POTASH DRAGON CHILE GEOPHYSICAL SURVEY TRANSIENT ELECTROMAGNETIC (TEM) METHOD. LLAMARA and SOLIDA PROJECTS SALAR DE LLAMARA, IQUIQUE, REGION I, CHILE

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1 POTASH DRAGON CHILE GEOPHYSICAL SURVEY TRANSIENT ELECTROMAGNETIC (TEM) METHOD LLAMARA and SOLIDA PROJECTS SALAR DE LLAMARA, IQUIQUE, REGION I, CHILE OCTOBER 2012

2 CONTENT Page I INTRODUCTION 1 II FIELD WORK Equipment Field Configuration 2 III TEM METHOD DESCRIPTION 5 IV DATA PROCESSING D Inversion Resistivity Sections 6 V RESULTS Interpretation Sections D Model of Conductive Unit Volumes Estimation 8 VI CONCLUSIONS 11

3 FIGURES Fig. 1 Fig. 2 Fig. T-1 Fig. T-2 Fig. T-3 Fig. T-4 Fig. T-5 Fig. T-6 Fig. T-7 Fig. T-8 Fig. T-9 Fig. T-10 Fig. T-11 Fig. T-12 Fig. T-13 Fig. T-14 Fig. T-15 Fig. T-16 Fig. T-17 Fig. T-18 Fig. T-19 Fig. T-20 Fig. T-21 Fig. T-22 Fig. T-23 Fig. T-1s Fig. T-2s Fig. T-3s Fig. T-4s Fig. T-5s Fig. T-6s Fig. T-7s Fig. T-8s Fig. T-9s Fig. T-10s Fig. T-11s Location Map Satellite Image of Projects Sectors Resistivity Section (Layered Model), Llamara Project, Line N Resistivity Section (Layered Model), Llamara Project, Line N Resistivity Section (Layered Model), Llamara Project, Line N Resistivity Section (Layered Model), Llamara Project, Line N Resistivity Section (Layered Model), Llamara Project, Line N Resistivity Section (Layered Model), Llamara Project, Line N Resistivity Section (Layered Model), Llamara Project, Line N Resistivity Section (Layered Model), Llamara Project, Line N Resistivity Section (Layered Model), Llamara Project, Line N Resistivity Section (Layered Model), Llamara Project, Line N Resistivity Section (Layered Model), Llamara Project, Line N Resistivity Section (Layered Model), Solida Project, Line N Resistivity Section (Layered Model), Solida Project, Line N Resistivity Section (Layered Model), Solida Project, Line N Resistivity Section (Layered Model), Solida Project, Line N Resistivity Section (Layered Model), Solida Project, Line N Resistivity Section (Layered Model), Solida Project, Line N Resistivity Section (Layered Model), Solida Project, Line N Resistivity Section (Layered Model), Solida Project, Line N Resistivity Section (Layered Model), Solida Project, Line N Resistivity Section (Layered Model), Solida Project, Line N Resistivity Section (Layered Model), Solida Project, Line N Resistivity Section (Layered Model), Solida Project, Line N Resistivity Section (Smooth Model), Llamara Project, Line N Resistivity Section (Smooth Model), Llamara Project, Line N Resistivity Section (Smooth Model), Llamara Project, Line N Resistivity Section (Smooth Model), Llamara Project, Line N Resistivity Section (Smooth Model), Llamara Project, Line N Resistivity Section (Smooth Model), Llamara Project, Line N Resistivity Section (Smooth Model), Llamara Project, Line N Resistivity Section (Smooth Model), Llamara Project, Line N Resistivity Section (Smooth Model), Llamara Project, Line N Resistivity Section (Smooth Model), Llamara Project, Line N Resistivity Section (Smooth Model), Llamara Project, Line N

4 Fig. T-12s Fig. T-13s Fig. T-14s Fig. T-15s Fig. T-16s Fig. T-17s Fig. T-18s Fig. T-19s Fig. T-20s Fig. T-21s Fig. T-22s Fig. T-23s Fig. I-T-1 Fig. I-T-2 Fig. I-T-3 Fig. I-T-4 Fig. I-T-5 Fig. I-T-6 Fig. I-T-7 Fig. I-T-8 Fig. I-T-9 Fig. I-T-10 Fig. I-T-11 Fig. I-T-12 Fig. I-T-13 Fig. I-T-14 Fig. I-T-15 Fig. I-T-16 Fig. I-T-17 Fig. I-T-18 Fig. I-T-19 Fig. I-T-20 Fig. I-T-21 Fig. I-T-22 Fig. I-T-23 Resistivity Section (Smooth Model), Solida Project, Line N Resistivity Section (Smooth Model), Solida Project, Line N Resistivity Section (Smooth Model), Solida Project, Line N Resistivity Section (Smooth Model), Solida Project, Line N Resistivity Section (Smooth Model), Solida Project, Line N Resistivity Section (Smooth Model), Solida Project, Line N Resistivity Section (Smooth Model), Solida Project, Line N Resistivity Section (Smooth Model), Solida Project, Line N Resistivity Section (Smooth Model), Solida Project, Line N Resistivity Section (Smooth Model), Solida Project, Line N Resistivity Section (Smooth Model), Solida Project, Line N Resistivity Section (Smooth Model), Solida Project, Line N Interpretation Section, Llamara Project, Line N Interpretation Section, Llamara Project, Line N Interpretation Section, Llamara Project, Line N Interpretation Section, Llamara Project, Line N Interpretation Section, Llamara Project, Line N Interpretation Section, Llamara Project, Line N Interpretation Section, Llamara Project, Line N Interpretation Section, Llamara Project, Line N Interpretation Section, Llamara Project, Line N Interpretation Section, Llamara Project, Line N Interpretation Section, Llamara Project, Line N Interpretation Section, Solida Project, Line N Interpretation Section, Solida Project, Line N Interpretation Section, Solida Project, Line N Interpretation Section, Solida Project, Line N Interpretation Section, Solida Project, Line N Interpretation Section, Solida Project, Line N Interpretation Section, Solida Project, Line N Interpretation Section, Solida Project, Line N Interpretation Section, Solida Project, Line N Interpretation Section, Solida Project, Line N Interpretation Section, Solida Project, Line N Interpretation Section, Solida Project, Line N

5 Fig. A1 Fig. A2 Fig. A3 Fig. A4 Fig. B1 Fig. B2 Fig. B3 Fig. B4 Fig. B5 Fig. B6 Fig. B7 Fig. B8 Fig. B9 Fig. B10 Fig. B11 Fig. C1 Fig. C2 Fig. C3 Fig. C4 Fig. C5 Fig. C6 Fig. C7 Fig. C8 Fig. C9 Fig. C10 Fig. C11 Fig. C12 Fig. C13 Fig. C14 Fig. C15 Fig. C16 Fig. D Conductor Unit Maps, Llamara Project: ASTER Topographic Relief, TEM Lines and Mining Properties Resistivity of Conductor Unit Upper Surface Elevation of Conductor Unit Thickness of Conductor Unit Resistivity Maps, Llamara Project: Resistivity of Conductor Unit, Resistivity 1.0 Ωm Resistivity of Conductor Unit, Resistivity 1.2 Ωm Resistivity of Conductor Unit, Resistivity 1.4 Ωm Resistivity of Conductor Unit, Resistivity 1.6 Ωm Resistivity of Conductor Unit, Resistivity 1.8 Ωm Resistivity of Conductor Unit, Resistivity 2.0 Ωm Resistivity of Conductor Unit, Resistivity 2.2 Ωm Resistivity of Conductor Unit, Resistivity 2.4 Ωm Resistivity of Conductor Unit, Resistivity 2.6 Ωm Resistivity of Conductor Unit, Resistivity 2.8 Ωm Resistivity of Conductor Unit, Resistivity 3.0 Ωm Perspectives, Llamara Project: Topographic Relief, TEM Lines and Mining Properties, view to NE Upper Surface Elevation of Conductor Unit, view to NE Resistivity of Conductor Unit, view to NE Conductor Unit, Resistivity 3.0 Ωm, view to NE Conductor Unit, Resistivity 2.5 Ωm, view to NE Conductor Unit, Resistivity 2.0 Ωm, view to NE Conductor Unit, Resistivity 1.5 Ωm, view to NE Conductor Unit, Resistivity 1.0 Ωm, view to NE Topographic Relief, TEM Lines and Mining Properties, view to SW Upper Surface Elevation of Conductor Unit, view to SW Resistivity of Conductor Unit, view to SW Conductor Unit, Resistivity 3.0 Ωm, view to SW Conductor Unit, Resistivity 2.5 Ωm, view to SW Conductor Unit, Resistivity 2.0 Ωm, view to SW Conductor Unit, Resistivity 1.5 Ωm, view to SW Conductor Unit, Resistivity 1.0 Ωm, view to SW Volume of Conductor Unit as a function of Cut-off Resistivity, Llamara Project

6 Fig. S-A1 Fig. S-A2 Fig. S-A3 Fig. S-A4 Fig. S-B1 Fig. S-B2 Fig. S-B3 Fig. S-B4 Fig. S-B5 Fig. S-B6 Fig. S-B7 Fig. S-B8 Fig. S-B9 Fig. S-B10 Fig. S-B11 Fig. S-C1 Fig. S-C2 Fig. S-C3 Fig. S-C4 Fig. S-C5 Fig. S-C6 Fig. S-C7 Fig. S-C8 Fig. S-C9 Fig. S-C10 Fig. S-C11 Fig. S-C12 Fig. S-C13 Fig. S-C14 Fig. S-C15 Fig. S-C16 Fig. S-D Conductor Unit Maps, Solida Project: ASTER Topographic Relief, TEM Lines and Mining Properties Resistivity of Conductor Unit Upper Surface Elevation of Conductor Unit Thickness of Conductor Unit Resistivity Maps, Solida Project: Resistivity of Conductor Unit, Resistivity 1.0 Ωm Resistivity of Conductor Unit, Resistivity 1.2 Ωm Resistivity of Conductor Unit, Resistivity 1.4 Ωm Resistivity of Conductor Unit, Resistivity 1.6 Ωm Resistivity of Conductor Unit, Resistivity 1.8 Ωm Resistivity of Conductor Unit, Resistivity 2.0 Ωm Resistivity of Conductor Unit, Resistivity 2.2 Ωm Resistivity of Conductor Unit, Resistivity 2.4 Ωm Resistivity of Conductor Unit, Resistivity 2.6 Ωm Resistivity of Conductor Unit, Resistivity 2.8 Ωm Resistivity of Conductor Unit, Resistivity 3.0 Ωm Perspectives, Solida Project: Topographic Relief, TEM Lines and Mining Properties, view to NW Upper Surface Elevation of Conductor Unit, view to NW Resistivity of Conductor Unit, view to NW Conductor Unit, Resistivity 3.0 Ωm, view to NW Conductor Unit, Resistivity 2.5 Ωm, view to NW Conductor Unit, Resistivity 2.0 Ωm, view to NW Conductor Unit, Resistivity 1.5 Ωm, view to NW Conductor Unit, Resistivity 1.0 Ωm, view to NW Topographic Relief, TEM Lines and Mining Properties, view to SE Upper Surface Elevation of Conductor Unit, view to SE Resistivity of Conductor Unit, view to SE Conductor Unit, Resistivity 3.0 Ωm, view to SE Conductor Unit, Resistivity 2.5 Ωm, view to SE Conductor Unit, Resistivity 2.0 Ωm, view to SE Conductor Unit, Resistivity 1.5 Ωm, view to SE Conductor Unit, Resistivity 1.0 Ωm, view to SE Volume of Conductor Unit as a function of Cut-off Resistivity, Solida Project -*-

7 I INTRODUCTION At the request of Potash Dragon Chile, a Geophysical Survey using the Transient Electromagnetic (TEM) Method was performed in the Llamara and Solida Projects; both sectors located in the northern part of Salar de Llamara, Region I of Tarapacá, between the cities of Calama and Iquique, Chile (Figure 1). The objective of the study is the delineation in extent and depth of brine layers. According to previous experience, this geophysical technique proves to be the most suitable for the detection and quantification of saline aquifers associated with this type of environment. The Coincident Loop configuration was used for this survey, with loop size of 200x200 m2. Distance between lines was 1 Km and distance between stations along the lines was 0.5 Km. A total of 288 TEM stations were measured between last week of July and first week of September, 2012 (144 stations in Llamara and 139 in Solida). Data were processed with a 1D inversion system, using layered and smooth models, and then integrated into sections of resistivity for each line. Interpretation sections were created from layered resistivity profiles. A 3D modeled body of the brine conductor layer was generated, which is presented in perspectives and plan maps. Volume estimations were obtained from this 3D modeled body. In this printed report, graphics are show in letter size for easy display and consultation. All digital data and real scale graphics are provided in CD. Preliminary and final results have been sent to the client during field, processing and interpretation steps. 1

8 II FIELD WORK 2.1 Equipment Zonge instrument were used in this survey, consisting of a multipurpose digital receiver model GDP-32 and TEM Transmitters, Models ZT-30 and NT-20 (with batteries as a power source). The receiver is used in electrical and electromagnetic methods as TEM, NanoTEM, IP (time and frequency domains), CSAMT, AMT, etc. It use frequencies from DC to 8 KHz, has software controlled digital filters; the data are recorded in solid state memory, transferred electronically to a PC. 2.2 Field Configuration Data acquisition was conducted from July 25 to August 15, 2012 for Llamara Project (149 stations) and from August 16 to September 7, 2012 for Solida Project (139 stations). The total of 288 stations were located using non-differential GPS equipment, Datum PSAD56 19S. TEM stations were placed in a regular network of east-west lines spaced every 1 km, with points every 0.5 Km along each line. The Coincident Loop configuration was used, where the transmitting and receiving antennas are equal size loops of isolated wire concentrically deployed on the ground. Table 1 show the measuring parameters used in the TEM survey. 2

9 Table 1 TEM Survey Parameters Loop Configuration Coincident Loop Transmitting and Receiving Antennas Loops of 200x200 m 2 Repetition Frequencies 4, 8, 16 and 32 Hz Measured Variable Vertical Component of Magnetic Field Figures A1 and S-A1 shows the plan maps of TEM stations and lines on the ASTER GDEM (Advanced Spaceborne Thermal Emission and Reflection Radiometer, Global Digital Elevation Model), for Llamara and Solida Projects, respectively. This GDEM has a horizontal resolution of 30 m. Table 2 and Table 3 show the position, length and stations of each line for Llamara and Solida Projects, respectively. Table 2 TEM Lines for Llamara Project (UTM Datum PSAD56 19S) Line Stations Total Stn Northing East min. East max. Length (m) L ,657, , , L ,656, , , L ,655, , , L ,654, , , L ,653, , , L ,652, , , L ,651, , , L ,650, , , L ,649, , , L ,648, , , L ,647, , ,

10 Table 3 TEM Lines for Solida Project (UTM Datum PSAD56 19S) Line Stations Total Stn Northing East min. East max. Length (m) L ,652, , , L ,651, , , L ,650, , , L ,649, , , L ,648, , , L ,647, , , L ,646, , , L ,645, , , L ,644, , , L ,643, , , L ,642, , , L ,641, , ,

11 III TEM METHOD DESCRIPTION The TEM technique is an inductive electromagnetic method that works in the time domain. Using wire coils placed on the ground, inductive currents are generated in the subsurface and the transient magnetic field produced by the decay of these currents to stop transmission is measured. This process is repeated using waves current of type "positive-zero-negative-zero" frequencies ('repetition') usually varying between 0.5 and 32 Hz, with binary step. The induced current is distributed by diffusion and its behavior depends on the resistivity, size and shape of geoelectric structures. In low resistivity materials, dissipation is slow and the initial amplitude is small, and vice versa. Numerical analysis of the transient magnetic field curve permits to infer quantitative information about subsurface geoelectric parameters. The subsoil is investigated at different depths depending on the duration of transient time. A longer duration of the transient (i.e., lower frequency of the transmitter current) the greater the depth of penetration (and the lower the resolution), and vice versa. As inductive technique, the TEM avoids the problem of galvanic methods to try to inject current directly into the ground in areas of very high contact resistance, such as dry salt soils highly resistive (as caliche ), characteristic of certain places in northern Chile. 5

12 IV DATA PROCESSING 4.1 1D Inversion Assuming a layered model for the subsurface beneath each station, 1D inversion process allows obtaining its intrinsic resistivities and thicknesses. The data inversion was performed with the Interpex IX1D system, which has two inversion methods. The 'layered model' algorithm enables to interactively vary a user model, with a sufficient number of layers to a proper fit the theoretical curve to the observed data. The 'smooth model' algorithm performs a semi-automatic inversion, providing a large number of thin layers, with a relatively continuous variation of resistivity. In general, the layered model better reflects stratified environments, especially the interfaces depth. The smooth model can give more details of the variation of resistivity with depth. 4.2 Resistivity Sections TEM measurement stations along a line enable the detection of lateral changes of the geoelectric parameters, represented in a resistivity section. Figures T-1 to T-23 shows resistivity profiles for layered models and Figures T-1s to T-23s shows resistivity profiles for smooth models, including Llamara and Solida projects. In resistivity sections, reds indicate a low resistivity (high conductivity), which correlate with fine and/or clayed sediments saturated with saline and/or brine solutions, and blues indicate high resistivity, which correlate with dry surface sediments and bedrock, while the orange, yellow and green realize the diverse characteristics of sedimentary layers. 6

13 V RESULTS 5.1 Interpretation Sections The objective of this geophysical work is the quantitative determination of the electrical properties of the subsoil in the area of interest, consisting of sedimentary formations and occasionally basement rocks. These geoelectric properties depend on the mineralogy (lithology) and microstructure (porosity, grain size, fracturing) of the rocks, which vary significantly with depth. Also, the fluid type (salinity, saturation, etc.) greatly affects the resistivity. Structures and alteration phenomena also produce changes in resistivity that can be detected with a geoelectromagnetic survey. From the layered resistivity sections, interpretation figures were created giving geological sense to the geoelectrical layer according to some knowledge of similar environments in the northern Chile. Figures I-T-1 to I-T-11 shows the interpretative sections for Llamara Project and Figures I-T-12 to I-T-23 shows the interpretative sections for Solida Project. The interpretative correlation is exposed in Table 4. Table 4 Interpretation of Geoelectrical Layer Average resistivity intervals [Ohm-m] Dry surface sediments 2 6 Saline aquifer 1 2 Brine < 1 Highly conductive cores 3 10 Compact basal sediments > 30 High resistivity rocks Lithologic description 7

14 5.2 3D Model of Conductive Unit A 3D resistivity model of conductive geoelectric unit correlated with brine aquifer was generated (with Voxel module, Oasis Montaj software, Geosoft) from the resistivity profiles (for layered model case), allowing to better visualize the geometry and location of aquifers of interest as well to estimate the associated volumes. Resistivity, upper surface elevation and thickness plan maps of the conductor unit are shown in Figures A2, A3 and A4 for Llamara Project and Figures S-A2, S-A3 and S-A4 for Solida Project. Also, the resistivity of conductor unit for upper cut-off resistivity of 1.0 to 3.0 Ωm, every 0.2 Ωm are presented in Figures B1 to B11 for Llamara Project and Figures S-B1 to S-B11 for Solida Project. Figures C1 to C16 shows the 3D conductor unit for Llamara Project and Figures S-C1 to S-C16 shows the 3D conductor unit for Solida Project. These figures are perspectives considering different resistivity cut-off values and points of view. It should be noted that this modeled body is not properly a 3D model (ie, was not generated by a 3D inversion), but corresponds to a volume created from interpretative sections, which in turn comes from a set of real 1D models. However, in stratified cases like this sector, this type of body is a proper first approximation to the actual structure. 5.3 Volumes Estimation The 3D integration of TEM models allows an initial calculation of volumes of saturated brine aquifers. The following Tables 5 and 6 and Figures D and S-D present the results of this volume calculation as a function of upper cut-off resistivity. 8

15 Table 5 Volume of Conductor Unit as a function of cut-off resistivity, Llamara Cutoff Resistivity [Ohm-m] Volume [Millions of m3] Cutoff Resistivity [Ohm-m] Volume [Millions of m3] Fig. D Volume of Conductor Unit as a function of cut-off resistivity, Llamara 9

16 Table 6 Volume of Conductor Unit as a function of cut-off resistivity, Solida Upper Cutoff Resistivity [Ohm-m] Volume [Millions of m3] Upper Cutoff Resistivity [Ohm-m] Volume [Millions of m3] Fig. S-D Volume of Conductor Unit as a function of cut-off resistivity, Solida 10

17 VI CONCLUSIONS The Transient Electromagnetic geophysical technique has proved suitable for the investigation of highly conductive aquifers existing in Llamara Salar sector in northern Chile. According to previous experiences in similar environments, it is expected the presence of brine aquifers containing high quantities of potassium end lithium, among others elements, then becoming geological targets of economic interest. The geophysical results are presented in the form of resistivity profiles, interpretation sections and a 3D model of the conductor unit interpreted as brine aquifer. The volume of this modeled body was calculated using different cutoff values of the resistivity. These values must be considered as a first approximation, since interpolation, gridding and masking process are involved, as well as interpretive judgment in interfaces delineation in some sectors. It is considered, however, that it constitutes a starting point for calibrating the dimensions of these targets. The aquifers of interest identified in this study can be verified by some exploration drilling. Geophysical well logging is suggested to perform in the holes with Natural Gamma, Density Gamma and Neutron Compensated Porosity probes. -*- Geodatos. Santiago of Chile, October

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