The Chahnaly low-sulfidation epithermal Au deposit and nearby Au prospects are located northwest of the intermittently active Bazman stratovolcano on the western end of the Makran volcanic arc, which formed as the result of subduction of the remnant Neo-Tethyan oceanic crust beneath the Lut block. The arc hosts the Siah Jangal epithermal and Kharestan porphyry prospects, near Taftan volcano, as well as the Saindak Cu-Au porphyry deposit and world-class Reko Diq Cu-Au porphyry deposit, near Koh-i-Sultan volcano to the east-northeast in Pakistan. The host rocks for the Chahnaly deposit include early Miocene andesite and andesitic volcaniclastic rocks that are intruded by younger dacitic domes. Unaltered late Miocene dacitic ignimbrites overlie these rocks. Laser ablation-inductively coupled plasma-mass spectrometry (LA-ICP-MS) U-Pb zircon geochronology data yield ages between 21.8 and 9.9 Ma for the acidic-intermediate regional volcanism. The most recent volcanic activity of the Bazman stratovolcano involved extrusion of an olivine basalt during Pliocene to Quaternary times. Interpretation of geochemical data indicate that the volcanic rocks are synsubduction and calc-alkaline to subalkaline. The lack of a significant negative Eu anomaly, a listric-shaped rare earth element pattern, and moderate La/Yb ratios of host suites indicate a high water content of the source magma.

Gold and electrum are temporally and spatially related to a series of structurally controlled, 030°-trending, subvertical hydrothermal breccias with chalcedony-adularia that cut porphyritic andesite and andesitic volcaniclastic rocks. Gold is associated with pyrite, a siliceous matrix of hydrothermal breccia, and previously formed vein clasts, as well as with iron oxides and hydroxides in oxidized zones. Rare silver minerals include Ag-bearing electrum and naumannite, iodargyrite, an unnamed silver diiodide, and hessite. Hydrothermal alteration is generally well developed surrounding the ore-bearing hydrothermal breccia. The main types of alteration in the area include an inner ~0.5- to 20-m-thick gold-bearing hydrothermal breccia composed of quartz-chalcedonyadularia-illite-pyrite, a ~5- to 50-m-thick zone of quartz, chalcedony, pyrite, illitic phengite, phengite, illitic muscovite, illite, illitic paragonite, paragonite, muscovite, montmorillonite and, rarely, siderite, and a 30- to 70-m outer propylitic zone of Fe-Mg chlorite, calcite, ankerite, dolomite, epidote, palygorskite, and pyrite.

The Chahnaly Au deposit formed during the early stages of magmatism. LA-ICP-MS zircon U-Pb geochronology of host andesite and 40Ar/39Ar dating of two samples of gold-associated adularia show that the ore-stage adularia (19.83 ± 0.10 and 19.2 ± 0.5 Ma) is younger, by as much as 1.5 million years, than the volcanic host rock (20.32 ± 0.4 Ma). Therefore, either hydrothermal activity continued well after volcanism or a second magmatic event rejuvenated hydrothermal activity. This second magmatic event may be related to eruption of porphyritic andesite at ~20.32 ± 0.40 Ma, which is within error of ~19.83 ± 0.10 Ma adularia. The new LA-ICP-MS zircon U-Pb host rock and vein adularia 40Ar/39Ar ages suggest that early Miocene magmatism and mineralization in the Bazman area is of a similar age to that of the Saindak porphyry and Tanjeel porphyry center of the giant Reko Diq deposit. This confirms the existence of early Miocene arc magmatism and mineralization along the Iranian part of the Makran volcanic arc. Ore, alteration mineralogy, and alteration patterns indicate that the Chahnaly deposit is a typical low-sulfidation epithermal Au deposit, located in a poorly explored part of the Makran volcanic arc in Iran.