Mine Area Geology
The earliest available source describes the U.P. & Burlington mine geology as follows: “The vein, which strikes N42ºE and dips 80-87ºNW, lies in the granite about 100 yards from its contact with the quartzites. The walls are firm and about 5 feet apart, the interim being filled with coarse gouge and vein matter. In most places the vein is about 10 inches wide, but locally it widens to 2 feet or narrows to a stringer. In some places it is split into two or more parallel bands, separated by gouge. The quartz is clear and coarsely crystalline and contains a few vugs lined with crystals of the same material. Pyrite occurs in coarse isolated cubes, bunches of cubes, and in a few fine-grained bands. It varies greatly in amount, in places constituting as much as 15 per cent of a face and in others being entirely absent.” (Umpleby, 1913).
Guewilik describes the property geology as follows: “The vein strikes N40ºE and dips 80º plus west. It is in granite formation, near the granite contact with the quartzite. It outcrops the whole length of the U.P. claim and part of the Burlington. The U.P. claim lies on the slope of a steep hill, the crest of which is the NE end line of the U.P. and the beginning of the Burlington claim. The Burlington claim lies on flat ground; heavy overburden covers the continuation of the outcrop and no effort has been made to expose it further. The vein is of fissure type filled with quartz and coarse gouge. Gouge is mostly crushed quartz, partly schist as found in No. 5 tunnel. Gold is deposited partly free, rest is found in pyrite, there are no other minerals worthy of mention found in the vein.” (Guewilik, 1935).
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. The granites Tysdal, 2000).
Sample descriptions and photographs from the 2011-2012 sampling near the No. 5 and No. 6 tunnels and dumps describe granite, quartzite, sheared quartzite, white quartz vein with or without sulfides (pyrite, sphalerite, galena, chalcopyrite), sheared quartz vein, strongly iron-oxidized fault zone, and rock gouge.
The 1935 reserve report presents computation of “developed and probable ore reserves” based on “map records” (Guewilik, 1935). KMS has reviewed the 1935 report, but the map records on which it is based were not available for review. The calculations presented in the 1935 report are summarized in the following table, which has retained the terminology from the report. A discussion of the terminology will follow the table.
Guewilik calculated the “Tons” column amounts of “developed” ore by simply computing a volume of vein material and applying a tonnage factor (13 cubic feet per ton which calculates to 2.46 metric tonnes per cubic meter). The columns labeled “OPT” and “Ounces” were calculated from Guewilik’s tonnage and value figures. The column labeled “Tons of Minable Ore” resulted from Guewilik’s subtraction of 20, 25 or 30 per cent of the resource tons to account for possibly un-minable ore. The column labeled “Ounces Recoverable” was calculated because of Guewilik’s estimation of 90% mill recovery.
The three blocks of “developed” ore add up to 58,600 tons at an average grade of 0.6686 opt Au for 38,813 ounces before any subtractions for mining. Guewilik reduced that amount to 38,650 tons/29,856 ounces minable and 26,870 ounces recoverable. Guewilik compares this reserve to the ore reserves originally shown on a 1907 map as Blocks A through E. The original 1907 reserves reportedly totaled 14,702 tons at a value of $13.50 per ton ($20 Au) or 0.675 opt Au. Guewilik cites improved mining and metallurgical processes over the interceding 28 years as the reason for the increased reserves.
For the two areas of “probable ore reserves,” Guewilik postulated that it was reasonable to assume two factors: (1) that the vein continues 300 feet along strike to the northeast with the same width and grade as the “developed” ore reserve, and (2) that the mineralization continues 150 feet below the lowest adit at grades equal to the grades evident in the lowest adit, the No. 6 tunnel. However, he conservatively assumed a slightly decreased value in the zone below the 1934 sampling (3.28 feet and 0.2677 opt Au) resulting in a total resource of 165,260 tons at 0.2677 opt Au before any subtractions.
As a worst case scenario, and “to show the margin of safety,” drift sample results from November 1934 sampling of drift No.5 were used in further calculations on page 6 of the 1935 report. Areas of vein surface were not changed, but the vein width and grade were taken from below the workings.
This is a conservative and appropriate way to assess the potential ore blocks and the associated tonnage. Survey samples collected by Mr. Brewer and reviewed as part of this audit, supports grades and width could be significantly better.
Classification of Resources
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, KMS believe that the assumptions used 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 likely 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; however, it should be noted that Brewer Exploration made recommendations that are intended to meet guidance that would meet resource classification. More importantly, this would provide information needed to make a production decision. The 1935 reserve report refers to maps that were not available for review, including a 1914 map by Emerson Hill. These unavailable maps presumably showed vein widths and assays along the drifts, as well as the mapped outlines of three reserve blocks of developed ore. Without being able to see that actual data, KMS cannot render an opinion on the average vein thickness or the average grade. Instead, our review has assumed that the widths and grades used in the 1935 calculations accurately represent the data. Surface exposure of the vein system indicates the widths are consistent with the historical assumptions used.
As a conceptual test of the extent of the vein, the areas reported for each block were compared with cross-sectional areas through the claims, from the adit to the crest of the hill, and with the lengths of the six drifts. It was determined that the areas used in the “developed” ore reserve calculations are reasonable, given the information available. Furthermore, the 64,000 tons estimated for the “probable” category is considered reasonable if three assumptions are made: a 500 foot height for the northern extension, a 1500 foot length (longest adit plus 300) for the portion below the workings, and a 1.85 foot vein width for the portion below the workings.
Assuming the work outlined by Brewer Exploration is successful, the historic resources may meet the Canadian National Instrument 43-101 rules. Using this 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 in either 1914 or 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.