Amato Exploration Ltd. - Colosio

Exploring for precious metals in North America

Colosio Property Geology Maps Project Photos El Creston

Property

The Colosio-Los Letreros Property ("Colosio") comprises 8 mineral exploration concessions totalling 2992.55 hectares located in the west-central part of Chihuahua State in northern Mexico. All concessions in the Property are subject to an Option Agreement between Amato and Francisco Cabrera. The Property is accessible by road and lies less than 20 km from Highway 16 that runs from Chihuahua to Hermosillo.

The Property lies within the prolific Sierra Madre Occidental ("SMO"), a northwest-southeast trending belt of volcanic rocks extending for 1100 km on the western flank of Mexico. The SMO has seen widespread gold and silver production for over 500 years and hosts numerous significant precious metal deposits including the Pinos Altos, Ocampo, Moris and Dolores mines. The Pinos Altos Mine of Agnico-Eagle Mines Ltd. is scheduled to begin production in mid-2009 and is located 23 km southwest of Colosio in a similar geological environment. As of Dec. 31, 2008, Pinos Altos contained Probable Reserves of 41.7 million tonnes grading 2.7 g/t gold and 74.6 g/t silver 1. At present numerous Canadian companies have active mining and exploration projects in the area.

2008 Exploration

Recent exploration programs conducted at the Property by Amato in June and September 2008 included surface geological mapping and prospecting over a 30 km2 area; surface and underground rock sampling of variably altered and mineralized host rocks and vein material; orientation soil geochemical surveys and a preliminary stream sediment survey.
In summary, the 2008 exploration program:

Confirmed the presence and type of mineralization that was mined from historic operators at the Los Letreros Mine,
Identified potential for finding more mineralization along strike and parallel to the Los Letreros Mine workings,
Demonstrated that the clay-altered zones adjacent to the high-grade veins contain disseminated polymetallic sulphides and provide a wider exploration target, and
Identified seven target areas for follow-up exploration

Taken together, the geological information collected in the 2008 exploration program leads to the conclusion that the mineralization types found on the Property are of the "intermediate sulphidation" type. The setting and level in the volcanic stratigraphy indicates that the mineralization observed is at relatively high levels in an epithermal mineralizing system. The high intensity, long strike length and width of the alteration zones, faulting and silver-base metal mineralization of the known occurrences, suggest that a strong, aerially extensive mineralizing event is present on the Property, and exploration is warranted to target additional near surface vein targets and to define drilling targets at depth below the known mineralized structures. It should be noted that, to date, the Property has seen no comprehensive modern exploration programs or diamond drilling.

Geology

The geology at the Property is dominated by an approximately 400 m-thick succession of intermediate to felsic tuffs and andesitic to dacitic lava flows with local horizons of volcanic conglomerate. The volcanic succession correlates with the mid-Tertiary volcanic rocks exposed in the Tomochi area. Tectonic features such as such as faults, cleavage and fractures are more prominent in the intermediate volcanic units. Dominant structures at district levels include: (1) NE-SW and NW-SE oriented strike-slip faults, with the former set controlling mineralization at Los Letreros and probably those anomalous sectors at Agua Salada Creek, La India and La Flor sectors; (2) NNE-SSW to NNW-SSE oriented structures, and (3) WSW-ENE oriented normal faults and semi-circular features at the NW part of the Property. In general these structures are attenuated or are concealed by younger felsic units. Regional structures, characterized as normal faults (SGM, 2001a), have dominant NW-SE strike.

Mineralization

Mineralization on the Property, exposed and exploited at Los Letreros Mine, is hosted within a 30 to 50-metre wide fault-controlled zone that contains multiple northeast-southwest striking, sub-vertical, polymetallic sulphide veins within mid-Tertiary andesitic tuffs. Thus far three sub-parallel veins have been identified within this zone.

Passing from the southeast to the northwest across the zone, the veins are designated Veins A, B and C. Vein A is a Au-Ag-Pb-Zn vein exploited from the El Union underground workings and the surface workings of San Agustin. Vein B is a Ag-Cu-Pb-Zn vein located 10 to 15 metres northwest of Vein A. It was accessed underground from the El Zinc workings. Vein C is a Ag-Cu rich vein, located 25 to 30 metres northwest of Vein B and was accessed from the Siete Leguas and Lumbrera workings.

Mineralization at Colosio-Los Letreros is hosted by a structurally-controlled, sub-vertical system of sulphide-bearing veins with a dominant northeasterly strike, within a package of volcanic rocks. On the basis of surface and underground observations it is inferred that the width of the mineralized system varies from 20 to 50 m. Three sulphide-vein bearing structures have been recognized (named Veins A, B and C), each up to few metres wide, consisting of thin stringer veins of massive sulphides (sphalerite, galena, pyrite, silver sulphides) hosted in strongly tectonized/altered host rock. The mineralized system can be traced along strike for many hundreds of metres and its continuity downwards remains to be established. Volcanic host rocks proximal to the polymetallic mineralized systems - in the range of few tens of metres wide - exhibit the effects of propylitic alteration (chlorite-clays-calcite±epidote) with sulphide disseminations (0.5 to 1%). These altered zones locally contain significant enrichments of silver and base metals and may provide a wider, and previously untested, target for future exploration.

A 0.4-metre long chip sample from the La Union workings, graded 870 g/t Ag, 8.8% Pb, and 1.89% Zn. At the El Zinc workings, a 0.4 m chip sample collected across the B-Vein structure returned 168 g/t Ag, 0.2% Cu, 2.75% Pb, 8.75% Zn.

The San Agustín workings are interpreted to be the surface expression of the Vein A structure at the Los Letreros Mine. Here, a 1 metre x 1 metre panel sample returned 7308 g/t Ag, 0.36 g/t Au 6.78% Cu, 5.76% Pb and 12.8% Zn.

The mineralized structures at the Los Letreros Mine typify shallow and structurally controlled polymetallic systems on which brittle structures such as faults and fractures served as conduits for mineralized hydrothermal solutions. According to the classification scheme proposed by Camprubí and Albinson (2006) for epithermal deposits in Mexico, the mineralized system at Los Letreros can be ascribed to intermediate sulphidation epithermal systems rich in base metals. These mineral deposits tend to be associated with andesitic-dacitic stratovolcanoes and may extend many hundreds of metres in their vertical dimension.

The interpretation of the formation of the mineralization at Los Letreros in the upper parts of a stratovolcano has important implications for future exploration. Mineral deposits related to intrusions and stratovolcanoes commonly occur at all depths of formation -- shallow, intermediate and deep. As metal-rich magmatic-hydrothermal fluids pass upwards from a deep-seated heat source towards the paleosurface, they form a variety of deposit styles; porphyry Cu-Au and skarn deposits at deeper levels, vein and epithermal Au-Ag deposits at intermediate to shallow levels. Given this spectrum of styles of mineralization within volcanic-related hydrothermal systems, there is a good potential for discovery of additional epithermal-style mineralization at greater depths at the Colosio Property. While there is no guarantee that such mineralization exists on the Property, the shallow level of formation of the Los Letreros veins suggests that the rocks at deeper levels below this mineralization provide a prospective exploration target.