codihue

MARIFIL MINES LTD. CODIHUE BIOGENIC SULFUR PROJECT

JAMES F. EBISCH FEBRUARY 2011

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MARIFIL MINES LTD.

CODIHUE BIOGENIC SULFUR PROPERTY

NEUQUEN PROVINCE

ARGENTINA

FEBRUARY 2011

NI 43-101 Technical Report

Prepared by

James F. Ebisch

Registered Professional Geologist (Oregon Lic. # G928)

&

Juan Carlos Danderfer

Senior Geologist

Marifil S.A.



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TABLE OF CONTENTS

1. SUMMARY……………………………………………………………… 4

2. INTRODUCTION……………………………………………………….. 9

3. RELIANCE ON OTHER EXPERTS………………………………….. 10

4. PROPERTY DESCRIPTION AND LOCATION……………………… 10

5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES,

INFRASTRUCTURE, AND PHYSIOGRAPHY………………………. 17

6. HISTORY………………………………………………………………… 17

7. GEOLOGICAL SETTING………………………………………………. 19

8. DEPOSIT TYPES………………………………………………………. 31

9. MINERALIZATION……………………………………………………… 35

10. EXPLORATION……………………………………………………….. 35

11. DRILLING……………………………………………………………… 36

12. SAMPLING METHOD AND APPROACH………………………….. 36

13. SAMPLE PREPARATION, ANALYSES, AND SECURITY………. 36

14. DATA VERIFICATION………………………………………………… 36

15. ADJACENT PROPERTIES………………………………………….. 37

16. MINERAL PROCESSING AND METALLURGICAL TESTING….. 37

17. MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES. 37

18. OTHER RELEVANT DATA AND INFORMATION…………………. 37

19. INTERPRETATIONS AND CONCLUSIONS……………………….. 37

20. RECOMMENDATIONS……………………………………………….. 38

21. REFERENCES…………………………………………………………. 41

22. DATE AND SIGNATURE PAGE…………………………………….. 44

23. CERTIFICATE OF QUALIFIED PERSON………………………….. 45

24. CONSENT OF AUTHOR……………………………………………... 46



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LIST OF FIGURES

FIGURE 1 LOCATION MAP

FIGURE 2 CLAIM MAP

FIGURE 3 GEOLOGIC MAP

FIGURE 4 STRATIGRAPHY

FIGURE 5 PROFILE LOCATIONS

FIGURE 6 A PROFILE

FIGURE 7 B PROFILE

FIGURE 8 C PROFILE

FIGURE 9 D PROFILE

LIST OF TABLES

TABLE 1 CATEO (CLAIM) SUMMARY



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1. SUMMARY

Marifil Mines Ltd., through its Argentine subsidiary Marifil S.A. (Marifil), has

acquired a biogenic sulfur target in west-central Neuquén Province, Argentina

within the Neuquen Basin (Figure 1). The Codihue Biogenic Sulfur Property is

composed of three contiguous exploration concessions that cover a total area of

18,000 hectares. It is owned 100% by Marifil. No drilling has been done on the

property. The target stratigraphy is buried at a depth estimated to be 300-400

meters. The target depth comes from the projection of well-documented

regional geology into the target area.

It is located about 60 km north of the city of Zapala and 10 km north of the town

of Las Lajas at 38°23' South Latitude and 70°28' West Longitude. The project

area is accessible throughout the year, mainly due to the low elevation and

proximity to domestic highways No. 40 and No. 231. The distance from the city

of Neuquén, Capital of the Neuquén Province, to the property, is 260 km along

paved roads.

The Codihue Biogenic Sulfur Property contains a buried target that is projected

to lie at a depth of 300-400 meters. It is a conceptual target based upon

regional geology similar to that of biogenic sulfur deposits elsewhere in the

world. No drilling has been completed on the property and no geochemical

sampling or geophysical studies have yet been undertaken. Marifil geologists

have only recently identified the target through regional geologic studies.



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The four elements most essential to biogenic sulfur development are a thick

evaporite section with abundant gypsum, faults and fractures, hydrocarbons,

and the presence of sulfate-reducing bacteria such as desulfovibrio

desulfuricans. The sulfate-reducing bacteria oxidize hydrocarbons to carbon

dioxide, reduce sulfate ions to hydrogen sulfide, and alter gypsum to calcite.

Data indicates that hydrogen sulfide is converted to polysulfides which are

oxidized to elemental sulfur by carbon dioxide in anaerobic environments.

(Ruckmick et al, 1979). Two to four barrels of oil (or its equivalent in natural

gas) must be consumed to create one ton of sulfur. Therefore, enormous

amounts of hydrocarbons are required to create large biogenic sulfur deposits.

These hydrocarbons are obtained through sustained artesian flushing by

groundwaters of laterally-extensive petroleum-bearing strata.

Because of a volume reduction resulting from the sulfate reduction process,

biogenic limestones are extremely porous, often similar in appearance to scoria,

with a honeycomb-like texture. Void spaces often comprise about 25% of the

rock. Since a significant amount of carbon is incorporated into the biogenic

limestone during the alteration process, the biogenic limestone is often a

battleship-grey to dark grey in color. In hand samples, specimens from a

biogenic sulfur deposit are unique and unmistakable. They look like an

exceptionally vuggy, commonly grey colored, fine crystalline – microcrystalline,

often banded limestone with disseminated native sulfur and large native sulfur

crystals filling parts of the void spaces. The most characteristic feature of

biogenic limestone is the extremely vuggy, porous nature of the rock.

If the biogenic limestone and sulfur develop within a relatively impermeable

envelope, the sulfur may be amenable to solution by the Frasch Process. In this

process, steam is pumped into the deposit through large-diameter bore holes.

The steam melts the sulfur and the molten sulfur returns to the surface through

production bore holes. On the surface, it can be pumped into trucks or rail cars

for transport. However, the Frasch Process has some depth limitations because

the steam cools as it travel down-hole and into the formation. The maximum

depth for the Frasch Process to be effective is about 500 meters.

Regional geology indicates that a thick gypsum bed over 100 meters in

thickness exists at a depth of 300-400 meters near the center of a breached

anticline. This is the buried target that Marifil intends to test by drilling. The

breached anticline may be part of a large collapse structure. Collapse structures

often accompany biogenic sulfur deposits because the alteration of gypsum to

biogenic limestone produces a 25-30% volume reduction. Because of this

volume reduction, biogenic limestone is exceptionally vuggy to cavernous. The

overall texture is much like pumice or scoria. These void spaces lead to



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weakness and often partial collapse. The three contiguous exploration

concessions controlled by Marifil contain several suspected collapse structures .

Favorable signs suggesting the presence of buried biogenic sulfur occurrences

in evaporate basins throughout the world are summarized below:

• Collapse structures that are often evidenced by depressions and/or

stratigraphic discontinuity.

• Native sulfur locally exposed on the surface.

• Hydrocarbon gas seeps.

• Reduced (green) shale beds.

• Gravity lows.

• Regional geology indicating the presence of evaporites at depth.

Trace amounts of visible, disseminated native sulfur have been observed in the

general area of the Codihue Project and some sulfur was noted in oil-well

cuttings about 9 km from the area of interest. Cuttings from that well are

preserved, but Marifil has not yet been able to obtain the permission necessary

to examine the cuttings.

The Mesozoic Age Neuquen Basin contains about 6,000 meters of continental

and marine sediments that are petroliferous. Factors favorable for the

development of biogenic sulfur deposits include the presence of hydrocarbons,

the existence of possible collapse structures, and the presence of thick

evaporite sequences. The layer-cake stratigraphy of the Neuquen Basin has

permitted relatively accurate projection of evaporite beds into the main target

area at depth. Other evidence suggesting the occurrence of biogenic sulfur

includes native sulfur in nearby oil-well cuttings and traces of native sulfur on

the surface locally in the project area.

One example of a biogenic sulfur deposit with similarities to the Codihue

Property is the Mishraq Deposit, located in northern Iraq. That deposit contains

>100 million tons of native sulfur. It is located in an anticline that is 11 km long

by 3.5 km wide.



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Most of the sulfur in the Mishraq Deposit is hosted by the Lower Fars

Formation. The productive stratigraphy is composed of a fine-grained carbonate

and secondary coarse-grained calcite and sulfur with gypsum / anhydrite. The

thickness of the sulfur-bearing stratigraphy varies from 40 to 140 meters. The

ore zones in the productive member are highly re-crystallized biogenic calcite

and finely crystallized native sulfur. The thickness of the mineralized zone

increases in fold hinges. The ore body covers approximately 10 km2. The

average sulfur content is 23.14% (ranging between 25.5% and 19.8%). The

thickness of the ore body varies from 2 to 124 meters with a variable depth of

73 to 303 meters. The porosity of the body varies between 3 to 13%.

MISHRAQ/CODIHUE COMPARISON

Mishraq Codihue

Age Tertiary Jurassic

Barren Cap 73-303 m 150-300 m?

Gypsum thickness 140 m 100-200 m?

Anticline width 3.5 km 3 km

Anticline length 11.5 km 15 km

Annual flow rate Tigris River: 48.2 m3/s Agrio River: 74.51 m3/s

Hydraulic gradient 107 100 approx.

Based upon the preceding factors, it is the opinion of the author that further

work is warranted on the Codihue Biogenic Sulfur Project. This work should

include the following endeavors:

• Geological mapping at a scale of 1:25,000 to refine the target

• Hydrocarbon soil gas sampling

• Gravity survey

• Drilling

A budget of U.S. $ 1.0 million is recommended to complete the project.



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2. INTRODUCTION

This NI 43-101 Technical Report has been prepared for Marifil S.A. (Marifil), the

Argentine subsidiary of Marifil Mines Ltd. The first purpose of the Technical

Report is to provide an independent analysis of the project and the target

concept. The second purpose of the Technical Report is to develop an

exploration program and a budget to support it. In preparing this report, the

primary author has reviewed regional geological data that is in the public

domain. The primary author has significant experience in biogenic sulfur

exploration from work done in the 1980’s with TexasGulf and U.S. Borax in the

Permian Age Delaware Basin of west Texas, U.S.A. Marifil geologists

generated the Codihue target through evaluation of regional geologic data and

the study of nearby oil-well logs.

The author visited the Codihue Sulfur Property area on October 30th and 31st,

2009, examining rock outcroppings and visiting a large topographic depression

which coincides with a broad anticlinal axis. The senior author also examined

northerly-dipping limestone bluffs and gypsum beds exposed about 10 km south

of the property. Because of the layer-cake stratigraphy present in the Neuquen

Basin, the limestone and gypsum stratigraphy can be projected with some

certainty into the target area at depth where the gypsum could be altered to

biogenic limestone with sulfur, comprising the drill target. The target concept is

supported by several lines of evidence:

1) A large topographic depression with a lake (El Salitral) near the center exists.

Marifil geologists report that carbon dioxide bubbles are released from the lake

waters, suggesting dissolution of carbonate at depth, further supporting the

collapse concept.

2) Traces of disseminated sulfur exist in younger rocks found nearby.

3) The probable presence of thick evaporate stratigraphy at depth. The

evaporate beds projected into the area contain anhydrite-gypsum beds that are

known to be over 100 meters in thickness.

4) The widespread presence of oil in the sedimentary rocks of the Neuquen

Basin.



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3. RELIANCE ON OTHER EXPERTS

Limited portions of this report were created by Juan Carlos Danderfer, an

Argentine geologist with over one-quarter century of geological experience. He

is the co-author of this report and a geological consultant for Marifil. His input

was necessary because the primary author was not familiar with the regional

geology of the Neuquen Basin. Like the primary author, Senor Danderfer also

has experience in biogenic sulfur exploration. Senor Danderfer does not meet

the criteria to be a Qualified Person as defined by NI 43-101 only because of

the lack of the proper license/registration required by NI 43-101. The author has

no reason to doubt the veracity of any data that Senor Danderfer has

contributed to this report. The primary author has attempted to verify all data

input by Senor Danderfer and has found said data to be satisfactory and

credible.

The primary author is an independent consultant that has no financial

relationship with Marifil and/or its subsidiaries other than remuneration for

completion of this study, although the author is a Marifil shareholder.The

compensation received is standard in the mining industry for this kind of work.

Compensation is not based upon the contents of this report.

4. PROPERTY DESCRIPTION AND LOCATION

Property Location

Marifil S.A. (Marifil) is a subsidiary of Marifil Mines Ltd., a publicly-traded

company listed on the Toronto Venture Exchange (TSX:V) that has recently

applied for 3 exploration concessions (Cateo) for Sulfur in the Province of

Neuquén (Figure 2)



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The geographical coordinates of the center are: 38 º 23 'South latitude and 70 º

28' west longitude. The area has a maximum altitude of 1100 m above sea

level.

TABLE 1-CATEO (CLAIM) SUMMARY

CLAIM NAME FILE #

AREA

(hectares)

1 BARDA BLANCA 4802-508/2009 6,000

2

QUEBRADA

FIERA 4802-507/2009 7,000

3 EL SALITRAL 4802-509/2009 5,000

Property Description

CATEO 1. - Area 6,000 Ha

Name: Barda Blanca

Description of the northern polygon

BARDA

BLANCA CORNER East North

1 2,365,000 5,758,000

2 2,377,000 5,758,000

3 2,377,000 5,753,000

4 2,365,000 5,753,000


Name: Quebrada Fiera



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Description of the center polygon

QUEBRADA

FIERA CORNER East North

1 2,366,000 5,753,000

2 2,376,000 5,753,000

3 2,376,000 5,746,000

4 2,366,000 5,746,000


Name: El Salitral

Description of the southern polygon

EL

SALITRAL CORNER East North

1 2.376.000 5.746.000

2 2.386.000 5.746.000

3 2.386.000 5.741.000

4 2.376.000 5.741.000

Current Legal Status

The properties have been formally submitted to the Provincial Mining Registry,

without conflict from previously presented properties or overlapping boundaries.

The next step in the legal process is to prepare an official publication in the

Provincial Gazette for three consecutive months. In the absence of opposition,

the request for exploration concession is officially granted.

Cateo Terms

According to the Argentinean Mining Code, the legal status for all properties is

the “Cateo” which translates to Exploration Concession. A key feature of an

Exploration Concession is that they are granted in connection with a limited



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ground area and for a limited period of time. Each concession is divided into

surface units and each surface unit contains 500 hectares. Concessions can

have up to 20 surface units and therefore the largest concession might cover an

area of 10,000 hectares, however, as the concession term runs, the size should

be gradually reduced by the concessionaire.

The term of each Exploration Concession depends on the size of the granted

concession area. The basic 500 hectares concession lasts for 150 days and

each surface unit added to such basic concession increases the term by 50

additional days, therefore, the largest possible concession will last for 1,100

days. The cateos will not expire until at least 2012. No monuments are

necessary in the field. The cateo corner coordinates are simply recorded with

the provincial mining authority.

The location of mineralization is currently unknown. The targets are conceptual,

coinciding with areas of suspected collapse structures which could reflect the

existence of biogenic sulfur deposits at a shallow depth where they might be

amenable to solution mining. There are no mine workings or existing mine

infrastructure. There are no improvements on the property.

The three cateos are controlled 100% by Marifil. There are no obligations to any

surface owner because the land is owned by the government. All three cateos

are free of royalties, back-in rights, and payments. There are no known

environmental liabilities on the property because there has been no exploration

work or industrial activities there in the past.

Provided that the area of the Exploration Concession is entirely free from mining

rights or properties previously granted, the exclusive right to claim properties in

such areas shall be binding from the date of filing the concession request with

the appropriate provincial mining authority.

Exploration Concessions require minimal obligations for the concessionaire.

However, these obligations are mandatory to maintain the concession in good

standing. The required obligations are listed below:



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• A one-time exploration canon payment

• Notification of the landowners within the Exploration Concession area

and to publish notification with the local official newspaper; in general

terms, landowners are not entitled to file opposition against Exploration

Concessions, however they can demand a bond from the concessionaire

to cover potential damages to the property.

• Provide an accurate forecast of exploration activities. Failure to fulfill

such obligations enables the provincial authority to terminate the

concession.

• Before exploration activities can begin, an environmental report should

be filed and approved by the provincial mining authority. This report

should be filed and approved on a bi-annual basis.

• Once the Exploration Concession expires the concessionaire must notify

the provincial mining authority and provide all information and

documentation resulting from the exploration activities conducted.

Applications to acquire these properties were submitted to the provincial mining

authorities but have not been received. The acquisition procedure usually takes

two to three months and the terms for each concession start once the claims

have been officially granted.

Location Method

Official maps of Argentina are scaled in both geographic and projected

coordinates. Usually, topographic maps are based on a grid system with a

limited number of degrees latitude and longitude.

The system used in Argentina is called Conformed Projection Gauss Kruger, a

variation of UTM (Universal Transverse Mercator). Argentina is divided into

seven meridian bands numbered from west to east. Each band is 3º wide

(Longitude) by 34º long (Latitude) with the origin located at the intersection of



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the South Pole with the central meridian (MCF= Meridiano Central de Faja) of

each band.

These bands are numbered according the following table:

Band Central Meridian

Band 1 72 W

Band 2 69 W

Band 3 66 W

Band 4 63 W

Band 5 60 W

Band 6 57 W

Band 7 54 W

Other parameters used are:

Scale Factor: 1

Distance from Equator to South Pole: 10,002,288,30

Ellipsoid of Reference: Hayford International 1924 in all the official cartography

and WGS 84 in some Provincial Property Maps.

Datums: Campo Inchauspe for Hayford 1924 or WGS 84

The coordinate system used in all of the graphic presentations included in this

report is Gauss Kruger Faja 2 WGS 84. This system was selected because it is

commonly used in the Neuquén Provincial Property Map.

Environmental Requirements

Prior to the execution of any exploration program, an Environmental Impact

Report will be submitted to the provincial mining authority in order to legally

initiate exploration activities. This report should be filed and approved on a bi-

annual basis. Marifil Mines has not presented an Environmental Impact Report



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to the provincial mining authority because the exploration activities are currently

in the planning stages. Field work requiring surface disturbances will not be

initiated until the claims have been awarded and the environmental impact

study has been submitted and approved by the provincial mining authority.

Approval of the Environmental Impact Report is the only permit necessary for

work to proceed. Unlike other provinces, it is unnecessary to gain permission to

use local water sources or obtain special waste disposal permits.

5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE,

AND PHYSIOGRAPHY

The Codihue Biogenic Sulfur Property is located in the central part of the

Neuquén province, in the west-central part of Argentina. From Neuquen City,

the properties can be reached by travel on National Highway 22 to Zapata and

then by National Highway 40 from Zapata to the project area, a distance of 50

km. National Highway No. 231 (paved) from the town of Las Lajas runs near the

western boundary of the Property. Unpaved roads within the Property are in

good conditions. Fuel, food and lodging are available on a limited basis at Las

Lajas. Additional services are available at Zapata. Industrial services are

available throughout the region because of the oil industry. Electricity is

available with power lines less than 10 km from the property.

The Codihue Biogenic Sulfur Property is located in the Andean foothills with

elevations between 900 and 1100 m above sea level. The climate is generally

semi-arid and temperate throughout the year. The seasons are well defined; fall

and spring are short whereas winters are long.

Temperatures average above freezing year-round although temperature

extremes can reach 30 Cº in the summer and -5º C during the winter months.

Rainfall ranges from 200 to 400 millimeters per year, most of which falls from

May to August. Snow is rare and usually melts within a few days after it falls.

Humidity is generally low. Prevailing winds are from the west.

6. HISTORY



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The three cateos controlled by Marifil have seen no previous exploration and

there have been no previous owners. The work completed by Marifil thus far

has consisted of regional geologic research that resulted in target definition and

acquisition. No historic mineral reserves or resources have been identified. The

property has seen no production.

However, regional exploration for Biogenic Sulfur Deposits in the Neuquén

Basin started in the 80’s after other workers also shrewdly recognized the

potential for Biogenic Sulfur Deposits. A historic summary of that work is shown

below only to indicate that Marifil geologists were not the first to realize the

sulfur potential.

1984 - Texas Gulf & Minera Tea SA-They started exploration of Yesera

Tromen, Neuquén Province. The project was not successful. Drilling did not find

any deposit. The biogenic process took place but there was not oxygenated

water to preserve the mineralization. Only bio-calcite was found by core drilling

only.

1986 - Minera Tea SA- This local Company continued exploration in the

Mendoza and Neuquén Provinces and abandoned the exploration for sulfur in

1988.

1990 – Ingeoma S.A. They drilled the Los Petisos occurrence, a discovery

made in 1980 in southern Mendoza Province. An oil well called YPFMd DP-4 x

intercepted sulfur at 149 m depth. The sulfur layer found in Los Petisos was not

thick enough to be economic.

1993- Cormine S.E.P. This company explored for sulfur in Codihue and Puerta

de Curaco, Neuquén Province.

2003 - Chediack S.A. This private company explored for sulfur in Cerro Casa

de Piedra and Los Potreritos in Neuquen Province.

2006 - Minera Cordillera del Viento SA- They did some exploratory work at La

Salvada Prospect in Neuquén Province.



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7.0 GEOLOGICAL SETTING

The Codihue Biogenic Sulfur Property is located in the Neuquén Basin which

formed from the Upper Triassic till the Paleocene age. The Neuquén Basin has

a sedimentary sequence with a thickness of approximately 7000 meters

(Legarreta and Uliana, 1999).

Legarreta and Gulisano (1989) divided the stratigraphic column into 3 sections:

• Cenozoic- recent terrestrial sediments

• Jurassic-Cretaceous - marine sediments

• Precambrian to Triassic – basement rocks

The basement is composed of volcanic rocks, low grade metamorphic rocks,

and granitic plutons.

The marine sediments are composed of sedimentary clastic rocks, carbonate

rocks, evaporites and volcanics.

The tectonic evolution comprises a first stage characterized by a series of Rift

Type Basins (Late Triassic-Early Jurassic) located in the western part of the

convergent margin of the South American plate. The basins subsequently

developed during the Jurassic as a retro arc depositional center where

amalgamation of isolated basins of the rift occurred due to post-rift regional

subsidence (Vergani et al., 1995). During this period, the sea transgressed the

basin concurrent with development of a volcanic arc. An evolution of a foreland

basin, as a product of Andean tectonics, occurred at the beginning of the Late

Cretaceous. A brief summary description of the sedimentary rock units follows:

Jurassic Age Rocks

Los Molles Formation (Weaver, 1931)

Age: Toarcian-Aalenian. Lithology: sandstone, limestone, marble, bituminous

shales, turbidite deposits (Marine facies). This unit does not crop out in

Codihue but can be found in the subsurface. Its thickness exceeds 400 meters.

It is a hydrocarbon source rock.



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Lajas Formation (Weaver, 1931)

Age: Bayocian-Bathonian. Lithology: sandstone and conglomerates (deltaic

facies). It intercalates the Molles Fm in the deltaic facies. Outcrops of this

formation are located south of Codihue, near Zapala.

Tábanos Formation (Stipanicic, 1966)

Age: Upper-Middle Callovian. Lithology: limestone-anhydrite-stromatolites

(evaporite facies). It is located in the sub-surface at Codihue. Nearby outcrops

at Cuchillo Curá reach a thickness of 20 m.

Lotena Formation (Weaver, 1931)

Age: Upper Callovian. Lithology: Sandstone, tuff and conglomerates. Its

thickness is estimated to be about 500 meters. In Codihue it would be found at

depth. Legarreta and Gulisano (1989) assigned a turbidite origin for this sector

of the Basin.

La Manga Formation (Stipanicic, 1966)

Age: Lower Oxfordian. Lithology: limestone (marine facies). In Codihue it is

found at depth in contact with the gypsum of the Auquilco Fm. It is a

hydrocarbon host rock.

Auquilco Formation

Age: Oxfordian. The lithological description comes from the Mallin Quemado

area, 30 km away because it is partially buried in the Codihue area and crops

out in the anticlinal structure that is observed in the southern edge of Cuchillo

Cura Ridge. The Auquilco Formation is thinner where the gypsum has been

replaced by fetid biogenic limestone. In the northern edge of Curimil Ridge, the

Auquilco Formation appears normal without the biogenic process. There, it was

described as follows:

Upper Member: 48 m thick laminated anhydrite and sucrosic gypsum.



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Las Pacas Member Limestone: 11.5 m thick micritic limestone, a stromatolitic

limestone is interbedded in the middle of the sequence. It has a lens shape from

500 hundred meters to 2000 meters in diameter. The height at its center can

reach 15 to 20 meters; it thins toward the edges where the height is reduced to

a few centimeters.

Lower Member: 165 m thick finely laminated anhydrite predominates, as well as

layers of nodular habit formed by early diagenetic processes. The texture is

patchy showing a grayish hallo around clay nodules; it is also common to find 2

to 3 cm diameter nodules, also often interrupted by the sedimentation of fine

gypsum horizons (2 to 5 cm thick) and tuffs.

After the accumulation of marine facies of the La Manga Fm the basin became

isolated from the ocean creating a saline event in the depocenter. The Auquilco

Formation would have developed in a body of shallow and hyper saline water

(Legarreta, 2002).

Tordillo Formation

Age: Upper Kimmeridgian. Lithology: The Tordillo Formation is composed of a

thick basal conglomerate with gross stratification. It is poorly sorted with a

detrital matrix, corresponding to alluvial fan facies. The sequence is thinning

upward and grades into playa deposits in the east. Generally it is formed by

thick sequences of conglomerates and purple to reddish brown sandstone with

cross bedding structures. Claystone layers appear within the calcareous

sandstones. Green clay lies at the top of the 400 meter thick sequence (Leanza

2002). Holmberg (1973) noted that these rocks are very compact and estimated

a thickness of 200 to 250 meters in the Codihue area, which may be possible

due to the short and irregular geometry of alluvial fans in front of a regional

fault. At Codihue, the facies represents a fluvial system proximal to the foothills

of the Andean Magmatic Arc. It was a rifting reactivation process and inversion

which is responsible for the material that was deposited. Spalleti et al (2003)

suggests an active clastic sedimentation of essentially continental domain.



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Tertiary Age Rocks

Carrancul Formation (Holmberg, 1973):

Age: Upper Pliocene. Lithology: breccias and andesitic agglomerates with

tuffaceous matrix of chaotic structure resting on angular unconformity over

Jurassic age strata. Their outcrops are isolated. Its thickness is irregular but not

exceeding 20 meters. It is the first level of the terraces (1,100 m) and it was

formed prior to the first glaciation.

Quaternary Age Rocks

Codihue Formation (Leanza and Hugo 2001)

Age: Pleistocene. Lithology: The deposits consist of terraced boulders in a

glacio-fluvial environment . In the western margin of the Agrio River, it forms a

terrace that is over 50 meters above the river level. In the west it is covered by

basalt. In the area of the property it forms the second level of fluvial terraces at

an elevation of about 900 m.

Basalt IV (Groeber, 1946) and their equivalents Maipo Formation (Irigoyen,

1972) or Avestruz Formation (Morabito y Folguera,2005). Age: Holocene

Lithology: This unit consists of laterally extensive olivine basalt flows that fills

the graben to the west of the tectonic trench near the property.

Terrace Deposits: Age: Holocene. Lithology: These deposits are composed of

sand, gravel, and silt. On the eastern margin of the Agrio River, they cover

much of the property. The Auquilco Fm (gypsum) is covered by these karst

landscapes with terraced levels where apparently the accelerated erosion of the

gypsum in the subsurface creates a stepped morphology.

Recent Deposits: Age: Holocene. Recent alluvial and eolian deposits are

widespread in the area. In some areas, perlite dunes are overlain by sand

dunes.



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7.1 PROJECT GEOLOGY

Stratigraphy

The stratigraphy in the project area reflects that of the regional stratigraphy

because the Neuqen Basin essentially has a laterally continuous layer-cake

stratigraphy over the entire basin. It is not necessary to reiterate the stratigraphy

in this section. The 200+ meter thick Jurassic Age Auquilco Formation is the

formation of interest on the property. It is comprised primarily of anhydrite-

gypsum with lesser amounts of limestone and clay. Regional stratigraphy

suggest that the Auquilco Formation may lie at a depth of 200-400 meters on

the Codihue Property. The stratigraphy of the formation was described about 30

km away from Codihue at Mallin Quemado. The Auquilco Formation is overlain

by the Jurassic Age Tordillo Formation which is 200-400 meters in thickness.

This clastic unit could provide an impermeable cap on top of the Auquilco

Formation. The geology and stratigraphy of the project area is summarized in

Figures 3-9.



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25



26



27



28



29



30



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Structure

In the central area of the property there are two main structures, an anticline

and a syncline. The anticlinal axis has been projected into the target area. The

target stratigraphy appears to lie at a depth amenable to the Frasch Process

near the center of the anticline. However, due to deformation by possible

solution collapse and the existing cover, the exact location of the anticlinal axis

and the depth to the Auquilco Formation cannot be easily determined. Only

drilling can determine the target depth, if the biogenic process took place there,

and if the mineralization was preserved. As the axis of the suspected anticline

collapsed, it seems to have created an extensive topographic basin with

centripetal drainage which is not hydraulically connected to the nearby Agrio

River.

West of the property, a major NNW-trending fault coincides roughly with the

current channel of the Agrio River. The Loncopue Graben lies immediately west

of that fault. The fault approximates the western margin of the Codihue

Property.

About 5-10 km south of the property, there is some evidence of imbricate

thrusting that projects gently northward into the project area. This could mean

that there are stacked, repeated sections of evaporite, enhancing target

thickness. Alternatively, however, it could also mean that some omission of

evaporate beds is also possible. Without drilling, there is no way to tell how this

low-angle faulting has impacted the stratigraphy at depth in the project area.

8. DEPOSIT TYPE

The type of deposit under investigation is a stratabound biogenic sulfur deposit.

They are found world-wide in marine evaporate basins. Biogenic limestone and

the accompanying native sulfur results from the epigenetic alteration of gypsum

and anhydrite, which alters to calcium carbonate and sulfur by bacterial action

(desulfovibrio desulfuricans).



32

The four elements most essential to biogenic sulfur development are a thick

evaporite section with abundant gypsum, faults and fractures, hydrocarbons,

and the presence of sulfate-reducing bacteria such as desulfovibrio

desulfuricans. The sulfate-reducing bacteria use hydrocarbons as an energy

source. They reduce the sulfate radical in gypsum, changing gypsum and

hydrocarbons into biogenic limestone and sulfur. Sulfate-reducing bacteria are

known to be able of producing hydrogen sulfide at a rate as fast as 1000 mg / l /

day (Miller, 1949). Kem and Thode (1968) found that hydrogen sulfide

production is maximized when sulfate reduction is minimal.

Because of a volume reduction resulting from the sulfate reduction process,

biogenic limestones are extremely porous, often similar in appearance to scoria,

with a honeycomb-like texture. Void spaces often comprise about 25% of the

rock if it has not been crushed by excessive lithostatic load. Since a significant

amount of carbon is incorporated into the biogenic limestone during the

alteration process, the biogenic limestone is often battleship-grey to dark grey in

color. The biogenic limestone is very fine crystalline to locally chalcedonic and

often banded in texture. In hand samples, specimens from a biogenic sulfur

deposit are unique and unmistakable. They look like an exceptionally vuggy,

grey colored, fine crystalline - microcrystalline limestone with disseminated

native sulfur and large native sulfur crystals filling parts of the void spaces. The

groundmass is often agate-like in appearance, although not in hardness.

If the biogenic limestone and sulfur develop within a relatively impermeable

envelope, the sulfur may be amenable to solution by the Frasch Process. A

complete seal is not absolutely necessary because grout curtains can be used

to seal limited amounts of leaks. In the Frasch process, steam is pumped into

the deposit through large-diameter bore holes. The steam melts the sulfur and

the molten sulfur returns to the surface through production bore holes. On the

surface, it can be pumped into trucks or rail cars for transport. The process is

extremely cost-effective. However, the Frasch Process has some depth

limitations because the steam cools as it travel down-hole and into the



33

formation. The maximum depth for the Frasch Process to be effective is about

500 meters.

In the area of the Codihue Property the Jurassic Age Auquilco Fm probably has

a 100-200 meter thickness of anhydrite and gypsum, the rock which can be

altered to biogenic limestone and native sulfur under favorable conditions. A

closed system which does not permit the escape of the hydrogen sulfide needs

to be present. The overlying Tordillo Formation could certainly have acted as an

impermeable seal. Biogenic sulfur deposits are often found along faults, in

anticlines, and in horsts. The anticlinal structure in Codihue is more than 15 km

long by 3 km wide. Other than depth considerations, the search for biogenic

sulfur deposits is similar to that undertaken for oil and gas. They are found

where hydrocarbon traps encounter thick gypsum beds.

The economic feasibility of a biogenic sulfur deposit amenable to solution

mining by the Frasch Process depends upon several factors:

1) The depth must be less than 500 meters

2) The deposit must be within an impermeable envelope

3) The deposit must be porous enough to readily permit fluid access and

relatively unimpeded circulation

Several lines of evidence may suggest the existence of a concealed biogenic

sulfur deposit:

• Collapse structures that are often evidenced by depressions and/or

stratigraphic discontinuity.

• Native sulfur locally exposed on the surface.

• Hydrocarbon gas seeps.

• Reduced (green) shale beds.

• Gravity lows.

• Regional geology indicates the presence of evaporates at depth.



34

One example of a biogenic sulfur deposit with similarities to the Codihue

Property is the Mishraq Deposit, located in northern Iraq. That deposit contains

+100 million tons of native sulfur. It is located in an anticline that is 11 km long

by 3.5 km wide. Very tight en echelon folds are superimposed on the main fold.

There are many fractures and joints which form circulation channels.

Most of the sulfur in the Mishraq Deposit is hosted by the Lower Fars

Formation. The productive stratigraphy is composed of a fine-grained carbonate

and secondary coarse-grained calcite and sulfur with gypsum / anhydrite. The

thickness of the sulfur-bearing stratigraphy varies from 40 to 140 meters. The

ore zones in the productive member are highly re-crystallized biogenic calcite

and finely crystallized native sulfur. The thickness of the mineralized zone

increases in fold hinges. The ore body covers approximately 10 km2. The

average sulfur content is 23.14% (ranging between 25.5% and 19.8%). The

thickness of the ore body varies from 2 to 124 meters with a variable depth of

73 to 303 meters. The porosity of the body varies between 3 to 13%.

MISHRAQ/CODIHUE COMPARISON

Mishraq Codihue

Age Tertiary Jurassic

Barren Cap 73-303 m 150-300 m?

Gypsum thickness 140 m 100-200 m?

Anticline width 3.5 km 3 km

Anticline length 11.5 km 15 km

Annual flow rate Tigris River: 48.2 m3/s Agrio River: 74.51 m3/s

Hydraulic gradient 107 100 approx.



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9. MINERALIZATION

No mineralization is exposed near the center of the anticline or in the suspected

collapse structures. The target lies at depth in the Auquilco Formation. Biogenic

limestone was reported about 10 km to the south of the Codihue Property by

Marifil geologists and sulfur, in unknown quantities, was reported in an oil well

about 9 km north of the property. Marifil geologists have not yet been granted

the permission necessary to examine those cuttings. Traces of disseminated

sulfur are found locally in the project area. Since the target lies at depth, the

type, character, and distribution of mineralization is currently unknown.

The target mineralization in Codihue is not exposed. There are several lines of

evidence that suggest that the epigenetic process altering gypsum to biogenic

limestone and sulfur might have taken place on the Codihue Property:

• Native sulfur mineralization is found regionally in the lower edges of

Auquilco Formation

• Occurrences of sulfur crystals are found regionally at the contact of the

Las Pacas Member limestone, and / or in the contact of La Manga

Formation limestone.

• Regional biogenic process evidence is found such as the biogenic

limestones of Cuchillo Curá Ridge reported by Marifl geologists. These

limestones, however, are about 10 km distant from the target area.

• Probable collapse structures coincident with the anticlinal axis.

10. EXPLORATION

No exploration work has been conducted on the property by Marifil. The only

work completed thus far has been a compilation of regional geological data to

identify areas of potential for biogenic sulfur at shallow depths. The data

indicates that the Codihue Project area has geologic similarities to that of the

biogenic sulfur deposits found world-wide, including:



36

• Thick evaporite stratigraphy at shallow depths

• Widespread hydrocarbons that may drive the bacterial sulfate-reduction

process in a petroliferous basin

• Probable collapse structures coincident with hydrocarbon traps

• Traces of sulfur locally at surface

The next stage of exploration should include:

• Geological mapping at 1:25,000

• Soil gas sampling

• Gravity survey

• Drilling

11. DRILLING

No drilling has been attempted or completed on the Codihue Property.

12. SAMPLING METHOD AND APPROACH

No sampling has yet been completed on the property because significant

mineralization, if indeed any is present, lies at a depth estimated to be 200-400

meters. Soil gas sampling is proposed as the first phase in geochemical

evaluation.

13. SAMPLE PREPARATION, ANALYSES, AND SECURITY

No sample preparation or analyses have yet been undertaken.

14. DATA VERIFICATION

Data verification by the primary author relied primarily upon a report created by

the co-author, Senor Juan Carlos Danderfer and upon a site visit completed on

October 30th and 31st, 2009. The primary author had to rely heavily upon the

report created by Senor Danderfer because of the primary author’s unfamiliarity

with the regional geology of the Neuqeun Basin. The primary author has been

able to verify much of the overall data because it is material that is from the



37

public domain. There was no proprietary data to evaluate included in the report

because the project is at such an early stage. The author has no reason to

doubt the veracity of any data included in this report. The author has attempted

to verify all data input by Senor Danderfer and has found it to be satisfactory

and credible. No verification samples were taken because the target is a

conceptual target which lies at depth.

15. ADJACENT PROPERTIES

There are no adjacent properties to which the Codihue Property can be

compared, although an unknown quantity of sulfur was intercepted by an oil well

located about 9 km to the north of the Codihue Property. Marifil geologists have

not yet been able to obtain permission to examine those cuttings. They may or

may not be germane to the Marifil exploration program because of their

distance from the Codihue Project and because of their uncertain stratigraphic

location.

16. MINERAL PROCESSING AND METALLURGICAL TESTING

There has been no mineral processing or metallurgical testing.

17. MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

No mineral resource or mineral reserve estimates have been undertaken.

18. OTHER RELEVANT DATA AND INFORMATION

The primary author is unaware of any other data and information relevant to the

Codihue Project.

19. INTERPRETATIONS AND CONCLUSIONS

The geology present on the Codihue Biogenic Sulfur Property exhibits

similarities to the geology found near biogenic sulfur deposits worldwide. These

include:



38

• Presence of collapse structures suggested by topographic depressions

and geologic discontinuities

• Traces of disseminated sulfur at surface

• Thick evaporate section at depth

• Widespread hydrocarbons that may drive the bacterial sulfate-reduction

process in a petroliferous basin

The primary author has concluded that sufficient geologic evidence exists to

warrant further exploration for a biogenic sulfur deposit on the Codihue cateos.

The area where the evaporite section is concealed at shallow depths on the

Codihue cateos is of sufficient size and probable sufficient stratigraphic

thickness to enable the existence a large biogenic sulfur occurrence. Work

completed by Marifil geologists thus far has been only of a target generation

nature. Further work should be completed on the property, culminating in the

completion of several drill holes

20. RECOMMENDATIONS

The Codihue Biogenic Sulfur Project is at a very early stage of exploration. The

primary work completed thus far by Marifil geologists has been that of geologic

research and property acquisition. Several things need to be done to move the

project forward.

• The areas that are suspected to be collapse structures should have

some 1:25,000 scale geological mapping completed to verify that they

are actually collapse structures.

• Once collapse structures are identified, a wide-spaced gravity survey

consisting of 100 meter station spacing and 200 meter line spacing is

recommended.

• Any areas that contain significant gravity lows should then undergo soil

gas sampling at 100 meter intervals. This is best accomplished with a

pickup-truck mounted, gas-powered auger drill that has the tools capable



39

of drilling to a 10 foot depth. Soils excavated from a 10 foot depth should

immediately be placed in an airtight container so that soil gases can be

preserved for analysis. Care must be taken that the all samples are

handled in a similar manner to generate standardized results. These gas

samples should be analyzed for butane, methane, and hydrogen sulfide.

These results should then be contoured.

• Finally, core drilling should be undertaken. Each hole will require drilling

of a vertical hole to a depth of about 450 meters.

Prior to drilling, a blowout preventer should be installed at the drill hole collar

because of the strong possibility that flammable formation gas under pressure

may be released. Further, hydrogen sulfide detectors with both visual and audio

warning alarms should be installed near the hole collar. Hydrogen sulfide gas is

exceptionally dangerous to life. An atmosphere containing as little as 10 ppm

hydrogen sulfide can cause rapid death. HQ size cores are advantageous for

development drilling. NQ size cores would be adequate for exploratory drilling if

hole conditions do not require reducing rod size.

A budget for this two-phase program is shown following. Phase two is not

contingent upon the results of phase one.



40

Budget-Phase One

Geologist Wages (3 months) $ 30,000

Geotech Wages (2 X 2 months) $ 30,000

Vehicle/Equipment Rentals $ 10,000

Expenses $ 20,000

Travel $ 10,000

Geochemistry $ 20,000

Geophysics $150,000

TOTAL PHASE ONE $270,000

Budget-Phase Two

Geologist Wages (3 months) $ 30,000

Geotech Wages (2 X 2 months) $ 30,000

Geochemistry $ 10,000

Water Truck Rental $ 20,000

Site Preparation/roads/reclamation $ 20,000

Blowout preventer/gas safety equipment $ 50,000

Drilling (3800 meters @ $150 meter) $570,000

TOTAL PHASE TWO $730,000

GRAND TOTAL $1,000,000



41

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