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Superior Mining International was granted exploration rights to explore for Witwatersrand Basin-hosted gold mineralization in the Free State of South Africa. The company's Mangalisa Project, is located over a potential eastwards extension of the western limb of the Witwatersrand Basin (see map of the Witwatersrand goldfields) in the Welkom district, Free State Province of the Republic of South Africa. The area covers 68 farms and portions of farms, contained in an irregular polygon. Current exploration operations are confined to the farms Erfenis 328 and Nooitgedacht 245 (see farm location map). Witwatersrand (meaning 'white water ridge' in Afrikaan) is often called simply "the Rand", and is located in the Gauteng province (formerly a part of the Transvaal) of South Africa.

Two gold-bearing trends in the Free State (or Welkom) Goldfield, the Target trend to the west and the Homestead trend to the east, separated by the De Bron Horst (see map showing the Free State Goldfield's two gold-producing trends), have produced over 320 million ounces since the Free State Goldfield was discovered in the 1940s and started to be developed in the 1950s. The Masimong gold mine was opened in 1987 by Anglo, but is now operated by Harmony Gold Ltd.

The Mangalisa property comprises an area of 195.9 km2 situated approximately 25 km east of the township of Welkom and less than 10 km north of the Masimong #5 (formerly Erfdeel) gold mine (see Mangalisa Property and Masimong Mine map). Both the Mangalisa property and the Masimong gold mine are within the eastern gold-bearing Homestead trend.

The highly prospective ground immediately north of the Masimong gold mine was selected by Superior Mining for its potential to host extensions of the western limb of the Free State Goldfield along the northeast-trending Homestead trend. The Target trend, host to numerous currently operating and non-operating shafts, is northwest-trending, but joins the Homestead trend at its southern end. The Mangalisa property dimensions contain approximately 19 km of strike and approximately 10 km of down-dip potential.

The Homestead trend is under-explored in the area where the Mangalisa property is located, representing one of the last remaining, high-potential gold exploration properties within the Free State Goldfield. Superior Mining's exploration program is targeting gold-bearing Late Archaean, Central Rand Group sediments that traditionally host highly economic gold-uranium-bearing conglomerate reefs (namely the A, B, Leader and Basal Reefs) of the Free State Goldfield. The Central Rand Group is unconformably overlain by variable thicknesses of Late Archaean Ventersdorp lavas and Palaeozoic Karoo sediments.

The Mangalisa property ("Mangalisa" means caused to be surprised in the local Zulu language) is located about 270 km southwest of Johannesburg's Oliver Tambo airport. There is excellent access on paved roads through the N1 freeway to Kroonstad, thence the R34 highway to Welkom, which has a population of about 200,000. The property can be reached on paved roads 25 km east of Welkom or about 30 km southwest of Kroonstad. Rail lines pass within 15 to 20 km south and east of the property. (see Mangalisa Locality & Infrastructure map).

It is the Central Rand Group succession sitting beneath variable thicknesses of Karoo sediments and Ventersdorp Group lavas, with its traditionally bountiful gold-bearing horizons (namely the A, B, Leader and Basal Reefs), that had been originally targeted by Superior Mining's exploration programs on the Mangalisa property, as potentially economic occurrences of gold were believed to occur at depths between 700 m and 1,500 m below surface.

After reviewing the results from historical exploration on the property, Superior Mining concluded that the Mangalisa property warranted careful exploration. High gold and uranium values had been intersected in exploratory borehole PG-1 (alias Borehole 1894) drilled by Gencor on the Erfenis farm in 1988. To confirm previous work, Superior Mining drilled a twin of drillhole PG-1 (named ERF-1) as well as a number of other holes and deflections during the company's  phase 1 diamond drilling program during the period mid-Agust 2008 to early January 2009 to explore for gold and uranium mineralization.

The verification hole ERF-1, collared only 6 m away from PG-1, did not emulate the high gold and uranium values obtained in PG-1. It is possible that ERF-1 failed to intersect auriferous development of the Erfenis Reef because of faulting, or the bore hole intersected an area outside the ancient braided alluvial channel (‘out of channel’ situation).

Witwatersrand gold and uranium reefs with high grades such as those intersected in PG-1 seldom, if ever, occur in isolation. Subsequent geophysical wire-line logs did not reveal any structural disturbance between these two boreholes as no major faulting between the two holes was evident from the wire-line logs. Nevertheless, this could be readily explained by the short range sedimentological variation observed elsewhere in Witwatersrand reefs. This is particularly notable with reefs in the Elsburg Formation, which is believed to host the Erfenis Reef intersected by the PG-1 borehole.

In December 2008, Superior Mining drilled two deflections out of PG-1 and intersected a quartz-pebble conglomerate that is underlain by a kerogen (carbon) seam at a depth of 776.5 m. The average grade of the two deflections was 19.6 g/t Au and 1.629 kg/t U3O8 over a dip-corrected stope width of 0.97 m. These intersections corroborated the original Gencor results and this reef was named the Erfenis Reef, after the farm on which the borehole was drilled.

The review of historical drilling and the results from the phase 1 drilling program led to what is believed by Superior Mining to be a significant find (see Phase 1 drilling details below) as it intersected a potential, new discovery of a Witwatersrand "Elsburg" type gold deposit at a relatively shallow depth of only about 770 to 780 m. Most gold-mineralized reefs in the Witwatersrand basin have been and continue to be mined at depths greater than 2,000 m. Current Harmony Gold shaft levels at their mines along the Target trend, to the west of the De Bron Horst, and at the Masimong mine are at depths of about 2,300 m, exploiting gold resources in a number of reefs. In its 2011 annual report, Harmony Gold reported that the Masimong reserve was 1.2 million oz of gold with measured and indicated resources of 18.2 million oz of gold. The mine's production in 2011 was 137,605 oz of gold at an average grade of 4.93 g/t.

Subsequently, Superior Mining executed an agreement with Minco Mineral Holdings (see news release) of Midrand, South Africa in April 2010, through which second phase drilling was started in the latter half of the second quarter of 2010. The objective of the second phase drilling was to determine whether the Erfenis Reef has a strike or dip extension, and to this end a sequence of 6 holes was drilled in a close-spaced array located around PG-1 (see Mangalisa Phase 1 & Phase 2 Drill Hole Locations map), each planned to a depth of up to approximately 1,000 m. The distribution and spacing of these holes was such that, should an Elsburg-type pay shoot occur, at least one of the Phase 2 boreholes should intersect good gold and uranium grades.

As in the Phase 1 drilling program, the Phase 2 holes were piloted by percussion drilling to depths ranging from 330 m to 400 m. Subsequently, exploratory diamond drilling was carried out to a greater depth with two diamond drills. Once the target mineralization was intersected, the pilot holes were then supplemented with a series of deflection holes to produce multiple reef intersections. To date USD$4.5 million have been spent by Superior Mining on Mangalisa property exploration activities.

Phase 1 Drilling

Each one of the individual "reef" horizons found in the goldfield area is a significant gold-producing horizon in its own right throughout the Free State region as a whole. The Phase 1 drilling program was aimed at confirming the original drill hole PG-1 intersection, which returned 50 g/t gold and 5 kg/t uranium over about one metre at a depth of 776 m.

Two deflections from the Gencor hole were drilled by Superior Mining, confirming the intersection of the reef at 776 m with similarly high grades. Moreover, up to an additional four exploratory phase 1 drill holes with multiple deflections were initially planned on the Mangalisa Property. When Superior commenced the first phase of diamond drilling it had initially been expected that drilling would be to depths of up to 1,500 m from surface, however target mineralization was again intercepted at a depth of only about 776 m, as had PG-1.

These drilling depths are unusually shallow for the Free State, and as a consequence the typically prolonged, dangerous and costly drilling activities that one normally associates with exploratory drilling in the Witwatersrand were avoided. Furthermore, there was no need for more expensive, robust equipment to embark upon and complete the typical Witwatersrand "deep drillhole" to depths in the order of over 3,000 m.

A total of seven pre-collar percussion holes plus three water wells were drilled (2,394 m drilled). Two of the percussion holes were then deepened by diamond drilling and the PG-1 historical hole, previously drilled in 1988, was was also re-opened. Further work included the completion of wedging and deflection drilling of seven separate deflection intervals (1,350.6 m drilled by diamond drill).

By using the "wire-line" core recovery technique and undertaking the multiple deflections off the primary holes, the geological, structural and reef continuity characteristics in the area were appraised in Superior Mining's search for a new gold deposit in the region. Samples were collected and analyzed from select intervals from two drill holes, PG-1 and ERF-1, and their respective deflections. Assay results from significant intersections in hole PG-1 are presented below. No other significant intersections were encountered.

Significant Phase 1 Drilling Intersections:

PG-1/12 776.32 - 776.77 (0.45 m) @ 45.8 g/t Au & 3.79 kg/t U
(Inc) 776.56 - 776.77 (0.21 m) @ 91.8 g/t Au & 7.24 kg/t U
   
PG-1/13 776.13 - 776.45 (0.32 m) @ 51.1 g/t Au & 4.27 kg/t U
   
PG-1: Re-opened 1998 drill hole (UMT: 35J, X: 3,080,224, Y: 0,011,792,
Elevation: 1,395 m AMSL, Direction: 263 degrees, Inclination: 85 degrees)
   
     Deflections 0 to 10 were drilled in 1988.
     Core was not recovered from Deflection 11.

Phase 2 Drilling

The Phase 2 drilling program was designed to step out from the original PG-1 discovery hole intercept and construct a geological model based on whether the Erfenis Reef has a strike or dip extension. A sequence of six holes was drilled in a close-spaced array around PG-1, with four holes intersecting what has since been termed the Erfenis Reef Zone (ERZ). Moreover, at least ten more individual conglomerate bands or reefs were intersected during the Phase 2 drilling.

The Phase 2 drilling again returned encouraging gold-uranium results from the ERZ, confirming the presence of high gold and uranium grades in the quartz pebble conglomerate reef.

Significant Phase 2 Drilling Intersections:

ERF-7/0
          and
          and
          and

797.71 - 798.01 (0.30 m) @ 4.58 g/t Au & 0.47 kg/t U 
874.10 -874.39 (0.29 m) @ 36.60 g/t Au & 0.24 kg/t U
923.70 - 924.02 (0.32 m) @ 4.04 g/t Au & 1.65 kg/t U 
925.50 - 925.72 (0.22 m) @ 6.90 g/t Au & 1.11 kg/t U

 

 

ERF-7/4
          and

873.71 - 873.95 (0.24 m) @ 19.55 g/t Au @ 0.00 kg/t U
922.46 - 922.72 (0.26 m) @ 5.03 g/t Au & 1.15 kg.t U

 

 

ERF-7/6 

922.58 - 922.78 (0.20 m) @ 11.94 g/t Au & 1.72 kg/t U 

 

 

ERF-7/10

797.70 - 797.95 (0.25 m) @3.38 g/t Au & 0.34 kg/t U

 

 

ERF-7/12

797.62 - 797.86 (0.24 m) @ 6.72 g/t Au & 0.67 kg/t U 

 

 

NGT-2/0

658.61 - 659.00 (0.39 m) & 3.64 g/t Au & 0.84 kg/t U 

 

 

NGT-2/1

658.48 - 658.68 (0.20 m) & 6.96 g/t Ag & 1.65 kg/t U 

These encouraging results represent an important discovery for Superior Mining, highlighting and confirming the presence of significant gold and uranium mineralization at much shallower depths than that found in the majority of mines currently operating within the Witwatersrand Basin. The highest gold and uranium grades typically are contained within a thin, small pebble conglomerate band and the associated carbon seam at its base. Importantly, this has confirmed a gold-mineralized system rather than a single-hole anomaly.

The strata intersected during the Phase 2 drilling program confirmed both the stratigraphic continuity of the ERZ and the presence of significant gold and uranium values in this zone, in particular to the south of PG1 in borehold ERF-7. Boreholes ERF-5 and ERF-6 also intersected gold and uranium mineralization, albeit at a lower tenor. These values give a clear indication that gold and uranium concentration has occurred in the system.

The results of this drilling support an "Elsburg Fan" geological model, which formed the basis for the exploration at Mangalisa. The stratigraphy and mineralization appears to be continuous. The gold and uranium reef discovered in PG-1 is not an isolated occurence, as the grades in ERF-7 have confirmed, since Witwatersrand gold and uranium reefs with values such as those intersected in PG-1 and in the Phase 2 boreholes seldom, if ever, occur in isolation. The failure of borehole ERF-1 to repeat values similar to those observed in PG-1 are likely due to either faulting or local natural sedimentological variations.

This new, shallower reef was named the 'Erfenis Reef', and it forms part of a reef system that was intersected at a depth of less than 800 m. This reef and several other conglomeratic reef horizons are situated in the Central Rand Group. The Central Rand Group in this area is at an atypically shallower depth than elsewhere in the Free State Goldfield because it has been uplifted by the De Bron Horst immediately to the west as it was thrust upwards by some 1,500 m (see Geology page for details of the Witwatersrand and Free State Goldfield geologic processes). The strata intersected in the Phase 1 and Phase 2 drilling programs suggest that the Erfenis Reef is likely to be an Elsburg correlative, analogous to the Beatrix Reef to the south of Welkom.

By comparison, the operating Masimong gold mine, immediately to the south of the Mangalisa property, was reported by Harmony Gold in its 2011 annual report to have produced 137,605 oz of gold from reefs approximately 2,300 m deep (see Harmony's Masimong operations). It is mining the gold at a head grade averaging 4.93 g/t. By comparison, diluting Superior Mining's core hole ERF7-0, for example, to a one-metre mining width (0.29 m @ 36.6 g/t) equates to 1.0 m @ 10.61 g/t, which is about double the grade being mined at the Masimong mine. Harmony Gold has recently embarked on a new drilling program immediately south of Mangalisa and north of its Masimong 5 shaft.

All drilling carried out by Superior Mining in the zones of interest was carried out using either NQ wireline or TNW conventional technique diamond core drilling. The majority of samples for assay were taken from TNW size cores, in the form of half-cores that were cut by diamond rock saw. Pre-collar drilling through non-target lava sequences to depths of approximately 300 m was carried out using percussive drilling.

Full quality control QA/QC supervision and protocols for the Phase 1 drilling were implemented and adhered to by Snowden Mining Industry Consultants P/L of Johannesburg (core logging and cutting, sample preparation, and the insertion of 'blanks' and standards at regular intervals). Analytical work was undertaken by Set Point Laboratories of Isando, Johannesburg and Performance Laboratories Pty Ltd of Randfontein, Johannesburg. At both laboratories, analyses for gold were undertaken using 50 g sample weight, fire assay and ICP, with blanks and/or standards inserted. Analyses for uranium were based on XRF and 'pressed disc'. Similarly, full quality control QA/QC supervision and protocols for the Phase 2 drilling were implemented and adhered to by Kernow Exploration Ltd of Gauteng, South Africa.

Historical Exploration at Mangalisa

The Mangalisa Project represents one of the last remaining, high potential gold and uranium exploration properties within the Witwatersrand's Free State Goldfield. The results of Superior's exploration program indicate the potential for the discovery of new gold and uranium mineralized reefs within the area. The reef, as revealed in PG-1 and in the results from the Comapny's Phase 1 and Phase 2 drilling programs, is a classic 'small-pebble, oligomict, carbon-rich and well-sorted conglomerate' reef that is typical of the Free State. The general area remains prospective for other Free State gold reefs deeper in the stratigraphic column, such as the 'A', 'B', Leader and Basal Reefs, which are being mined nearby to the south at Harmony's Masimong Gold Mine.

A few holes drilled in the area prior to 1952 led to the view that the area of the Mangalisa property was too low grade and/or too deep to be of interest. However, the wide spacing of other old boreholes in the area suggests that previous exploration strategy was devised to investigate the distribution of a laterally continuous Witwatersrand conglomerate horizon rather than Elsburg type fans. Much of the ground was locked away prior to the mineral rights being reverted to the state in 2001.

In about 1985, Anglo American started drilling some 5 to 10 km north of the northern boundary of Masimong 5, and thereafter purchased the mineral rights of certain farms. In 1987, a small private company optioned three blocks of farms located between 10 and 20 km north of the Masimong 5 Mine boundary. A joint venture was established with Gencor, now part of BHP Billiton.

The first hole drilled by Gencor, here referred to as hole PG-1, on the western side of the ground intersected a Witwatersrand reef not previously encountered in the area at 776 m below the surface. The reef was inferred to be an equivalent of the Beatrix reef and had a gold grade of about 50 g/t and a uranium grade of 5 kg/t over one metre.

The same reef was intersected about 2 km to the south, however the grade was significantly lower, possibly due to poor recovery. A third hole drilled 2 km east of the first hole passed through an area of faulting and therefore failed to intersect the reef.

Nonetheless, economic development of Elsburg gold-bearing reefs has been shown to occur at Harmony Gold's Target Mine, about 25 km north-west of Erfenis in the northern part of the Free State Goldfield. Very high grades are reported in several of these reefs, which provide an appropriate exploration model for the Erfenis Reef Zone. Generally, Elsburg reefs can have very high values.

The conglomeratic Elsburg reefs at Target have a short down-dip extent, often as little as 200 to 400 m before grading into quartzites. Optimal gold mineralization occurs in a number of superimposed 1,500-m wide fan-shaped deposits. These are generally spaced 3.5 km along strike. PG-1 might have intersected a similar fan, and this would explain the lack of similar intersections in other old boreholes in the area. There appears to be a similar Elsburg geological setting at Mangalisa, therefore the regional layout of boreholes drilled in the area by Gencor, and perhaps others, was inappropriate for the discovery of a gold resource similar to that of the Target gold mine. The Target type deposits occur along a narrow belt that is typically less than 500 m wide, but over a remarkably straight strike, which can continue for over 12 km in extent.

New Properties

Superior seeks to acquire additional exploration and/or mining properties in South Africa as opportunities arise to do so.

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