Hosko

The land stripping of the deposit Hosko. Source: Endomines.

The deposit Hosko is the northernmost identified gold mineralisation along the Karelian Gold Line. The deposit lies approximately 10 kilometres north of the Pampalo mine. The studied mineralisation seems to be 600 metres long and 2-15 metres wide according to the core drilling and land stripping. The studies carried out so far approve that it is at least 100 metres deep. Just like Pampalo and other mineralisations along the Karelian Gold Line Hosko mineralisation is open to depth and along the strike. That is why Endomines considers to increase resources with further studies.

According to the geophysical and geological indications the potential auriferous zone might be as long as 7 kilometres. That has not yet been verified by systematic drilling.

The gold mineralisations in Hosko exist in a brecciated zone in greywacke of volcanic-sedimentary origin. The host rocks have altered hydrothermally to sericite rich schists. In the volcanic part it is possible to see primary volcanic-sedimentary structures as well as turbidites. The auriferous zones are characterised by, quartz, tourmaline, feldspar, arsenopyrite, pyrrhotite, marcasite and scheelite in little amounts. Some thinner massive sulphide veins occur. There are no outcrops in the area. However, Endomines has, based on the drilling and stripping, confirmed that the vast shear zones in the Karelian Gold Line characterise the formation of auriferous zones. The gold mineralisations at Hosko area are strongly tectonised which results that the richer parts now appear in sub-vertical lodes.

Exploration

The drilling in the area Hosko, totalling 8940 metres of drilling divided into 89 drill holes, indicates that the gold zone extends continuously. Locally the gold grades are high. The highest gold grades are up to hundreds of grammes per tonne. Extreme gold grades, up to 1 770 grammes per tonne (1,7 kg/t), have been analysed from some individual one metre long analyse intervals. Gold in Hosko deposit exists heterogeneously both when it comes to gold distribution and grain size. The so called nugget effect complicates the exploration work and increases costs.

Larger gold grains that exist sparsely are more difficult to catch with drilling than smaller and more homogeneously divided grains. To get the statistically acceptable results the hole size must be as large as possible and the holes have to be drilled nearby each other to obtain representative samples to assays. A deposit with large gold grains usually leads to the beneficiation with good recovery with reliable and relatively economical methods. In 1999 Endomines carried out beneficiation tests for 760 t with 4,3 g gold/t mined from Hosko. The recovery was up to 90 per cent. The Hosko mineralisation is related according to the drilling to a long IP anomaly (induced polarisation, a geophysical survey method) which has its southernmost part situated in Kuivisto West, six kilometres south of Hosko.

Hosko: Long Section View of Model Coloured by Gold Grade.

Classification of Mineral Resources

According to Runge Ltd, the Hosko deposit has 11 000 t measured mineral resources with gold grade of 49,7 g/t (3 400 oz), 519 000 t indicated mineral resources with gold grade of 3,7 g/t (61 600 oz), and 547 000 t inferred mineral resources with 1,8 g gold/t (31 400 oz). The estimates have been made with a 0,5 g/t cut-off.

The Mineral Resource is classified as Measured Mineral Resource for material within 20 metres of the open pit which has been tested by close spaced percussion drilling. The portion of the Mineral Resource where the drill spacing was generally less than 20 metres by 20 metres showing good lode and grade lode continuity was classified as Indicated Mineral Resource. The remainder of the resource was classified as Inferred Mineral Resource as it was extrapolated beyond the limit of drilling or comprised isolated, discontinuous zones of mineralisation.

The resource and reserve estimates comply with recommendations in the Australasian Code for Reporting of Mineral Resources and Ore Reserves prepared in 2004 by the Joint Ore Reserves Committee (JORC).

3D model of Hosko deposit with the existing drill holes.

Hosko Ore Reserves

Table. Ore Reserves in Hosko, May 2009 (JORC – Code 2004)

A three-dimensional model of the mining area at Hosko

Planned Future Works

Some infill drilling is needed especially in northern parts of the mineralisation. Some new holes have to be drilled with a profile distance of 12,5 metres. Also some of the earlier holes have to be redrilled with a thicker core barrel suitable for this kind of mineralisation. Some new modern geophysical surveys are planned to be performed in the areas that are considered the most interesting.

The gold mineralisations are tied to a brecciated zone in graywacke with tectonically dependent ”gold pipe”. The horizontal length of the pipe is approximately 25 metres and its known depth is 100 metres.

Reservations, Claims, and Licences for Mining Operations

The deposit Hosko is covered by an amount of claims from which some can be extended maximum to the summer 2010. That is why Endomines applied for a mining license for the deposit September 2007.