

The following sections provide a brief description of waypoints taken en route (Handheld Garmin GPS

unit used on datum WGS 84) during Scarab’s first pass survey at the Iron Cap Mine.



37

9.1 Pit

The historic open pit at Iron Cap is approximately 2 m in depth and approximately 50 x 15 m in extent.

Most of the pit is overgrown by shrubs and trees, but the lithology targeted (ferruginous duricrust) is

still visible within the pit walls (Figures 9.3 and 9.4).

Figure 9.3 Open Pit at Iron Cap Mine measuring 50 x 15 m (2 m in depth) in extent.

Figure 9.4 Ferruginous duricrust in north wall of open pit at Iron Cap Mine.



38

Apart from the duricrust, a quartz vein was encountered in the pit and sampled accordingly (cf.

Section 18).

Figure 9.5 Quartz vein in Open Pit on Iron Cap Mine.

The ferruginous duricrust contain fragments of quartzite as well as minor quartz veins. Quartz

fragments are furthermore scattered around the base of the pit. These fragments are derived from

weathering of deeper seated bedrock probably comprised of quartzite with or without quartz veins.

These lithologies are similar to what the literature proposes for the bedrock constituents (Nguni,

2007).

Figure 9.6 Quartzite, quartz vein fragment and ferruginous duricrust from Iron Cap Mine.



39

9.2 Shafts

Scarab was not able to access historical shaft 1 or shaft 2 (cf. Section 5.2), but Londoloza Resources

/ Triple Plate Plc. joint venture was able to cut a trench into the top part of shaft 1 (Figure 9.7) during

their 2008 exploration campaign. This trench enabled Scarab to view the shaft, which is comprised

mostly of similar surface duricrust. Of interest was the exposure of the crosscut in shaft 1 (cf. Section

5.2). Limited access, however, prevented Scarab from entering the crosscut or shaft.

Figure 9.7 Trench cut into top part of shaft 1 by Londoloza Resources / Triple Plate Plc. joint venture

in 2008.

9.3 Trenches

Thirty-six (36) exploration trenches (26 historic and 8 recent) were cut of which Scarab investigated

27 for sampling and general geological investigation purposes. The remaining trenches were either

overgrown or not accessible.

Most of these trenches contain a similar lithology to the open pit namely a ferruginous duricrust, but

many are also devoid of rocky lithologies showing only Quaternary sand in section (Figure 9.8). The

only difference in lithology (to that of ferruginous duricrust) was at a recently cut trench where outcrop

of massive magnetite was present (Figure 9.9).



40

Figure 9.8 Historical trench showing only Quaternary sand (no duricrust visible).

Figure 9.9 Massive magnetite in recently cut trench at Iron Cap Mine.



41

10. DRILLING

No evidence for exploration drilling on any part of the Iron Cap property could be located by Scarab

during the field investigation nor does any of the historical reports mention exploration drilling on the

Iron Cap property.



42

11. SAMPLING METHOD AND APPROACH

11.1 Scarab sampling programme

Scarab acquired eighteen (18) lithological samples during the recent first pass field investigation on

the Iron Cap mine site. All necessary steps were taken to ensure correct sampling, preparation and

storage techniques according to International Standards. Scarab endeavored to sample as many

different in-situ lithologies from the historical pit and trenches. Three main in-situ lithotypes were

encountered namely ferruginous duricrust, quartz veins and magnetite. Scarab did not sample

complete trenches (or pit) and only retrieved grab samples from random localities.

The samples were retrieved manually by a geological pick and stored in a plastic sample bag with

accompanying tag. Lithological sample retrieval and storage involved techniques as described by

Wagner (1995) as follows:

a. Use of plastic sample bags.

b. Sample material on clean surface.

c. Closing bag to ensure no contamination.

d. Labelling outside and inside (tag) of bag respectively.

Figure 11.1 Position of surface lithological grab sample on Iron Cap (Not all trenches shown).



43

11.2 Londoloza Resources / Triple Plate Plc. joint venture sampling programme

Scarab was furthermore able to obtain sample results from a Triple Plate Plc. / Londoloza JV

sampling programme completed during 2008 (cf. Appendix C). According to Triple Plate Plc.

employees, the trenches (as well as the pit) were sampled as follows:

a. Use of cloth-type sample bags.

b. Each trench was channel sampled throughout the extent of the west wall at half the distance

from surface to base.

c. The north wall and south walls of the pit were sampled in a similar manner as mentioned in

point b above.

d. Sample was coned and quartered until a 50 kg bag limit was reached, which was handed in

for analyses.



44

12. SAMPLE PREPARATION AND ANALYSES

12.1 Scarab sampling programme

Geochemical analysis for gold (Au), iron (Fe) and silver (Ag) within samples (cf. Section 11) taken on

the Iron Cap property in Zambia were completed by Alex Stewart International Corporation Zambia

Limited (ISO Certified) (cf. Appendix B). The sampling methods included the following:

Gold (Au) fire assay Atomic Absorption (AAS) method

Silver (Ag) and Iron (Fe) Atomic Absorption spectrometry (AAS) method

Scarab conducted all aspects of obtaining and labeling the samples, which included the insertion of a

printed label inside the sample bag and sealing the bag with a cable tie®. An associate to Challenger

provided the sample to Alex Stewart International Corporation Zambia Limited Laboratories for

analyses.

12.2 Londoloza Resources / Triple Plate Plc. joint venture sampling programme

Geochemical analysis for gold (Au) and silver (Ag) within samples (cf. Section 11) taken on the Iron

Cap property in Zambia were completed by The Geochemical Analytical Laboratory at the School of

Mines, University of Zambia (ISO certification lacking) (cf. Appendix C). The sampling methods

included the following:

Metal analytes by flame atomic spectrophotometry

Scarab cannot comment on any aspects of obtaining and labeling the said samples. According to the

accompanying certificate, quality control measures for the samples included the use of a calibration

standard as a control sample.



45

13. DATA VERIFICATION

The qualified person responsible for the completion of this report has relied upon the data supplied

and obtained through sources as mentioned (cf. Section 1.3). No limitations were encountered during

the verification process.

The data supplied for the compilation of the Technical Report was mostly generated by Scarab either

as a literature review or obtained during fieldwork. Data obtained (i.e. reports indicating position,

productions and historical exploration i.e. Nguni, 2007) could not be verified.

No similar datasets could be obtained during the literature investigation and Scarab cannot verify the

validity of the data.



46

14. ADJACENT PROPERTIES

The properties adjacent to the Iron Cap Mine in central Zambia have been defined based upon the

following criteria:

1. Mesothermal gold (Au) occurence (cf. Section 7.1.1)

2. Location on the Mwembeshi Shear / dislocation Zone (cf. Section 7.1.6)

3. Setting within the low grade Luangwa – Kariba Metamorphic Zone (cf. Section 7.1.3)

Two properties that meet the above-mentioned criteria have been delineated and are briefly described

below. This description aims to assist with future exploration activities on Iron Cap and improving the

Geological Model.

14.1 Luiri Hill (Dunrobin and Matala)

The southern part of the Luiri Gold’s Luiri Hill Project area incorporates a prominent and geologically

complex area known as the Matala Dome (Figure 14.1).

Figure 14.1 Location of Luiri Gold’s Dunrobin and Matala Mines within Matala Dome.



47

The Matala Dome is located approximately 5km east-northeast of the main body of the Hook Granite

and it and is located within or is just north of the Mwembeshi Shear Zone. The Dome is elongated in

an east-northeast direction and is parallel or sub parallel to the trend of the shear. The old Matala

mine is located within the Basement rocks of the Dome on or close to its axial plane trace. The old

Dunrobin mine is located within the dolomite and limestone rocks immediately overlying the Basement

in the hinge of the west-southwest plunging Matala Dome anticline. The apparent concentration of Au

mineralisation along the axial zone of the Matala Dome anticline is noteworthy (Brown et al., 2008).

Drilling by Luiri Gold into the Matala Dome has uncovered mafic-intermediate igneous rocks which

appear to represent andesites, however are silicified due to alteration related to mineralization. Their

spatial association with mineralized zones suggests a relationship to the mineralisation process. At

Dunrobin, there are Au mineralised quartz veins and vein stockworks within the Basement rocks

below the overlying dolomites. This mineralisation appears to consist of hydrothermal quartz veins

and associated pyrite alteration and replacement zones.

Figure 14.2 Cross section of old Dunrobin Mine showing trend of mineralisation.

Luiri Gold Mines principal exploration focus has been directed towards the exploration drilling of the

old Dunrobin and Matala mine areas. Other work undertaken includes field mapping around the

Matala Dome, alteration studies of the Matala and Dunrobin core, geochemical soil sampling

programs across the Matala Dome and the excavation (or re-excavation) of shallow trenches across

the Matala deposit. An RC drilling programme tested prospective lithologies and soil anomalies both



48

along strike and in similar lithological and structural settings to those present at Matala and Dunrobin,

on a number of previously identified prospects (Brown et al., 2008).

A Pilot Induced Polarization (IP) survey, including gradient array and pole-dipole was undertaken

around Dunrobin in December 2006. The gradient array survey identified a number of anomalous

zones. The sun-shaded views highlight strong NE-SW and NW-SE textures which bear a strong

resemblance to conjugate fault directions.

Figure 14.3 Induced Polarization (IP) pilot survey over Luiri Gold’s Dunrobin area (From Luiri Gold

Jan. 2007 News Release).

14.2 Mwomboshi

Zamezi Resources’ Mwomboshi Project occurs some 75 kilometres northeast of Lusaka. Numerous

historic Au occurrences are closely related to regional shears and splays, with previous geological

mapping indicating that two or more parallel quartz vein systems occur over a strike length of

approximately 12 kilometres.



49

Rock chip and stream sediment sampling as well as geological interpretation based upon ASTER

satellite imagery has enhanced Zambezi Resources’ understanding of the Mwomboshi licence area

(Zambezi Resources 2004 Exploration Field season update no. 7).

Figure 14.4 Soil sampling results at Zambezi Resources’ Mwomboshi project area southwest of Iron

Cap (Zambezi Resources 2004 Exploration Field Season Update no. 6).



50

15. MINERAL PROCESSING AND METALLURGICAL TESTING

Scarab could not locate any data or information on mineral processing or metallurgical testing on the

Iron Cap Mine.



51

16. MINERAL RESOURCE AND RESERVE ESTIMATES

According to Nguni (2007) an historic resource of the eastern 880 m of the Iron Cap mine area has

been completed based historical work completed by Reeve (1963). Nguni (2007) furthermore states

that the eastern half of Iron Cap consists of well defined ironstones with an average width of 4.6 m.

Former estimates gave the gold content of this eastern extent to be 1.555 g Au / t.


The resource was calculated as follows

880 m x 4.6 m x 20 m = 80,960m3

Density assumed at 3 (mixture of quartzite, schist and ironstone)

Tonnage equals 242,880 ton @ 1.555 g Au / t

13,322 (thirteen thousand three hundred and twenty two) ounces of Au

Scarab has not received any data or available information on the above mentioned resource

calculation and cannot comment on its accuracy.



52

17. ENVIRONMENTAL AND SOCIAL IMPACTS

Scarab’s literature review and field investigation have revealed that potential for social and

environmental implications should be addressed prior to the onset, or during any extensive

exploration activities within the Iron Cap Mine area. Scarab understands that the Zambian Ministry of

Mines allows exploration and mining within the Iron Cap area, and is unaware of any current

regulations or environmental liabilities that may significantly restrict access to this area for exploration.

17.1 Social implications

The southern and central part of the Iron Cap Small Mining Licence is inhabited and being used for

agricultural activities (Figure 17.1). Scarab is unaware how these communities might react to the

possibility of a mine or continued exploration work (cf. Section 3.3.2). A social impact investigation

should address such potentially forthcoming issues and aim to provide plausible solutions for local

inhabitants.

Figure 17.1 Agricultural activities in central to southern extent of Iron Cap SML.



53

17.2 Environmental implications

Although the Iron Cap area has no environmental liabilities and no known explicitly environmentally

sensitive or fragile areas, Scarab does recommend that a suitable and qualified Environmental

Scientist perform an Environmental Impact Investigation (in association with a Social Impact

Investigation cf. Section 17.1) addressing the following:

Presence of Red Data fauna and flora species

The Environmental Protection and Pollution Control Act (No. 12) of 1990 (EPPCA) and the Mines and

Minerals (Environmental) Regulations of 1997 also regulates mining operations. The EPPCA sets

environmental quality standards and makes the polluter responsible for meeting them. Thus under the

EPPCA, all effluents and emissions from mining operations are regulated through a system of

permits, licenses and fines. Dumps, including overburden dumps and tailings dams, are similarly

regulated.

Key steps in establishing a project as laid down by the 1997 regulations are (Ministry of Mines and

Mineral Development, 1999):

Preparation of a project brief to the Director of Mines Safety describing the site, proposed

activities, and all aspects of potential environmental impact.

The Director may request more information or can forward the project brief to the

Environmental Council of Zambia recommending one of: rejection; acceptance after

submission of a full Environmental Impact Statement; the project be accepted and allowed to

proceed immediately.

Preparation of an Environmental Impact Statement and submission to the Director of Mines

Safety. The Director of Mines Safety submits his recommendations to the Environmental

Council which makes the final decision.

Environmental Impact Statements, if called for, to be updated annually or within fifteen months

of the first statement. Environmental audits of projects to be completed annually.

If a developer finds the provisions of any regulation unduly onerous, he may apply to the

Minister or Director of Mines Safety for an exemption from that regulation. The exemption may

be granted under prescribed conditions.

Developers of large-scale mining projects to contribute to the Environmental Management

Fund for rehabilitation purposes.



54

The Environmental Impact Assessment regulations require that an Environmental Impact Assessment

(EIA) be prepared for all investments that have a major impact on the environment. The identification

and implementation of adequate environmental mitigation measures is also regulated by the EIA. The

Mines and Minerals Act and the Mines and Minerals Environmental Regulations 1997 addresses the

environmental, health and safety aspects of the mining licences delivered by the Mines and Minerals

Development Department. They regulate environmental protection and pollution control in the areas

where prospecting, exploration and mining operations are being carried out. They also require that

any licensed mining operator closing down a mining facility must first decommission the site to a level

where it does not pose any danger to public safety and health (Environmental Council of Zambia).

There are numerous private protected areas recorded for Zambia. With the exception of commercial

farming, there has been very little real private investment in Zambia due to the economic policies of

the former government which favoured state ownership (MacPherson, 1992). The Iron Cap Mine is

located outside Zambian National Parks and these protected areas (Figure 17.2).

Figure 17.2 Location of Iron Cap Mine Outside Protected areas in Zambia (Comaco website).



55

18. RESULTS AND INTERPRETATIONS




information during fieldwork conducted on the Iron Cap Gold Mine in Zambia, southern central Africa.

The compilation of this Technical Report incorporated the following (including aspects as stipulated

within National Instrument and Form 43-101F1):

1. Review of available Au prospecting data for the Iron Cap area

2. Literature review and geological model for Au mineralisation in the Iron Cap area

3. Field visit to inspect historic Iron Cap Au mining activities

The field investigation to Iron Cap involved the following:

1. Personal communication and introduction to previous employees and other significant

persons

2. Investigate and report on infrastructure conditions and availability of exploration

requirements

3. General geological, structural and stratigraphical setting

4. Investigate any potential for social and environmental impact associated with any

forthcoming exploration activities

5. Advise on future exploration programme and budget

During the first pass field investigation of the Iron Cap area Scarab was able to investigate some of

the trenches cut by Rhodesian Anglo American and more recently by the Triple Plate Plc. JV. Scarab

was further able to obtain grab samples from these trenches which were assayed for Au, silver (Ag)

and iron (Fe) (cf. Appendix B). An investigation into the distribution patterns of the sample assay

results revealed the following:

Gold (ppm) does not favour any of the lithologies sampled by Scarab and appears to show a

slight increase towards the central and eastern extent of the sampling area.

Silver (ppm) appears to have elevated concentrations within the ferruginous duricrust and

seems to favour this lithotype. Silver values appear to show increases towards the western

extent of the sampling area.

The iron (%) content for the applicable lithotypes are high and shows, similar to Au, an

increase towards the central and eastern extent of the sampling area.



56

Figure 18.1 Gold, silver and iron assays from first pass field investigation completed by Scarab.

Although the increase in Au and Fe towards the eastern extent of the property (cf. Figure 18.1) and

the associated decrease in Ag towards the west is noticeable, these results are not conclusive due to

the small sampling programme completed by Scarab. Further recommendations are provided in

Section 19. The samples obtained during the sampling programme completed by the Triple Plate plc.

JV was also obtained from trenches and the open pit, similar to areas sampled by Scarab. Triple Plate

plc. however, endeavoured to channel sample complete walls of the open pit and trenches (trenches

western wall sampled and open pit northern and southern walls sampled) whereas Scarab only

retrieved grab samples. The sample assay results for Triple Plate plc. is available in Appendix C.

These results are noteworthy as channel sample values of up to 19 g Au / t were obtained (specific

trench locality not available).

Scarab could not locate any local structural features that might have a controlling effect on Au

mineralisation, similar to the Matala Dome of Luiri Gold (cf. Section 14.1). This absence of a domal

feature on Iron Cap does not imply absence of similar grades or thicknesses of Au mineralisation,

only that further work is required on the Iron Cap property to discern similar or site specific

parameters that might control mineralisation.



57

The anomalous Au values returned for all grab samples (ferruginous duricrust, magnetite-rich

lithologies and quartz veins) retrieved by Scarab might be indicative of a deeper seated Au reef or

vein system situated below the surface duricrust, as delineated by historical reports (Nguni, 2007) (cf.

Section 7.1.2).

Lateritic profiles capped by ferruginous crusts (ferruginous duricrust) are mostly developed under

tropical climates characterized by alternating wet and dry seasons (i.e., savannah climates). The

climatic stability field of extensive duricrusts in Africa corresponds to an E-W band in which the

average annual temperature exceeds 22°C and annual rainfall ranges between 900 mm and 1400

mm. Ferruginous duricrusts tend to be less abundant in semi-arid areas such as in the Sahelian band.

In savannah zones, similar to Iron Cap location (cf. Section 4.4), the formation of a duricrust induces a

leaching in the upper horizons and thus develops strongly depleted Au anomalies. As duricrust

formation is a very long process, the dispersion of Au is generally well extended, but show a low

signal on surface. Thus, duricrust Au deposits in many cases underestimate the potential for deeper-

seated Au mineralisation (Freyssinet and Itard, 1997).



58

19. CONCLUSION AND RECOMMENDATIONS

19.1 Conclusion

Although the Iron Cap Mine has not received any exploration drilling and historic activities were

confined to surficial trenching, pitting and limited shaft sinking, results obtained during the compilation

of the current NI 43-101 report is conclusive that with further exploration the Iron Cap prospect

appears to contain considerable potential for significant Au mineralisation.

19.2 Recommendations

Scarab recommends that a staged exploration programme be completed with defined targets at the

end of each exploration stage.

19.2.1 Stage 1 (Drilling targets)

a. Detailed sampling and mapping exercise of available trenches, open pit and shafts (as well

as horizontal cross cuts in depth). The mapping and sampling of the shafts and horizontal

cross cuts in depth are important to assess the character of the mentioned Au-bearing reef.

b. Structural investigations (Ortho photo and satellite structural mapping)

c. Ground and airborne geophysics (High resolution magnetometer and Induced Polarisation)

d. Surface geochemical sampling and mapping

e. Define drill targets through collaboration of all of the above

19.2.2 Stage 2 (Contemporaneous with end of stage one) (Nature of mineralisation)

a. Diamond drilling on mineralised targets as defined by RC drilling

b. Structural and alteration mapping on core and down-hole geophysics to assess control on

mineralisation

19.2.3 Stage 3 (Resource definition)

a. Infill drilling where required

b. Resource definition

19.3 Exploration programme budget

Scarab has compiled a two-year exploration programme and budget based upon the agreement

between the Challenger Development Corp. (Challenger) and Londoloza Mining and Exploration

Zambia Ltd (cf. Section 3.5). Each exploration year is based upon successful results from the

previous year.



59

Table 19.1 Two year Exploration Budget

First year (All costs in US$)

Historical data compilation 40,000

Environmental baseline study 20,000

Contribution to technical training 10,000

Salaries of expatriate staff 20,000

Salaries of local staff 20,000

Geophysical Surveys 120,000

Reverse circulation drilling in (2,000 m x US$ 90 / m) 180,000

Core drilling (1,000 m x US$ 150.00 / m) 150,000

Chemical (2,000 samples x US$ 15 / sample) 30,000

Purchase of vehicle 20,000

Purchase and rental equipment 20,000

Office, Camp ground 20,000

Travel, Communications 20,000

Consumables, Fuel 20,000

Geological field investigation 10,000

Miscellaneous 10,000

SUB TOTAL (US$) 710,000

Second year

Contribution to technical training 10,000

Salaries of expatriate staff 30,000

Salaries of local staff 30,000

Reverse circulation drilling in (3,000 m x US$ 90 / m) 270,000

Core drilling (2,000 m x CDN$ 150.00 / m) 300,000

Down the hole geophysics (5,000 m x US$ 10 / m) 50,000

Chemical (2,000 samples x US$ 15 / sample) 30,000

Purchase of vehicle 10,000

Buy and equipment rental 10,000

Office, Camp ground 20,000

Travel and communications 20,000

Consumables, Fuel 20,000

Miscellaneous 10,000

SUB TOTAL (US$) 810,000

TOTAL FOR TWO BUDGET YEARS (US$) 1,520,000



60

Scarab considers the proposed expenditure of US$ 1,520,000.00 over the initial 24-month period to

be consistent with the potential of the project, providing it is appropriately staged such that the results

of each phase can be reviewed before proceeding to the next stage. The proposed expenditure is

considered adequate to cover the cost of the proposed programs and the budgets are sufficient to

meet minimum statutory expenditure requirements.

The reconnaissance field investigation performed by Scarab (cf. Section 9) met its objectives of a first

pass survey into the Iron Cap Mine area and has laid the foundation for further exploration as

recommended.



61

20. REFERENCES

Alida S. 2007. Classification of Birimian Gold occurrences - Using their Geological and Geochemical

Attributes: Case study in south Ashanti Belt Ghana. M.Sc. Thesis International Institute for

GeoInformation Science and Earth Observation. The Netherlands.

Barley M.E. and Godlfarb R.J. 1996. Exploration Guides: Global Tectonic Setting of Mesothermal

Gold deposits. In: Mesothermal Gold Deposits: A Global Overview. Abstracts to accompany a short

course.

Bernier, M. A., Milner, M. W and Myles, T. G. 2006. Mineralogical and geochemical analysis of

cathedral termitaria applied to lode gold exploration in the Roandji alluvial gold fields, Bandas

Greenstone Belt, Central African Republic. Oral or poster presentations. Abstracts for the 19th

International Geochemical Exploration Symposium.

Brooks, R.R., Dunn, C.E. and Hall, G.E.M. 1995. Biological systems in mineral exploration and

processing. Ellis Horwood Ltd, p. 538.

Brown R., Slater D. and Sperinck M. 2008. Technical Report on the updated resource estimates at

the Matala and Dunrobin deposits, Luiri Hill Project. NI43-101 Technical Report completed for Luiri

Gold Ltd.

De Waele B. Kampunzu A.B., Mapani B.S.E and Tembo F. 2006. The Mesoproterozoic Irumide belt of

Zambia. Journal of African Earth Sciences 46, 36 – 70.

Doyle H.A. 1986. Geophysical exploration for gold: a review. Exploration Geophysics 17(4) 169 – 180.

Forest Resource assessment working paper, 2001. Global Forest Fire assessment 1990 – 2000.

Food and agriculture organization of the United Nations.

Freyssinet, P. and Itard, Y. 1997. Geochemical Mass Balance of Gold Under Various Tropical

Weathering Conditions: Application to Exploration. In “Proceedings of Exploration 97: Fourth

Decennial International Conference on Mineral Exploration” edited by A.G. Gubins, 1997, p. 347–354

Goldfarb R.J., Groves D.I. and Gardoll S. 2001. Orogenic gold and geologic time: a global synthesis.

Ore Geology Reviews 18, 1 – 75.

IDL 2002 An assessment of trends in the Zambian agriculture sector. Department of International

Development Zambia Office.



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Kampunzu A.B., Cailteux J.L.H., Kamona A.F., Intiomale M.M and Melcher F. 2009. Sediment-hosted

Zn–Pb–Cu deposits in the Central African Copperbelt. Ore Geology Reviews 35 263–297.

Kara S. and Scholtz N. 2006. The use of termitaria of Trinervitermes trinervoides (Isoptera:

Termitidae) in geochemical exploration in the Karoo Uranium Province of South Africa. Student

GeoCongress.

Lugo O.B. 2003. The mineral Industry of Mali. U.S. Geological Survey Minerals Yearbook—2003

MDN Inc. 2008. Presentation.

Luiri Gold Ltd. News Release. January 2007. Results of the Pilot Geophysical Programme at the Luiri

Hills Project, Zambia.

MacPherson, N. 1992. A GTZ/IUCN National Environmental Assessment and Planning Programme

for Zambia. IUCN, Gland, Switzerland.

Mines and Minerals Act of Zambia. 1995

Ministry of Mines and Mineral Development (1999) Zambia: Investment opportunities in the mining

industry. Produced on behalf of the Republic of Zambia by Exploration Consultants Ltd. (available as

.pdf document http://www.zambia-mining.com/home.html).

Mitchell. No date. Industrial Mineral Resources of Zambia.

Mobbs P.M. 2009. The mineral industry of Zambia. 2007 Mineral Yearbook. (US Geological Survey).

Morel V., Slater D. and Sperinck M. 2007. Technical Report on the updated resource estimates at the

Matala and Dunrobin deposits, Luiri Hill Project. NI43-101 Technical Report completed for Luiri Gold

Ltd.

Nguni B. 2007. Geological Report on Iron Cap Gold Mine. Confidential Report compiled as a

contribution and recommendation to the deposit’s bankable document.

Prasad, E. A. V., Jayarama Gupta, M. and Dunn, C. E. 1987. Significance of termite mounds in gold

exploration. Curr. Sci. India, 56: 1219-1222.

Rivera M, Dudek D and Mann M. 2009. Project evaluation of the Tabakoto and Segala properties

Mali, West Africa for Avion Resources Corp.



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Robert, F., Brommecker, R., Bourne, B. T. and Dobak, P. 2007. Models and Exploration Methods for

Major Gold Deposit Types. In "Proceedings of Exploration 07: Fifth Decennial International

Conference on Mineral Exploration" edited by B. Milkereit, 2007, p. 691-711.

Rocks for Crops. No Date.

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geohazards and geosites of each country. 272 pp. Springer.

United Nations 2009, GDP Article

Watts, Griffis and McOuat Limited, 1991, Assessment of mineral exploration opportunities in Zambia.

Watts, Griffis and McOuat, Toronto, Canada, unpublished report.

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collection and storage for environmental monitoring. The Science of the Total Environ. 176, 63–71.

West, W. F. 1965. Some unconventional ideas on prospecting. Chamber Mines j. Rhodesia. 7:40-42.

West, W. F. 1970. Termite prospecting. Chamber Mines j. Rhodesia. 12:32-35.

White F. 1983, "The Vegetation of Africa", UNESCO, LaChaux-de-fonds, Switzerland.

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Zambian Environmental Protection and Pollution Control Act (No. 12) of 1990.

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Zambezi Resources 2004 Exploration Field season update no. 6

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Internet references

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http://earth.google.com/

www.wikipedia.org

http://www.necz.org.zm/cep/rationale.html (Environmental Council of Zambia)

http://www.itswild.org/comaco-work-area (Community markets for conservation)



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21. DATE AND SIGNATURE PAGE

21.1 Certificate of Qualified Person

As compiler of the report entitled “Iron Cap Gold Mine, Zambia – Technical Report” dated 25 March

2010, I hereby state:

1. My name is Nico Scholtz, Principal Geologist with Scarab Enterprises of PO Box 1316,

Swakopmund, Namibia.

2. I am a practicing geologist and a member of the South African Council for Natural and

Scientific Professions (SACNASP).

3. I am a M.Sc. graduate of Dept Geology, University of the Free State, South Africa.

4. I have practiced my profession continuously since 2004.

5. I am a “qualified person” as that term is defined in National Instrument 43-101 (Standards of

Disclosure for Mineral Projects) (the “Instrument”).

6. I have been actively involved in mineral exploration (uranium and gold) for the past 7 years in

settings where structural coordination plays a major role in mineralisation including South

Africa, Mali, Niger, Tanzania, Zambia and Namibia.

7. I have completed fieldwork on the Iron Cap Mine area on 6 January 2010.

8. I have been responsible for the compilation of all parts of the Technical Report.

9. I have had no prior involvement with the property that is the subject of this Technical Report.

10. I have reviewed this report along with data supplied by The Challenger Development Corp.

11. I am independent of The Challenger Development Corp.

12. I have read the National Instrument and Form 43-101F1 (the “Form”) and this report has been

prepared in compliance with the Instrument and the Form.

13. I do not have nor do I expect to receive a direct or indirect interest in the properties of The

Challenger Development Corp., and I do not beneficially own, directly or indirectly, any

securities of The Challenger Development Corp. or any associate or affiliate of such

company.

14. This report, to the best of my knowledge, information and belief, contains all scientific and

technical information that is required to be disclosed to make the Report not misleading.

Dated at Swakopmund, Namibia, on 25 March 2010

…………………………………………………………

Nico Scholtz

Principal Geologist

M.Sc. Geology (Pr. Sci. Nat.)



65

21.2 Consent of Qualified Person

To: Securities Regulatory Authority

I, Nico Scholtz, do hereby consent to the public filing of technical report entitled Iron Cap Gold Mine,

Zambia – Technical Report and dated 25 March 2010 (the "Technical Report") by Challenger

Development Corporation (the "Issuer"), with the TSX Venture Exchange under its applicable policies

and forms in connection with the Agreement in Appendix A to be entered into by the Issuer and I

acknowledge that the Technical Report will become part of the Issuer's public record.

Dated at Swakopmund, Namibia, on 25 March 2010

…………………………………………………………

Nico Scholtz

Principal Geologist

M.Sc. Geology (Pr. Sci. Nat.)



66

Appendix A – (Licence details)

Figure A1. Licence details for Iron Cap SML 177.



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Figure A2. Licence details for Iron Cap SML 177.



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Appendix B – (Chemical assays)



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Appendix C – (Chemical assays)



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Appendix D – (Agreements)



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Documents

Iron Cap Gold Mine Zambia