Gladiator Gold Mine Project. Crown King, Yavapai County, Arizona. Overview of Geologic Potential

Transcription

1 Gladiator Gold Mine Project Crown King, Yavapai County, Arizona Overview of Geologic Potential Written By: Damir Cukor, P. Geo. Latest Revised Date: Nov. 10, 2015

2 Gladiator Gold Mine Geological & Resource Overview: 1. Introduction Proposed reopening of the Gladiator Gold Mine Project comprises: Phase 1, surface mining of the crown pillar, remaining from the 1930 s and the 1980 s underground mining; Phase 2, extension of these underground workings to depth; Phase 3, expanding the underground development to adjacent vein structures The Phase 1 mining concept is based on the historic resource estimate made in 1997 by Jim Park (Gladiator Mine geologist during the 1980 s mining), and supported by production figures from past mining activity (directly below the crown pillar). 2. Location and Claims The Gladiator Gold Mine Project Property is located approximately 65 miles NW of Phoenix, in Yavapai County, Arizona. Access is by road to Crown King, from where Crown King Roads Department maintained roads lead to and onto the property. The property comprises 2300 contiguous acres, with 24 patented mining claims and 89 BLM claims. The surface expression of the Gladiator -War Eagle structure lies fully on patented ground. Please see Appendix A and B 3. Infrastructure The nearest supply centres are Prescott and Phoenix; some of the exploration, construction and mining personnel can be sourced locally, but most will be from either Prescott or Phoenix. Housing and Electric power is available in Crown King; diesel generators are required for powering the process facilities, as estimates received from APS (Arizona Public Service) to extend power to the Gladiator millsite have been deemed to be cost prohibitive. Cellular telephone and internet are available most everywhere on the project area and in Crown King. Two wells on the property are capable of supplying a total of 25 gallons per minute; these wells have provided sufficient water for the last cycle of mining in the late 1980 s. 4. Mineralized Structure The Gladiator-War Eagle vein is part of an en-echelon vein system trending approximately 22 degrees and comprising some eight individual vein systems within the boundaries of the project. The currently-mapped mineralized corridor exceeds 11,000 ft in length and is almost 7000 ft wide. Underground workings from past mining on the Gladiator -War Eagle vein extends 2500ft along strike and to a known depth of approximately 600ft below surface; the vein structure dips steeply to the west, at an attitude conducive to narrow-vein underground mining methods. The vein structure is conceptualized as possibly extending at least another 1200ft beyond the currently mined depth, using the Crown King Mine as a model for the area; additional drilling and

3 sampling will be required to test the structure down-dip. Four main ore shoots have been the focus of previous mining, an average ore grade of 0.43 oz/t Au is recorded in archived smelter receipts. 5. Geology and Metalogeny Structures comprising the mineralized corridor are hosted by a package of Proterozoic meta-volcanics and pelitic meta-sediments, overturned into a steeply dipping monocline. Mineralized structures are interpreted to be concordant or semi-concordant with schistosity. Work done by Noranda Explorations in the early 1980 s identifies the first mineralizing event as volcanic exhalative in origin; subsequent events include remobilization of this mineralization. Additionally, several subsequent mineralizing events are suggested from the complex interelemental correlations identified by the Noranda geochemical study. 6. Alteration Extended weathering has zoned the deposit: a deeply weathered horizon, the oxide zone or iron cap is found at surface, and reportedly extends to approximately 200ft below surface; a gradational transition zone gives way to the sulphide zone at depth; the haulage level is fully within the sulphide zone. Phase 1 will be conducted as open cut mining of the crown pillar, fully within the top of the oxide zone. It is important to note that during oxidation, sulphides alter to oxides, and silicates to clay materials; while some of the metals variably dissolve and are remobilized. The result of oxidation is that the rock hardness is diminished and gold previously associated with sulphides appears to have been liberated; thus mining and crushing costs for surface operation in oxides is reduced significantly from that of the underground ores in the sulphide zone, meanwhile gold grade is expected to remain within a range similar to that of the sulphide zone. It is noteworthy that the Noranda geochemical study links enhanced gold values (20% elevation in grade) in iron gossan zones to supergene enrichment; the oxide zone thus could potentially exhibit greater values than those found in the sulphide zones directly below. 7. Phase 1- Mining and Processing: The process circuit designed for the Gladiator- War Eagle oxide zone is based on gravity concentration, specifically centrifugal concentrators, while the sulphide zone circuit is based on both gravity and flotation. Mining is conceptualized to commence with bulldozer stripping of overburden, as well as some cutting of the footwall and hanging wall; an excavator is to perform surface-cut mining generally in 20ft benches and in 400ft alternating cuts. A fleet of 2 or 3 all-wheel drive 7 ton 10 ton dump trucks will be utilised to haul ore to the mill; a 40-ton articulated mining truck will be added to the fleet (once cash-flow is established) to minimize road construction and allow for efficient ore haulage from distal locations on the structure. The crushing and milling circuit comprises a coarse ore bin, jaw crusher, a cone crusher, a -3/8in screen, impact mills and a ball mill. Processing is by gravity circuit: a jig and centrifugal concentrator are planned in a

4 recirculating circuit with oversize material returned to the ball mill for additional grinding until -150 mesh size is achieved all fine material passes through a scavenging circuit comprising of another centrifugal concentrator and jig combination Concentrates, depending on grade go directly to secured storage or are upgraded on a shaker table. Dewatering will take place on the final tails and will comprise of a dewatering cyclone, thickener followed by filtration with the process water then sent to a clarifying circuit for reuse in the circuit; this will eliminate discharge and minimize the make-up water requirements for ongoing operation. Please see Appendix C 8. Phase 2 Conceptualized Mining and Processing: The planned Phase 2 mining comprises deepening the mining conducted in the 1930 s and the late 1980 s; the ore is entirely within the sulphide zone. Historic reserves estimates have been calculated by Jim Park, based on underground sampling, and drilling. Park revised the estimates several times over the years, with additional drilling adding tonnage and ounces; tonnage also varies with different selected mining widths. A comprehensive Historical Reserves Estimate calculated in 2010 from the four ore shoots on the Gladiator vein, and two adjacent veins yields: Proven Ore: 104,302 t at oz/t Au and 2.44 oz/t Ag Probable Ore: 93, 273 at oz/t Au and 2.51 oz/t Ag The current concept is to commence Phase 2 mining on the D-Zone; the D-Zone Historic Estimate numbers from the 2010 calculations: Proven Ore: 23,306 tons at oz/t Au and 1.64 oz/t Ag Probable Ore: 15,214 tons at oz/t Au and 3.49 oz/t Ag Drilling is planned to validate the estimate numbers above, using current industry standards for surveying, sampling QAQC and analysis. The Historic Reserves would thus translate to current resources. Additional engineering work is necessary in order to calculate reserves to current industry standards. Production figures and smelter receipts from the 1930s and 1980 s lend support to the Historic Reserves Estimates, recording similar grades of gold and silver. The planned process circuit is designed generally similar to the 1980 s circuit, with flotation the main method of recovery. Metallurgical consultants have suggested modernizing the circuit: product separation to zinc and copper concentrates as well as the addition of a centrifugal concentrator, potentially the same centrifugal concentrator from Phase 1 process. It has been opined that the 89% recovery, achieved in the 1980 s could be significantly improved. Metallurgical testing is planned to validate these concepts.

5 9. Phase 3 Close-Proximity Vein Structures & Potential Development: From west to east, some of the parallel veins cover former producing mines, including: the Del Pasco Mine, the Crown King Mine north extension, Spring Green vein, Fairview Mine and the Lincoln Mine. Del Pasco Mine was the first mine to be discovered in the Crown King area. Mine grades of $50 per ton were reported in 1880 s; gold was $20 per ounce at the time. Nor-Quest holds over 5000 feet of potential vein strike length within BLM claims on this structure. Crown King Mine north extension Nor-Quest has 4000 feet of potential vein strike length on its patented mine claims. Fairview Mine Soil sample survey indicates 7500 feet of gold anomalies that are on strike and open to the north. 300 feet of underground sampling (26 samples) show an average of 0.5 opt Gold over a 5 ft. width. Outcrop and soil sampling infers a potential additional parallel vein which warrants further exploration. Lincoln Mine Underground maps, smelter receipts and underground sampling of the south end workings indicate an ore shoot 40 feet wide and 350 feet long. Verification sampling will be required along with trenching, drilling and underground rehabilitation of the above structures to validate the historic results above. 10. Environmental and Permitting for Phase 2 : Reported to the author from Blair Carson. Blair has reported meeting with ADEQ (Arizona Department Of Environmental Quality); ADEQ stated that if an inert tailings product can be produced and all water storage facilities were inspectable above ground, that an APP (Aquifer Protection Permit) would not be necessary. Blair has expressed his expectation that the material can be neutralised and returned underground utilizing known paste backfill technology ; this would be dependent on a final bulk sulphide float to create an inert tails product. A permit may be necessary for a tailings impoundment; an old tailings impoundment is currently located on-site; permitting for an expansion of the facility should not be onerous. The key permit to be obtained for long-term operations is the APP; obtaining an APP should be routine. Nor-Quest s environmental consultant estimates it will take about months to obtain, with about 6 months of data-gathering and testing, and 6-12 months of review process and approval. As a comparison, American Bonanza s Copperstone Mine a very similar sized project in Arizona successfully obtained their APP in 12 months. The biggest constraint on the process is associated with lack of manpower in the ADEQ.; Accordingly ADEQ now has a list of pre-approved consultants to help expedite the review and approval process, there is an added cost for this, as they are independent

6 consultants. The Nor-Quest consultants are familiar with the process, and sufficiently well-connected with the relevant authorities to guide permitting to completion. No other permits appear to be serious issues. In Arizona the level of permitting is very localised and county-centric, notably in the Bradshaw Mountains area permitting is much easier than elsewhere in the state. Road upgrade permits are currently easy to obtain (or unnecessary) a bridge takes a couple of months to permit. Road construction and maintenance is viewed favourably as a mechanism of creating employment in a portion of the Yavapai County where the economy is struggling. Public relations and stakeholder liaison has been addressed by the owner, Blair Carson. Nor-Quest Arizona Inc. and the project has been promoted in the local communities, building strong relations with key people, and providing financial and moral support to key issues. Yavapai County officials have been both receptive and supportive of the project thus far. 11. Conclusions and Recommendations: The historic resource estimate for surface mining of the oxides will be augmented by systematic trenching and bulk sampling. Due to grade variability and nugget effect, a robust bulk sampling program is planned: 40-ton composite samples from mined ores are to be processed through the main mill circuit; measured grade will determine if the rest of the mined ore is to be processed or returned to the surface cut. A drill program is to be planned, following compilation of historic drill and sampling data into a modern database and 3D model. Gladiator Gold Mine Project SWOT Analysis Strengths: Arizona is a mining-friendly jurisdiction and the area of the Bradshaw Mountains has had a lengthy mining history since the late 1800's. Gold was mined on the Gladiator and War Eagle at turn of the 20th century, in the 1930's and again in the 1980's. The mine was shut down due to low prices of gold - the mine was not mined-out. The Gladiator War Eagle Project is a small high grade low tonnage narrow-vein gold deposit with accessory silver, copper and zinc. The size is well above that of artisanal mines, but generally below that of projects found in public companies - ideal for a privately run operation. Mineralization averaging approximately 0.43 oz/t Au was found and mined from four ore shoots, along a strike length of roughly 2500ft; mine workings extend from near surface to depths exceeding 600ft below. The structure thus demonstrates continuity both along strike and dip. It is fully expected that similar

7 grades continue into the crown pillar above the mined ore shoots (as well as below the old mine workings). The crown pillar comprises of 'oxide zone' materials; the mineralized structure is characterized by clayey-sandy material with quartz vein and quartz stockwork veinlets. In December 2014 six test pits were dug with an excavator to depths of 20 ft below surface. No drilling and blasting was necessary thus far; mining is thus expected to be simple and cheap in comparison. Mineralized material was delivered to Blue Coast Metallurgical Laboratories for bench-scale testing. A set of samples was run through a gravity circuit comprising a centrifugal concentrator (60% recovery, from a head grade of 0.36 oz/t Au). Conclusion: a centrifugal concentrator successfully recovers gold from the Gladiator War Eagle Phase 1 oxide ore. The mining team comprises highly qualified personnel: the owner and operations manager on the project, Blair Carson, is a seasoned ex-sgs metallurgical pilot plant manager; the project geologist is the author, Damir Cukor, a Qualified Person under NI and JORC regulations and metallurgical support will be provided by Blue Coast Metallurgical - Chris Martin is a highly respected ex-sgs metallurgist. Weakness: Scarcity of surface water; two wells are located on the property one with a capacity of 5gpm and the second at 20gpm. Water has been saved in storage tanks and the lowest portions of the mine below the haulage levels are flooded - if need arises, this water can be pumped to the mill, proximal to the mine haulage level portal. The area of Crown King is recorded as the wettest area in Arizona; there should be sufficient precipitation to recharge the aquifer to sustain the water wells. For Phase 1 there will be sufficient water; for Phase 2, water will have to be considered as a limiting factor when designing mining and milling operations (note that there was sufficient water for operations in the 1980's). The life-of-mine for Phase 1 is extremely short - there may be little time for optimizing recoveries...however the known recovery rate and high grades are projected to be sufficient for supporting a profitable operation. Opportunity: The opportunity in Phase 1 for an early run of gold concentrate is very good; the premium offered, combined with set delivery schedule and equipment collateral make this a very attractive offer. The opportunity for Phase 2 is also very attractive; historic production figures and historic drilling and sampling results will be supported with a planned program of new drilling and sampling.

8 Threats: Water scarcity will be a limiting factor...however the amount of water currently available for Phase 1 is more than adequate (especially at Phase 1 early stages ) Lack of mineralization or problem with recovery - very slim chance of either, since historic operations processed oxide ores in workings directly below the crown pillar Phase 1 target. Testing performed in laboratory with centrifugal concentrators has produced very good gold concentrate. Collapse of commodity price below operational costs: the likelihood is almost nil. Damir Cukor, P.Geo. Nov 10, 2015

9 Appendix A

10 Appendix B

11 Appendix C