The 40 acre “U.P. & Burlington” mine near Salmon, Idaho contains two Federal patented mining claims which we acquired for the purpose of the exploration and potential development.

The project is a tight vein system with historical production, significant material grades, excellent metallurgy and modest permitting requirements. We have received all necessary permits and have begun bulk sampling program. The vein is surface-exposed, allowing for ease of extraction, while allowing for further resource confirmation via opening and assaying the existing adits.

Classification of Resources

A survey published in 1935 estimated 26,870 ounces of recoverable Au, from 38,650 tons of ore with an average grade of 0.6686 ounces per ton (opt). At this stage of the project, it is difficult to classify the projected ore blocks with any confidence or ability to meet reporting criteria. However, we believe that the assumptions used in the survey are reasonable based on the available data. With the proper evaluation/documentation of these ore blocks, they could fall into a resource classification under the Canadian National Instrument regulations. Even with the work to meet the Canadian regulations, it is likely these historic resources would only meet the classification of “mineralized material” under the U.S. Security and Exchange Commission.

This is not to imply any negative qualities of the historic resource; significant changes have occurred in both the U.S. and Canada regarding resource/reserve reporting making it more difficult to report what was generally accepted just a few years ago. This has limited public companies’ ability to keep shareholders or future investors informed. The U.S. SEC has become even more restrictive and has completely eliminated “resource” classification. They classify material as either mineralized or as a reserve. The information presented would not likely qualify under either regulatory authority for reserves.

Using more modern terminology, the following conclusions are reasonable from the data presented in the 1935 reserve report: Indicated Resource of 58,600 tons averaging 0.6623 opt Au (1935 “developed” ore); Inferred Resource of 64,000 tons averaging 0.5057 opt Au (1935 “probable” ore); Probable Reserve of 38,650 tons averaging 0.6623 opt Au (1935 “developed” ore). The “probable ore reserve” from the report would probably not qualify as an actual reserve, even after the subtractions for un-minable areas, unless it was qualified as hypothetical. U.S. SEC rules governing reserves require that a bankable feasibility be completed and that it is likely the project will be permitted to allow mineralized material to be classified as a reserve.

It is important to note that the 1935 report states that the width sampled was only on “favorable” portions of the vein, and other portions of the vein had lower values not desirable in 1907. The numbers used in the reserve calculations do not represent those lower value portions. Obviously, today’s gold prices and mine operating costs are significantly different than 1935 and the lower values may be feasible to mine and could be converted to resources with drilling and other geologic investigation techniques.
Chip channel sampling performed within the last two years by the current owners resulted in significant gold values including 0.422 opt Au over 8.5 feet and 0.905 opt Au over 3 feet. Although this sampling effort was too minimal to allow for any updating of the historic resource calculations, the results certainly indicate that further investigation of the property is warranted.

Regional Geology

The U.P. & Burlington mine is one of numerous epithermal precious metal deposits spatially and genetically related to the trans-Challis fault system, a broad northeast-trending structural system that has been traced 270 kilometers across the center of the state of Idaho, from Idaho City and the Boise Basin in the southwest, to the Montana border beyond the city of Salmon in the northeast. Features of the trans-Challis fault system such as the extent and linearity of the system, the high-angle nature of the faults, aligned grabens, Eocene igneous intrusions, a caldera, and post-intrusive adjustment along the faults, all indicate that the regional structure is a major zone of Eocene rifting and crustal extension. Faults and fractures, domes, and grabens of the trans-Challis fault system controlled the locations for vein-filling precious metals and hydrothermal activity. (Bennett, 1984; Kilsgaard & others, 1986; Johnson & others, 1988).

The Boise Basin, at the southwest end of the trans-Challis fault system, produced 2.9 million ounces from 1863-1980, more gold than any other mining locality in Idaho. At the opposite, northeastern end of the fault system, there are more than a dozen epithermal gold-silver deposits of Tertiary age with common characteristics, including the U.P. & Burlington mine. They are all vein deposits with simple mineralogy (i.e. quartz gangue) with free gold and auriferous pyrite, and they are in northeast-trending shears or fissures of the trans-Challis fault system. Mineral deposits along the trans-Challis structural system are hosted by a variety of country rock types: Upper Cretaceous granitic rocks of the Idaho batholith, Tertiary dikes, Eocene plutonic rocks and dikes, Paleozoic or PreCambrian roof pendants within the Idaho batholith, pyroclastic rocks of the Eocene Challis volcanics, or, as in the case of the U.P. & Burlington mine, Precambrian meta-sedimentary and igneous rocks. (Kilsgaard & others, 1986).

Geologic mapping in the 1980’s (Connor & Evans, 1986) shows the U.P. & Burlington property to be underlain by both middle Proterozoic granite, and the middle unit of the Yellowjacket Formation quartzitic sediments, with the contact between quartzite and granite lying somewhere within the property. More recent research, however, has redefined the Yellowjacket Formation to a more restricted locale, and the quartzites at the U.P. & Burlington property are identified as part of the Lemhi Group, more particularly the Mesoproterozoic Gunsight Formation.