South Tally Pond Project

100% Paragon

Target: Precious metal-rich Volcanogenic Massive Sulphide (VMS) Deposits (Cu, Pb, Zn, Ag, Au)

Highlights

• Large, 100%-controlled land position located adjacent to the producing Duck Pond Cu-Zn Mine (Teck Resources Ltd.)

• Highly prospective, producing volcanic belt with numerous, underexplored Cu-Pb-Zn-Ag-Au VMS targets.

• 74 drillholes totalling 24,277 metres completed at Lemarchant prospect;

• Significant precious metal-rich base metal drill intercepts include:
  • 1.65% Cu, 12.74% Zn, 3.27% Pb, 185.75 g/t Ag and 10.13 g/t Au over 7.0 metres
  • 1.61% Cu, 11.83% Zn, 3.27% Pb, 528.31 g/t Ag and 3.13 g/t Au over 10.3 metres
  • 1.40% Cu, 14.80% Zn, 3.56% Pb, 80.90 g/t Ag and 1.35 g/t Au over 17.05 metres 

• Initial NI43-101 Mineral Resource Estimate completed on the Lemarchant “Main Zone” in January 2012.

• Lemarchant Deposit is defined to 210 metres depth and remains open along strike and to depth.

Property Information

The 100% controlled South Tally Pond VMS Project is located in central Newfoundland, approximately 90 kilometres southwest of Grand Falls-Windsor. The property borders and extends southwest of Teck's Duck Pond Mine. The property area is accessible by well-maintained logging/mining roads originating from paved highway at Millertown. Secondary logging roads and logging trails provide good access to various parts of the property.

The project consists of 10 contiguous mineral licences (856 claims) that cover a total area of 21,400 hectares (214 square kilometres). Paragon can earn a 100% interest in the property area which was acquired through a combination of company staking (100%-owned), option agreements with local prospectors (100% earned-in) and Altius Resources Inc (earning-in).  Portions of the property are subject to underlying net smelter royalties of up to 2% to previous owners.

History

The central Newfoundland region has a rich-history of base metal production beginning with the world-class Buchan's Zn-Cu deposits which were mined by Asarco from 1928 to 1984. In 2006, mining operations began at the Duck Pond Cu-Zn mine owned by Teck Resources. The Duck Pond mine is the first producing mine in the Tally Pond volcanic belt of which approximately 60% is covered by Paragon's South Tally Pond VMS Project.

Since 2007, Paragon has focused primarily on the Lemarchant Prospect where Paragon is aggressively advancing a significant massive sulphide discovery.  Outside of the Lemarchant area, there remain numerous other, underexplored priority VMS targets on the South Tally Pond project area.  These areas have seen limited or no drilling and include the Beaver Lake Area, Bindons Pond Area, Rogerson Lake Area, Spencers Pond Area, Duck Pond West Area, and Gills Pond Area. 

Regional Geology

The South Tally Pond VMS Project is situated within the Cambrian Tally Pond volcanic belt, a 45 km long by up to 8 km wide northeast-trending volcanic belt that extends from Sandy Lake in the northeast to Victoria Lake in the southwest. The volcanic rocks consist of a bi-modal sequence of felsic and mafic volcanics, associated pyroclastic rocks and related intrusive rocks. The belt has a high proportion of subaqueous rhyolite flow domes which are particularly important hosts for VMS-style mineralization. Thin beds of graphitic argillite and siltstone are often intercalated with the volcanic rocks and represent local hiatuses in the volcanic activity. The volcanic sequences are capped by younger Ordovician black graphitic argillite, siltstone and greywacke.

The Tally Pond volcanic belt is host to Teck's Duck Pond Mine, a precious metal-rich Cu-Zn-Pb VMS deposit containing 5.48 million tonnes of 3.3% copper, 5.8% zinc, 0.9% lead, 59 g/t silver and 0.86 g/t gold. The Duck Pond deposit consists of a number of relatively flat-lying massive to semi-massive sulphide lenses composed of pyrite, chalcopyrite, sphalerite and galena at, or near the top of, an altered felsic volcanic horizon located between 200 and 850 metres below surface. The Cu-Zn mineralized envelope is tabular shaped with a plan view dimension of 250 metres by 450 metres and thickness of about 20 metres.  Lenses of barren massive pyrite occur peripheral to, and between, the Cu-Zn-Pb mineralized lenses.

Lemarchant Discovery

The Lemarchant Deposit is a precious metal-rich polymetalic massive sulphide deposit.  The mineralization occurs at, or near the top of, a subaqueous rhyolite dome that is hydrothermally altered and fractured. The altered and mineralized rhyolite are overlain by discontinuous thin beds of pyrite-rich graphitic argillite which in turn are overlain to the east by pillowed to massive mafic volcanic rocks. Sulphides are medium grained and consist of various proportions of sphalerite, pyrite, chalcopyrite and galena.  Barite is often present and can locally be massive and intensely fractured by the sulphides.  A surface alteration zone associated with the mineralization has been outlined over a strike length of at least 2 kilometres and has strong similarities to the alteration signature at the Duck Pond Mine.  Both areas display intense feldspar-destruction and aluminum-enrichment with concomitant magnesium-enrichment peripheral to the mineralization.

Since 2007, Paragon has completed 60 drillholes for 21,259.1 metres at the Lemarchant Prospect. This drilling has outlined a significant zone of semi-massive to massive sulphide mineralization over a 500 metre strike length. The mineralization remains open for expansion.

In January 2012, Paragon completed an initial NI43-101 mineral resource estimate on the Lemarchant Main Zone. The resource estimate was completed by Gary Giroux of Giroux Consultants Limited (“Giroux”) and provided the following indicated and inferred resource estimate:

• Indicated Mineral Resource of 1.24 million tonnes grading 5.38% zinc, 0.58% copper, 1.19% lead, 1.01 g/t gold and 59.17 g/t silver (15.40% ZnEQ) using a 7.5% zinc equivalent grade cut-off.


• Inferred Mineral Resource of 1.34 million tonnes grading 3.70% zinc, 0.41% copper, 0.86% lead, 1.00 g/t gold and 50.41 g/t silver (11.97% ZnEQ) using a 7.5% zinc equivalent grade cut-off.

Indicated and inferred mineral resource estimates for the Lemarchant Deposit are tabulated below for a range of zinc equivalent (ZnEQ) cut-off values.  The effective date of the resource estimate is January 16, 2011.

1. CIM definitions were followed for the estimation of mineral resources and include drillholes up to September 2011.
2. Mineral resources are estimated at a ZnEQ cut-off where ZnEQ% = ((Zn% * 22.05 * Zn Recovery * Zn Price) + (Cu% *22.05 * Cu Recovery * Cu Price) + (Pb%*22.05*Pb Recovery*Pb Price) + (Au * Au Recovery * Au Price / 31.1035) + (Ag *Ag Recovery * Ag Price/31.1035)) / (22.05*Zn Recovery*Zn Price).
3. Metal price assumptions are US$0.88/lb Zn, US$3.15/lb Cu, US$0.91/lb Pb, US$1350/oz Au and US$26.57/oz Ag.
4. Metal recovery assumptions are based on preliminary metallurgical results of 68.4% Zn, 83.4% Cu, 92.9% Pb, 75.6% Au and 86.9% Ag.
5. Zinc, Copper, Lead, Gold and Silver assays were capped at 46.0% Zn, 5.5% Cu, 12.5% Pb, 14.0g/t Au and 800g/t Ag.
6. Specific gravity (SG) measurements were taken on most of the samples, where actual measurements were not available either stoichiometric values were calculated or average SG values were used.
7.  No economic evaluation has been undertaken.  A ZnEQ cut-off grade of 7.5% was selected as a reasonable cut-off grade for underground development.  

All significant Lemarchant drill intercepts from are provided on the following link 

Lemarchant - Drill Assay Results