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Zonge Engineering Strawberry K2 Site, p. 1 CSAMT Geophysical Survey K2 Groundwater Project Strawberry, Arizona Prepared for: Pine Water Company January 30, 2008 by Zonge Engineering & Research Organization, Inc. 3322 E Fort Lowell Rd. Tucson, Arizona, USA 85716 Phone: 520-327-5501 FAX: 520-325-1588 www.zonge.com

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Zonge Engineering Strawberry K2 Site, p. 1

CSAMT Geophysical Survey K2 Groundwater Project

Strawberry, Arizona

Prepared for: Pine Water Company

January 30, 2008

by Zonge Engineering & Research Organization, Inc.

3322 E Fort Lowell Rd. Tucson, Arizona, USA 85716

Phone: 520-327-5501 FAX: 520-325-1588 www.zonge.com

Zonge Engineering Strawberry K2 Site, p. 2

TABLE OF CONTENTS

Survey Results Page 3 Project Logistics Page 9

Survey Summary Page 9 Field Instrumentation Page 9 Cultural Contamination Page 10 Data Quality Page 10 Data Presentation Page 11 Smooth-model Inversion Page 11

Sounding Plots Appendix A Equipment Specifications Appendix B CSAMT Background and References Appendix C

List of Plates and Figures

General Map Figure 1 Transmitter Location Map Figure 2 Pseudo-cross section plot of CSAMT data Figure 3

Zonge Engineering Strawberry K2 Site, p. 3

CSAMT Geophysical Survey

Strawberry K2 Site Project

for

Pine Water Company

by Zonge Engineering & Research Organization, Inc.

Survey Results On November 10 and November 15, 2007, Zonge Engineering and Research Organization, Inc.

acquired Controlled Source Audio-frequency Magnetotellurics (CSAMT) geophysical data on the

K2 Groundwater Project near Strawberry, Arizona, at the request of John Breninger of the Pine

Water Company. Mark Reed of Zonge Engineering was the field crew chief on site. The goals of

the survey included determining, if possible, the likelihood and depth of water in the deep

aquifer (known as the “R” aquifer) and the presence or absence of water in shallow zones

(primarily for planning purposes in the drilling activities).

As originally planned, the survey would have included several lines of data through and near the

K2 site to provide cross sections of resistivity through the site. Permission to cross property

outside the K2 site could not be obtained, however, and as a result, the survey activities were

restricted to the K2 parcel itself. Data were acquired at a single station south of the storage tank

on the K2 parcel, one station north of the storage tank, one station west of the tank, and two

stations east and southeast of the tank. This small data set limits the ability to interpret lateral

changes across the site (fractures, faults, perched zones), as well as limiting the ability to

evaluate the effects of cultural contamination on the data (man-made features such as power

lines, fences, and utilities).

Zonge Engineering Strawberry K2 Site, p. 4

Figure 1 shows the general location of the survey site in Strawberry relative to the Mogollon Rim

and nearby Pine, Arizona, and Figure 2 shows the location of the two transmitter dipoles used

for this survey. Figure 3 shows a pseudo-cross section of results from the two stations that

provided the most realistic modeling results.

The two stations acquired using Transmitter # 1 provided moderately good data; the resistivity

ranges and changes with depth from these two stations are in good agreement with the down-

hole geophysical resistivity log from the Strawberry Borehole (located approximately 1.5 miles

west of the K2 site) and with prior CSAMT surveys by Zonge in the general area of

Strawberry/Pine.

The three stations acquired using Transmitter # 2 were noisier, and resulted in models with

unrealistically high and low resistivities relative to the Strawberry Borehole and prior Zonge

results. This is most likely the result of cultural noise that affected the north-south oriented

readings more strongly than the east-west oriented stations.

Our interpretation is based on the measurements made using Transmitter # 1; the model results

for these stations are shown in Figure 3. Assuming that cultural affects are not influencing the

final processed data, these results suggest that the geologic environment at the K2 site is

consistent with expectations. For example, there are no anomalously high resistivity values at

the target depths that might suggest tight, crystalline rock that would be non-productive.

Although it is not possible from this limited data set to estimate a depth to water, our

interpretation is that the “R” aquifer at the K2 site is not expected to be any less productive than

at any other randomly selected site in the Strawberry/Pine area. It is possible that the

differences in resistivity below approximately 700 feet between the stations north and south of

the storage tank indicate fracturing, which would make the K2 site more attractive with respect

to groundwater production. This should be considered tentative, since it assumes that cultural

effects are approximately the same on the two stations. It should be noted that a lineament map

(generated by Mike Plough) included in Pine Water’s RFP for this project suggests a W-SW to

E-NE trending lineament through this area which may be correlated to fracturing. In addition,

mapping by Clay Conway (also provided by Pine Water) suggests that multiple faults may cross

the general area of the K2 site. The independent interpretation of lineaments and faults,

combined with the changes seen between the southern and northern station suggests the

possibility that the K2 site may indeed be more fractured than is typical for the general area.

Zonge Engineering Strawberry K2 Site, p. 5

With respect to shallow perched water, the survey results suggest that a zone centered at a

depth of approximately 400 feet may be fractured and/or saturated below the southern station,

but this zone is not evident on the northern station. If cultural effects are influencing the two

stations similarly, this suggests that the low resistivity zone is relatively small, or at least not

extensive across the site.

It is very important to note that the interpretation of the K2 site as an average or better-than-

average drill site for “R” aquifer production, with a possible shallow perched or fracture zone

centered at about 400 feet, is tentative due to the limited number of stations and the cultural

noise in the area. Normally, multiple stations, usually in a line, provide a way to evaluate the

repeatability of data and the effects of cultural features, since these effects vary with orientation

and distance relative to the culture. The individual components of the data have been evaluated

on a block-by-block basis, the data are admittedly limited and noisy, but given the data as it is,

the K2 site appears to be an average or better-than-average location for deep “R” aquifer

groundwater production.

Zonge Engineering Strawberry K2 Site, p. 6

Figure 1: General location of K2 survey area in Strawberry, Arizona.

Survey Area

Zonge Engineering Strawberry K2 Site, p. 7

Figure 2: Location map showing Transmitters 1 and 2 relative to the survey site.

Zonge Engineering Strawberry K2 Site, p. 8

Figure 3: Pseudo-cross section plot of CSAMT data from the north transmitter site.

Zonge Engineering Strawberry K2 Site, p. 9

PROJECT LOGISTICS

Survey Summary: The geophysical survey was designed to map subsurface changes in

resistivity, which can be related to changes in pore space and pore fluids. Bedrock is often high

resistivity relative to overlying material, and fractured, saturated bedrock is often lower resistivity

than un-fractured bedrock. Areas of high TDS in the groundwater should appear more

conductive than equivalent areas of low TDS. Variations in depth to bedrock, faulting, and other

structural changes are often also evident as changes in resistivity. The geophysical method

used was controlled source audio-frequency magnetotellurics (CSAMT). CSAMT is a resistivity

sounding method used commonly in the minerals, geothermal, and groundwater exploration

industries. This method typically has higher lateral resolution than other resistivity methods, and

is usually logistically more efficient.

The CSAMT data were acquired on two days in November of 2007. The CSAMT stations were

acquired using an electric-field receiver dipole size varying from 80 to120 feet (due to property

restrictions), and the transmitted frequencies were in binary increments from 4 Hz up to 8192 Hz

(i.e., 4Hz, 8 Hz, 16 Hz, etc.). For each electric-field measurement, a magnetic field

measurement was made simultaneously at the center of the dipole.

Hand-held GPS measurements for the station locations are as follows (in NAD 83 UTM feet,

Zone 12):

Sounding Easting Northing K21 1491112 12491205 K22 1491110 12491259 K23 1491078 12491220 K24 1491150 12491204 K25 1491164 12491136

These locations should be considered approximate, since the GPS locations were acquired

using a hand-held GPS unit, and vegetative cover, structures, and topography most likely

affected satellite reception.

Field Instrumentation: The receiver used for the CSAMT survey was a Zonge GDP-32 multi-

purpose receiver. This receiver is a backpack-portable, 16-bit, microprocessor-controlled

Zonge Engineering Strawberry K2 Site, p. 10

receiver capable of gathering data on as many as 16 channels simultaneously. The electric-

field signals were sensed using non-polarizable porous pot electrodes, connected to the

receiver with 16-gauge insulated wire. The CSAMT magnetic-field signal was sensed with a

Zonge Ant/1B magnetic field antenna.

The signal source for the survey was a Zonge GGT-30 transmitter, which is a current-controlled

transmitter capable of 30 kW output. The transmitter was controlled with an XMT-32 transmitter

controller, which contains a quartz oscillator identical to the one in the receiver. Each morning

prior to data acquisition, the two oscillators were trimmed and synchronized in order to allow the

crew to acquire accurate phase data.

For each CSAMT receiver setup, the transmitter generates a square-wave signal at discrete

frequencies from 4 hertz to 8192 hertz in binary increments (i.e.,4 Hz, 8 Hz, 16 Hz, etc.).

Electric and magnetic field values were recorded at each of these primary frequencies, as well

as the odd harmonics for all frequencies up to 1024 Hz. Results from the electric and magnetic

field measurements are then used to calculate resistivity and impedance phase values at each

measured frequency, from which depth vs. resistivity sections can be generated. At all

frequencies, the receiver recorded the received electric field and magnetic field magnitude and

phase components, as well as the data at the odd harmonics (3rd, 5th, 7th, and 9th) of the

transmitted frequencies, providing a very large data set for modeling purposes. The 1st and 3rd

harmonics were used for modeling purposes.

Cultural Contamination: Cultural contamination refers to any man-made electrically conductive

or electrically noisy objects that may influence the geophysical measurements. These include

passive objects like metal fences, pipelines, power lines, or large metal structures, and active

(electrically) objects such as active power lines, pipelines with cathodic protection, and radio

transmitters. The K2 site is in a residential area and has numerous sources of electrical noise,

including power lines, fences, and pipelines, as well as suspected buried utilities that were not

obvious to the field crew.

Data Quality: Data quality was only poor to fair on this project, due to the cultural noise

discussed above. Standard Zonge field procedure requires that the receiver operator make

multiple measurements of each data point while monitoring real-time standard-error values

displayed on the screen of the receiver. For CSAMT, multiple blocks of the data are also

displayed graphically as resistivity-versus-frequency curves (plotted on a log-log scale), with

Zonge Engineering Strawberry K2 Site, p. 11

error bars denoting data scatter for the operator in the field. The data quality for these five sets

of measurements is considered poor (at Station 5 for example) to fair (at Station 1).

Data Presentation: The results of processing and modeling the data are shown as a color

pseudo-cross section for stations 1 and 2 (south and north of the storage tank, respectively),

which were acquired from the northern transmitter. In this plot, decreasing elevation is shown

down the side of the plot. Resistivity results are shown in ohm-meters, with “warm” colors

(orange, red) indicating low resistivity and “cool” colors (green, blue) indicating high resistivity.

The color shading and contouring is on a logarithmic scale. Raw data and sounding curves for

each station are also included in the appendix of this report.

Smooth-Model Inversion: Briefly, smooth-model inversion mathematically “back-calculates” (or

“inverts”) from the measured data to determine a likely location, size and depth of the source or

sources of resistivity changes. The results of the smooth-model inversion are intentionally

gradational, rather than showing abrupt, “blocky” changes in the subsurface.

For the CSAMT data, a 1D smooth-model inversion program was used for modeling this data

due to the inability to acquire multiple stations in along a line. This program is a robust method

for converting CSAMT measurements to profiles of resistivity versus depth. Cagniard apparent

resistivities and impedance-phase data for each station are used to determine the parameters of

a layered earth model. Layer thicknesses are fixed by calculating source-field penetration

depths for each frequency. Layer resistivities are then adjusted iteratively until the model

CSAMT response is as close as possible to the observed data. The algorithm for calculating

the CSAMT response of a layered model includes the effects of finite transmitter-receiver

separation and a three-dimensional source field. Accurate impedance magnitude and phase

values are calculated for all frequencies and transmitter-receiver separations for the 1-D

models. The result of the smooth-model inversion is a set of estimated resistivities which vary

smoothly with depth, giving the gradational result seen in the color data plots in this report. The

smooth-model inversion does not require any a priori estimates of model parameters, thus the

results are unaffected by any data processor's bias.

Zonge Engineering Strawberry K2 Site, p. 12

Norman R. Carlson Cris Mayerle Chief Geophysicist Geophysicist Zonge Engineering & Research Organization, Inc. 3322 E. Fort Lowell Rd. Tucson. Arizona, USA 85716

Zonge Engineering Strawberry K2 Site, p. 13

Appendix A

Sounding Plots

Zonge Engineering Strawberry K2 Site, p. 14

Freq

uenc

y (h

ertz

)10

110

210

310

4

Apparent Resistivity (ohm-m)

101

102

103

104

105

Mod

el R

esis

tivity

(ohm

-m)

101

102

103

104

Model Depth (ft)

-300

0

-250

0

-200

0

-150

0

-100

0

-5000

Stra

wbe

rryLi

ne K

2 1,

Sta

tion

1Sc

alar

CSA

MT

data

from

K21

.scs

dxW

eigh

t: 1

.00

dzW

eigh

t: 2

.00

Res

idua

l: 2

.70

Smoo

th-M

odel

CSA

MT

Inve

rsio

nPl

otte

d at

12:

05:0

1, 1

5/01

/08

Zong

e En

gine

erin

g

Zonge Engineering Strawberry K2 Site, p. 15

Freq

uenc

y (h

ertz

)10

110

210

310

4

Apparent Resistivity (ohm-m)

101

102

103

104

105

Mod

el R

esis

tivity

(ohm

-m)

101

102

103

104

Model Depth (ft)

-300

0

-250

0

-200

0

-150

0

-100

0

-5000

Stra

wbe

ery

Line

K2

2, S

tatio

n 1

Scal

ar C

SAM

T da

tafro

m K

22.s

csdx

Wei

ght:

1.0

0dz

Wei

ght:

2.0

0R

esid

ual:

3.6

5

Smoo

th-M

odel

CSA

MT

Inve

rsio

nPl

otte

d at

12:

06:1

7, 1

5/01

/08

Zong

e En

gine

erin

g

Zonge Engineering Strawberry K2 Site, p. 16

Freq

uenc

y (h

ertz

)10

110

210

310

4

Apparent Resistivity (ohm-m)

102

103

104

105

106

Mod

el R

esis

tivity

(ohm

-m)

102

103

104

Model Depth (ft)

-300

0

-250

0

-200

0

-150

0

-100

0

-5000

Stra

wbe

ery

Line

K2

3 N

, Sta

tion

45Sc

alar

CSA

MT

data

from

K23

.scs

dxW

eigh

t: 1

.00

dzW

eigh

t: 2

.00

Res

idua

l: 2

.91

Smoo

th-M

odel

CSA

MT

Inve

rsio

nPl

otte

d at

12:

06:3

4, 1

5/01

/08

Zong

e En

gine

erin

g

Zonge Engineering Strawberry K2 Site, p. 17

Freq

uenc

y (h

ertz

)10

110

210

310

4

Apparent Resistivity (ohm-m)

101

102

103

104

105

Mod

el R

esis

tivity

(ohm

-m)

101

102

103

104

Model Depth (ft)

-300

0

-250

0

-200

0

-150

0

-100

0

-5000

Stra

wbe

ery

Line

K2

4 N

, Sta

tion

45Sc

alar

CSA

MT

data

from

K24

.scs

dxW

eigh

t: 1

.00

dzW

eigh

t: 2

.00

Res

idua

l: 2

.33

Smoo

th-M

odel

CSA

MT

Inve

rsio

nPl

otte

d at

12:

07:0

3, 1

5/01

/08

Zong

e En

gine

erin

g

Zonge Engineering Strawberry K2 Site, p. 18

Freq

uenc

y (h

ertz

)10

110

210

310

4

Apparent Resistivity (ohm-m)

100

101

102

103

104

Mod

el R

esis

tivity

(ohm

-m)

100

101

102

103

104

105

Model Depth (ft)-3

000

-250

0

-200

0

-150

0

-100

0

-5000

Stra

wbe

ery

Line

K2

5 N

, Sta

tion

45Sc

alar

CSA

MT

data

from

K25

.scs

dxW

eigh

t: 1

.00

dzW

eigh

t: 2

.00

Res

idua

l: 9

.94

Smoo

th-M

odel

CSA

MT

Inve

rsio

nPl

otte

d at

12:

07:2

4, 1

5/01

/08

Zong

e En

gine

erin

g

Zonge Engineering Strawberry K2 Site, p. 19

Appendix B

Equipment Specifications

Zonge Engineering Strawberry K2 Site, p. 20

Zonge Engineering Strawberry K2 Site, p. 21

Zonge Engineering Strawberry K2 Site, p. 22

Appendix C CSAMT is a commonly-used, surface-based geophysical method which provides resistivity

information of the subsurface, usually at greater depths and better lateral resolution than other

resistivity methods such as Schlumberger soundings, dipole-dipole, or gradient arrays. CSAMT

has been used extensively by the minerals, geothermal, hydrocarbon, and groundwater

exploration industries since 1978 when CSAMT equipment systems first became commercially

available.

CSAMT Methodology: Controlled source audio-frequency magnetotellurics (CSAMT) is a high-

resolution electromagnetic sounding technique that uses a fixed grounded dipole as a signal

source. For complete, published, peer-reviewed discussions of the CSAMT method and its

common applications, see the Zonge and Hughes (1991) and Zonge (1992) references. Briefly,

the CSAMT method can be described as follows:

A CSAMT transmitter signal source usually consists of a grounded electric dipole one to two km

in length, located four to ten km from the area where the measurements are to be made (see

Figure App-1).

Figure App-1: General field lay-out of a scalar CSAMT survey.

Zonge Engineering Strawberry K2 Site, p. 23

At the receiver site, grounded dipoles detect the electric field parallel to the transmitter and

magnetic coil antennas sense the perpendicular magnetic field. The ratio of orthogonal,

horizontal electric and magnetic field magnitudes (e.g. Ex and Hy) yields the apparent resistivity:

y

xa H

Ef5

1=ρ

where f is frequency of the measurement, Ex is the electric field along the observation line, and

Hy is the magnetic field perpendicular to the line.

The difference between the phase of the electric and magnetic fields yields the impedance

phase, which we will often just call the phase or phase difference:

( ) ( )yx HE ϕϕϕ −=

Varying the frequency of the observations controls the depth of investigation using the CSAMT

method. A concept used extensively in electromagnetic geophysics is the skin depth, which is

the depth at which the amplitude of the field decays to 37 percent of the original value. The skin

depth, ∂ , is given by the equation:

faρ503=∂ meters;

where aρ = apparent (measured) resistivity, and f = signal frequency. An estimate of the total

depth of investigation is given by D, which is:

2δ=D or 356 f

aρ meters.

Therefore, depth sections can be generated using the CSAMT method by measuring the electric

and magnetic fields over a range of frequencies. The ratio of the measured electric and

magnetic fields provides information about the resistivity at depth and by making measurements

at lower frequencies a greater depth of penetration can be attained.

Zonge Engineering Strawberry K2 Site, p. 24

CSAMT Reference Material

Cagniard, L. 1953, Basic Theory of the magnetotelluric method of geophysical prospecting, Geophysics, 18, pp. 605-635. Goldstein, M.A., and Strangway, D.W., 1975, Audio-frequency magnetotellurics with a grounded electric dipole source: Geophysics, 40, 669-683. Hughes, L.J., and Carlson, N.R., 1987, Structure mapping at Trap Spring Oilfield, Nevada, using controlled-source magnetotellurics, First Break, Vol. 5, No. 11, the European Association of Exploration Geophysicists, pp. 403-418. Zonge, K.L., Ostrander, A.O., and Emer, D.F., 1985, Controlled-source Audio-Frequency Magnetotelluric Measurements, in Magnetotelluric Methods, ed. Vozoff, K., Geophysics Reprint Series No. 5, Society of Exploration Geophysicists, pp. 749-763. Zonge, K.L. and Hughes, L.J., 1991, “Controlled source audio-frequency magnetotellurics”, in Electromagnetic Methods in Applied Geophysics, ed. Nabighian, M.N., Vol. 2, Society of Exploration Geophysicists, pp. 713-809. Zonge, K. L., 1992, “Broad Band Electromagnetic Systems”, in Practical Geophysics II for the Exploration Geologist”, ed. Richard Van Blaricom, Northwest Mining Association, pp. 439-523.