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1
Update on Lode Mineral Resource and Reserve Estimates,
Antimony‐Gold Lode Deposits, Nolan Creek,
Wiseman B‐1 Quadrangle, Koyukuk Mining District, Alaska
July 9
th
, 2011
NI 43‐101F1 Technical Report For:
Silverado Gold Mines, Ltd.
1820‐1111 West Georgia Street
Vancouver, British Columbia,
CANADA V6E 4M3
Prepared by:
Thomas K. Bundtzen
AIPG Certified Professional Geologist2
Pacific Rim Geological Consulting Inc.
P.O. Box 81906, 4868 Old Airport Road
Fairbanks, Alaska, 99708
Fax: +1 907 458-8511
Phone: +1 907 458-8951
Email: bundtzen@mosquitonet.com
Website: www.pacrimgeol.com
Cover photo: Massive, re-crystallized, fine
grained, granoblastic stibnite (Sb2S3) intercepted in
diamond drill core DDH 09SH-05, Workman’s
bench lode, Wiseman B-1 Quadrangle, Alaska.
True thickness of the massive stibnite interval
estimated to be 1.6 feet. The sampled interval
(09SS022-23) contained 69.21% antimony and
0.251 oz/ton gold. Photo by Karl Sharp
Important Notice
This report was prepared as a National Instrument
43-101 Technical Report in accordance with Form
43-101F1, for Silverado Gold Mines Ltd. (the
Client), by a Qualified Person, Thomas K.
Bundtzen, President of Pacific Rim Geological
Consulting Inc. (the Contractor). The quality of
information, conclusions, and estimates contained
in this report are based on: 1) information
available at the time of preparation as of January
6th
, 2010; 2) data from outside sources; and 3) the
assumptions, conditions, and qualifications as put
forth by the writer of the report. This report is
intended to be used by the Client, subject to terms
and conditions of the Contractor. The relationship
permits the Client to file this report as a Technical
Report with applicable securities regulatory
authorities pursuant to provincial securities
legislation.
In accordance with Form NI43-101F1, Technical
Report Instructions, this report is not required to
include certain items that have been previously
reported in the following NI43-101 Technical
Reports, which are filed on SEDAR
(www.SEDAR.com); also accessed @
http://www.silverado.com/: 1) Estimation of
Lode and Placer Mineral resources, Nolan Creek,
Wiseman B-1 Quadrangle, Koyukuk Mining
District, Northern Alaska, July 29th
, 2008; and 2)
Update of Mineral Resource and Reserve
Estimates and Preliminary Feasibility Study,
Workman’s Bench Antimony-Gold Lode Deposit,
Wiseman B-1 Quadrangle, Koyukuk Mining
District, Northern Alaska, January 1, 2009,
Amended June 1, 2009. Reference is made in this
Technical Report to those previously released
sections for which no new information has been
acquired since their release.3
Contents
1 Summary……………………………………………………………………………………….
1.1 Property description and location………………………………………………………
1.2 Ownership………………………………………………………………………………
1.3 Geology and Mineralization……………………………………………………………
1.4 Development and operations……………………………………………………………
1.5 Exploration concept…………………………………………………………………….
1.6 Status of Exploration……………………………………………………………………
1.7 Mineral Resources and Reserves……………………………………………………….
1.8 Conclusions and recommendations…………………………………………………….
2 Introduction and terms of reference …………………………………………………………...
2.1 Source of data and information…………………………………………………………
2.2 Scope of personal inspections…………………………………………………………..
2.3 Units of measure………………………………………………………………………..
3 Disclaimer……………………………………………………………………………………..
4 Property description and location………………………………………………………………
4.1 Mineral tenure…………………………………………………………………………..
4.2 Silverado’s property title and interest……………………………………………………
4.3 Location and maintenance of property boundaries………………………………………
4.4 Location of mineralized zones, mine workings, and mineral resources…………………
4.5 Environmental liabilities…………………………………………………………………
4.6 Permit and general regulatory requirements…………………………………………….
5 Accessibility, climate, local resources, infrastructure, and physiography……………………..
5.1 Infrastructure……………………………………………………………………………..
6 History…………………………………………………………………………………………..
6.1 Historical ownership of property…………………………………………………………
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6.2 Exploration and development by previous owners……………………………………….
6.3 Historical production……………………………………………………………………..
7 Geological Setting……………………………………………………………………………….
8 Deposit types…………………………………………………………………………………….
9 Mineralization……………………………………………………………………………………
9.1 Lode Deposits…………………………………………………………………………….
9.2 Placer Deposits…………………………………………………………………………..
10 Exploration………………………………………………………………………………………
10.1 Results of placer and lode exploration…………………………………………………..
10.2 Placer gold deposits……………………………………………………………………..
10.3 Lode deposits…………………………………………………………………………….
10.4 Origin of exploration data……………………………………………………………….
11 Drilling…………………………………………………………………………………………..
11.1 Placer drilling programs…………………………………………………………………
11.2 Lode Drilling Program…………………………………………………………………..
12 Sampling method and approach…………………………………………………………………
12.1 Placer deposits………………………………………………………………………….
12.2 Lode deposits……………………………………………………………………………
13 Sample preparation, analyses, and security……………………………………………………..
13.1 Independence of sample preparation and analysis……………………………………..
13.2 Sample preparation and analytical procedures…………………………………………
13.3 Quality control and quality assurance…………………………………………………..
14 Data verification…………………………………………………………………………………
14.1 Data verification by qualified person…………………………………………………...
14.2 Exploration data limitations…………………………………………………………….
15 Adjacent properties……………………………………………………………………………
16 Mineral processing and metallurgical testing…………………………………………………
16.1 Placer deposits…………………………………………………………………………
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16.2 Lode Deposits………………………………………………………………………….
16.3 Trace element content of mineralization………………………………………………
17 Mineral resource and mineral reserve estimates………………………………………………..
17.1 Summary………………………………………………………………………………
17.2 Disclosure……………………………………………………………………………..
17.3 Known issues that materially affect mineral resources and mineral reserves…………
17.4 Assumptions, methods, and parameters……………………………………………….
17.5 Placer gold resources estimation………………………………………………………
17.6 Expanded explanation of methodology used in calculating resources…………………
17.6.1 Continuity between control points for the vein-faults, Nolan Creek…………………
17.6.2 True thickness versus measured thickness…………………………………………….
17.6.3 Dilution with respect to classifying lode mineral resources, Nolan Creek……………
17.6.4 Polygonal method used in analysis of lode mineral resources, Nolan Creek………….
17.6.5 Analysis of antimony and gold grade data at Nolan Creek……………………………
17.6.6 Additional assay data rejected during Nolan Creek evaluation………………………..
17.6.7 Specific Gravity, cut-off, and tonnage factors used in the resource calculations……
17.7 Probable reserve estimate from lode antimony gold deposit, Workman’s Bench……...
17.8 Indicated lode resource estimate, Workman’s Bench antimony-gold deposit…………
17.9 Inferred lode resource estimate, Pringle Bench and Workman’s Bench………………
17.10 Comparisons between polygonal versus Vulcan block computer method……………..
18 Other relevant data and information……………………………………………………………
18.1 Prefeasibility study Workman’s Bench……………………………………………….
18.2 Mining………………………………………………………………………………..
18.3 Processing…………………………………………………………………………….
18.4 Administration, Engineering, and Infrastructure……………………………………...
18.5 Environmental and Social Considerations…………………………………………….
18.6 Project Implementation Schedule…………………………………………………….
18.7 Capital Costs…………………………………………………………………………..
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18.8 Operating Costs……………………………………………………………………….
18.9 Economic Analysis……………………………………………………………………
19 Interpretation and conclusions…………………………………………………………………
19.1 Lode antimony-gold mineralization…………………………………………………..
19.2 Placer gold mineralization…………………………………………………………….
20 Recommendations……………………………………………………………………………...
20.1 Lode exploration and development…………………………………………………..
20.2 Placer exploration and development…………………………………………………
20.3 Budget requirements………………………………………………………………….
21 Dates and signature……………………………………………………………………………..
22 References……………………………………………………………………………………..
23 Certificates…………………………………………………………………………………….
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Figures
Figure 4.1 Figure 4.1 Silverado updated placer claim configuration, Nolan Creek,
August 28
th
, 2010, as plotted on sectional base………………………………………….
Figure 4.2 Figure 4.2 Silverado updated lode claim configuration, Nolan Creek,
August 28
th
, 2010………………………………………………………………………
Figure 4.3 Location map of Nolan Creek placer and lode mineral deposits………………………..
Figure 5.1 Nolan Creek location map……………………………………………………………….
Figure 6.1 Location of areas test-mined by Silverado……………………………………………….
Figure 7. 1 Geologic map of the Nolan Creek area Koyukuk District; modified from
Dillon and Reifenstuhl (1990) and Hamilton (1979)…………………………………….
Figure 9.1 Photomicrographs, Workman’s Bench mineralized system……………………………..
Figure 10.1 Map of Nolan Creek Basin illustrating 870 Khz geophysical anomaly in gray………..
Figure 10.2 Section of 1994 drill hole results for Workman’s Bench……………………………….
Figure 10.3 Summary of 2004 and 2007 soil anomalies in Workman bench and Hillside areas…..
Figure 10.4 Combined VLF-EM data acquired by Silverado during 2004 and 2007……………….
Figure 10.5 VLF-EM survey of Fortress Area showing both northeast structural trend……………
Figure 10.6 Stacked geochemical and structural data set in Fortress gold-bearing trend…………..
Figure 11.1 Plan View of Workman’s Bench, showing locations of three cross sectional profiles…
Figure 11.2 Schematic cross sectional profile A-A’, Workman’s Bench……………………………
Figure 11.3 Schematic cross sectional profile B-B’, Workman’s Bench…………………………….
Figure 11.4 Schematic cross sectional profile C-C’, Workman’s Bench…………………………….
Figure 11.5 Plan View of Pringle Bench, showing location of cross sectional profile D-D’……….
Figure 11.6 Schematic cross sectional profile D-D’, Pringle Bench………………………………..
Figure 12.1 Location of underground development and channel samples, Workman’s Bench……..
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Figure 16.1 Tabled Rougher Concentrate from bulk sample from Workman’s Bench Deposit…….
Figure 16.2 Hazen mineralogical separation process flowchart , Workman’s Bench bulk sample….
Figure 16.3 Gold (bright color) in stibnite (gray grain), Workman’s Bench Bulk sample…………..
Figure 16.4 Stibnite-gold concentrate from table product—example 1……………………………..
Figure 16.5 Stibnite-gold concentrate from table product—example 2…………………………….
Figure 16.6 Drill plan showing Hg analyses in intercepts…………………………………………..
Figure 17.1 Histogram plots of antimony and gold, Workman’s Bench and Pringle bench………..
Figure 17.2 Correlation coefficients for assay intervals from Workman’s bench………………….
Figure 17.3 Surface view of Workman’s bench mineralized zones…………………………………
Figure 17.4 Probable reserve polygons for ‘A’ zone, Workman’s Bench…………………………..
Figure 17.5 Probable reserve polygons for ‘B’ Zone, Workman’s Bench…………………………..
Figure 17.6 Probable reserve polygons for the ‘West Zone, Workman’s Bench…………………….
Figure 17.7 Indicated resource polygons for ‘A’ Zone, Workman’s Bench…………………… ….
Figure 17.8 Indicated resource polygons for ‘B’ Zone, Workman’s Bench…………………………
Figure 17.9 Inferred Resources polygons for ‘A’ Zone, Workman’s Bench………………………
Figure 17.10 Inferred resource polygons for ‘B’ Zone, Workman’s Bench………………………..
Figure 17.11 Inferred resource polygons for ‘C’ Zone, Workman’s Bench…………………………
Figure 17. 12 Inferred resource polygons for ‘West’ Zone, Workman’s Bench…………………….
Figure 17.13 Surface view of Pringle Bench showing 2007 and 2009 drill hole collars……………
Figure 17.14 Inferred resource polygons for ‘A’ Zone, Pringle Bench……………………………
Figure 17.15 Inferred resource polygons for West Zone, Pringle Bench…………………………….
Figure 17.16 Plan view of Workman’s bench ‘A’ zone, showing distribution of Vulcan blocks……
Figure 17.17 Side profile of Workman’s Bench ‘A’ zone showing Vulcan blocks………………….
Figure 18.1 Simplified outline illustrating mine infrastructure, Nolan lode mine development…….
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Figure 18.2 Simplified surface plan view, proposed Workman’s Bench underground development..
Figure 18.3 Spiral decline into Workman’s Bench deposit…………………………………………
Figure 18.4 Simplified concept of the working face, Workman’s Bench deposit……………………
Figure 18.5 Side panel of proposed Workman’s Bench mine……………………………………….
Figure 18.6 Side panel of proposed Workman’s bench cut and fill method…………………………
Figure 18.7 Ventilation design, proposed Workman’s bench mine development……………………
Figure 18.8 ‘A’ Crosscut looking southeast. Note near-horizontal phyllitic schist bands…………..
Figure 18.9 Core logging summary from 2007 core drilling………………………………………...
Figure 18.10 Mill flow sheet, Nolan Lode Project. From Sepro Systems
TM
, 12/31/08…………….
Figure 18.11 Simplified flow sheet showing separation of Sb and Au……………………………...
Figure 18.12 Illustration of gravity separation of Sb and Au……………………………………….
Figure 18.13 Overview of Nolan Camp……………………………………………………………..
Figure 18.14 Shop facility at Nolan Camp showing mechanic working on mining equipment……..
Figure 18.15 Reclaimed mined lands, valley of Nolan Creek, near left limit bench, 2008 …………
Figure 18.16 Five year antimony price in USD/lb Source: www. Metalprices.com…………………..
Figure 18.17 Five year gold price in USD/ounce ; source: www.Goldprice.com...............................
Figure 18.18 Price sensitivity diagrams for antimony and gold, Nolan Lode Project ….………….
Figure 18.19 Variation of NPV with interest rates………………………………………………….
Figure 20.1 Priority I 2011 work program for Workman’s Bench, illustrating drill pattern…………
Figure 20.2 Priority II 2011 program for Pringle Bench, illustrating drill pattern…………………..
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Tables
Table 1.1 Silverado’s placer gold mineral resources, Nolan Creek--------------------------------------
Table 1.2 Silverado’s probable lode mineral reserves, Nolan Creek area------------------------------
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Table 1.3 Total Indicated lode mineral resources, Workman’s Bench Nolan Creek-------------------
Table 1.4 Total inferred lode mineral resources, Workman’s Bench and Pringle Bench---------------
Table 2. 1 Units of measure used in this report---------------------------------------------------------------
Table 4.1 Regulatory Agency Listing Involved with Silverado’s Nolan Creek Plan of Operations
and Environmental Assessment (EA); continued through December 31, 2010-------------
Table 6.1 Placer gold production from Silverado properties, 1979 to 2007, Nolan Creek--------------
Table 10. 1 Summary of exploration activities, Nolan Creek, 1981 to 2009------------------------------
Table 10.2 Summary of Silverado’s soil sampling programs, Nolan Creek, 2003 to 2007-------------
Table 10.3 Summary of Silverado VLF/EM data, Nolan Creek, 2004 to 2008--------------------------
Table 10.4 Summary of Silverado exploration trenches, Nolan Creek, 2004 to 2007------------------
Table 11.1 Summary of lode drilling programs---------------------------------------------------------------
Table 11.2 Collar location, Pringle Bench, 2006, 2007, and 2009 Exploration Campaigns-----------
Table 11.3 Collar location and data Workman’s Bench; 2007, 2008, and 2009 exploration------------
Table 12.1 Table of selected sample composites , 2009 Workman’s Bench drilling program---------
Table 14.1 Duplicate analytical comparisons between QP and Silverado contractor samples-------
Table 14.2 List of Duplicate Samples Workman’s Bench Drilling Program 2008--------------------
Table 16.1. Composition of the Heavy-Liquid Sink Product----------------------------------------------
Table 16.2 Stibnite quality from Amalgamet-Canada versus Workman’s Bench samples-------------
Table 17.1 Silverado’s placer gold mineral resources, Nolan Creek—see notes--------------------------
Table 17.2 Silverado’s probable lode mineral reserves, Nolan Creek area------------------------------
Table 17.3 Total Indicated lode mineral resources, Workman’s Bench Nolan Creek-----------------
Table 17.4 Inferred lode mineral resources, Workman’s Bench and Pringle Bench Nolan Creek---
Table 17.5 Sample assay intervals from Workman’s and Pringle Bench deposit, Nolan Creek-------
Table 17.6 Comparisons between assay interval and true thickness estimates---------------------------
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Table 17.7 Characteristics of indicated resources-probable reserves versus inferred resources-------
Table 17.8 Analysis of high grade gold intervals Workman’s bench and Pringle Bench---------------
Table 17.9 Specific gravity (SG) measurements (ASTM C 127) from mineralized intervals----------
Table 17.10 Polygonal probable reserve block summary, ‘A’ zone, Workman’s Bench---------------
Table 17.11 Polygonal probable reserve block summary ‘B’ Zone, Workman’s Bench----------------
Table 17.12 Polygonal probable reserve block summary ‘West’ Zone, Workman’s Bench-----------
Table 17.13 Summary data for probable reserves in ‘A’, ‘B’, and ‘West’ Zones, Nolan Creek------
Table 17.14 Polygonal block summary from 2009 Drill Program, A-Zone, Workman’s Bench------
Table 17.15 Polygonal block summary from 2009 Drill Program, B-Zone, Workman’s bench, -----
Table 17.16 Polygonal block inferred resource estimate, ‘C’ Zone, Workman’s Bench---------------
Table 7.17 Polygonal block inferred resource estimate, ‘A’ Zone, Workman’s Bench----------------
Table 7.18 Polygonal block inferred resource estimate, ‘West’ Zone, Workman’s Bench------------
Table 17.19 Polygonal block inferred resource estimate, ‘B’ Zone, Workman’s Bench---------------
Table 17.20 Summary of inferred antimony an gold resources, Workman’s Bench---------------------
Table 17.21 Inferred resource calculation for ‘A’ Zone, Pringle Bench, from Bundtzen (2009b)-----
Table 17.22 Inferred resource calculation for ‘A’ Zone, Pringle Bench (This Technical Report)----
Table 17.23 Inferred resource calculation for ‘West’ Zone, Pringle Bench (Bundtzen, 2009b)------
Table 17.24 Inferred resource calculation for West-Zone, Pringle Bench (This Technical Report---
Table 17.25 Total inferred resource calculation, Pringle Bench, Nolan Creek--------------------------
Table 17.26 Indicated resources from ‘A’ Zone, Workman’s bench calculated with Vulcan----------
Table 17.26 Comparison of resource estimates between Polygonal versus Vulcan methods-----------
Table 18.1 Five year mine plan, Workman’s Bench/Nolan Lode Projec---------------------------------
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Table 18.2 Annual schedule for Nolan Creek lode development when in full production-------------
Table 18.3 Base case mill production schedule--------------------------------------------------------------
Table 18.4 Summary of core employment requirements for the Nolan Lode Project------------------
Table 18.5 State agencies involved in permitting Nolan Lode Project-----------------------------------
Table 18.6 Federal agencies involved in permitting Nolan Lode Projec---------------------------------
Table 18.7 Critical elements of Plan of Operation/Environmental Assessment, Nolan----------------
Table 18.8 Water Quality Management objectives, Nolan project----------------------------------------
Table 18.9 Initial permit goals for Silverado’s Nolan lode development. for 2009 and 2010---------
Table 18.10 Results of field rinses, Nolan project------------------------------------------------------------
Table 18.11 Underground environmental sampling, for ML/ARD, Nolan lode--------------------------
Table 18.12 Project implementation schedule---------------------------------------------------------------
Table 18.13 Capital cost categories and sources for estimates---------------------------------------------
Table 18.14 Itemized capital cost estimates, Nolan Lode Project------------------------------------------
Table 18.15 Operating cost categories and sources for estimates------------------------------------------
Table 18.16 Project monthly and annual operating costs when in commercial production-------------
Table 18.17 Year-by-year summary of operating costs, Nolan Lode Project-----------------------------
Table 18.18 Macro assumptions, output of gold and stibnite (antimony), Nolan Lode Project--------
Table 18.19 Base Case cash flow analysis Nolan Lode Project--------------------------------------------
Table 18.20 Rates of return for base case---------------------------------------------------------------------
Table 18.21 Cash flow assuming dilution (2.0 ft wide zone); 85 % Sb 90 % Au recoveries----------
Table 18.22 Rate of return assuming dilution (2.0 ft wide zone); 85 % Sb and 90 % Au recoveries-
Table 18.23 Cash flow assuming 80 percent Sb recovery and 85 percent Au recovery-----------------
Table 18.24 Rate of return assuming 80 percent Sb recovery and 85 percent Au recovery------------
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Table 18.25 Cash flow assuming dilution (2.0 ft wide zone); 80 % Sb and 85 % Au recoveries-----
Table 18.26 Rate of return assuming dilution (2.0 ft wide zone); 80 % Sb and 85 % Au recoveries -
Table 18.27 Cash flow assuming $3.00/lb Sb and $900/oz Au--------------------------------------------
Table 18.28 Rate of return assuming $3.00/lb Sb and $900/oz Au----------------------------------------
Table 18.29 Cash flow assuming $3.00/lb Sb and $600/oz gold-------------------------------------------
Table 18.30 Rate of return assuming $3.00/lb Sb and $600/oz gold---------------------------------------
Table 18.31 Cash flow assuming $1.00lb Sb and $600/oz Au---------------------------------------------
Table 18.32 Rate of return assuming $1.00/lb Sb and $600/oz Au----------------------------------------
Table 18.33 Cash flow assuming $1.00/lb Sb and $900/oz Au---------------------------------------------
Table 18.34 Rate of return assuming $1.00/lb Sb and $900/oz Au----------------------------------------
Table 18.35 Cash flow analysis summary assuming various economic criteria-------------------------
Table 20.1 Budget estimate, Nolan Creek exploration program-------------------------------------------
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APPENDIX I: Summary of Relevant Sample Data Used in Calculation of all Categories
of Sb and Au Resources from Workman’s Bench That are Described in this Technical Report;
Including Relevant Trace Element Data………………………………………………………………
APPENDIX II Summary of Relevant Sample Data Used in Calculation of Inferred Sb and Au
Resources from Pringle Bench That are Described in this Technical Report………………………....
APPENDIX III Comparisons between assay interval and true thickness estimates of veinfaults, Nolan Creek area………………………………………………………………...
APPENDIX IV Tonnage Factor Calculations for Vulcan Test…………………………….
APPENDIX V Resume of Will Robinson …………………………………………………..
APPENDIX VI Claim Update Summary, Nolan Creek Area………………………………
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1 Summary
1.1 Property description and location
This Technical Report discloses the results of 2009 exploration conducted by Silverado Gold Mines, Ltd. in
the Nolan Creek Area (Nolan Creek) of the historic Koyukuk Mining District of Northern Alaska.
According to government reports, historic placer gold production in the area is about 350,000 oz of placerstyle gold. Silverado Gold Mines Ltd. (Silverado) is exploring and developing placer-style gold deposits and
vein-hosted gold-stibnite deposits in this area. Nolan Creek is about 175 mi north-northwest of Fairbanks,
Alaska. This analysis is focused on the lode antimony-gold deposits.
Nolan Creek is part of the Koyukuk Mining District, which covers about 12,500 sq mi (32,000 km2
), is
bounded on the east by the South Fork of Koyukuk River, the Alatna River on the west, the continental
divide of the Brooks Range on the north, and the Kanuti River Basin on the south. Nolan Creek is at the
center of the Koyukuk Mining District. Elevations in the area range from 4,635 ft on Vermont Dome to
about 1,220 ft on the floodplain of the Middle Fork of the Koyukuk River.
Silverado’s mine properties occur in the SE1/4, Township 31 North, Range 12 West, the NE1/4, Township
30 North, Range 12 West, and SW1/4, Township 31 North, Range 11 West, Fairbanks Meridian. All of the
mining claims occur in the Wiseman B-1 USGS quadrangle of northern Alaska.
Regularly scheduled commuter flights from Fairbanks to the state-maintained Coldfoot airport are currently
provided by Wright Air Service Inc. Silverado’s Nolan Creek properties are road-accessible from Fairbanks
via the Dalton Highway.
1.2 Ownership
Government records as of August 28th
, 2010 indicate that Silverado Gold Mines Inc., a wholly owned
subsidiary of Silverado, holds numerous mining claims at Nolan Creek. Silverado’s claim groups consist of
placer and lode claims; the U.S. Mining Law of 1872 (amended) allows for a locater to stake either a placer
deposit or a lode deposit. Silverado has 204 unpatented, federal placer mining claims covering approximately
4,080 acres (1,651 ha) in three, non-contiguous groups and 408 unpatented federal lode mining claims
covering approximately 8,140 acres (3,294 ha). The total is 612 federal mining claims.
The majority of all federal mining claims are fully controlled by Silverado. Payment of claim holding fees for
the 2010 calendar year were due on or before December 1, 2010, with annual claim assessment due
September 1st
of each year. The last claim holding payments were made on August 28th
, 2010. The QP
inspected all federal records, which demonstrates that required maintenance fees have been paid. In 2009,
the USBLM raised claim assessment fees to $140/claim, up from $125/claim. The Thompson Pup claim
group of six placer claims is subject to a purchase royalty of 3% of net profits on 80% of gold production,
payable to third parties.
Silverado’s third placer claim group, referred to as the Hammond Property, contains 60 contiguous federal
placer and lode claims leased from Alaska Mining Company (ALMINCO) in the Hammond River drainage
northeast of the Nolan Creek Gold Project claims.
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1.3 Geology and mineralization
The bedrock geology of Nolan Creek is dominated by units of the Brooks Range schist belt, a poly-deformed
package of schist, greenstone, and orthogneiss. The schist belt is part of the Coldfoot sub-terrane of the
Arctic Alaska terrane, which underlies more than 75% of the south flank of the Brooks Range.
The Workman’s Bench and Pringle Bench properties contain quartz-stibnite-gold veins that cut a high-angle,
structurally controlled zone that is 150 ft to 300 ft wide and at least 1,600 ft in length. These quartz-only and
stibnite-quartz (gold) veins strike northeast and cross-cut low angle cleavage at steep to vertical angles.
Besides locally massive stibnite, the quartz-carbonate vein stock works also contain arsenopyrite.
The gold-stibnite-quartz veins of Nolan Creek Valley strongly resemble the gold-antimony deposit type (U.S.
Geological Survey Deposit Model 36C). These deposits are characterized by the presence of stibnite,
berthierite, high fineness gold, and aurostibnite hosted in metamorphosed, quartz-carbonate-bearing,
compressive shear zones within low grade, greenschist facies metamorphic rocks. The deposit types are
characterized by deformed, ductile fabrics and tectonically re-crystallized, fine grained, granoblastic stibnite
lobes and lenses.
The gold-antimony deposit type 36C is considered to be a sub-type of the mesothermal, auriferous lodes
found in mineral provinces worldwide. Mineral deposit type 36C is not very well documented in North
America but well studied in Asia, Europe, and Africa. Worldwide examples include deposits in the Transvaal
of South Africa, the Reefton District in New Zealand, and deposits in Eastern Europe and in Russia.
Olympiada in Siberia is an example of a large, productive gold (stibnite) deposit of this type.
Placer gold deposits eroding from the Sb-Au vein deposits have formed in valleys and on benches of Nolan
Creek valley and the Hammond River areas.
1.4 Development and operations
For 14 of the last 29 years, Silverado has produced minor amounts placer gold during seasonal test-mining
periods. From 1979 to 2007, Silverado’s production activities involved the test-mining of placer gold from:
• The main channels of Archibald and Fay Creeks, which are left limit tributaries of Nolan Creek;
• The Nolan Deep and 3B1 Channels, which are ancestral fluvial concentrations of Nolan Creek
basin; and
• A number of individual bench placer deposits designated Wooll, Mary’s, West Block, Swede’s
Channel, Eureka, Dolney, and Workman’s Bench placer deposits that represent left limit
segments of ancestral channels of Nolan Creek valley
In each case, production was initiated only after exploration had been completed. Total production from
1981 to 2007 was 23,150 oz of placer gold recovered from 271,771 cu yd of gravel at an average grade of
0.085 oz /cu yd gold. There has been no production since 2007. More than two-thirds of the total gold
output has been from the underground drift mining of frozen auriferous gravel. The remaining gold
production has come from the exploitation of shallow placer deposits using open cut mining methods. 16
Lode antimony development was confined to the World War II Era, when approximately 5 tonnes of massive
stibnite was extracted from surface exposures of massive stibnite on Smith Creek and shipped to market.
Silverado has not produced any lode materials from the Nolan Creek area.
1.5 Exploration concept
Silverado has engaged in both lode and placer exploration for more than 25 years. Until 2006, however,
Silverado was focused on exploration for placer-style gold. Silverado has drilled 910 reverse circulation (RC)
drill holes to explore the bench and channel placer deposits of the Nolan Creek and Hammond River areas.
This exploration has led to the development and the test mining of placer deposits at Nolan Creek. This
includes development and test mining of the relatively high grade, Mary’s Bench and Ogden-Eureka Bench
deposits in 1994; the West Block and 3B1 Underground deposits in 1995, the Swede Channel development in
both 1999 and during 2005 to 2006; and the Mary’s East deposit during 2007.
Silverado recently refocused its exploration efforts on the lode potential of the area. From 1994 to 2009
exploration drilling for lode gold deposits totaled 3,230 ft (990 m) in 15 RC drill holes and 21,144 ft (6,446 m)
in 72 shallow core drill holes. Samples have been analyzed for gold, antimony (stibnite is a sulphide of
antimony), and other metals. A systematic soil sampling grid totaling 1,383 samples covers portions of the
mineralized trends in Smith Creek area and Fortress Mountain. Silverado has defined a northeast-trending
zone of antimony-arsenic-gold anomalies as a result of this soil sampling program.
1.6 Status of exploration
The 2007-2009 core drilling, limited to first phase campaigns on Pringle and Workman’s Bench, indicated the
existence of persistent, northeast-striking, steeply dipping, antimony-gold structural zones on Silverado’s lode
claims. The drilling helped to identify:
• A 150 ft to 300 ft wide, diffuse zone of antimony-gold-bearing quartz veinlets on Pringle Bench
with individual veins typically 1 in to 3 in wide but up to 2.0 feet wide in the main ‘A’ Zone
vein-fault;
• A focused zone averaging about 110 ft thick on Workman’s Bench that contains semi-massive
to massive stibnite zones up to 1.6 feet in thickness in the main ‘A’ Zone vein-fault
• A clear linkage between mineralized zones on Pringle and Workman’s Bench, for a combined
strike length of approximately 3,500 ft (which was confirmed in 2009); and
• Elevated gold values in most stibnite-bearing sample in core or in channels. Grades of
antimony range from 20.0-28.0 percent in various resource categories; gold averages about 0.35
ounce/ton (see Tables 1.1-to-1.4 below).
The results of the 2007-2008 drill campaign prompted Silverado to focus more exploration work on
Workman’s Bench with the aim to market and process selected high grade stibnite-bearing areas. Workman’s
Bench was accessed with 570 ft of underground workings late in 2007 for the purpose of conducting detailed
channel sampling and metallurgical studies. A 400 lb bulk sample of stibnite-bearing mineralization was
submitted in 2008 for a bench testing to Hazen Research Inc. Preliminary results show that during a flotation
test, about 98% of the gold was recovered in 38% of the weight and assayed 0.542 oz/ton. A 15 kg, -20
mesh ‘rougher concentrate’ yielded three separate, streamed products: gangue minerals, stibnite, and
arsenopyrite-gold. In 2009, a core drilling program was resumed on both Pringle and Workman’s Bench. 17
1.7 Mineral resources and reserves
Mr. Thomas K. Bundtzen, President of Pacific Rim Geological Consulting Inc. (Pacific Rim), and
independent Qualified Person (QP) for this project, has estimated indicated and inferred placer gold
resources, inferred and indicated lode antimony and gold mineral resources on Workman’s Bench and Pringle
bench, and a probable reserve of lode antimony and gold on Workman’s Bench. These mineral resources
are reported in Table 1.1, Table 1.2, Table 1.3, and Table 1.4.
Table 1.1 Silverado’s placer gold mineral resources, Nolan Creek
Resource
category
Cut-off
grade
(oz/cu yd
Au)
Quantity
(cu yd)
Grade
(oz/cu yd Au)
Metal
(oz Au)
Indicated 0.06 66,800 0.095 6,250
Inferred 0.01 185,670 0.033 6,177
Notes:
The effective date of these resources is July 29
th
, 2008
Rounding may result in some discrepancies.
No processing recovery factors have been applied to these resource figures
The industry standard unit of quantity for Alaskan placer deposit is cubic yards. The weight of a cubic yard varies, but averages about
2.4 short tons.
Table 1.2 Silverado’s probable lode mineral reserves, Nolan Creek area
Reserve
Category
Cut-off
grade
(% Sb)
Quantity
(ton)
Grade
(% Sb)
Metal
(ton Sb)
Grade
(oz/ton Au)
Metal
(oz Au)
Probable 4.0 42,412 28.00 11,880 0.408 17,300
Notes:
The effective date of these probable reserves is January 1, 2009
Assumed processing recoveries for the base case are 90% gold recovery and 85% antimony recovery. The unit ton refers to short tons.
Rounding may result in some discrepancies.
Cut-off grade is 4.0% Sb ‘equivalent’, which refers to the combined values of gold plus antimony expressed in terms of antimony. The assumed
prices for this analysis was $700/ounce gold and $2.25/pound antimony
Table 1.3 Total Indicated lode mineral resources, Workman’s Bench Nolan Creek
Resource Vein-Fault Cut-off grade Quantity Grade Metal Grade Metal
Category Ore Zone (% Sb) (short tons) (% Sb) (ton Sb) (oz/ton Au) (oz Au)
Indicated A Zone 4.0 10,424 19.72 2,056.6 0.248 2,584.9
Indicated B Zone 4.0 780 19.61 153.0 0.105 82.6
Indicated A and B
Combined
4.0 11,204 19.71 2,209.6 0.238 2,667.5
Notes:
The effective date of these resources Is July 9th, 2011
Mineral Resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be
materially affected by environmental, permitting, legal, title, taxation, socio‐political, marketing, or other relevant issues.
Rounding may result in some discrepancies.
No processing recovery factors have been applied to these resource figures. The unit ton refers to short tons
Cut-off grade is 4.0% Sb ‘equivalent’, which refers to the combined values of gold plus antimony expressed in terms of antimony. The assumed
prices for this analysis was $700/ounce gold and $2.25/pound antimony18
Table 1.4 Total inferred lode mineral resources, Workman’s Bench and Pringle Bench Nolan Creek
Resource Deposit Cut-off grade Quantity Grade Metal Grade Metal
Category (% Sb) (short tons) (% Sb) (ton Sb) (oz/ton Au) (oz Au)
Inferred Pringle 4.0 12,817 19.61 2,513.8 0.499 6,390.4
Inferred Workman’s
Bench
4.0 19,642 11.17 2,194.7 0.273 5,362.1
Total Inferred Workman’s
Pringle Benches
4.0 32,459 14.50 4,708.5 0.362 11,752.5
Notes:
The effective date of these resources is March 7
th
, 2011.
Mineral Resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially
affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
Rounding may result in some minor discrepancies.
No processing recovery factors have been applied to these resource figures. The unit ton refers to short tons.
Cut-off grade is 4.0% Sb ‘equivalent’, which refers to the combined values of gold plus antimony expressed in terms of antimony. The assumed prices
for this analysis was $700/ounce gold and $2.25/pound antimony
To confirm the results of the polygonal method of lode resource estimation used at Nolan Creek, the QP
initiated a comparison in which the ‘A’ Zone on Workman’s Bench was tested using a VulcanTM computer
block model and compared those results determined by the polygonal method. The results show that
indicated resources as calculated using the polygonal method compare within a few percent of resources
determined by the Vulcan method (see pages 125-127 of this Technical Report for details). The QP
concludes that the polygonal resource estimation method selected for this study is valid.
On July 29th
, 2008, the QP released the NI 43-101 Report: ‘Estimation of Lode and Placer Mineral
Resources, Nolan Creek, Wiseman B-1 Quadrangle, Koyukuk District, Northern Alaska’. This Technical
Report describes indicated and inferred gold resources in placer deposits held by Silverado in the Nolan
Creek area (see Table 1.1). No new information concerning either indicated or inferred placer gold resources
has been generated for the Nolan Creek project since the release of those estimates in July, 2008, which are
filed on SEDAR (www.SEDAR.com); also accessed @ http://www.silverado.com/.
On January 1st
, 2009 (Amended June 1, 2009), the QP released the NI 43-101 Report: ‘Update of Mineral
Resource and Reserve Estimates and Preliminary Feasibility Study, Workman’s Bench Antimony-Gold Lode
Deposit, Wiseman B-1 Quadrangle, Koyukuk Mining District, Northern Alaska, January 1, 2009, Amended
June 1, 2009’. This Technical Report describes the probable reserve estimate of antimony and gold identified
in Table 1.2 above. No new information concerning the probable reserves has been generated for the Nolan
Creek project since the release of those estimates on January 1, 2009 Amended June 1, 2009, which are filed
on SEDAR (www.SEDAR.com); also accessed @ http://www.silverado.com/.
The completion of the pre-feasibility study referenced above, converted indicated resources on Workman’s
Bench into a probable reserve. The 2009 drilling resulted in: 1) a 26 percent increase of the amount of
indicated resources on Workman’s Bench; and 2) a 35 percent increase of the amount of inferred mineral
resources mainly on Pringle Bench as compared to previous estimates released in 2009. 19
1.8 Conclusions and recommendations
A relatively small but high grade probable reserve estimate of lode antimony and gold on Workman’s Bench
in the Nolan Creek area, Wiseman District, Alaska, was reported in the NI43-101 Technical Report released
January, 2009 (Amended June 1, 2009). The resource and reserve estimates provided in that report were
based on all information acquired to the end of 2008. In 2009, a 5,000 foot diamond core drill program
added modest amounts of inferred and indicated resources to the Workman’s Bench and Pringle Bench
mineralized vein-fault structures. There has been no additional environmental base line work, surface and
underground engineering investigations, or metallurgical work at Nolan Creek since 2008. In the QP’s
opinion, completing a new prefeasibility study on the property is not justified unless the program of work
outlined below indicates there is significant new information. The QP believes that the primary focus of
Silverado should be to acquire new information on several fronts:
Metallurgical Testing Collect a series of bulk samples on the Workman’s Bench and Pringle Bench lode systems
The 415 pound bulk sample collected in 2008 by the QP and processed by Hazen Research in Colorado
yielded promising results concerning the beneficiation of the antimony-gold mineralization for the Nolan lode
project (see Section 16 of this Technical Report). That bulk sample was collected underground from the
main ‘A Zone’ on Workman’s Bench. The QP suggests that four (4) additional bulk samples of vein-fault
mineralization be collected: 1) another bulk sample from ‘A’ zone on Workman’s bench using both
underground and surface exposures and selected core where available; 2) a bulk sample ‘B’, West, and ‘C’
zones on Workman’s bench; 3) a bulk sample from ‘A’ Zone on Pringle Bench; and 4) a bulk sample from
other mineralized zones on Pringle Bench. Collecting more metallurgical data will allow Silverado to continue
to refine their mill-plans and provide increased confidence to a potential market for their stibnite-gold
concentrate products.
Environmental Baseline Characterization Program Continuing to improve on the environmental baseline work
should be an important priority for the Nolan lode project. SRK Consulting initiated base line studies on the
property in 2008, but none have been completed since. Silverado should advance baseline studies through
investigations of geochemical characterization, meteorological precipitation, hydrological steam run-off
(including storm water) prediction and mixing zone potential. Large samples taken underground should be
run using acid-base accounting procedures. In similar fashion, selected core of both mineralized vein and
wall rock material should be split for the expressed purpose of acid-base accounting analyses.
Additional Engineering Geology Investigations Completion of a joint study with core stress testing at University of
Alaska laboratory In order to improve the existing data base and understanding on wall rock behavior
during underground work, a comprehensive joint and fracture could be completed, using logs already
available in Silverado files, as well as new joint measurement studies by a designated engineering geologist. In
addition, ASTM tensile stress measurements could be completed at a facility at the University of AlaskaFairbanks, or another contracted facility.
Infill Drilling Complete an additional 15,000 feet of deep drilling on Workman’s Bench with a larger diameter
drill. Workman’s Bench should be the top priority because it contains the best chance thus far known for
documenting consistent widths and grades of stibnite-quartz mineralization. Drill-testing the zone of inferred
mineralization under the probable reserve in ‘A’ zone should be given a high priority. A secondary drill
priority would be to drill-test Pringle Bench. To date lode resources are only inferred within this latter block. 20
2 Introduction and terms of reference
This Technical Report was requested by Silverado Gold Mines Ltd. This report is intended to disclose
mineral resources and reserves and disclose the results of a pre-feasibility study in accordance with National
Instrument 43-101 (NI 43-101) for Silverado’s holdings in the Nolan Creek Area (Nolan Creek). The
independent Qualified Person, Mr. Thomas K. Bundtzen, President of Pacific Rim Geological Consulting
Inc. (Pacific Rim), is responsible for this report. Henceforth Mr. Bundtzen is referred to as the QP.
2.1 Source of data and information
The sources of information are numerous and include U.S. Government, State of Alaska, and internal
Silverado reports, which are detailed in the References section of this report. In December, 2004, the QP
produced an Independent Technical Review of all of Silverado’s mineral properties in Alaska (Bundtzen,
2004). That document reviewed all aspects of Silverado’s operations, including but limited to exploration,
development, and mining activities, environmental remediation steps needed for compliance, and permitting
issues at all of their properties. Although comprehensive in nature, the report format was not designed to be
compliant with Form 43-101F1. Information from Bundtzen (2004) was used in the compilation of this
Technical Report.
In July, 2008, the QP completed the NI43-101 compliant document: Estimation of Lode and Placer Mineral
Resources, Nolan Creek, Wiseman B-1 Quadrangle, Koyukuk Mining District, Northern Alaska, July 29,
2008. This document was released by Silverado and is available on their website @ www.silverado.com.
In 2009, the QP completed the NI 43-101 compliant document: ‘Update of Mineral Resource and Reserve
Estimates and Preliminary Feasibility Study, Workman’s Bench Antimony-Gold Lode Deposit, Wiseman B-1
Quadrangle, Koyukuk Mining District, Northern Alaska, January 1, 2009, Amended June 1, 2009’.
During 2009, Silverado drilled eleven (11) diamond core holes totaling 2,329 feet on Pringle Bench and nine
(9) drill holes totaling 2,663 feet on Workman’s Bench. That data was used directly to calculate inferred and
indicated lode antimony and gold resources on Pringle Bench and Workman’s Bench. A January 2010 press
release summarizes resource estimates identified as a result of that exploration program.
2.2 Scope of personal inspections
During his career with the Alaska Department of Natural Resources, the QP completed geological mapping
and mineral resource investigations on some Silverado properties described in this Technical Report. The
author visited Nolan Creek in 1994, when Silverado was producing placer gold from the Mary’s underground
and Ogden-Eureka open cut placer deposits, and witnessed Silverado’s placer gold processing activities. The
purpose of the 1994 trip was to observe Silverado’s gold production activities, which were subsequently
described in the official State of Alaska Minerals Report series (Bundtzen et al, 1995).
In 1999, the QP sampled and mapped stibnite-gold lodes on Smith Dome and in Smith Creek basin, which
constitutes a part of Silverado’s lode claim group in the area. The QP’s 1999 work in the Koyukuk Mining
District was completed on behalf of North Star Exploration Inc., a junior mining company then based in
Denver, Colorado. From November 14 to 15, 2004, the QP visited Silverado’s operation at Nolan Creek,
where he examined current infrastructure, and discussed with Silverado geologists Brian Flanigan and Edward
Armstrong technical databases stored on the property. 21
The QP has also technically reviewed Silverado’s exploration and placer mining activities on the left limit
bench of Nolan Creek and at Workman’s Bench during 2006 to 2008 and produced a series of reports for
Silverado (Bundtzen 2006 a, b, c; 2008 a, b, c).
During April 22 to 24, 2008, the QP examined stibnite mineralization in the Workman’s Bench underground
workings, collected channel samples to cross-check those collected by Silverado geologists, mapped the
geological features, and acquired a large bulk sample for laboratory bench testing. During June 13 to 14,
2008, the QP examined all mineralized intercepts from the 2007 core drilling program on Workman’s Bench
and examined and sampled surface exposures of stibnite mineralization also on Workman’s Bench.
On September 28 and 29, 2008, the QP visited Nolan Camp and examined all significantly mineralized core
intervals acquired from the 2008 exploration of the Workman’s bench property. A total of 124 mineralized
intervals were encountered during the 2008 program.
During portions of July 23-25, 2009, the QP reviewed the 2009 Silverado drill program at Nolan Creek with
Karl Sharp, the company geologist. During parts of the time interval August 13-29, the QP inspected the
following technical items acquired by him from Karl Sharp: 1) certified analytical results of drill core
intervals; 2) photos for surface and subsurface exploration activities; 3) EXCEL spread sheets of the data
acquired during the drill program; 4) core logs from all holes that had been completed; 5) Sharp’s preliminary
interpretations of the structural corridors drilled during the season; and 6) surveys of drill collar locations in
UTM coordinates and elevations based on the NAD27AK datum. At the QP’s request, selected sections of
core were brought to his Fairbanks office later in September for further inspection. Because the most
important mineralized structure—the A zone—exhibits a peculiar fine-grained granoblastic texture,
comparisons between underground samples collected by the QP in 2008 and the samples brought to
Fairbanks by Sharp were made by the QP in his office. During December 11-17, the QP reviewed with Karl
Sharp all of the data acquired during the 2009 drill program including his (Sharp’s) structural interpretation of
the mineralization encountered and his thoughts on previous exploration work competed in 2007 and 2008.
During this last effort, the QP inspected a total of 23 new mineralized intercepts.
The QP has summarized additional work experience information in the ‘Certificates Section’ (23) that bear on
his qualifications needed to complete this Technical Report.
2.3 Units of measure
Table 2.1 describes the units of measure used in this report. The author has generally used the original units
of measure for company data, which was reported in the English system, or industry conventions to avoid
conversion errors and confusion. All dollar amounts are in U.S. currency. 22
Table 2. 1 Units of measure used in this report
Type Unit abbreviation Description (with SI conversion)
area acre acre (4,046.86 m2
)
area ha hectare (10,000 m2
)
area km2
square kilometer (100 ha)
area sq mi square mile (259.00 ha)
concentration g/t grams per tonne (1 part per million)
concentration oz/cu yd troy ounces per cubic yard
concentration oz/ton troy ounces per short ton (34.28552 g/t)
length ft foot (0.3048 m)
length m meter (SI base unit)
length mi mile (1,609.344 m)
length yd yard (0.9144 m)
mass g grams (SI base unit)
mass kg kilogram (1,000 g)
mass oz troy ounce (31.10348 g)
mass t tonne (1,000 kg)
mass ton short ton or US ton (0.90719 t)
time Ma million years
volume cu yd cubic yard (0.7646 m3
)
volume gallon U.S. liquid gallon (3.785411784 L)
volume L litre (SI base unit)
temperature °C degrees Celsius
temperature °F degrees Fahrenheit (°F = °C × 9⁄5 + 32)
− Notes:
− SI refers to the International System of Units; Degrees Celsius is not an SI unit but is a de facto standard for temperature 23
3 Disclaimer
No reliance on other experts who are not qualified persons was made in the preparation of this report.24
4 Property Description and Location
Nolan Creek is at the center of the Koyukuk Mining District and about 175 mi north-northwest of Fairbanks,
Alaska. Claim records submitted to the QP on January 28th
, 2011 by Silverado employee Mr. Roger Burggraf
in Fairbanks are summarized below.
Silverado’s lode and placer claims occur: 1) in the Nolan Creek drainage, a third order tributary of Wiseman
Creek; and 2) along a right limit bench of Hammond River, a tributary of the Koyukuk River. Relief ranges
from 1,500 feet in Wiseman Creek to Smith Dome, at an elevation 4,005 feet. The center of the claim group
is approximately 67o
28 minutes Latitude, and 150o
10 minutes West Longitude, in the Wiseman B-1
quadrangle, Alaska.
As of August 26th, 2010, Silverado’s Nolan Creek holdings consist of 204 unpatented, federal placer mining
claims covering approximately 4,080 acres ( 1,651 ha) in three, non-contiguous groups, and 408 unpatented
federal lode mining claims covering approximately 8,140 acres (3,294 ha) in one group. An updated list of all
of Silverado’s placer and lode claims is included in Appendix III.
All of Silverado’s claims, with the exception of seven of the placer claims, are in the SE1/4, Township 31
North, Range 12 West, the NE1/4, Township 30 North, Range 12 West, and SW1/4, Township 31 North,
Range 11 West, Fairbanks Meridian. All of the claims are in the Wiseman B-1 quadrangle, southern Brooks
Mountain Range, northern Alaska.
The first and largest group of federal mining claims, referred to by Silverado as the Nolan Creek Gold
Project, consists of 197 contiguous placer mining claims covering about 12 sq mi and a second placer claim
group of eight contiguous claims that cover about 0.5 sq mi; the latter group lies about 0.25 mi east of the
first claim group. Silverado Gold Mines, Inc., a wholly owned subsidiary of Silverado, is the registered owner
of the 197 placer claims.
The second group of six (6) placer claims are on Thompson Gulch (i.e., Thompson Pup claim group), which
are known as Discovery Claim on Thompson Pup, No. 1 Above Discovery, No. 2 Above Discovery, No. 3
Above Discovery, L&L Bench, and Rough Gold Bench.
Silverado’s third placer claim group, referred to as the Hammond Property, contains 60 contiguous federal
placer and lode claims leased from Alaska Mining Company (ALMINCO) that are about 1 mi east of the
Nolan Creek Gold Project claims.
Silverado has 407 federal lode mining claims, many of which overlap or are superimposed over their federal
placer mining claims; an updated claim location appears in Figures 4.1 and 4.2. This total includes recent
additions to the lode claim group to the east and north of the historic holdings. In total, Silverado controls
611 federal placer and lode mining claims in the Nolan Creek area.
Eight (8) key federal lode mining claims secure the mineralized zones on the Workman’s and Pringle Benches
that are the focus of this investigation. They include claims covering the NE1/4 of Section 33, Township 30
North, Range 12 West Fairbanks Meridian, which include claims SSH10, SSH09, SSH07, SSH11, 151, 179,
152, and SSH14 (Figure 4.2). 25
Figure 4.1 Silverado updated placer claim configuration, Nolan Creek, August 28th, 2010 , as plotted on a
company sectional base
One Mile
North 26
Figure 4.2 Silverado lode claim configuration, Nolan Creek, August 28th
2010, as plotted on sectional base
One Mile
North27
4.1 Mineral tenure
All of Silverado’s mineral properties at Nolan Creek are federal mining claims. The U.S Mining Law of 1872
(as amended) allows for a locater to stake either a placer deposit or a lode deposit. Under the federal mining
law, a 20 acre placer claim with the dimensions of 660 ft by 1,320 ft may be staked. For lode claims, the
dimensions are 600 ft by 1,500 ft.
There are many individual claim names. Many of the original placer claims acquired or staked by Silverado
have historic names such as Mary’s Bench, Workman’s Bench, Clara Discovery, and others. Beginning in
2006, new lode and placer claims were designated in numerical succession. An updated list of all of
Silverado’s placer and lode claims is included in Appendix V.
The Alaska State Government requires a mining license tax from all mineral production net income of the tax
payer regardless of underlying land ownership. For a major mining operation, it is computed at $4,000 plus
7.0% of the excess over $100,000 of net income (Alaska Department of Natural Resources, 2004).
Furthermore, there is a 3.5 year tax exemption period after initial production begins. Depletion is figured as
an allowable deduction of 15% of annual gross income, excluding from gross income an amount equal to
rents and royalties. The Alaska State corporate income tax rate is 9.4% if net profit is more than a set
threshold amount.
4.2 Silverado’s property title and interest
The majority of the Nolan Creek federal mining claims are controlled by Silverado Gold Mines Inc., a wholly
owned subsidiary of Silverado. Annual fees must be paid to the federal government. Silverado must also pay a
federal mining claim holders fee of $140 per claim by September 1st
, of each year or within 90 days of
location. Maintenance and holding fees for the federal placer and lode mining claims in Nolan Creek totaling
approximately $85,680.00 USD were paid on August 28th
, 2010 to the U.S. Bureau of Land Management by
Silverado; an additional $8,400.00 USD was paid to cover maintenance fees for sixty (60) federal placer and
lode mining claims (A.K.A., the ‘Hammond Property’) owned by Alaska Mining Company, Inc.
(ALMINCO). The QP inspected an August 28th
2010, U.S. dollar bank draft from the Royal Bank of
Canada to the U.S. Bureau of Land Management for the amount of $94,080.00 USD, which covers the Nolan
area federal claim maintenance fees (including the ALMINCO claims) for the period September 1, 2010 to
September 1, 2011. Additional evidence of maintenance fees paid for the federal mining claims held in the
Nolan and Hammond River area are shown in Appendix V..
The Thompson Pup claim group of six placer claims is subject to a purchase royalty of 3% of net profits on
80% of gold production, payable to Mr. Frank Figlinski and Mr. Lyle R. Carlson. The Hammond Property
(60 federal mining claims) is subject to lease with an option to purchase from ALMINCO for $500,000, with
terms including payment, subject to a purchase royalty of 10% of gross production from the claims with a
minimum royalty payment of $80,000 annually, regardless of the level of production activities.
4.3 Location and maintenance of property boundaries
Claim posts are located in the field on all four sides of each claim. The laws of the State of Alaska permit
staking both state and federal mining claims with the assistance of a helicopter, and many claims were staked
at Nolan Creek using this mode of transportation during the winter period. In the spring, all claims were
checked with GPS equipment on the ground. The federal law allows for a 20 acre association claim to be
located adjacent to the initial location. The locater must record the locations within 45 days of staking. An 28
affidavit of annual labor must be filed in the recording district of location and at the principle land
management agency, the U.S. Bureau of Land Management (USBLM) office by December 30 of each year.
These requirements were completed through the end of 2010, and all Silverado claims are current (see
Appendix V).
4.4 Location of mineralized zones, mine workings, and mineral resources
Past test mining of placer gold deposits by Silverado has occurred in a number of localities in Nolan Creek
Valley (Figure 4.3). These include a number of small, discontinuous, placer gold deposits, including OgdenEureka, Swede Channel, Mary’s East, Mary’s North, and 3B-1 Deposits, all of which are found on a left limit
bench system above Nolan Creek, and Archibald and Faye Creeks, which are typical modern stream placer
deposits. The Slisco Bench is a terrace placer deposit that occurs on the right limit of Hammond River about
3 mi northeast of Nolan Creek Camp. More recently, exploration for hard rock lodes has taken place on
Pringle Bench north of Smith Creek and especially on Workman’s Bench to the southwest, which are part of
the same northeast-striking vein and vein-fault antimony-gold mineralized system.
4.5 Environmental liabilities
Because the claims are federal, reclamation activities follow guidelines administered by the USBLM. Overall
water quality is administered by the State of Alaska Department of Environmental Conservation (ADEC).
The QP conducted an audit of the ADEC and Alaska Department of Natural Resources (ADNR) websites
for any environmental liabilities related to Silverado’s Nolan Creek properties, and could not find any notice
of water quality violations, public notice violations, non-point source water pollution control issues, or
wastewater violations.
The Nolan Creek property is on federal lands that are adjacent to Gates of the Arctic National Park and
Preserve, which is administered by the U.S. National Park Service (USNPS). According to records researched
by the QP, neither the USBLM nor USNPS have ever lodged a complaint about exploration or mining
activities that have occurred on Silverado’s claims.
A potential issue for future mine closure on the property deals with the maintenance shop facility at the
Nolan Creek Mine. The shop has a dirt floor and has been in use since the early 1980s. The shop may contain
contaminated soils that will need to be remediated at mine closure. There also is a solid waste permit
application that has been submitted to the ADEC for the burial of clean metal material. Based on discussions
with USBLM personnel, these issues are not, at present, considered to be a significant environmental
concern.
4.6 Permit and general regulatory requirements
Silverado already possesses a number of permits, licenses, and authorizations that allow them to operate on
their federal lode and placer mineral claims, which are summarized in Table 4.1. Dealing simultaneously with
placer and lode exploration and development activities, such as those existing on Silverado’s Nolan Creek
properties, presents unique challenges when summarizing permitting requirements and general mine-related
activities. The QP has subdivided permitting regimes governing placer and lode exploration and
development activities below, but cautions the reader that some permits simultaneously cover both lode and
placer development activities. 29
Figure 4.3 Location map of Nolan Creek placer and lode mineral deposits 30
4.6.1 Placer mineral development permitting
On July 29th
, 2008, the QP released the NI 43-101 Report: ‘Estimation of Lode and Placer Mineral
Resources, Nolan Creek, Wiseman B-1 Quadrangle, Koyukuk District, Northern Alaska’. This report
describes placer mineral development permitting requirements and plans on property held by Silverado in the
Nolan Creek area (see table 1.1 of that report). No new information concerning placer mineral permitting
been generated for the Nolan Creek project since the release of those estimates in July, 2008, which are filed
on SEDAR (www.SEDAR.com); also accessed @ http://www.silverado.com/.
4.6.2 Lode mineral exploration and development permitting
Permits required for Silverado’s lode operations include a NPDES permit from the USEPA that also covers
lode operations, the annual Alaska Placer Mine Application (APMA), which has been traditionally defined as
the ‘APMA/Hardrock Permit’ for a small lode operation like the Nolan Lode Development. On December
28th
, 2010, Silverado applied for a new APMA permit (No. F10-7084) with the State of Alaska that will cover
the three year period 2011-2013. The December 28th
, 2010, ten page Silverado APMA permit application
covers the following:
1) 1st
--Phase diamond core drill program;
2) 2nd—Bulk sample program which will follow drill program;
3) 3rd—Reclamation plan narrative;
4) 4th
--Exploration trenching; and
5) 5th
--Structures and Facilities and Make-Up Water Supplies and other Issues of Concern
Both state and federal agencies review provisions of the new APMA/Hardrock Permit. This three year
Nolan Creek APMA is specifically designed for hardrock exploration. If Silverado wants to process a bulk
metallurgical sample on site, they will have to amend their plan, which would result in a several month delay.
The company has acquired a permit from the USBLM to collect a bulk mineralized sample. This will allow
Silverado to acquire up to 1,000 cubic yards of mineralized materials for metallurgical testing and analysis
from Workman’s Bench. During the QP’s previous review of the ongoing operations this year, the QP
identified the need for Silverado to produce a potential acid generation (PAG) plan designed to mitigate Acid
Rock Drainage (ARD) initially for both the bulk sample collection effort and later for underground
development of the Workman’s Bench lode (Bundtzen, 2008b, c). Permitting for potential (ARD) will
require compliance with the National Pollution Discharge Elimination System (NPDES), a program that has
been administered by the U.S. Environmental Protection Agency (EPA).
In 2011, the State of Alaska is expected to completely take over primacy of the NPDES as have more than 30
other U. S. States, which means that NPDES permitting requirements in Alaska will be processed through the
Alaska Department of Environmental Conservation (ADEC). The NPDES regulatory package includes: 1)
impacts and risks to surface water; 2) mitigation of total dissolved solids (TDS); 3) permitting of tailings and
decant water containment facilities; and 4) treatment and management costs. Specific permit types will
depend on an assessment of risks analysis, which must be completed by Silverado prior to development. This
transformation from Federal to State oversight will impact both placer and lode mineral development at
Nolan Creek, but especially the proposed lode development. 31
Table 4.1 Regulatory Agency Listing Involved with Silverado’s Nolan Creek Plan of Operations and
Environmental Assessment (EA) Approved in 2008 and continued through December 31, 2010
Agency Name Explanation Permit Held
by Silverado
Oversight
Function
U.S. Bureau of Land Management
(USBLM)
Principle agency that approves Alaska Placer
Mine Application/Hardrock Permit;
Involves Environmental Assessment;
includes Historic preservation issues
APMA
Permit
Oversight
through issuance
of Environmental
Assessment
U.S. Environmental Protection
Agency (USEPA)
Principle Agency that issues National
Pollution Discharge Elimination System
(NPDES); will transfer to Alaska
Department of Environmental Conservation
in 2010 or 2011.
NPDES
Permit
Includes Input
through USBLM
Environmental
Assessment
U.S. Army Corps of Engineers
(Corps of Engineers)
Issues 404 Wetland Permit General 404
Wetlands
Permit
Includes Input
through USBLM
Environmental
Assessment
U.S. Mine Health and Safety
Administration (MSHA)
Monitors Safety at Placer and Lode
developments through regular inspections
Oversight and
Inspections
Alaska Department of Natural
Resources (ADNR)
Administers 1) Bonding and Reclamation;
and 2) APMA Permit with Federal Agencies
APMA;
Bonding
Alaska Department of
Environmental Conservation
(ADEC)
Environmental issues Nolan area Waste water
treatment
permit;
Additional Input
through USBLM
Environmental
Assessment
Alaska Department of Fish and
Game (ADF&G)
Authority concerning wildlife and aquatic
habitat maintenance issues
Alaska
Statute Title
16 Permit
Requirements
Additional Input
through USBLM
Environmental
Assessment
Alaska Department of Revenue
(ADR)
Monitors and collects taxes on all mine
activities regardless of underlying land
ownership
Alaska Mining
License tax;
Alaska Corporate
Income taxes
Alaska Department of
Transportation and Public Facilities
(DOTPF)
Maintenance of Nolan Road from Wiseman
to Nolan Camp
Silverado works
with DOTPF on
road maintenance
needs
Alaska State Historic Preservation
Office (ASHPO)
Regulates State Historical Artifacts Input through
USBLM
Environmental
Assessment
A regulatory issue did affect Silverado’s 2007 core drilling program on Pringle Bench north of Smith Creek.
Lode exploration must comply with Section 106 of the National Historic Preservation Act (NHPA) as
codified in USBLM regulation 36CFR 800. Silverado hired Northern Land Use Research (NLUR) of
Fairbanks, Alaska to complete a cultural review on a number of claims where historic mining activities had
taken place. Last year, NLUR produced a report for Silverado detailing the extent of historical artifacts
present on the mining claims. That report was then forwarded to the USBLM (Neely, 2007). After the
USBLM reviewed the 2007 NLUR report, their staff recommended removal of a historic cabin on Smith
Creek and removal of an elevated sluice on the south wall of Smith Creek. 32
4.6.3 Permit and Plan of Approval Verification
The QP has searched websites to document Silverado’s permit acquisitions; and obtained copies of
correspondence that confirm the permit acquisitions listed in Table 4.1. The written documentation include:
1) a camp wastewater discharge permit from ADEC (file no. 330.45.081); 2) four NPDES General permits
for placer mining from the USEPA (AKG37-0142-to-AKG37-0145); 3) a General 404 Permit from the Corps
(POA-2007-1388-D); 4) a Habitat permit issued by ADNR Office of Habitat Management and ADF&G
(F087084); 5) the Annual multi-year APMA/Hardrock permit for 2008-2011 (#F077084) issued by ADNR;
and 6) the entire listing agencies of the USBLM Environmental Assessment, which was reviewed in 28
categories by 20 separate individuals that represented multiple agencies (#EA-AK-025-08-002). The
ADEC-APDES Wastewater Discharge permit No. AKG-37-0143 is current. For the comprehensive
Environmental Assessment (EA) referenced above, Mr. Steve Lundeen of the USBLM stated:
“The finding of no significant effect signed on January 24th
, 2008 for the Environmental Assessment #EA-AK-025-08-002
actually makes up the approval for your (Silverado’s) plan of operations outlined in Alaska Placer Application #F077084.
These documents, along with the annual bonding form, comprise your approval to conduct operations described in your APMA
Application.”
Silverado’s acquired permits carried forward through December 31st
, 2010. As stated previously, a new
APMA (permit #F10-7084) has been applied for with the State of Alaska for the period from 2011 to 2013. 33
5 Accessibility, Climate, Local Resources, Infrastructure,
and Physiography
The Koyukuk Mining District is bounded on the east by the South Fork of Koyukuk River, the Alatna River
on the west, the continental divide of the Brooks Range on the north, and the Kanuti River basin on the
south. Elevations in the district range from 4,635 ft on Vermont Dome to about 1,220 ft on the floodplain of
the Middle Fork of the Koyukuk River. Other prominent landforms present at or near Nolan Creek include
Smith Dome at 4,005 ft elevation, Montana Mountain at 3,270 ft, and Midnight Dome at 3,860 ft (Figure 5.1).
Vegetation in the area is dominantly mature white spruce forests and occasional groves of birch and alder.
Although lower slopes are heavily forested, the entire area was logged during the late 19th to early 20th
Centuries to provide fuel for early underground placer mine activities, heat for miner’s cabins, and wood for
construction activities. Currently, the timberline is at about 2,500 ft elevation. Alpine species consist of
various mosses, shrubs, lichen, and wild berries.
Nolan Creek is at the center of the Koyukuk district . Regularly scheduled commuter flights from Fairbanks
to the 4,500 ft long, state-maintained Coldfoot Airport are provided by Wright Air Service Inc. Nolan Creek
is road-accessible from Fairbanks via the Dalton Highway, which services the Trans-Alaska Pipeline and the
North Slope oil fields.
The Trans-Alaska Pipeline and Dalton Highway corridor in the valley of the Middle Fork, Koyukuk River is
east-southeast of the Nolan Creek property holdings . The small community of Wiseman, with a 2010 census
population of 35, is at the junction of the 7 mi long, secondary access road that links the Dalton Highway
with Silverado’s Nolan Creek mine camp. In 1985, the access road from Wiseman to Nolan Creek was
upgraded to secondary standards by the Alaska Department of Transportation and Public Facilities
(DOTPF).
Silverado’s Nolan Creek property is remote and far from Alaska’s urban areas. Silverado’s camp is located 175
air miles north-northwest of Fairbanks, Alaska’s second largest community, with a population in 2007 of
about 98,000.
The community of Coldfoot, which is about 13 mi south of the community of Wiseman, has Alaska’s most
northern gas station, grocery, bar, and public lodging facilities. The weather station at Coldfoot provides the
Alaska State Weather Service with climatic condition on the Southern Brooks Range. DOTPF operates a
large shop facility at Coldfoot on a year-round basis, and maintains a 125 mi long segment of the Dalton
Highway and the Coldfoot Airport.
Nolan Creek Valley is located about 75 mi north of the Arctic Circle. Winter usually begins in late September
or early October and lasts until early April. A very brief spring is followed by summer in early June, which
lasts until late August. Fall weather conditions occur for about one month in September. Coldfoot, about 15
mi southeast of Nolan Creek Valley, recorded the unofficial all-time, State of Alaska record low of −82°F in
January, 1989. 34
Figure 5.1 Nolan Creek location map. 35
Temperatures as high as 85°F have been recorded in nearby Wiseman. Exploration drilling by Silverado has
generally taken place from June 1st
to late October. For example, the 2007 core drilling program ended on
October 23, when temperatures rapidly decreased to −10°F and froze the water lines. The annual duration of
surface exploration and test-mining activities ranges from 135 days to 150 days.
During 2008, core drilling on Workman’s Bench was delayed until June 8th
, due to a late spring thaw. An
earlier May startup had been planned. Heavy snows prevented access into areas where collars were planned.
Sub-freezing temperatures that occurred well into May reinforced the company decision to delay the start of
the drilling season until June 8th
.
The camp is underlain by permafrost for up to several hundred feet. This necessitates engineering of facilities
to combat the thawing of the substrate and drawing water from wells, which tend to freeze.
Silverado has operated seasonal, underground placer drift mines intermittently from 1994 to 2007. These
mine methods, which blast with standard drill-and-shoot techniques and excavate frozen gravels with lowprofile mining equipment, are dependent upon freezing weather conditions. Since 1994, winter drifting has
taken place from November 1st
to March 31st
. When temperatures exceed 15°F underground, test-mining
activities are curtailed to avoid thawing of frozen gravels until colder temperatures are encountered.
The freezing ground conditions also affected the underground testing of lode antimony-gold mineralization in
the 470 feet of drifts and crosscuts constructed at Workman’s bench during late 2007 and early 2008.
Because the ground was in a frozen state, there was no need to shore up underground workings and no
timbering was required. The portal was closed tight in early spring and underground conditions remained
safe and intact although some deterioration caused by thawing at the portal required some remedial work in
the fall. The reinforcement of wall rock competency by freezing conditions is an important positive factor in
the development of the antimony-gold-lodes.
5.1 Infrastructure
Nolan Camp is located in the valley of Nolan Creek about 2 mi above the confluence with Wiseman Creek.
The original Nolan operations, including camp, buildings, machinery shops, and related equipment, were
constructed in the late 1980s. Power is produced by a diesel power plant at the camp site. Nolan Camp was
upgraded in 2002 and again in 2007 so that underground and open-cut mining operations could be effectively
carried out. The upgrading and efforts included:
• The purchase and installation of a ten room housing unit;
• The construction of an engineering office;
• The upgrading of laboratory facilities;
• The installation of a new sewage treatment facility;
• The construction of a new kitchen and cafeteria; and
• The installation of new communications equipment.
The camp is capable of housing 30 workers on a full-time basis. Water is obtained from a well near Wiseman,
about 5 mi from Nolan Camp, and transported to camp with a water truck. Water is then pumped into three
2,500 gallon plastic holding tanks that are housed in the main utility room. A conventional well near the camp
is no longer used because of problems encountered with permafrost, which freezes the well casing. 36
Tailings have been stored on USBLM approved pads at several sites in Nolan Creek Valley, and are included
in this Technical Report as important infrastructure. Tailings ponds have been constructed during seasonal
mining activities, and operate under a 100% recycle technology. Currently twenty-one (21) acres are bonded
through the USBLM; this bonded land is considered by Silverado to be essential for ongoing operations at
Nolan Creek.
Silverado has fuel containment facilities associated with their two 15,000 gallon capacity diesel tanks. All
gasoline is purchased in 55 gallon barrels. Both gas and diesel tanks, which are stored on liners in accordance
with ADEC specifications, are located about 100 yd west of the cafeteria and bunkhouse complex.
There appears to be adequate space for storage of tailings, mine equipment, and fuel in Nolan Creek Valley.
Most exploration, development, and test mining activities from placer claims have been of a small scale
nature, extracting and processing less than 50,000 tons of mineralized material each year. Each year, this
quantity of materials has been stacked for processing, restacked after processing, and reclaimed in a manner
required by the Alaska Department of Natural Resources (ADNR), the principle agency that administers the
State of Alaska’s mined land reclamation programs. 37
6 History
6.1 Historical ownership of property
Placer mining claims held by Silverado in the Nolan Creek Valley area are centered on historic claims located
by miners and prospectors prior to World War II. Prior to 1920, the claims were held by more than 30 small
companies and individuals. During the 1930s-to-1960s, prospectors consolidated most of the claim group in
Nolan Creek Valley.
In 1978, Silverado leased ten core placer claims on Nolan Creek while working its claims staked the same
year. In 1981, Silverado acquired 55 core claims in Nolan Creek Valley, which forms the base of the placer
interests today. In 1991, Silverado acquired key claims on Woll Bench and adjacent areas near Archibald
Creek from Mr. Paul Dionne, who was mining placer gold at a small scale with underground drift mining
methods. Silverado located an additional 150 placer mining claims starting in 1994 and ending in 2007.
In 1994, Silverado leased 38 placer mining claims from Alminco on the Hammond River. This claim group
includes the Eldorado Association, which includes the ‘Slisco Bench’ system that has been explored with
drilling by Silverado up through 2006. Silverado has maintained a lease on this claim group through 2008.
Because placer mining activity dominated Nolan Creek Valley, Silverado held only a small number of federal
lode claims until the last 5 years. Historic lode mining claims were largely confined to Smith Creek Valley. In
1978, Smith Lodes 1 to 3 were also acquired. Silverado agent Mr. Brian Flanigan staked 38 federal lode claims
for Silverado in 2003 (SS01-SS38 series). Agent Mr. Glen Drexler staked 221 lode claims for Silverado in 2006
and 68 lode claims for Silverado in 2007.
6.2 Exploration and development by previous owners
Prior to Silverado activities in Nolan Creek Valley, exploration and development work by previous claim
owners was minimal. Mine development was directly associated with surface and underground placer gold
mining activities. During World War II, some trenching of stibnite (antimony) lode mineralization took place
on Pringle Bench north of Smith Creek. The QP could find no evidence of any drilling programs that took
place on either in Nolan Creek Valley or in the Hammond River property area during this period.
Since 1983, mineral resource estimates have been prepared by Silverado contractors for Nolan Creek deposits
(see Armstrong, 2001; Armstrong et al, 1994; Childress, 1995; House, 1995a, b, c; Murton, 2004; and
Flanigan, 2004 ). These estimates were made over a period of time that saw the rules that govern public
disclosure of mineral resource data significantly change in the United States, Canada, and abroad.
In general, most mineral resource estimates made by Silverado do not conform to guidelines set forth in
Sections 1.2, 1.3, and 2.4 of NI 43-101, and have not been relied upon in this analysis. However, some
resource estimates of individual placer gold deposits made by Armstrong et al (1994), Murton (2004), and
Flanigan (2004) do conform to NI 43-101, and have been selectively incorporated into this analysis.
In 2004, the QP prepared an independent technical review of Silverado’s mineral properties in the Fairbanks
Mining District and at Nolan Creek (Bundtzen, 2004). This report provides a comprehensive summary of the
lodes and placer mineral properties in both areas, but was not presented in Form 43-101F1 format and was
hence not compliant with NI 43-101. 38
On July 29th
, 2008, the QP released NI 43-101 Report ‘Estimation of Lode and Placer Mineral resources,
Nolan Creek, Wiseman B-1 Quadrangle, Koyukuk District, Northern Alaska’, which describes and
documents exploration and development activities by previous workers in the area (Bundtzen, 2008c).
6.3 Historical production
Placer gold was found on the bars of the Koyukuk River between 1885 and 1890, and the first commercial
discoveries on Nolan Creek and tributaries of the Hammond River and tributaries were made in 1901 (Cobb,
1973). Since then, about 344,990 oz of gold have been recovered from both open cut and underground
placer mines in the Koyukuk District (Kurtak et al, 2002a, b). The largest single producer has been Nolan
Creek and its tributaries, Smith Creek and Archibald and Fay Gulches, which have produced an estimated
185,000 oz of placer gold from 1901 to 2007, or about 54% of the Koyukuk District total. More than 100,000
oz of gold was produced during 1908 to 1911 by underground drift miners on Nolan Creek.
Figure 6.1 shows the location of Silverado’s past placer mining activities from 1979 to the present. In that
period gold production was intermittent. Total production from 1979 to 2007 was 23,150 oz of placer gold
recovered from 271,771 cu yd of gravel at an average grade of 0.085 oz/cu yd gold (Table 6.1).
Silverado’s production of placer gold began in 1979, when a small test cut on Archibald Creek yielded about
12 ounces of coarse placer gold. Silverado’s initial placer mining efforts on Nolan Creek focused on mining
restricted fractions of pay gravels on Archibald and Fay Creeks at the upper end of Nolan Creek basin.
Production totaled 730 ounces from 12,166 cubic yards in 1981; 304 ounces of placer gold from 4,343 cubic
yards in 1984; and 1,338 ounces of placer gold in 20,585 cubic yards in 1987 (Armstrong, 2001; Murton,
2004). Recovered grade during all three years ranged from 0.060-0.070 ounce gold/cubic yard. During 1989-
1990, Paul Dionne drifted underground on the Wool Bench south of Archibald Creek and reported grades of
0.100 oz/ton gold. His results and the success of other drift miners in the Koyukuk district led Silverado to
test-mine underground placer gold resources on their Nolan Creek claims.
From 1994 to 1995, Silverado extracted gold bearing gravels from two underground mining operations, the
Mary’s Bench and 3B1 ore bodies; and four surface-mineable sources: the Ogden-Eureka Bench, Phase 3
Open Cut, West Block, and Mary’s Bench Hydraulic Pit. During this two year production period, Silverado’s
placer mining activities in the Nolan Creek property area were nearly continuous with underground stopes
being extracted during the winter and surface mines developed during the summer. Pay gravels from all
sources were washed during the summer months. During 1994-1995, 13,162 ounces of placer gold, much of
it of jewelry grade, were recovered from 100,307 cubic yards of gravels, at an average grade of 0.131 ounces
gold /cubic yard. Production steeply declined during 1996 to 1998 because of the lack of drill-indicated
(underground) resources.
During 2002-2003, Silverado explored and developed the ‘Nolan Deep Channel underground drift project’,
which was quickly terminated after encountering ‘live water’ and roof and sidewall instability.
During 2006-2007 Silverado began a phased development of the Swede Channel and Mary’s East
underground drift mine projects (see Bundtzen, 2006, a ,b, c; Bundtzen, 2008a) ). Both mine developments
were initiated after RC drill hole data identified placer gold deposits. Silverado recovered 4,661 ounces of
placer gold from 34,228 loose cubic yards of gravel at an average grade of 0.136 ounces gold per loose cubic
yard. No test mining of placer gold has taken place at Nolan Creek by Silverado since 2007. 39
Figure 6.1 Location of areas test-mined by Silverado 40
Table 6.1 Placer gold production from Silverado properties, 1979 to 2007, Nolan Creek
Year Location Bank cu yd
(BCY)
Placer gold
recovered
(oz)
Recovered grade
(oz/BCY)
1979 Fay Creek NA 12 NA
1981 Archibald/Fay Creek 12,166 730 0.060
1984 Archibald/Fay Creek 4,343 304 0.070
1987 Archibald/Fay Creek 20,585 1,338 0.065
1993 Thompson Pup 33,800 1,304 0.038
1994 Mary’s Bench Underground 16,143 2,697 0.167
1994 Ogden-Eureka Bench Open Cut 29,300 5,733 0.196
1995 Phase 3 Open Cut 22,285 2,394 0.107
1995 3B1 Underground 12,991 1,006 0.077
1995 West Block Open Cut 18,988 1,305 0.069
1995 Mary’s Bench Hydraulic 600 27 0.045
1996 Dolney Bench Open Cut 5,042 126 0.025
1998 Archibald Creek Open Cut 5,947 128 0.022
1999 Swede Channel Underground 4,575 623 0.136
1999 Workman’s Bench Open Cut 5,580 112 0.020
2000 Workman’s Bench Open Cut 14,919 201 0.013
2003 Nolan Deep Channel; Wool Bench, Mary’s Bench 30,279 451 0.015
2006 Swede Channel 8,896 951 0.105
2007 Swede Channel and Mary’s East 25,332 3,711 0.146
Total 271,771 23,153 0.085
Notes:
− Modified from Bundtzen (2004); unpublished Silverado production files, and Bundtzen (2006c; 2008).
− Includes 1,338 ounces of gold nuggets produced by lessee Eclipse Mining in 1987 and 623 ounces of placer gold produced
by lessee Mike Roberts in 1999 41
7 Geological Setting
The bedrock geology of Nolan Creek is dominated by units of the Brooks Range schist belt, a poly-deformed
package of schist, greenstone, and orthogneiss (Figure 7.1). The schist belt is part of the Coldfoot subterrane of the Arctic Alaska terrane, which underlies more than 75% of the south flank of the Brooks Range.
Geological summaries of the Nolan Creek area have been published by Maddren (1910, 1913), Brosge and
Reiser (1970), Dillon (1989), Dillon and others (1986), Dillon and Reifenstuhl (1990), Moore and others
(1994), Mull (1989), and Eden (1999, 2000).
Nolan Creek has been subjected to the effects of Pleistocene glaciation, which has carved U-shaped profiles
in the various trunk valleys (Figure 7.1). Glacial drift of the Middle Pleistocene Sagavanirktok River
Glaciation occupies hill slopes, low saddle areas, and high level cirques to maximum elevations of about 3,200
ft at Nolan Creek (Hamilton, 1979; 1986). The Late Pleistocene Itkillik Glaciation left various types of drift
in major trunk streams including in the valleys of Middle Fork, Koyukuk River. During the Itkillik glacial
maximum, an extensive 9 mi long by 2 mi wide lake, called Glacial Lake Wiseman, inundated nearly the entire
valley of Wiseman Creek. With valley base levels reestablished to much lower levels, Glacial Lake Wiseman
was eventually drained to the east, cutting a steep, till-covered, bedrock canyon to the Middle Fork, Koyukuk
River. Such rapid base level adjustments are a key mechanism for the development of placer-style gold
mineralization at Nolan Creek.
Brittle deformation began to form as the last regional metamorphic gradients subsided in Middle Cretaceous
time as manifested in an orthogonal, stress field pattern that is in a conjugate relationship in the Nolan Creek
and Hammond River areas. A northeast-striking high angle fault cuts across the left limit of Nolan Creek over
Vermont Pass and into Hammond River canyon. A northwest-trending fault in conjugate relationship with
northeast structures trends up Wiseman Creek, and possibly through lower Hammond River canyon. During
late stage deformation, siliceous hydrothermal solutions containing antimony, gold, arsenic and other metals
migrated upward into fault zones.
Erosion of Sb-Au-As vein deposits in the Coldfoot Terrane have formed gold-bearing fluvial gravel deposits
in valleys and on benches of Nolan Creek valley and the Hammond River areas.
On July 29th
, 2008, the QP released the NI 43-101 Report ‘Estimation of Lode and Placer Mineral resources,
Nolan Creek, Wiseman B-1 Quadrangle, Koyukuk District, Northern Alaska’, which describes more detailed
aspects of the geologic setting of the area then presented in this Technical Report. This more complete
description of the geologic setting of the Nolan Creek area was released on SEDAR (www.sedar.com) and
can be accessed @ http://www.silverado.com/(also see Bundtzen, 2008c). 42
Figure 7.1 Geologic map of the Nolan Creek area Koyukuk District; modified from Dillon and Reifenstuhl (1990) and Hamilton (1979). 43
8 Deposit Types
Modern and bench or ancestral terrace placer deposit types of the Nolan Creek area are glacio-fluvial placer
deposits that resemble those described by Knight and McTaggert (1989) Laznika (1985), and Reger and
Bundtzen (1990). Such deposits types are typical of fluvial placers that have been modified by the effects of
Pleistocene glaciation.
The Workman’s Bench and Pringle Bench properties contain quartz-stibnite-arsenopyrite-gold veins. These
quartz-only and stibnite-quartz (gold) veins strike northeast and cross-cut low angle cleavage at steep to
vertical angles. Besides locally massive stibnite, the quartz-carbonate vein stock works also contain
arsenopyrite.
The gold-stibnite-quartz veins of Nolan Creek Valley strongly resemble the gold-antimony deposit type
(Berger, 1993; U.S. Geological Survey Deposit Model 36C). These deposits are characterized by the presence
of stibnite, berthierite, high fineness gold, and aurostibite hosted in metamorphosed, quartz-carbonatebearing, compressive shear zones within low grade, greenschist facies metamorphic rocks. The deposit types
are characterized by deformed, ductile fabrics and tectonically recrystallized, fine grained, granoblastic stibnite
lobes and lenses.
The gold-antimony deposit type 36C is considered to be a sub-type of the mesothermal, auriferous lodes
found in mineral provinces worldwide (Berger, 1986; Laznika, 1985; Hodgson, 1993). Radiogenic leads
characterize gold-bearing vein deposits of the Brooks Range (Gacetta and Church, 1989). This data
reinforces the classification of the Nolan lode deposits as mesothermal in origin. Mineral deposit type 36C is
not very well documented in North America but well studied in Asia, Europe, and Africa. Worldwide
examples include deposits in the Transvaal of South Africa, the Reefton District in New Zealand, and
deposits in Eastern Europe and in Russia. Olympiada in Siberia is an example of a large, productive gold
(stibnite) deposit of this type.
On July 29th
, 2008, the QP released the NI 43-101 Report ‘Estimation of Lode and Placer Mineral resources,
Nolan Creek, Wiseman B-1 Quadrangle, Koyukuk District, Northern Alaska’, which describes lode and placer
mineral deposit types in the Nolan Creek area, including the Workman’s bench area. Detailed descriptions of
placer and lode deposit types are described in that Technical Report (Bundtzen, 2008c), which was released
on SEDAR (www.sedar.com) and can be accessed @ http://www.silverado.com/. 44
9 Mineralization
9.1 Lode deposits
The Workman’s Bench and Pringle Bench properties contain quartz-stibnite-gold veins that cut a high angle,
structurally controlled zone that is 150 ft to 300 ft wide and at least 3,500 ft in length. These quartzcarbonate-sulfide and stibnite-quartz (gold) veins strike north 45° east and cross-cut low angle cleavage at
steep-to-vertical angles. Besides locally massive stibnite, the veins also contain local arsenopyrite. According
to Ebbley and Wright (1948), individual quartz-sulfide veins north of Smith Creek ranged from 1 in to 4 in
thick and can be traced for at least 400 ft of strike length. This area, now known as ‘Pringle Bench’, contains
individual quartz-sulfide (stibnite) veins up to 1.5 feet in thickness, based on 2009 Silverado exploration work.
Bedrock units on Workman’s Bench and Pringle Bench consist of dark gray, carbonaceous phyllite and schist,
light gray quartz-rich meta-sandstone, greenish gray chlorite rich muscovite schist, and occasional lenses of
calcareous chlorite schist. Isolated boudins of greenstone-gabbro have also been observed, but not in place.
The layered rock units have been deformed by both open and sub-isoclinal folds. Metamorphic foliation in
the hanging wall and footwall zones of the vein-fault zone is normally shallow, with dips of less than 45°. S1
foliation usually parallels compositional banding, but locally, a conspicuous S2 secondary cleavage crosscuts
compositional banding at a high angle. Northeast and northwest-striking, high angle fault zones and low angle
thrust faults cut the metamorphic rock basement.
Lode mineralization at Workman’s Bench and Pringle Bench systems consists of a northeast-striking, steeply
dipping zone of gold-bearing, quartz-stibnite veins and veinlets. At Workman’s Bench, stibnite-bearing
veinlets occur from 86 ft to 234 ft from the portal or over a width of about 150 ft. Because the drift was cut
perpendicular to strike, this represents a true thickness of the vein-veinlet swarm. A more focused zone of
quartz stibnite vein concentration occurs mainly from 136 ft to 234 ft or an estimated width of about 98 ft,
where 67 individual veins were identified. Within the ‘Crosscut A’ zone, 21 of the veins contained identifiable
stibnite. In the ‘Crosscut C’ zone, the same mineralized stock work veins occur from 120 ft-to-228 ft or an
estimated width of 108 ft. Within this measured width, 79 individual veins were identified, 22 of which
contain stibnite.
At Pringle Bench, which is the northeasterly extension of the Workman’s Bench system, the same stibnitequartz vein-fault system widens to nearly 400 ft in three subsidiary zones. In 2009, the ‘A Zone’ vein fault
was recognized on Pringle Bench—the same zone that contains the bulk of the known mineralization on
Workman’s Bench.
A majority of veins observed in either trenches, core, or underground workings exhibit nearly horizontal
slickensides, suggesting intrusion of hydrothermal fluids along fault zones and lateral movement subsequent
to vein emplacement.
Silverado geologists recognized that distinct near-vertical vein-fault structures could be recognized in drill
core and in the underground workings on the basis of both spatial relationships and physical features. All of
these structures strike approximately north 45o
east, and can be traced for variable lengths along strike. The
strongest mineralized vein-fault is designated ‘A’ Zone, which exhibits evidence of post-mineralization
movement. Others include ‘B’ Zone, ‘West’ Zone, and ‘C’ Zone. Detailed physical characteristics of these
structures and how they are recognized during exploration are found in Section 11.2 of this Technical Report. 45
Polished section analysis shows that two basic fabrics are observed in the stibnite (aurostibnite)-quartz veins:
• Simple, twinned stibnite blades and grains showing resorption textures with euhedral, quartz
crystals and grains.
• Extensive shearing and local coarsening of sulfide grains (mainly stibnite), 120° triple junctions
in mono-mineralic stibnite, and recrystallization of gangue minerals (quartz) that indicate
dynamic metamorphism.
Mineralization in the ‘A Zone’ at Workman’s Bench contains a shear fabric consisting of parallel lamina of
recrystallized stibnite. These fabrics are referred to in the literature as thermal metamorphic textures (i.e., Ineson,
1989). The sheared fabric results in a fine grained stibnite exhibiting a distinct granoblastic texture, which
contrasts with the other subsidiary stibnite-bearing veins-faults that contain coarser grained stibnite grains and
blades. Microprobe analyses by Cannon Microprobe Inc. document that siderite (as gangue) and accessory
arsenopyrite occur in the stibnite-bearing zones along vein selvage zones (Figure 9.1).
More than 90% of the veins and veinlets dip steeply southeast, with dips ranging from 50° to 85°. A few
veins dip steeply northwest. A system of east-west to northwest striking, moderately dipping vein-faults cut
through the underground workings. The QP observed that these faults both offset, to a minor degree, the
northeast-striking, stibnite-bearing veins, but are also cut by other northeast-striking stibnite veins.
Figure 9.1 Photomicrographs, Workman’s Bench mineralized system 46
9.2 Placer deposits
On July 29th
, 2008, the QP released the NI 43-101 Report ‘Estimation of Lode and Placer Mineral Resources,
Nolan Creek, Wiseman B-1 Quadrangle, Koyukuk District, Northern Alaska’, which describes lode and placer
mineralization in the Nolan Creek area, including the Workman’s Bench area (Bundtzen, 2008c). No
significantly new placer deposit mineralization information has been generated for Nolan Creek project since
that report was released on SEDAR (www.sedar.com) and which can be accessed @
10 Exploration
10.1 Results of placer and lode exploration
Since 1978, Silverado has explored for placer gold and lode gold deposits on their Nolan Creek and
Hammond River-Silsco Bench properties. Table10.1 summarizes the scope of the exploration work that has
been conducted on Silverado properties since about 1981. Until 2006, most of the exploration work focused
on placer gold deposits. Through the end of 2007, an estimated 910 RC drill holes that total 58,756 ft have
evaluated placer gold deposits in the study area (Table10.1). Drill holes range from 25 ft to 145 ft in depth
and average 62 ft in depth. During the drill program, more than 11,750 five-ft intervals were systematically
processed and panned down the entire length of each drill hole. The drill holes were generally designed on 50
ft centers. In Nolan Creek Valley, drill hole collars are oriented 290°, which crosscut the northeast trend of
ancestral and modern, gold-bearing fluvial deposits. On Slisco Bench in the Hammond River area, drill holes
are spaced at 50 ft intervals but aligned to cross the channel orientation which trends northeast in the north
and northwest in the south. Since 1993, an estimated 6,380 ft of underground exploration drifts have been
completed by Tricon Mining and other contractors of Silverado.
RC drilling is the principle exploration method used by Silverado in the identification of placer gold deposits
in the Nolan Creek and Hammond River areas. RC drilling campaigns have led directly to the development
and test mining of placer deposits at Nolan Creek. These would include successful development of the
relatively high grade Mary’s Bench and Ogden-Eureka Bench deposits in 1994; the West Block and 3B1
Underground deposits in 1995, The Swede Channel development in 1999 and 2005 to 2006; and the Mary’s
East deposit during 2007.
Table10.1 Summary of exploration activities, Nolan Creek, 1981 to 2009
Activity Sample count Drill hole count Total (ft)
Soil/stream sediment samples 1,383(1)
NA NA
Rock chip samples 275 NA NA
Rotary drilling (lode) 739 14 3,695
Core drilling (lode) 1,842 72 21,144
Reverse circulation drilling (placer) 11,751(2)
910 58,756
Trenching 340(3)
NA 4,672(3)
Underground exploration drifts NA NA 6,380(4)
Geophysical surveys (VLF/EM) NA NA 70.28 line mi
(5)
Notes:
− (1)
Does not include soil sampling conducted by USBLM on Silverado claims.
− (2)
5 ft intervals were panned and gold, where encountered, weighed or estimated.
− (3)
Estimated from 2004, 2006, 2007, and 2009 Silverado work. Does not include exploration work completed
by the federal government (USBLM).
− (4)
Exploration drifting only. Does not include production or development stopes.
− (5)
Does not include airborne work conducted by USBLM over Silverado claims. 48
However, drilling also led to the decision to develop the Nolan Deep Channel deposit during 2002 to 2003, a
project that failed due to geo-technical issues, including an unseasonably warm winter and the presence of live
water in underground workings below the base of Nolan Creek valley.
Prior to 2007, lode exploration included soil, rock, and geophysical investigations that were followed up by
limited drilling campaigns. A systematic soil grid totaling about 1,383 samples covers portions of the
mineralized trends in Smith Creek area and Fortress Mountain. A northeast-trending zone of antimonyarsenic-gold anomalies were identified in soils.
Follow-up geophysical studies, using the VLF/EM method, covered soil surveys in the Smith Creek area,
including the Workman’s Bench and Pringle Bench, the Hillside stibnite occurrence, and in the so-called
Fortress trend. From 1994 to 2009 exploration for lode gold deposits totaled 3,695 ft in 14 RC drill holes and
21,144 ft in 72 shallow core drilling holes. A combined 1,738 samples (at 5 ft and variables lengths) have
been laboratory tested for gold, antimony, and other metals. An estimated 4,422 ft of trenching has taken
place mostly on Pringle Bench, at Workman’s Bench prospects. Rock-chip samples test mineralized outcrops
in the Nolan Creek Valley. Beginning in 2004 and carried through to 2008, Silverado placed an emphasis on
surface VLF/EM geophysical exploration of identified mineralized trends. The firm has completed a total of
70.28 line miles covering 2.85 square miles of surface area. Soil exploration statistics are compiled in
Table10.2.
Table10.3 and Table10.4 summarize VLF/EM data and exploration trench statistics, respectively.
Table10.2 Summary of Silverado’s soil sampling programs, Nolan Creek, 2003 to 2007
Year Location of soil grid Grid
coverage
(sq ft)
Sample
count
Analytical methods
(1)
2003 and 2004 Workman’s Bench, Hillside, and Wool Bench 171,000 398 ME-ICP41; Au-ICP21
2007 Workman’s and Pringle Bench, and Hillside 208,700 695 ME-ICP41; Au-ICP21
2007 Fortress 107,240 290 ME-ICP41; Au-ICP21
Total 486,940 1,383
Notes:
− (1) Analytical methods as designated by ALS Chemex Labs.
Table10.3 Summary of Silverado VLF/EM data, Nolan Creek, 2004 to 2008
Year Grid location Survey area
(sq mi)
(1)
Linear distance
(mi)
2004 Hillside and Wool Bench 0.60 11.57
2007 Workman’s Bench, Pringle Bench and Hillside 0.69 18.02
2007 Fortress 0.36 9.33
2008 Hillside 0.11 2.61
2008 Fortress 1.09 28.75
TOTAL NA 2.85 70.28
Notes:(1) Line spacing variable but generally 32 ft apart. 49
Table10.4 Summary of Silverado exploration trenches, Nolan Creek, 2004 to 2007
Year Target area Trench name Length (ft) Sample count
2004 Hillside Trenches A,B,C 911 104
2006 Pringle Bench Trenches D,E,F 920 71
2007 Pringle Bench Trenches G,H,I,K,L,M 1,296 153
2009 Pringle Bench Trenches N, O P 235 10
Total NA NA 4,422 338
10.2 Placer gold deposits
On July 29th
, 2008, the QP released the NI 43-101 Report ‘Estimation of Lode and Placer Mineral Resources,
Nolan Creek, Wiseman B-1 Quadrangle, Koyukuk District, Northern Alaska’, which describes lode and placer
mineralization in the Nolan Creek area, including the Workman’s bench area (Bundtzen, 2008c). No
significantly new placer exploration information has been generated for Nolan Creek project since that release
of information, which was posted on SEDAR (www.sedar.com) and can be accessed @
10.3 Lode deposits
The combination of soil surveys, VLF/EM geophysical data, past trenching and limited RC drilling on Smith
Creek at Pringle Bench and Workman’s Bench laid the foundation for the interpretation of the character of
lode mineralization (Figures 10.1 to 10.6). An early 1993 drill campaign tested mineralization at Thompson’s
Pup. Four drill holes penetrated a brownish gray phyllite with varying degrees of silicification, pyritization,
and generally weak, hydrothermal alteration. Arsenopyrite and trace stibnite were identified in two drill logs,
designated 93TPHR-03 and 93TPHR-04. At 50 ft to 55 ft in drill hole 93TPHR-04, grades were 145 ppb
gold, > 1.0% arsenic, and 25 ppm antimony, in association with abundant quartz veins.
In 1994, Silverado completed a short, rotary drill program to test the lode potential of the Workman’s Bench
area, where stibnite-gash veins were found in a placer mine cut. A ‘first phase’ program consisted of about
750 ft of drilling in four drill holes that ranged from 130 ft to 300 ft in depth. Figure 10.2 illustrates the
results. Three different horizons display vein-hosted gold-antimony mineralization over a combined 100 ft to
120 ft of true width. The veins range from 0.026 oz/ton Au to 0.086 oz/ton Au over 5.0 ft assay intervals,
with up to >1.0% antimony and 4,370 ppm arsenic. One 10.0 ft assay interval averaged about 0.036 oz/ton
Au, >1.0% antimony, and 3,300 ppm arsenic. Underground exposures have shown that veins dip vertical or
steeply southeast, not northwest as shown in 1994 cross sections.
During 1999, the U.S. Bureau of Land Management (USBLM) completed surface prospecting activities in the
Smith Creek lode area as part of their study of the Koyukuk Mining District. Results of these studies are
summarized in Kurtak et al (2002a, b). Five grab samples of quartz-sulfide mineralization were taken from
veins on Workman’s Bench while 13 samples tested vein exposures on the left (north) limit of Smith Creek,
about 800 ft northeast of Workman’s Bench. The 18 grab samples averaged 0.092 oz/ton Au and 33.0%
antimony, but samples ran as high as 0.476 oz/ton Au and 61.7% antimony (USBLM sample #11705). 50
In 2000, The USBLM flew a contracted airborne geophysical survey over portions of the Koyukuk
mining district. Data was collected over a 40 sq mi area that generally covered Silverado’s Nolan
Creek property. Flight lines were approximately 1,500 ft apart and oriented northwest to take into
account the northeast structural trend of known mineralization.
In the summer of 2003, Silverado modeled the resistivity data using Surfer 8.02 by Golden Software,
with kriging parameters that focused on narrow target zones (Flanigan, 2003a; Flanigan et al, 2003).
The modeled geophysical data resulted in the recognition of two northeast-trending 870 Hz
resistivity lows, one of which more-or-less correlates with the trend of quartz-sulfide veins on Smith
Creek and the associated gold, antimony, and arsenic-in-soil anomalies (Figure10.1). This geophysical
anomaly, with associated quartz-sulfide lode prospects and metalliferous soil anomalies, has been
referred to by Silverado as the ‘Solomon Shear’ lode target (Flanigan, 2003b). Silverado estimates that
the Solomon Shear is about 1 mi long and 0.25 mi wide, with geophysical indications of extensions,
possibly offset, for an additional 2 mi to 3 mi to the northeast. Also during 2003, Silverado geological
staff acquired the multi-element geochemical data from all rotary drill programs
Figure10.1 Map of Nolan Creek Basin illustrating 870 Khz geophysical anomaly in gray 51
Figure 10.2 Section of 1994 pioneer percussion (RC) drill hole results for Workman’s Bench;
illustrating a pioneer attempt at exploring the Workman’s Bench antimony-gold deposit
completed previously in Nolan Creek basin, and generated ‘Kriged’, contour maps for 26 of 35
analyzed elements. The contour intervals were based on information from 635, non-uniformly
spaced, drill holes that were primarily evaluating placer deposits, but which penetrate bedrock for 52
depths of 2 ft to 6 ft. The elemental data from the RC drill holes confirm the existence of a
significant arsenic-antimony-gold system in the Workman’s Bench area.
From 2006 to 2010, Silverado added to all existing information and arrived at a coherent model for
mineralization in Nolan Creek. The trench, soil, and drill data all show a series of parallel, nearly
vertical, quartz-carbonate-stibnite-gold veins that trend from Workman’s Bench on the southwest to
Pringle Bench on the northeast for a minimum strike length of 1600 ft (Figure 10.3). The resistivity
low in the ‘Solomon Shear Zone’ is interpreted by Silverado to be several parallel fracture systems
that might control mineralization (Figure 10.4).
In 2007, Silverado also conducted VLF-EM geophysical and soil sample surveys in the Fortress
Trend northeast of the Workman Bench-Hillside area previously summarized. Soil sample grid area
of anomalous arsenic, gold, and antimony in soil samples, and generalized locations of gold-quartzbearing structures and veins are also shown. Elevated VLF/EM readings appear to crudely coincide
with arsenic-gold anomalies. In 2008, VLF/EM coverage continued in the Fortress area.
Silverado believes that they now recognize two distinct auriferous structural trends: 1) the goldbearing, antimony-quartz veins that are fairly well documented in the general Smith Creek area, and
2) gold-quartz-arsenopyrite veins exposed on the ridge between Hammond River and Nolan Creek,
with up to 0.24 oz/ton Au and 28.09 percent antimony; i.e., at the Saddle prospect. Northeast
structures of the first type in the Fay Creek area contain antimony, arsenic, and sparse gold
anomalies.
Exploration work conducted during the latter part of 2007 and all of 2008 and 2009 focused on: 1)
driving 470 feet of underground drift to affirm surface and core sampling results and collection of
bulk sample for a metallurgical test; and 2) completion of 72 diamond drill holes totaling 21,144 feet
to test the extent of the Workman’s Bench and Pringle bench antimony-gold mineralized system.
This confirmed that several, parallel mineralized veins are intersected by diamond drill holes for a
strike length of more than 3,500 feet (including across Smith Creek) and a maximum vertical depth
of 450 feet.
In December, 2009, Silverado issued a news release that reported results of an inspection of assay
data from four 2008 drill holes on Workman’s Bench—08SH01B, 08SH02, 08SH32, and 08SH33.
It was found that wider zones of elevated gold values occur on Workman’s Bench. For example, in
drill hole 08SH32, a 42.5 foot wide interval contained 0.063 ounces.ton (2.01 g/t) gold. Antimony
values were not examined. This preliminary data would suggest that there are wider zones of lower
grade, auriferous mineralization within the numerous quartz-carbonate-sulfide veinlet zones on the
property.
10.4 Origin of exploration data
Although Silverado has utilized and benefited from government-sponsored mineral investigations,
the majority of the exploration work compiled from Nolan Creek Valley has been carried out by
subcontractors over a 30 year period beginning in 1979. Subcontracting drilling firms have included
Alaska Arctic Drilling, Inc., of Fairbanks, Alaska, and more recently Penn-Jersey Drilling of Wasilla.
The exploration programs have been carried out through Silverado employees and contractors, and
all aspects of the 2008-2009 core drilling programs on Pringle and Workman’s Benches were carried
out by Silverado employees and it’s contractors. 53
Figure 10.3 Summary of 2004 and 2007 soil anomalies in Workman bench and Hillside areas 54
Figure10.4 Combined VLF-EM data acquired by Silverado during 2004 and 2007 55
Figure10.5 VLF-EM survey of Fortress Area showing both generalized northeast structural trend and two, distinctive east-west structural trends 56
Figure 10.6 Stacked geochemical and structural data set in Fortress gold-bearing trend 57
11 Drilling
11.1 Placer drilling programs
On July 29th
, 2008, the QP released the NI 43-101 Report ‘Estimation of Lode and Placer Mineral Resources,
Nolan Creek, Wiseman B-1 Quadrangle, Koyukuk District, Northern Alaska’, which describes lode and placer
mineralization in the Nolan Creek area, including the Workman’s bench area. No new placer drilling
information has been generated for Silverado’s Nolan Creek project since that release of information, which
was placed on SEDAR (www.sedar.com) and can be accessed @ http://www.silverado.com/.
11.2 Lode Drilling Programs
Drilling programs investigating lodes in the district are more recent than the extensive placer drilling
programs. Table 11.1 summarizes lode drilling programs conducted by Silverado since 1993.
Table 11.1 Summary of lode drilling programs
Year Location Drilling
method
Drill
hole
count
Amount
of drilling
(ft)
Assay
count
Drilling contractor
1993 Thompson Pup percussion 4 1,275 255 Tri-Con Mining Company
1994 Workman’s Bench percussion 4 780 156 Tri-Con Mining Company
2003 Pringle Bench and Hillside percussion 5 1,340 260 American Arctic Drilling
2006 Pringle Bench percussion 1 300 56 American Arctic Drilling
Total percussion 14 3,695 727
2007 Pringle Bench diamond 11 2,415 607 Silverado Contractors
2007 Workman’s Bench diamond 7 2,140 588 Silverado Contractors
2008 Workman’s Bench diamond 34 11,597 627 Silverado Contractors
2009 Workman’s Bench diamond 9 2,663 19
(1)
Silverado Contractors
2009 Pringle Bench diamond 11 2,329 23
(1)
Silverado Contractors
Total diamond 72 21,144 1,863 Silverado Contractors
GRAND TOTAL NA 86 24,839 2,588 NA
(1) approximately 150 samples were assayed during 2009; 42 are included in assayed intervals used for resource estimates
Drilling to define lode-style deposits commenced in 1993 when short (130 ft to 300 ft) RC drilling was used
to test for stibnite-gold-arsenic mineralization on Thomson’s Pup and later on Workman’s Bench. At
Workman’s Bench the shallow holes intersected thin, steeply dipping quartz-stibnite veins some of which
contained elevated gold grades. Another program in 2003 tested isolated thin vein targets on Hillside and
Pringle Bench. Elevated gold, stibnite, and arsenic intersections were encountered in this program. All RC
drill holes were sampled at 5 ft intervals. Because of concerns of how assay intervals were selected, as well as
questions about precise collar locations, the pre-2006 drilling has not been used in the current resources
assessment.
In 2006, one RC drill hole tested Pringle Bench (Tables 11.1 and 11.2). In 2007 Silverado purchased it’s own
diamond drill rig and contracted the drilling to Tricon, originally using BTW-sized core on the Pringle Bench
and Workman’s Bench deposits. A conversion to NQ core which is larger in diameter by about ¼ inch, was
made during July, 2008. NQ refers to the size of the core, which is approximately 1.75 inches in diameter.
Core drilling is better suited to this narrow-vein style of deposits than RC percussion drilling. 58
During 2007, Silverado tested closely spaced stibnite-quartz veins and veinlets at Pringle Bench north of
Smith Creek using eleven diamond drill holes totaling 2,415 ft (Table 11.1). Also during 2007, Silverado
drilled seven drill holes totaling 2,140 ft to test the Workman’s Bench deposit (Table 11.1).
During the 2007season, seven (7) drill holes penetrated the Workman’s bench mineralized veins. During
2007-2008, Silverado drilled 34 diamond drill holes totaling 11,597 feet for a total of 41 core drill holes at
Workman’s Bench during the 2007and 2008 seasons (Table 11.3). Drill orientations ranged from -45o
to -65o
in order to intersect the mineralized veins at different depths from the surface. Drill collars and azimuth
bearings were laid in such a way as to provide more-or-less equidistant spacing, a requirement for estimating
indicated resources. In 2009, chief geologist Karl Sharp decided to locate on the eastern side of the
Workman’s bench mineralized structures with drill holes aimed in a westerly direction. This data set provides
for a cross scissors profile with pervious holes on the vein-fault system and increases confidence in
determining a true thickness of the vein-fault structures.
During 2009, diamond drill core program was designed by Karl Sharp to: 1) explore shallower level of
Workman’s Bench southwest of the underground workings driven in 2008; and 2) test deeper levels of the
Pringle Bench vein-fault system and provide for vertical extensions of the shallow inferred resource estimate
previously reported in the 2009 NI- 43-101 Technical Report (see Bundtzen, 2009). In 2009, approximately
5,000 feet was drilled in twenty holes on Pringle and Workman’s Bench. Silverado soon recognized the need
to selectively sample the thin mineralized quartz veins and changed their sampling protocol so that smaller
samples, better representing these veins, could be taken.
Collar location, orientation data and drill footage summaries for the RC and diamond core programs on
Pringle and Workman’s bench are provided in Tables 11.2 and 11.3. Coordinates for all collars are
determined with GarminTM Global Positioning System (GPS) units using a datum of NAD27 Alaska. This
datum is used because the topographic bases created by Silverado in the 1990s was grounded in NAD27
Alaska, which is also the same used for USGS 1:63,360 scale maps that cover the area. GPS measurements
are taken twice for each collar location. If a discrepancy is detected, then a third and forth measurement is
taken to insure that the collar is accurately located. All collar elevations are determined from the same bench
mark (BM) at survey control point CP-06-01. The significance of using the same bench mark is that a much
more accurate elevation estimate for each collar can be ascertained.
Figures 11.1 to 11.6 depict the vein-fault system on Pringle and Workman’s Benches that has been drilled by
Silverado since 2006, but mainly since 2007. Figure 11.1 is the plane view of the Workman’s bench vein-fault
system. Figure 11.5 is a plane view of the Pringle Bench vein-fault system. Much of the data for the cross
sectional profiles on Workman’s Bench was compiled from a series of twelve (12) large plates that depict
vertical sections constructed by the company (see Staff, 2008, a-l). Additional vertical profile was completed
by the QP after inspection of the 2009 drill program data. A cross sectional profile on Pringle Bench was
developed by the QP mainly from drill information provided by Silverado. Three cross sectional profiles,
namely A-‘A’, B-‘B’, and C-‘C’, which are shown in figures 11.2, 11.3, and 11.4, provide a generalized fence of
the Workman’s Bench vein-fault system from southwest to northeast. They reveal that three, sometimes
four, mineralized zones designated ‘West’, ‘A’, ‘B’, and ’C’ zones, are more-or-less sub-parallel to each other
and dip steeply southeast in the southern part, steeply northwest in the central part, and essentially vertical in
the northern part of the drill tested system. The vertical profile designated D-‘D’ on Pringle Bench indicates
that the vein-fault system there dips steeply to the northwest. Silverado geologists recognized that distinct 59
near-vertical vein-fault structures could be recognized in drill core and in the underground workings on the
basis of both spatial relationships and physical features.
• ‘A’ Zone is the largest and most distinctive of the mineralized structures at Nolan—appearing on both
Workman’s and Pringle Benches. It is almost always accompanied by a distinctive lateral slickenside on its
footwall and a pervasive quartz-sulfide stock work on it’s hanging wall. This post-mineral movement creates
a distinctive granoblastic texture in stibnite. ‘A’ zone varies from less than 1.0 feet to 5.8 feet in true thickness
and is thicker when combined with the stock work hanging wall.
• ‘B’ Zone generally occurs 40-50 feet to the southeast of ‘A’ zone and sub-parallels the latter. It is also a veinfault but does not generally contain slickensides—indicating that movement has not taken place after
mineralization. Besides the conspicuous quartz-stibnite mineralization, ‘B’ zone also contains significant
siderite gangue—up to 10 percent. ‘B’ zone is somewhat thinner than ‘A’ zone, averaging about 0.85 foot
true thickness, but can attain a true thickness of 4.8 feet.
• ‘West’ Zone generally lies 20-30 feet west of ‘A’ Zone but sometimes further. It is similar to ‘B’ zone in that it
does not contain slicken-sided features typical of ‘A’ Zone. However, it can contain distinctive stock work
quartz-sulfide zones in it’s hanging wall like ‘A’ Zone. ‘West’ zone averages the same thickness as ‘B’ Zone
but can be up to 5.0 feet true thickness. It has been recognized on both Workman’s Bench and Pringle
Bench.
• ‘C’ zone is the weakest mineralized Sb-Au vein-fault in the Nolan system and has only been positively identified
on Workman’s Bench. Like ‘B’ and ‘West’ zones, no post-mineral slickenside has been observed. It averages
only about 0.75 feet in thickness and normally found about 30-40 feet southeast of ‘B’ zone. It is also the
weakest mineralization observed on the Workman’s bench and thus far con only be traced for about 275 feet
of strike length.
Other Sb-Au veinlet zones have been recognized and sampled, but cannot be correlated with a specific fault
structure of the Nolan system. More work has to be completed to better understand these additional zones.
Two methods were deployed to calculate the estimated true widths of the mineralized vein-faults being
evaluated for resources estimates. Firstly, the core-logging geologist estimated true widths by measuring
across the extent of the parallel footwall and hanging wall contacts of the mineralized structure being sampled
with host metamorphic phyllite. This field estimate is aided by the fact that foliation in the host phyllite, is
nearly horizontal. Thus the geologist can check his true width calculations with the angle of the drill hole.
During April, June, and September of 2008, the QP looked at all core intervals, underground stations, and
selected channel sites in order to check true width intervals. In 2009, the QP examined twelve of the twentytwo core intervals to estimate true width. When true widths were ambiguous in core, standard trigometric
calculations were used to calculate the actual dip of the vein(s) in core versus the calculated angle that the vein
intersects the zone. Additional descriptive information is described in section 12 of this report. A
comparison of drill interval widths versus estimated true width are presented in Appendices I and II.
No down-hole orientation surveys were conducted. Oriented drill holes are important to insure that drill
azimuths are not off course. The QP judges that the shortcomings of not having oriented core is minimized
by: 1) the relatively short drill holes that accessed the mineralized zones; 2) the relative competency of the
host rocks; and 3) the near horizontal foliation of the host lithology probably minimize the potential of
steeply angled drill holes from bending and diverting off trajectory for any significant amounts. As an
example, down hole depths of most mineralized intercepts; i.e., ‘A’ Zone, were predicted accurately at the drill
site by the geologist before the actual intersection took place. However, as Silverado explores deeper
portions of the system, holes should be oriented. 60
Table 11.2 Collar location and data, Pringle Bench, 2006, 2007, and 2009 Exploration Campaigns
RC Drill Hole
DDH No. UTM Easting UTM Northing Datum Zone Collar Elevation Azimuth Dip Total Depth Core Diameter
06SH01 618868.02 7486656.03 NAD 27 Alaska 5W 1801.50 320 -45 300 RC, 8 in
Diamond Core Drill Holes
DDH No. UTM Easting UTM Norhing Datum Zone Collar Elev. (ft) Azimuth Dip Total Depth (ft) Core Size
07SH02 618888.00 7486745.27 NAD 27 Alaska 5W 1848.50 320 -45 212 BTW
07SH03 618867.00 7486735.00 NAD 27 Alaska 5W 1848.50 320 -45 102 BTW
07SH04 618867.00 7486735.00 NAD 27 Alaska 5W 1848.50 320 -45 284 BTW
07SH05 618889.00 7486768.00 NAD 27 Alaska 5W 1872.60 320 -45 297 BTW
07SH06 618913.00 7486776.00 NAD 27 Alaska 5W 1884.90 320 -45 139 BTW
07SH07 618931.00 7486782.00 NAD 27 Alaska 5W 1898.10 320 -45 207 BTW
07SH08 618942.00 7486790.00 NAD 27 Alaska 5W 1900.50 320 -45 182 BTW
07SH09 618942.00 7486790.00 NAD 27 Alaska 5W 1900.50 320 -45 92 BTW
07SH10 619008.00 7486676.00 NAD 27 Alaska 5W 1873.70 320 -45 301 BTW
07SH11 618985.00 7486706.00 NAD 27 Alaska 5W 1876.40 320 -45 307 BTW
07SH12 618985.00 7486704.00 NAD 27 Alaska 5W 1876.40 320 -45 292 BTW
09SH10 618918 7486843 NAD 27 Alaska 5W 1913.00 110 -45 267 NQ
09SH11 618862 7486741 NAD 27 Alaska 5W 1854.00 160 -45 142 NQ
09SH12 618862 7486741 NAD 27 Alaska 5W 1854.00 160 -60 137 NQ
09SH13 618860 7486743 NAD 27 Alaska 5W 1854.00 160 -69 267 NQ
09SH14 618927 7486755 NAD 27 Alaska 5W 1887.00 320 -45 202 NQ
09SH15 618927 7486755 NAD 27 Alaska 5W 1887.00 320 -65 222 NQ
09SH16 618967 7486802 NAD 27 Alaska 5W 1920.00 320 -45 192 NQ
09SH17 618808 7486735 NAD 27 Alaska 5W 1835.00 140 -55 139 NQ
09SH18 618879 7486722 NAD 27 Alaska 5W 1850.00 320 -60 137 NQ
09SH19 618874 7486721 NAD 27 Alaska 5W 1850.00 250 -60 282 NQ
09SH20 618874 7486721 NAD 27 Alaska 5W 1850.00 245 -65 342 NQ
Total Drill Holes, Pringle Bench—23
Total Drill Footage, Pringle Bench—5,044 Feet
Note—Five (5) percussion drill holes completed in 2003 that total 1,340 feet are not included in the above tabulation 61
Table 11.3 Collar location and data Workman’s Bench; 2007, 2008, and 2009 exploration campaigns
DDH No. UTM Easting UTM Norhing Datum Zone Collar Elev. (ft) Azimuth Dip Total Depth (ft) Core Size
07SH01 618652.00 7486576.58 NAD 27 Alaska 5W 1749.10 140 -45 312 BTW
07SH13 618571.00 7486484.00 NAD 27 Alaska 5W 1776.80 143 -45 358 BTW
07SH14 618571.00 7486484.00 NAD 27 Alaska 5W 1776.80 100 -45 407 BTW
07SH15 618579.00 7486499.00 NAD 27 Alaska 5W 1776.80 100 -45 323 BTW
07SH16 618525.00 7486470.00 NAD 27 Alaska 5W 1766.00 140 -45 397 BTW
07SH17 618500.00 7486495.00 NAD 27 Alaska 5W 1763.30 140 -45 252 BTW
07SH18 618615.00 7486507.00 NAD 27 Alaska 5W 1811.00 90 -45 91 BTW
08SH01A 618669.37 7486571.13 NAD 27 Alaska 5W 1751.20 184 -45 216 BTW
08SH01B 618669.37 7486571.13 NAD 27 Alaska 5W 1751.20 140 -45 312 NQ
08SH02 618662.66 7486569.92 NAD 27 Alaska 5W 1752.71 110 -45 343 NQ
08SH03 618675.00 7486564.00 NAD 27 Alaska 5W 1755.00 140 -50 252 NQ
08SH04 618740.14 7486553.52 NAD 27 Alaska 5W 1751.00 320 -50 55 NQ
08SH05 618771.00 7486541.00 NAD 27 Alaska 5W 1751.00 320 -50 30 NQ
08SH06 618621.85 7486506.24 NAD 27 Alaska 5W 1788.00 100 -50 72 NQ
08SH07 618551.00 7486477.00 NAD 27 Alaska 5W 1777.00 140 -50 370 NQ
08SH08 618485.00 7486452.00 NAD 27 Alaska 5W 1772.00 140 -50 452 NQ
08SH09 618426.00 7486379.00 NAD 27 Alaska 5W 1762.00 140 -50 457 NQ
08SH10 618558.00 7486465.33 NAD 27 Alaska 5W 1777.00 140 -45 317 NQ
08SH11 618584.00 7486489.00 NAD 27 Alaska 5W 1780.00 140 -60 362 NQ
08SH12 618584.00 7486489.00 NAD 27 Alaska 5W 1780.00 100 -50 282 NQ
08SH13 618619.24 7486508.75 NAD 27 Alaska 5W 1788.00 90 -60 312 NQ
08SH14 618674.39 7486570.08 NAD 27 Alaska 5W 1752.00 140 -45 242 NQ
08SH15 618671.51 7486567.75 NAD 27 Alaska 5W 1752.00 180 -45 397 NQ
08SH16 618671.51 7486567.75 NAD 27 Alaska 5W 1752.00 190 -45 352 NQ
08SH17 618672.65 7486567.85 NAD 27 Alaska 5W 1752.00 140 -70 497 NQ
08SH18 618501.00 7486434.00 NAD 27 Alaska 5W 1803.00 140 -60 472 NQ
08SH19 618501.00 7486434.00 NAD 27 Alaska 5W 1803.00 140 -45 307 NQ
08SH20 618501.00 7486434.00 NAD 27 Alaska 5W 1803.00 110 -50 397 NQ
08SH21 618501.00 7486434.00 NAD 27 Alaska 5W 1803.00 170 -50 402 NQ
08SH22 618560.00 7486468.00 NAD 27 Alaska 5W 1777.00 140 -60 302 NQ
08SH23 618560.00 7486468.00 NAD 27 Alaska 5W 1777.00 165 -50 307 NQ
08SH24 618560.00 7486468.00 NAD 27 Alaska 5W 1777.00 120 -50 317 NQ
08SH25 618451.00 7486419.00 NAD 27 Alaska 5W 1765.00 140 -45 427 NQ
08SH26 618426.00 7486379.00 NAD 27 Alaska 5W 1762.00 120 -45 432 NQ
08SH27 618426.00 7486379.00 NAD 27 Alaska 5W 1762.00 140 -45 402 NQ
08SH28 618426.00 7486379.00 NAD 27 Alaska 5W 1762.00 160 -45 450 NQ
08SH29 618451.00 7486419.00 NAD 27 Alaska 5W 1765.00 110 -45 450 NQ
08SH30 618451.00 7486419.00 NAD 27 Alaska 5W 1765.00 155 -45 450 NQ
08SH31 618451.00 7486419.00 NAD 27 Alaska 5W 1765.00 140 -55 487 NQ 62
DDH No. UTM Easting UTM Norhing Datum Zone Collar Elev. (ft) Azimuth Dip Total Depth (ft) Core Size
08SH32 618639.00 7486563.00 NAD 27 Alaska 5W 1758.00 160 -45 307 NQ
08SH33 618639.00 7486563.00 NAD 27 Alaska 5W 1758.00 160 -45 367 NQ
09SH01 618594 7486411 NAD 27 Alaska 5W 1880.00 320 -45 257 NQ
09SH02 618594 7486411 NAD 27 Alaska 5W 1880.00 291 -50 302 NQ
09SH03 618548 7486371 NAD 27 Alaska 5W 1880.00 326 -45 302 NQ
09SH04 618564 7486387 NAD 27 Alaska 5W 1880.00 290 -55 297 NQ
09SH05 618529 7486347 NAD 27 Alaska 5W 1873.00 320 -69 342 NQ
09SH06 618530 7486350 NAD 27 Alaska 5W 1873.00 335 -66 302 NQ
09SH07 618516 7486337 NAD 27 Alaska 5W 1870.00 305 -69 322 NQ
09SH08 618547 7486365 NAD 27 Alaska 5W 1873.00 297 -68 332 NQ
09SH09 618547 7486365 NAD 27 Alaska 5W 1873.00 297 -45 207 NQ
Total Core Drill Holes Workman’s Bench--50
Total Drill Footage Workman’s Bench—16,400 feet
Note—Four (4) percussion (RC) drill holes completed in 1994 that total 780 feet are not included in the above tabulation 63
Figure 11.1 Schematic of Workman’s Bench, illustrating bench configuration, locations of 2007-2009 drill holes, the ‘A Zone’ ‘West Zone, ‘B’ Zone, and
‘C’ zone, and locations of three cross sectional profiles illustrated in Figure 11.2, 11.3 and 11.4
64
Figure 11.2 Schematic, cross sectional profile A-A’ the southern portion of Workman’s Bench, illustrating the intersection of the major mineralizing
structures currently being assessed—note that the ‘Zones as drawn represent a width of mineralizing structure and not the sampled assay interval, which
is generally much thinner. 65
Figure 11.3 Schematic, cross sectional profile B-B’ in the central portion of Workman’s Bench, just south of the ‘South Portal’ tunnel, illustrating the
intersection of the near-vertical, major mineralizing structures currently being assessed—note that the ‘Zones’ as drawn represent a width of mineralizing
structure from inspection of core and not the sampled assay interval, which is generally much thinner. 66
Figure 11.4 Schematic, cross sectional profile C-C’ in the northern portion of Workman’s Bench, just north of the ‘North Portal’ tunnel, illustrating the
intersection of the near-vertical, major mineralizing structures currently being assessed—note that the ‘Zones’ as drawn represent a width of mineralizing
structure from inspection of core and not the sampled assay interval, which is generally much thinner.
67
Figure 11.5 Schematic plane view of Pringle Bench, illustrating bench configuration, locations of 2006, 2007 and 2009 drill holes, the ‘A Zone’, ‘West
Zone, and other non-desgnated vein-fault zones; location of cross sectional profile D-D’ illustrated in Figure 11.6 68
Figure 11.6 Schematic, cross sectional profile D-D’ (and including RC hole 06SH01) on Pringle Bench , illustrating the intersection of the essentially
vertical, major mineralizing structures currently being assessed—namely ‘A’ Zone (red) and West Zone (blue). Note that the ‘A’ and ‘West’ zones as
drawn represent a width of mineralizing structure from inspection of core and not the sampled assay interval, which is generally much thinner. From
Silverado Staff (2008 m) and QP files 69
12 Sampling Method and Approach
12.1 Placer deposits
On July 29th
, 2008, the QP released the NI 43-101 Report ‘Estimation of Lode and Placer Mineral
Resources, Nolan Creek, Wiseman B-1 Quadrangle, Koyukuk District, Northern Alaska’, which
describes placer sampling methods and approaches in the Nolan Creek area, including the
Workman’s Bench area (Bundtzen, 2008c). No new information concerning placer sampling
methods and approach has been generated for Nolan Creek project since that release of information,
which was filed on SEDAR (www.sedar.com) and can be accessed @ http://www.silverado.com/.
12.2 Lode deposits
Four types of samples are collected during lode exploration: 1) soil samples, 2) trench samples, 3)
drill core samples, and 4) percussion drill hole samples. Soil samples were taken every 50 ft over
established grids. Silverado used hand-held, mechanized augers to collect the samples and sometimes
spade shovels. Trench channel samples are taken each 5 ft. When mineralized veins are encountered,
a narrower (to a minimum of 6 in) segment may be collected. This reflects Silverado’s interest in
evaluating the stibnite-bearing veins for selective extraction rather than looking at the deposits as a
lower grade bulk tonnage play.
All drill core is split by diamond saw technology at the mine site. Half of the core is split and bagged
for shipment to the selected lab; the other half is kept for further logging activities and reference.
The location of trenches and diamond drill holes are shown for the lode deposits at Pringle Bench
and Workman’s Bench in the previous section. Summaries of the number of percussion and
diamond core samples are presented in Sections 10 and 11 of this Technical Report. The locations of
channel samples for the Workman’s Bench deposit are shown in Figure 12.1. Table 12.1 illustrates
by example how sample interval and assay data are formatted from the diamond core drilling,
surface-trench, and underground sampling programs.
In February 2008, Silverado completed an underground channel sample program of thin zones of
quartz-stibnite mineralization exposed in the workings driven in late 2007. Sample widths across
mainly massive stibnite veins ranged from 3 in to 11 in and averaged 4.5 in. In April 2008, Silverado
re-entered the underground workings and collected an additional 92 channel samples along 460 ft of
underground development.
A portable, air-powered chipper (i.e., jackhammer) and chisel were used to extract the samples at
mostly 5 ft intervals. The sample channel was first cut with an air-powered rock saw before being
extracted with the jackhammer. Sample weight was estimated to be about 15 pounds each, for a total
of approximately 600 kg for the 92 samples. The broken sample was collected on a plastic sheet lain
on the floor of the drive immediately below the channel. The QP considers that adequate care was
taken in the collection of the material in the sampled intervals.
The QP collected 23 independent channel samples from underground workings, using sampling
methods similar to those described above. The samples were taken across sixteen (16), northeaststriking, steeply-dipping, stibnite-quartz (gold) veinlet zones, four quartz veins without visible sulfides
or sulfosalts, and three northwest-striking cross faults. A bulk sample collected underground from 70
‘A’ Zone weighing 415 lb was shipped to Hazen Research, Inc., Lakewood, Colorado, for a
metallurgical bench test.
During September 29-30, 2008, the QP inspected the methodology of the sampling methods and
approaches during the processing of core from the 2008 Workman’s Bench exploration program. In
contrast to the 2007 exploration drill program on both Pringle and Workman’s Benches, where 5.0
foot lengths of core were systematically assayed along with selected mineralized zones, sample
intervals selected during the 2008 drill program on Workman’s Bench was entirely focused on the
relatively thin mineralized veins intervals in core. Five foot intervals in core were not assayed if
veinlet mineralization was not recognized. This Silverado decision reflects the desire to focus
exclusively on relatively small, high grade, antimony-gold veinlet zones in core. As a result, the total
number of assay intervals during the 2008 drill program (627) was only 52 percent of the 2007 drill
program total (1,195) despite the fact that drill footage in 2008 (11,597 ft) exceeded the drill footage
in 2007 (4,555 ft) by about 160 percent.
During 2009, Silverado contractors continued to selectively assay mineralized zones in a similar
manner to what was done in 2008. Samples were cut for assay only in recognized zones of stibnitequartz (arsenopyrite) mineralization. Sample widths ranged from 2.0 inches to 4.8 feet (56 inches)
and averaged about 1.5 feet (18 inches). Like in 2008, the total vein-fault assay intervals taken in
2009 (42) are down significantly from years when more of the core was sampled; i.e., 2007. Details
of the nature of the 2009 sample intervals and those from earlier years are provided in Appendices I
and II of this Technical Report.
During June 13-14 and September 29-30, 2008, the author examined nearly all of the mineralized drill
intervals selected for assay from the 2007 and 2008 drill programs. In 2009, the QP examined twelve
(12) additional drill intercepts from the 2009 drill campaign that were brought to his office in
Fairbanks. Based on these collective observations, the QP judges that the sampled intervals are
representative of the mineralization tested. 71
Figure 12.1 Location of underground development and channel samples, Workman’s Bench; note this figure does depict ‘West’ zone 72
Table 12.1 Table of selected sample composite, illustrating composited assay information and true widths of mineralized structures from 2009
Workman’s Bench core drilling program.
Drill Hole #
(Assay Intervals)
Underground or
Surface Channels
Stibnite Target
Vein Zone
From
(feet)
To (feet) Width
(feet)
Estimated
True
Width
Sb (%) Au (oz/t) As (ppm) Hg
(ppm)
Pb
(ppm)
Brief Description
09SH01
(09SS03)
‘A’ Zone 181.1 182.0 0.90 0.75 <0.01 0.072 7,730 0.25 2.5 Dense quartz vein
swarm with trace
stibnite and
arsenopyrite
09SH01
(09SS04)
West Zone 189.9 190.6 0.70 0.58 0.07 0.126 6,680 0.27 8.9 3.25 inch thick vuggy
quartz‐stibnite vein
09SH02
(09SS019)
‘A’ Zone
hanging wall
160.3 162.0 1.70 1.36 5.64 0.035 2,310 0.27 0.9 Quartz carbonate
stibnite stockwork
09SH02
(09SS020)
‘A’ Zone 162.0 162.9 0.90 0.72 0.18 0.035 4,560 0.37 15.6 Quartz‐stibnite breccias
vein; analytical Sb
content lower than
visual in core
09SH02
(09SS021)
‘A’ Zone 162.9 164.6 1.70 1.36 3.05 0.042 3,790 0.40 29.1 Two vertical quartz‐
stibnite veins 0.75
inches thick; 0.30 foot
carbonate vein
09SH03
(09SS035
‘A’ Zone
hanging wall
164.1 164.6 0.50 0.40 0.35 0.012 NA NA NA 3/8 inch qtz +Sb; 30%
stibnite—over‐drilled
09SH03
(09SS036)
‘A’ Zone 168.0 168.6 0.60 0.40 0.80 0.019 NA NA NA <1/2 inch qtz‐Sb; 80%
stibnite‐over ‐drilled
09SH04
(09SS039‐040)
‘B’ Zone 145.0 148.7 3.70 2.75 1.57 0.169 5,130 0.90 2.6 Quartz‐carbonate veins
and quartz‐stibnite
breccias—
contamination from
hanging wall
09SH04
(09SS047)
‘A’ Zone 193.6 195.8 2.20 1.62 3.71 0.002 415 0.24 3.4 Abundant quartz
carbonate stibnite veins
09SH04
(09SS048)
‘A’ Zone 195.8 196.3 0.50 0.37 1.65 0.190 2,170 0.37 15.7 Similar to 09SS047 but
more arsenopyrite
09SH05
(09SH022)
‘A’ Zone 276.2 276.7 0.50 0.30 47.29 0.217 2.9 1.16 0.7 Hanging wall of massive
stibnite vein;
arsenopyrite in hanging
wall (see cover photo)
09SH05
(09SS023)
‘A’ Zone 276.7 278.3 1.60 1.30 69.21 0.251 <0.1 1.63 0.2 Massive stibnite vein
(see cover photo)
09SH05
(09SS024)
‘A’ Zone 278.3 278.8 0.50 0.30 39.53 0.389 17.9 0.79 1.3 Footwall contact zone 73
13 Sample preparation, analyses, and security
13.1 Independence of sample preparation and analysis
To the QP’s knowledge, all primary sample preparation from both lode and placer mineral
exploration programs at Nolan Creek was conducted by professional geologists employed by
Silverado. All work completed on behalf of Silverado was completed by or under the supervision of a
contractor of Silverado. Officers, directors, and associates of Silverado were not involved in sample
preparation. Independent, off site analytical laboratories perform additional sample preparation of
samples from the lode-style deposits.
Analysis of placer samples is performed on site by Silverado contractors. Analysis of lode-style
deposit samples (core, percussion, trench, and underground channel) is performed by independent,
off site laboratories.
13.2 Sample preparation and analytical procedures
13.2.1 Placer deposits
On July 29th
, 2008, the QP released the NI 43-101 Report ‘Estimation of Lode and Placer Mineral
Resources, Nolan Creek, Wiseman B-1 Quadrangle, Koyukuk District, Northern Alaska’, which
describes sample preparation, analyses, and security of placer sampling programs in the Nolan Creek
area, including those drill programs in Nolan Creek valley as well as in the Hammond River area.
(Bundtzen, 2008c). No new information concerning sampling methods and approach for placer
deposits has been generated for Nolan Creek project since that release of information, which was
filed on SEDAR (www.sedar.com) and can be accessed @ http://www.silverado.com/.
13.2.2 Lode Deposits
Diamond core samples are split in half on site by Silverado personnel using a core saw. Half of the
core is submitted to external laboratories for analysis and half is retained on site. Samples from RC
drilling are split with a splitter and surface samples are split by contracted laboratory personnel.
ALS Chemex of Vancouver, Canada, an ISO 9001:2000 accredited laboratory, has analyzed most of
the Silverado sample stream from lode-style deposits. More recently, Alaska Assay Laboratories LLC
of Fairbanks, Alaska, an ANS/ISO/IEC Standard 17035:2005 accredited laboratory has been used
by Silverado for analytical work. Both laboratories produce a coarse split from which a finely ground
material to 150 mesh is analyzed. The pulverized material and the coarse reject are stored by the
laboratories for possible re-analysis. Both laboratories were utilized during the 2008 exploration
program. In 2009, analytical services were exclusively provided by ALS Chemex Labs (now ALS
Minerals).
Trench and drill core samples submitted to ALS Chemex during 2007-2009 are analyzed by the
following methods: ME-MS41 (41 multi-element), Au-AA23 (fire assay gold to 5 ppb level), and SbAA65 (> 1% antimony or referred to as ‘ore grade’ antimony). Soil samples shipped to ALS Chemex
are analyzed by the ME-ICP41 (41 multi-element) and Au-ICP21 methods.
The 23 samples of mineralization collected by the QP and submitted to Alaska Assay Laboratories
LLC were analyzed using the following methods: Au-30 element (multi-element), fire assay AA for74
gold and silver, and ICP-4A (ore-grade antimony). The packages from each laboratory are roughly
comparable in both elemental suite and analytical methods.
13.3 Quality Assurance and Quality Control
Quality assurance and quality control (QAQC) is routinely performed by Silverado exploration
contractors. During 2008, standards have been obtained from Shea Clark Smith, (Minerals,
Exploration, and Environmental Geochemistry) in Reno, Nevada that supplies standards for mining
companies. For core intervals intersecting vein zones, two standards and one blank are randomly
inserted in batches of twenty (20) sample intervals. One standard contains 0.174 oz/ton gold. The
other standard contains 0.261 oz/ton gold. For core penetrating mainly wall rock zones, one
standard and one blank are randomly inserted into batches of twenty (20) samples, with the standard
used containing 0.174 oz/ton gold. The standards for gold that were inspected by the QP during
2008; all appear to be within a narrow 1.0 percent of the values.
During 2009, standards were again obtained from Shea Clark Smith, (Minerals, Exploration, and
Environmental Geochemistry) in Reno, Nevada. One mineralized standard contained 6 ppm (0.174
oz/ton) gold while another contained 9 ppm (0.264 oz/ton) gold. A blank consisting of pure quartz
was also obtained from Shea Clark Smith. Duplicate samples were prepared by Karl Sharp using
known intervals with known assay values. In 2009, standards, blanks, and duplicate samples were
inserted into the sample stream every twenty (20) samples in a similar fashion to that developed for
the 2008 sample stream.
The QP inspected ALS Chemex certified analytical results for the 2008-2009 programs. For
example, in 2009, Certificates FA09127826-828; FA0917035-037; FA09091985; FA09085913; and
FA09081078 contained 170 assayed samples from all sources. Of these the QP observed the
standards and blanks. The low gold standard (6 ppm Au) ranged from 5.91-6.27 and averaged 6.04
ppm Au. The higher standard (9 ppm Au) ranged from 8.61-9.38 and averaged 8.84 ppm Au. The
QP judges that the contracted laboratory is performing in a satisfactory manner. Antimony
standards are not being deployed and should be considered in the future.
Core recovery is checked in every box coming off the drill rig. The QP witnessed core loggers
estimating core recovery during 2007 and 2008. During 2008, Silverado's geological contractors have
reported that core recovery and Rock Quality Designators values (RQD) averaged 95 percent,
especially after switching from BTW size core to the larger diameter NQ core. During his October
22-23, 2007, June 13-14, 2008, and September 29-30, 2008 site visits, the QP notes that core
recovery is consistently very high and averages >90 percent. Lower RQD values occur in
mineralized intervals.
The QP considers that Silverado contractors have competently prepared samples analysis and
dispatch to external laboratories. The QP has observed sampling procedures and QAQC issues since
about 2003.
Sample security is maintained by geological contractors. Samples are stored in a secure trailer at
Nolan Camp. Individual samples are composited into larger rice bags and sealed with plastic tape.
Samples are then stored in a locked trailer at Nolan Camp prior to transport to the ALS Chemex
preparation laboratory in Fairbanks, Alaska. 75
During the April 20th
2008 inspection of the Workman’s Bench underground workings, the QP
suggested some modifications to Silverado contactors during the collection of channel samples
underground, which included covering the floor of the drift with a tarp to collect the samples and to
prevent contamination and using larger sample bags than were being used.
The analytical package selected from external assay laboratories is adequate and reflects the need to:
obtain precise antimony and gold values, obtain information on trace metals such as bismuth, lead,
arsenic, cadmium, and selenium, and to seek to understand background levels of other elements for
environmental monitoring reasons. Because Silverado is evaluating the lode resources of the area for
potential development, it is useful for Silverado to take a broad look at the elemental suite present in
the affected environment in order to better design an environmental monitoring program. Data from
Workman’s Bench shows Ca values as high as 17.50 percent. This may indicate a high CaCO3
content of some sample intervals.
For the 2009 programs, only narrow mineralized zones were selected for assay; therefore, the bulk of
the core volume was not submitted for analytical work. The QP suggests that a selected portion of
the unanalyzed core should be submitted for: 1) the same analytical methods as used in the
mineralized zones in order to estimate the possibility of bulk mineable albeit lower grade zones of
mineralization; and 2) acid-base accounting (ABA), in order to better predict the acid generating
capacity (AGC) of the site during development and for future permitting requirements.
Marketability issues have been addressed, especially in 2008. Some metals are considered to be
deleterious in antimony purchases. For example, most antimony smelters will not accept material
that exceeds 0.5% combined lead and arsenic. Smaller amounts of selenium and bismuth also pose
potential limitations and may invoke smelter penalties. A broader suite of elemental information has
been acquired during the exploration of what is basically an antimony-gold-arsenic system so that
background values are better understood. 76
14 Data verification
14.1 Data verification by qualified person
The QP observed core logging and trench samples being prepared for shipment from Nolan Creek during
October 22 to October 23, 2007. The QP also observed Silverado contractors preparing placer samples for
separation of placer gold, the subsequent weighing of recovered gold and calculation of gold per unit volume
of material. Concentrate splits are stored at Nolan Camp. The QP inspected these records during 2003 to
2004 and also looked at chip trays collected during 2006 to 2007. The QP observed placer exploration
conducted by Silverado contractors during underground development of Swede Channel in 2006. The QP is
confident that Silverado contractors conducted a sound panning program that was directly factored into the
development of drifts and crosscuts. The QP has verified all data relied upon in this Technical Report. In
2009, the QP observed mineralized sample intervals being prepared for submittal to the ALS Chemex
Laboratory in his Fairbanks office complex. All of the core boxes were nailed shut prior to shipment to
Fairbanks. According to Karl Sharp (pers. commun., September, 2009), splitting occurred after the core was
photographed.
Selected field duplicates of sampled intervals, two from underground channels, and one from a trench, were
submitted by the QP to an umpire laboratory (Alaska Assay Laboratories LLC) to check analytical results
from ALS Chemex. In as much that the samples are collected by different individuals at different times and
analyzed by different labs, the QP judges that results from this limited comparison indicate acceptable levels
of bias and accuracy for gold and antimony values (Table 14.1).
Table 14.1 Duplicate analytical comparisons between QP and Silverado contractor samples
Sampler Sample # Sb (%) Au (oz/ton) Description
QP 203808 43.64 1.190 Underground sample, Alaska Assay
Laboratories
Karsten Eden WBUG5-S2 50.04 1.040 Underground sample, ALS Chemex
QP 203810 41.00 0.696 Underground sample, Alaska Assay
Laboratories
Karsten Eden WBUG8-S3 58.02 0.696 Underground sample ALS Chemex
QP 267397 36.51 0.793 Trench Sample, Alaska Assay Laboratories
Silverado
Contractor
Trench J1 29.30 0.120 Trench Sample, ALS Chemex
During 2008, Silverado submitted sixty-one (61) duplicate samples of mineralized core to ALS Chemex, and
analyzed them for the Au-GRA21 and Sb-AA65 packages (Table 14.2). The QP did not rigorously compare
the data but generally found that, by visual inspection, the assay results for both antimony and gold
compared, in the average within 2.5 percent.
During October 22-24, 2007, the QP briefly examined surface exposures of mineralization in snow-covered
trenches on Pringle Bench but did not examine core intervals from the drill program that took place there.
He did examine all Certified Analytical Results from the 2007 Pringle Bench program. During April 8-9, and
June 13 to June 14, 2008, the QP visited Nolan Camp and examined all significantly mineralized core and
surface and underground intervals acquired from the 2007 exploration of the Workman’s Bench property.
During September 29-30, 2008, the QP examined all significant mineralized intervals intercepted by the 2008
drill program. During August and September, 2009, a grand total of 124 mineralized core sample intervals
(182 assay intervals) were examined from the Workman’s Bench lode. 77
Table 14.2 List of Duplicate Samples Workman’s Bench Drilling Program 2008
Total: 61 duplicate samples
FA08083476
08SS13
08SS14
08SS18
08SS25
FA08086192
08SS33
08SS46
08SS51
FA08093001
08SS102
08SS106
08SS111
FA08093002
08SS119
08SS122
08SS123
08SS124
FA08076587
08SS02
08SS09
FA08093003
08SS52
08SS67
08SS68
08SS70
FA08095943
08SS138
08SS147
08SS149
08SS150
FA08117975
08SS235
08SS241
08SS242
FA08117976
08SS254
08SS255
08SS192
FA08117977
08SS281
08SS283
08SS287
FA08108706
08SS195
08SS196
08SS212
FA08108707
08SS215
08SS218
08SS227
FA08100110
08SS177
08SS182
08SS190
FA08100111
08SS158
08SS159
08SS170
FA08093000
08SS73
08SS80
FA08127442
08SS313
08SS326
FA08127448
08SS302
08SS305
FA08130451
08SS342
08SS351
FA08135958
08SS353
08SS372
FA08135959
08SS375
08SS386
FA08136610
08SS393
08SS398
FA08137318
08SS413
08SS426
Analytical Methods:
Au-GRA21
Sb-AA6578
In the vast majority of cases (>97%), the mineralized zones had corresponding elevated values of antimony
and frequently (but not always) gold. In four (4) examples (1.9 percent of the total 202 sample assay intervals
on Workman’s Bench), where stibnite-quartz and trace visual gold was identified in core, analytical results did
not indicate correspondingly high metal values; i.e., sample intervals 08SS216 (DDH 08SH14), 08SS379
(DDH 08SH32), 08SS380 (DDH 08SH32), and 08SS243 (DDH08SH17). In the remaining 98.1 percent of
the assay intervals, analytical results seemed to correspond with estimated amounts of mineralization; i.e.
estimated content of stibnite and occasional visible gold. Appendices I and II provides sample interval notes
and assay information for inspection by the reader.
All Certified Analytical Results from the 2007-2009 exploration programs, including compilations of log and
assay data in EXCEL spread sheets, were examined by the QP. Based on review of all information and his
personnel inspections of sampling procedures, the QP judges that all remaining mineralized sample intervals
collected in drill core and in underground channel and trench excavations are representative.
Data from twenty three (23) drill holes totaling 5,044 feet on Pringle Bench, twenty two core holes and one
RC hole, were used in this Technical Report. Fifty (50) diamond drill holes totaling 16,400 feet on
Workman’s bench, all core holes, were used in this Technical Report.
14.2 Exploration data limitations
Although drill core intervals can be checked through re-assay activities, placer intervals cannot be checked as
the sample material is completely consumed. After interviews with Silverado contractors involved with the
1990s placer exploration programs, the QP is satisfied that exploration data acquired during that time is
reliable.
The QP cannot comment on the validity of sampling and analysis performed prior to the mid 1990s, because
he was not present during the exploration programs. The early RC (percussion) drill programs directed at
assessing lode mineral potential in the Nolan Creek area are not very well documented. For example, the
specific locations of drill hole collars on the Thompson Pup area could not be found.
Because of: 1) the uncertainties of sampling procedures; 2) the uncertainties of some drill hole collars and drill
orientations; 3) the apparent incorrect depiction of the orientation of the mineralized structures; and 4) the
lack of accurate antimony assays, the QP elected not to use percussion drilling results prior to the 2006 effort
to evaluate specifically the antimony-gold lodes of the area. One percussion hole, 06SH-01, has been used
during the resource calculations on Pringle Bench. This hole was used because it was drilled by the same
geological team that designed the core drilling program for 2007-2008, and contained accurate antimony assay
data. Location and logging data was consistent with what was obtained for the core drilling efforts. 79
15 Adjacent properties
No modern lode mineral exploration work of significance has been conducted on adjacent lands. Doyon
Limited (Doyon), a native regional corporation based in Fairbanks, has selected lands 2.0 mi to the west of
Nolan Creek that contain base metal prospects and some placer gold in nearby streams (e.g., lead and zinc
mineralization has been identified in calcareous schist thought to be base metal occurrences). The QP is not
aware of any deposit types like those known at Nolan Creek that have been documented on the Doyonowned lands. Antimony-gold vein deposits were discovered by ADNR geologists at Sukupak Mountain about
20 mi northeast of Nolan Creek Camp (Dillon, 1989; Dillon and others, 1989; Mull, 1989). This occurrence is
similar to the mineralization found at Workman’s Bench and Pringle Bench, but very little data for the
Sukapak Mountain occurrence is available except for assays from a few surface samples. Because of this, no
data from lode prospects in adjacent areas was used in this analysis. The privately funded structural analysis
by Proffett et al (1982) and Driscoll (1987) has been useful in this analysis in understanding the structural
regime of the area.
There are significant placer gold prospects immediately flanking the Nolan Creek and Hammond River claims
held by Silverado. The QP has relied on the synopsis published by Kurtak and others (2002 a, b) of the
USBLM for pertinent information concerning placer potential on Silverado’s claim groups.
The QP has been unable to verify any of the information with respect to adjacent properties and that
information is not necessarily indicative of the mineralization on the Nolan Creek property.80
16 Mineral Processing and Metallurgical Testing
16.1 Placer deposits
On July 29th
, 2008, the QP released the NI 43-101 Report ‘Estimation of Lode and Placer Mineral Resources,
Nolan Creek, Wiseman B-1 Quadrangle, Koyukuk District, Northern Alaska’, which describes mineral
processing and metallurgical testing of placer gold deposits held by Silverado in the Nolan Creek area. No
new information concerning mineral processing and metallurgical testing of placer deposits has been
generated for Nolan Creek project since that release of that information, which was filed on SEDAR
(www.sedar.com) and can be accessed @ http://www.silverado.com/.
16.2 Lode Deposits
Until very recently, Silverado has not completed mineral processing or testing of lode mineralization in the
Nolan Creek area. Silverado has acquired a permit from the USBLM to collect and process a maximum 1,000
cu yd of material from the Workman’s Bench lode for metallurgical testing. This large bulk sample will be
collected to determine further grinding, flotation, and other processing and characteristics of stibnite.
In April 2008, the QP collected a 414 lb bulk sample of semi-massive to massive stibnite, vein quartz, and
wall rock gangue all from the defined mineralized ‘A’ Zone in the Workman’s Bench underground workings
(see Bundtzen, 2008c). The purpose was to determine the mineralogical nature of the antimony
mineralization and the source of significant gold values. There is variation in gold content of the stibnite
zones even within constrained sample collection areas. The bulk sample was sent to Hazen Research Labs
Inc. (Hazen) in Golden, Colorado, USA in order to discover the most optimal grind for potential marketing
of a stibnite product and identify the mineralogical nature of gold and antimony values. The QP believes that
the bulk sample was representative of the mineralized zone on Workman’s Bench.
Two reports were produced by Hazen in September: 1) Report #1-Flotation and Gravity Results,
Workman’s Bench Stibnite-Gold Deposit, Wiseman District, Alaska; and 2) Report #2-Mineralogical
Examination, Workman’s Bench Stibnite-Gold Deposit, Wiseman District (Schultz, 2008 a, b). Both yielded
important and relevant information. Hazen tested both gravity and flotation separation technologies,
provided for heavy mineral components of the ore, predicted recovery of both stibnite and free gold, and
suggested recovery technologies to be used in a future operation.
Importantly, in the QP’s opinion, the bulk sample demonstrated that stibnite can be effectively separated
from the other heavy mineral components such as gold and arsenopyrite, which report separately in the
rougher concentrate table testing (see Figure 16.1). Hence the two economic products of the proposed
mineral development, stibnite (antimony) and native gold, can be successfully separated. The stibnite
concentrates can be upgraded to market quality and most of the gold (90 percent according to Hazen test
results) can be recovered at the mine site.
In Report #1 (Schultz, 2008a), rod mill grinding followed by two rougher stages yielded a gold recovery of
98% and an antimony recovery of nearly 100% in 37.8 percent of the weight, which strongly indicates
flotation may be a viable process for recovering gold and antimony at Workman’s Bench. The gold and
antimony grades from the sample were 0.546 oz/ton (as stated, 18.7 g/t) and 36.7 percent, respectively,
which compare fairly closely to the average inferred resource grades of 39.13 % antimony and 0.395 oz/ton
gold from ‘A’ Zone (see Bundtzen, 2008c). 81
Figure 16.1 Tabled Rougher Concentrate from bulk sample from Workman’s Bench Deposit submitted by QP to Hazen Research Labs, Inc.82
Gravity separation using a quarter DeisterTM shaking table produced a second, cleaner gold and arsenopyrite
concentrate that assayed 9.4 oz/ton (as stated, 356.0 g/t) gold (Figure 16.1). This test work indicates that
coarse gold and coarse stibnite can likely be recovered by gravity separation; however, fine grained
components of both mineralogical products might benefit from flotation (Figure 16.2). Given the tendency
for stibnite to ‘slime’, a flotation circuit may be an important prerequisite for a recovery system. Using
gravity-only methods would result in a stibnite recovery of approximately 85 percent and gold recovery of
about 90 percent.
Report #2 (Schultz, 2008b) was designed to learn more about the mineralogical constituents of the bulk
sample. In an effort to determine the nature of the gold occurrence, gravity concentration was carried out
using heavy liquid, to enable detection and to allow examination of a statistically valid number of gold
particles and also to obtain preliminary information on response to gravity separation. A 500-g split from the
minus 10-mesh head sample was dry-screened at 35-mesh, and the oversized material was stage-crushed to
minus 35-mesh for the gravity separation and the mineralogical work on the separated fractions. For the
separation, the minus 35-mesh split was wet-screened at 500 mesh. The minus 35 mesh fraction was
separated with heavy liquid using acetylene tetra-bromide at a specific gravity of 2.96 to upgrade the heavy
minerals and concentrate the gold.
Figure 16.2 Hazen mineralogical separation process flowchart , Workman’s Bench bulk sample.
Minus 500-mesh fraction
Panning Assay
Tails Concentrate
Mineralogy
Gravity Concentration
(Heavy Liquid sg 2.96)
Float Sink
Mineralogy Mineralogy
Assay Assay
Plus 500-mesh fraction
Representative Head Sample
Dry screen at 35 mesh
Stage crush to minus 35 mesh
Wet-screen at 500 mesh83
The heavy liquid sink product contained as predicted, dominantly stibnite, but also other minerals as
summarized in Table 16.1 below.
Table 16.1. Composition of the Heavy-Liquid Sink Product
Constituent
Estimate
Area, %
Stibnite 85
Gangue 10
Pyrite (including marcasite) 3
Arsenopyrite 2
Rutile 1
Chalcopyrite Trace
Covellite Trace
Gold Trace
Small gold inclusions (less than 20 µm) in stibnite were observed in the sink product. The identification was
confirmed by EMP which shows 100 percent Au. Also, fine microcrystalline gold was observed associated
with stibnite. The EMP analysis of these particles also showed 100 percent Au. Figure 16.3 illustrate these
gold inclusions in stibnite.
Figure 16.3 Gold (bright color) in stibnite (gray grain), Workman’s Bench Bulk sample. 84
A split portion of the concentrate from the shaking table was panned to concentrate the gold even further.
Several gold particles were observed ranging in size between 500 µm to about 2 mm. Figures 16.4 and 16.5
illustrate the gold in the shaking table concentrate; note the coarse nature of the gold particles in the sample.
In the QP’s judgment, the Hazen work on the bulk sample, coupled with his own mineralogical work derived
from his underground sampling, provide enough information to initiate design and operations for recovery of
gold and stibnite.
Figure 16.4 Stibnite-gold concentrate from table product—example 1
2
Figure 16.5 Stibnite-gold concentrate from table product—example 2
16.3 Trace element content in mineralization for metallurgical considerations 85
16.3 Trace Element content of mineralization
Trace element content of the stibnite mineralization in the Nolan Creek area will affect potential
marketability. Amalgamet-CanadaTM provides specifications for threshold concentrations of trace elements in
stibnite ores, which if exceeded, could result in penalties. The metals of concern are mercury, lead, arsenic,
selenium, tellurium, tin, and bismuth. Three of these elements, mercury, lead, and arsenic, are included in
Appendix I (from Workman’s Bench lode), because they are usually the most scrutinized during metallurgical
and environmental evaluation of stibnite ores. Silverado has analyzed for all of these elements during their
Workman’s bench exploration program. When the QP released his July 29, 2008 NI 43-101 Technical
Report (Bundtzen, 2008c) to Silverado, he indicated that mercury analyses did not exist for 2007 and earlier
exploration sampling programs and recommended that mercury analyses be given a priority, given the need to
document mercury levels in stibnite-gold mineralization for metallurgical and marketing issues. Silverado
responded to this recommendation and added mercury analyses to the analytical package for the 2008 core
drilling campaign on Workman’s Bench.
Table 16.2 compares a selected roster of industry standard trace impurities with trace elements identified
from the Workman’s Bench and Pringle Bench stibnite-quartz zones. Analytical data is provided in
Appendices I and II. Arsenic, mercury, lead, selenium, bismuth, tellurium, and tin, all pass accepted industrial
criteria (maximum quantities) for those metals. The average levels for all of the trace metals in the assay
intercepts fall below the Amalgamet-Canada metal specifications, which were used as a standard to test the
metallurgical nature of the Workman’s Bench mineralization.
The Silverado data set includes mercury results from 174 mineralized assay intervals used in the resource
analysis, or about 80 percent of those used in the probable reserve estimates. For specific clarification,
mercury assays exists for all holes drilled in 2008 and 2009, but does not exist for the 2007 drill holes, nor in
surface trench samples and underground channel samples collected prior to April, 2008. However, the 2008
and 2009 drill holes and respective intercepts into mineralized zones flank the 2007 drill core intercepts
described in the previously released July, 29th
, 2008 Technical Report (Bundtzen, 2008 c). The 2008 drill
intercepts represent approximately 80 percent of all mineralized intercept data acquired on Workman’s Bench
and Pringle Bench. Figure 16.6 illustrates where mercury data is available in mineralized intervals.
Mercury values from the 2008 drill-indicated intervals range from nil to a maximum value of 8.12 ppm and
average 0.774 ppm mercury (n=134). Twenty one (or 16 percent) of the intervals contained greater than 1.00
ppm mercury whereas 113 (or 84 percent) of the intervals contained less than 1.00 ppm mercury. The QP
inspected the 2009 drill core analytical data from 43 intercepted mineralized zones. Mercury values from the
2009 intercepts ranged from 0.22 ppm-to-15.70 ppm and averaged 1.45 ppm. None of the mercury values
exceed the threshold of concern (see Table 16.2).
Lead and arsenic values exist for all 2007, 2008 and 2009 drill core intervals, but not trench or chip samples.
For 2007-2008, about 87 percent of the mineralized intercepts have Pb and As control. All 2009 vein-fault
assay intervals have arsenic and lead assay control. For 199, or 91 percent of the analyses, arsenic levels
average 2,379 ppm (0.224 percent) and lead values are very low, averaging just 17.1 ppm. The highest lead
value was 275 ppm, indicating that lead only exists in very small amounts in the mineralized rock.
However, for 15 sample intervals or 8 percent of the sample population, arsenic values are >1.00 percent.
Arsenic levels in zones of greater than 10 percent antimony average about 0.18 percent. For 2009, arsenic
values ranged from 2.9 ppm to 9,380 ppm and averaged 2,312 ppm. Lead values ranged from 0.2 ppm to 86
Figure 16.6 Drill plan showing the locations of mercury analyses on 2008 core drilling program 87
14.5 ppm and averaged 6.55 ppm. The QP is confident that the mercury, arsenic, and lead values
encountered in the core drilling program provides adequate information for the metallurgical testing
summarized in this Technical Report.
The maximum arsenic value in these higher grade Sb intervals is 0.41 percent in sample interval #203789,
which contains 22.48 percent Sb (sample control #61, Appendix I). During development of milling
technologies, Silverado’s work will focus on the most effective removal of arsenopyrite from the stibnite
concentrate prior to marketing. The metallurgical data shown by the Hazen Research on the Bulk Sample
(see Figure 16.1) shows that arsenopyrite and gold report to separate mill circuits during gravity processing.
The QP reviewed tin, bismuth, selenium, and tellurium values. For the majority of the mineralized zones,
values were below limits of detection as indicated in Table 16.2, indicating that they do not constitute a
significant metallurgical contaminate.
Table 16.2 Selected stibnite quality characteristics from Amalgamet-Canada versus values determined from
Workman’s Bench samples from 2008 and 2009 data.
Amalgamet-Canada Threshold of Concern
Specifications for Stibnite Ores
Average Content Workman’s bench Mineralized Zones
<0.50 % Pb+As 0.224 % arsenic for 91 percent of intervals; and 17.1 ppm lead
Trace Selenium (<30 ppm) 5.0 ppm selenium
Trace tellurium (<10 ppm) <2.0 ppm tellurium
Trace tin (<10 ppm) <4.0 ppm tin
Trace bismuth (<10 ppm) <3.0 ppm bismuth
Trace mercury (<20 ppm) 0.90 ppm mercury (maximum value is 15.70 ppm)
(1)
(1)
mercury data available for 177 mineralized intervals from 2008 and 2009 core drilling programs 88
17 Mineral resource and mineral reserve estimates
17.1 Summary
Silverado’s placer gold resources and lode antimony-gold mineral resources and reserves all within
the Nolan Creek area are reported in Table 17.1, Table 17.2, Table 17.3 and Table 17.4.
Table 17.1 Silverado’s placer gold mineral resources, Nolan Creek—see notes
Resource
category
Cut-off
grade
(oz/cu yd
Au)
Quantity
(cu yd)
Grade
(oz/cu yd Au)
Metal
(oz Au)
Indicated 0.06 66,800 0.095 6,250
Inferred 0.01 185,670 0.033 6,177
The effective date of these resources is July 29
th
, 2008
Rounding may result in some discrepancies.
No processing recovery factors have been applied to these resource figures
The industry standard unit of quantity for Alaskan placer deposit is cubic yards. The weight of a cubic yard varies, but averages
about 2.4 short tons.
Table 17.2 Silverado’s probable lode mineral reserves, Nolan Creek area
Reserve
Category
Cut-off
grade
(% Sb)
Quantity
(ton)
Grade
(% Sb)
Metal
(ton Sb)
Grade
(oz/ton Au)
Metal
(oz Au)
Probable 4.0 42,412 28.00 11,880 0.408 17,300
Notes:
The effective date of these probable reserves is January 1, 2009
Assumed processing recoveries for the base case are 90% gold recovery and 85% antimony recovery. The unit ton refers to short tons.
Rounding may result in some discrepancies.
Cut-off grade is 4.0% Sb ‘equivalent’, which refers to the combined values of gold plus antimony expressed in terms of antimony only. The
assumed prices for this analysis was $700/ounce gold and $2.25/pound antimony
Table 17.3 Total Indicated lode mineral resources, Workman’s Bench Nolan Creek
Resource Vein-Fault Cut-off grade Quantity Grade Metal Grade Metal
Category Ore Zone (% Sb) (short tons) (% Sb) (ton Sb) (oz/ton Au) (oz Au)
Indicated A Zone 4.0 10,424 19.77 2,056.6 0.248 2,584.9
Indicated B Zone 4.0 780 19.61 153.0 0.105 82.6
Indicated
A and B
Combined
4.0 11,204 19.72 2,209.6 0.238 2,667.5
The effective date of these resources Is July 9th, 2011
Mineral Resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may
be materially affected by environmental, permitting, legal, title, taxation, socio‐political, marketing, or other relevant issues.
Cut-off grade is 4.0% Sb ‘equivalent’, which refers to the combined values of gold plus antimony expressed in terms of antimony.
No processing recovery factors have been applied to these resource figures. The unit ton refers to short tons89
Table 17.4 Total inferred lode mineral resources, Workman’s Bench and Pringle Bench Nolan Creek
Resource Deposit Cut-off grade Quantity Grade Metal Grade Metal
Category (% Sb) (short tons) (% Sb) (ton Sb) (oz/ton Au) (oz Au)
Inferred Pringle 4.0 12,817 19.61 2,513.8 0.499 6,390.4
Inferred Workman’s
Bench
4.0 19,642 11.17 2,194.7 0.273 5,362.1
Total Inferred
Pringle Bench +
Workman’s
Bench
4.0 32,459.0 14.50 4,708.5 0.362 11,752.5
The effective date of these resources is March 7, 2011
Mineral Resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially
affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
Rounding may result in some discrepancies.
No processing recovery factors have been applied to these resource figures. The unit ton refers to short tons.
Cut-off grade is 4.0% Sb ‘equivalent’, which refers to the combined values of gold plus antimony expressed in terms of antimony.
17.2 Disclosure
The mineral resource estimates reported in this section were prepared by Mr. Thomas K. Bundtzen,
President of Pacific Rim Geological Consulting Inc. and AIPG Certified Professional Geologist. Mr.
Bundtzen is the QP and is independent of Silverado as defined by NI 43-101. In accordance with
CIM Definition Standards (Staff, 2003, 2004, 2005a, b), a mineral resource may be sub-divided into
Inferred, Indicated, and Measured categories. “Measured and Indicated mineral resources” are that
part of a mineral resource for which quantity and grade can be estimated with a level of confidence
sufficient to allow the application of technical and economic parameters to support mine planning
and evaluation of the economic viability of the deposit. An “Inferred mineral resource” is that part of
a mineral resource for which quantity and grade can be estimated on the basis of geological evidence
and limited sampling and reasonably assumed, but not verified, geological and grade continuity (Staff,
2004). The QP judges that the mineral resource and reserve estimates presented in this Section are
representative of the mineralized zones that have been explored by Silverado.
17.3 Known issues that materially affect mineral resources and mineral
reserves
The QP is unaware of any issues that materially affect the mineral resource in a detrimental sense,
and has checked agency records, company correspondence with regulatory agencies and reviewed
regulatory agency websites. In addition:
• To the best of the QP’s knowledge, there are no known material exploration, legal,
marketing, socio-economic, political, title, permitting, or taxation issues;
• To the best of the QP’s knowledge, apart from the usual environmental aspects that
require consideration as part of any mineral exploration project, there are no known
material specific environmental issues; and
• To the best of the QP’s knowledge, there are no known material mining, metallurgical,
or infrastructure issues other than those discussed in this Technical Report. 90
17.4 Summary of Assumptions, methods, and parameters
The QP estimated mineral resources using the following steps:
• Personal inspection of both and the Nolan Creek placer-gold and Workman’s Bench
lode gold-antimony properties during 1999-2004, and 2007-to-2009 respectively.
• Database compilation and data validation by the QP.
• Geological interpretation and modeling by the QP.
• Compositing assay intervals to a common length.
• Determination of average material density both lode and placer properties by the QP.
• Analysis of grade variability by the QP.
• Polygonal estimation of grade by compositing of sample assay information taken within
designated widths and lengths of mineralized zones by the QP.
• Assignment of appropriate cut-off grades, the lowest grade that can be mined
economically.
• Classification of confidence with respect to CIM (2005) guidelines by the QP; and.
• Mineral resource tabulation and validation of the resource estimates by the QP.
17.5 Placer gold resources estimation
On July 29th
, 2008, the QP released the NI 43-101 Report ‘Estimation of Lode and Placer Mineral
Resources, Nolan Creek, Wiseman B-1 Quadrangle, Koyukuk District, Northern Alaska’ (Bundtzen,
2008c), which describes indicated and inferred gold resources in placer deposits held by Silverado in
the Nolan Creek area (see Table 17.1). Resources were calculated using techniques described by
Doheny (1941. 1942a, b; Daley, 1962)). No new information concerning either indicated or inferred
placer gold resources has been generated for the Nolan Creek project since the release of those
estimates in July, 2008, which are filed on SEDAR (www.SEDAR.com); also accessed @
17.6 Expanded Explanation of Methodology Used in Calculating Resource
Estimates on Workman’s and Pringle Benches
Because of the importance of understanding the updated resource estimates provided in this
Technical Report, a brief review of past exploration on Workman’s and Pringle Bench is deemed
relevant. From 2007 through the end of 2009, Silverado completed fifty (50) diamond drill holes
totaling 16,400 feet at the Workman’s Bench antimony-gold deposit and twenty three (23) drill holes
totaling 5,044 feet on Pringle Bench. Figures 17.3 and 17.13 shows the locations of the 2007-2008
and 2009 drill collars and their respective drill orientations on Workman’s Bench and Pringle Bench.
A total of 1,483 drill assay intervals were obtained from the 2006-2009 Workman’s Bench and
Pringle Bench diamond drill core programs (Table 17.5). During late November and December of
2007, mine crews drove 570 ft of drifts and cross cuts into the Workman’s Bench mineralized area.
The underground mine workings intersected the northeast-trending, quartz-stibnite-gold veinlet zone
identified in surface exposures and in core drilling intercepts. Combining underground and historic
trench samples sites provides and additional 127 assay intervals (see verification summary in Section
14 of this Technical Report). 91
Table 17.5 Summary of sample assay intervals from Workman’s and Pringle Bench deposit, Nolan
Creek
Sample type Sample count
Workman’s Bench underground 2008 119
2006 RC intervals, Pringle Bench 156
2007 core drilling (Workmans + Pringle) 531
2008 core drilling (Workmans Only) 627
2009 core drilling Workmans + Pringle) 42
(1)
Surface trench samples 8
Total 1,483
(1)
In 2009 a total of 150 sample intervals were analyzed. Only 42 of these were from mineralized intervals used in resource
Calculations.
17.6.1 Continuity Between control points for the vein-fault antimony-gold
deposits at Nolan Creek
To date, the drilling program, coupled with the underground sampling and mapping program, has
helped to identify four (4), northeast-striking, steeply dipping stibnite-quartz vein-faults that are
discernable from the wider stockwork vein swarm that contains elevated gold and antimony values.
These four zones on Workman’s Bench, hereafter referred to as ‘A’ Zone, ‘B’ Zone, ‘C’ Zone, and
‘West’ Zone, contain subsidiary but persistent zones of semi-massive to massive stibnite, which are
the focus of the resource evaluation efforts. The same ‘A’ Zone and ‘West’ Zones were recognized
on Pringle Bench but only a few exposures of the ‘B’ Zone and ‘C’ Zone have been identified on
Pringle Bench. A detailed explanation on how these vein-faults were identified is stated in Section
11.2 of this Technical Report.
The QP is familiar with the extent and character of the stibnite mineralization present in the
underground workings. The QP, accompanied by Silverado’s contractors, traveled to Nolan Camp
during June 13 to June 14, 2008 and reviewed significant intercepts of stibnite mineralization in the
2007 drill hole core library as well as all available certified assay results as completed by ALS Chemex.
The focus of the 2007-2008 and 2009 core drilling programs was to improve the accuracy of resource
estimates of the Workman’s Bench antimony-gold deposit. The QP participated with Silverado
Chief Geologist Karsten Eden in the design of the 2nd
phase 2008 core drilling program, which
sought to provide closer and especially more evenly spaced drill intercepts of the main target
mineralized zones identified in the 2007 drill program.
The QP also interfaced with Silverado’s current geologist Karl Sharp, who was hired and
subsequently trained by Eden to continue the exploration program. The 2008 and 2009 drill collars
at Workman’s Bench and orientations provide generally evenly spaced drill collar spacing (except in
the extreme northeastern portion of the vein-fault system), which is illustrated in Figure 17.3 of this
Technical Report. Figure 17.13 provides a plan view of Pringle Bench. The drill collars at Pringle
Bench offer similar coverage, but do not display the same generally isotopic drill pattern distribution
as undertaken on Workman’s Bench. There is more trench control at Pringle Bench than at
Workman’s bench. In the drill program design for Workman’s Bench, an even spacing in lateral and
vertical control has been accomplished with the 2008 drill program. In some portions of the drillvein structures, the spacing is much closer, reflecting the increased density of drill holes in the 92
northeast extension of the vein, coupled by utilization of the 2007 drill intercepts and the closely
spaced sampling in the underground drifts completed in April, 2008.
Figures 11.1 to 11.6 in section 11 (the drilling summary) depict the vein-fault system on Pringle and
Workman’s Benches that has been drilled by Silverado since 2006, but mainly since 2007. Figure
11.1 is the plane view of the Workman’s bench vein-fault system. Figure 11.5 is a plane view of the
Pringle Bench vein-fault system. Much of the data for the cross sectional profiles on Workman’s
Bench was compiled from a series of twelve (12) large plates that depict vertical sections constructed
by the company (see Staff, 2008, a-m). These profiles, which are drawn at approximately 100 foot
intervals across the Workman’s bench vein-fault system, were utilized into the calculation of
resources on Workman’s Bench and the construction of the polygonal resource blocks described in
this study and previous Technical Reports summarizing Nolan Creek antimony-gold resources. An
additional vertical profile was completed by the QP after inspection by of the 2009 drill program
data. A cross sectional profile on Pringle Bench (Figure 11.6) was developed by a profile drawn by
Silverado in (Staff, 2008 m) and the QP mainly from drill information provided by Silverado.
Three cross sectional profiles, namely A-‘A’, B-‘B’, and C-‘C’, which are shown in figures 11.2, 11.3,
and 11.4, provide a generalized fence of the Workman’s Bench vein-fault system from southwest to
northeast. They reveal that three, sometimes four, mineralized zones designated ‘West’, ‘A’, ‘B’, and
’C’ zones, are more-or-less sub-parallel to each other and dip steeply southeast in the southern part,
steeply northwest in the central part, and essentially vertical in the northern part of the drill tested
system. On Pringle Bench, the profile depicted in Figure 11.6 indicates a near-vertical configuration
for the ‘A’ zone, and ‘West’ Zone.
Forty six (46) of the fifty (50) core holes drilled to date on Workman’s Bench intercepted the ‘A’
zone vein-fault. Drill hole 07SH17 was collared too far to the west to have intercepted the ‘A’ zone
mineralization. Drill holes 08SH04, 08SH05, and 08SH06 were terminated before 100 feet depth and
could not have intercepted ‘A’ zone or any others identified (see Table 12.1). That the majority of
the drill holes cut the main mineralized structure on Workman’s Bench adds confidence to the
resource estimates calculated and presented in this Technical Report by the QP. Subsidiary, but
never-the-less persistent, mineralized intercepts occur in the B, C, and West Zones, which are
documented over lesser strike length than the consistency observed in ‘A Zone’. Thirteen of 23
holes on Pringle Bench intersected ‘A’ Zone. The remaining ten holes were collared and oriented in
order to test other zones of mineralization on the property.
17.6.2 True thickness versus measured thickness comparisons
Because the lode mineral resources evaluated occur in thin vein-faults, it is important that assayed
true thickness estimates be accurate. Two methods were deployed to calculate the estimated true
widths of the mineralized vein-faults being evaluated for resources estimates. Firstly, the corelogging geologist estimated true widths by measuring perpendicular across the extent of the parallel
footwall and hanging wall contacts of the mineralized structure being sampled. This field estimate is
aided by the fact that foliation in the host phyllite is nearly horizontal on both Pringle and
Workman’s Bench. The Silverado geologist can cross check his true width estimate of the
mineralized zone to a true thickness as predicted by the known angle of the drill hole. A primary
objective of QP’s inspection of core, underground stations and trench exposures during April, June, 93
and September of 2008, was to check the true widths of assayed vein-faults. In 2009, the QP
examined twelve of the twenty-two core intervals in order to estimate true width. When true widths
were ambiguous in core, standard trigonometric calculations were used to calculate the actual dip of
the vein(s) in core versus the calculated angle that the vein intersects the zone. Additional descriptive
explanation for calculating true thicknesses is presented in Section 12 of this report. A comparison
of drill interval widths versus estimated true width are presented in Appendices I and II of this
report. Appendix III compiles the true thickness estimates to the core interval thicknesses for all
intervals from which resource calculations of all categories were made. Table 17.6 below summarizes
the thickness categories.
Table 17.6 Comparisons between assay interval thicknesses and true thickness estimates, Workman’s
Bench and Pringle Bench vein-faults
Location West Zone
measured
(ft)
West Zone
true width
(ft)
‘A’ Zone
measured
(ft)
‘A’ Zone
true
width (ft)
‘B’ Zone
measured
(ft)
‘B’ Zone
true
width
‘C’ Zone
measured
(ft)
‘C’ Zone true
width
(ft)
Workman’s
Bench
1.86
(n=27)
1.31
(n=27)
1.90
(n=50)
1.52
(n=50)
1.71
(n=33)
1.25
(n=33)
0.98
(n=17)
0.71
(n=17)
Pringle
Bench
1.05
(n=19)
0.85
(n=19)
1.77
(n=21)
1.38
(n=21)
(1) (1) (1) (1)
(1)
No resources were calculated from ‘B’ and ‘C’ zones on Pringle Bench
These thickness estimates contrast somewhat with those that were arrived at during the calculation of
resources and reserves on Nolan Creek from the 2007-2008 exploration program. That is because
thickness estimates during those calculations are weighted. Hence average weighted true thickness
estimates in the previously reported resource estimates are thinner. In addition, the assay results
from the 2009 core program did report and assay wider zones of vein-fault mineralization.
17.6.3 Dilution with respect to classifying lode mineral resources, Nolan
Creek Area
According to CIM definitions, it is not a requirement to demonstrate economic viability for either
indicated or inferred mineral resources. However, it must be a reasonable assumption that these
resources could be extracted. On January 1st
, 2009 (Amended June 1, 2009), the QP released the NI
43-101 Report: ‘Update of Mineral Resource and Reserve Estimates and Preliminary Feasibility
Study, Workman’s Bench Antimony-Gold Lode Deposit, Wiseman B-1 Quadrangle, Koyukuk
Mining District, Northern Alaska, January 1, 2009, Amended June 1, 2009’. The Technical Report
describes the probable reserve estimate identified in Table 17.2 above. The proposed mining method
modeled is a modified cut-and fill. Once the stope is driven alongside the vein-fault structure, the
mineralized zone will be shot off the rib at an extracted and diluted width of 2.0 feet and mucked out
for processing. This type of mining method is used in vein-faults systems to reduce dilution and
avoid wall rock issues, including ARD and wall rock competency. The QP has observed this method
used in the Aginskaya mine in Kamchatka (where the QP has consulted) and others in North
America. Vein-faults in the indicated and inferred resource categories presented in this report are
similar in thickness to the zones modeled in the previous Technical Report. All are in fairly close
proximity to each other. For example, ‘A’ Zone on Workman’s bench is nearly the same average 94
thickness as ‘A’ zone on Pringle Bench. The West Zone on Workman’s Bench is nearly the same
width as ‘A’ Zone in both areas. The ‘C’ zone is the thinnest examined, it being just over half the
thickness of the ‘A’ zone (see Table 17.6 above). Attention is paid to the 4.0 percent antimony
equivalent cut-off grade. In the QP’s judgment, it would be reasonable to contemplate the extraction
of ‘C’ zone albeit with dilution in mind.
17.6.4 Polygonal method used in analysis of lode mineral resources, Nolan
Creek area
The triangular block method (a.k.a. polygonal method) was selected by the QP to calculate lode
mineral resources in the Nolan Creek area. Peters (1978) describes five (5) geometric polygonal
patterns for ore reserve calculations as: 1) uniform spacing; 2) perpendicular at midpoints between
holes; 3) triangular blocks (the method used in this analysis); 4) random spacing; and 5) angular
bisectors. Stevens (2010) suggests that geometric pattern methods are best used for tabular deposits
such as massive sulfide bodies and for veins. A sixth method known as the ‘cross sectional method’
is used when there is significant variance in deposit thicknesses.
A Society of Economic Geologists (SEG) publication summarized polygonal methods of resource
estimation in Ore Reserve Estimates in the Real World (Stone and others, 1998). While describing
Triangular Estimation Techniques, these authors state: “Polygons can be constructed with the drill holes
at the corners of the polygons. Such polygons normally consist of triangles; the solid lines define
triangles with a drill hole at each apex”. Using this method, which is the one that the QP has selected
and used: “the area of the polygonal figure is easily calculated but the thickness and grade are
calculated by averaging the intercepts in the bounding drill holes”. Stone and others (1998) indicate
that polygonal methods are sometimes preferred for resource calculations over other techniques for
several reasons: 1) polygons are better adopted than computerized block techniques to handle erratic
distribution of assay results; 2) polygons work well when dealing with narrow planar deposits such as
vein-faults, which are more-or-less two dimensional in scope with large surface areas; and 3)
polygonal estimates can be carried out without recourse to sophisticated computer hardware. The
overall results have proven to be generally very close to the results obtained by the more detailed
computer-assisted, krigged estimates. The triangular method of resource calculations works best
when the majority of sample points exceed cut-off grades. When the mix of waste versus ore is too
high, the accuracy of the polygonal estimate decreases. Grades in 4 of 46 drill holes used in
calculations on Workman’s Bench do not meet cut-off grade in ‘A’ zone, a relatively small percentage
of the total. Using techniques advocated by Stone and others (1998) drill holes below cut-off can be
applied to the calculations, but grades must be assigned a zero value during the calculation of the
tons and grade of each triangular block.
There are several important considerations for the comparison of indicated versus inferred resources:
1) The assessment of the areas of influence between core drill or other control points or ‘area of
influence’; 2) the comparison of tonnage present in each polygonal block; 3) drill pattern; i.e.,
whether it is isotropic, anisotropic, or erratic, and 4) factoring in other features such as known vein
length and depth continuity (or lack of), and assay grade variance. Table 17. 7 summarizes the
resource classification criteria adapted by the QP for the Nolan lode evaluation. 95
In 2008, the QP calculated an initial inferred resources for the Workman’s bench lodes (‘A’ Zone and
‘B’ Zone) , using the results of the 2007 drill campaign, underground channel sampling, and surfacetrench channel sampling. Those estimates were released in the July 29th
, 2008 43-101 Technical
Report for Silverado. At that juncture, the QP discussed with Karsten Eden, then chief geologist,
the need to design an isotropic drill pattern for the exploration program at Workman’s Bench, and he
agreed. This was successfully accomplished and allows for the QP to systematically estimate
resources on selected portions of the Workman’s bench antimony-gold deposit. Work in 2009
continued to add subsurface control on the southwestern extension of workman’s Bench and also on
Pringle Bench.
For computing areas of influence between control points (i.e., drill holes and underground and
trench channel samples), a generalized ‘halfway rule’ is often used. According to Storrar (1981) and
Peters (1978), areas of influence can vary and are often based on vein continuity and average vein
thicknesses. Table 17.7 compares polygonal density between the probable reserve-indicated
resources versus inferred resources in the Nolan Creek area. The average size (in tons) of the
polygons for the former is 17 percent smaller than the latter.
The QP believes that geometric polygonal sizes are comparable to those in the literature and active
mines for indicated and inferred resources. The size (in tons) of the polygonal blocks is a significant
consideration in classifying resource estimates.
Table 17.7 Characteristics of indicated resources-probable reserves versus inferred resources, Nolan
Creek antimony-gold deposits, Alaska
Locations Resource Category Drill
Hole/Sample
Control
Pattern
# Polygons Total
Tons
Tons/
Polygon
Additional
comparisons
Workman’s Bench Probable Reserves and
Indicated Resources‐
Anisotropic;
but generally
isotropic
123 54,451 442 Vein‐fault system
exhibit predictable
widths and
orientations
Workman’s Bench
and Pringle Bench
Inferred Resources Erratic to
anisotropic
62 32,459 523 Uncertainty
concerning
extensions both
laterally and at depth
(1)
Lumped here only because the indicated resource of November 2008 was converted into a probable reserve in the
January 1, 2009—Amended June 1, 2009 Technical Report; hence these statistics are comparable.
Storrar (1981) presents stope blocks in a modeled South African ‘gold reef’ mine operation, in which
each block of approximately 500 tons is controlled by a channel sample; the average width of the
gold reef used in the example is about 1.26 meters (4.13 feet). In this case, channel sample or drill
interval control may be only 25-30 feet apart. Recently the QP examined channel sample control at
the Pogo gold mine. There a 10 foot thick channel sample governed blocks that average about 20
feet by 25 feet. Hence the total cubic foot volume is about 5,000 cubic feet of rock. When applying
a standard tonnage factor, (with Pogo ore averaging 2.9 specific gravity) then the ore is 11.0 cubic 96
feet/ton. Then 5,000 cubic feet divided by 11.0=454 tons per single channel control. This is roughly
comparable to the average tonnage within polygons of the indicated and probable reserve classified
at Nolan Creek in this Technical Report. Each polygonal tonnage block is controlled by three data
points (drill hole or channel samples) as summarized in this Technical Report.
Vein-fault continuity is a significant consideration in assessing the classification of polygons. ‘A’
zone has been identified for a strike length of 3,500 feet, based on 72 core drill holes and extended
surface sampling control. The West and ‘B’ zones have less strike length but can be verified for
significant strike length, based on test drilling and surface control. The more consistent the veinfault, the more predictable is the presence of mineralization. Finally, drill pattern is an important
criteria at Nolan Creek. Even though the relative density of polygons at Pringle Bench is more-orless comparable with indicated resources on Workman’s Bench, the drill pattern at Pringle bench has
a generally erratic distribution. Because of this, the QP decided that resources on Pringle Bench
could only be regarded as inferred.
17.6.5 Analysis of Antimony and Gold grade data at Nolan Creek
For average grades of antimony and gold, each channel interval was weighted by an interval of
influence as well as a width in order to obtain an area of influence. It is important that metal grades
not be overstated in a mineral deposit—thus exaggerating the amount of resources in question. It is
also important to note that the Nolan Creek lodes that have been drill tested are primarily antimony
deposits. Based on past and present prices, the antimony content of the vein-faults constitute about
70-75% of the value. Gold is a byproduct, albeit a significant credit. In order to better understand
antimony and gold distribution in the vein-faults, the QP constructed two (2) histograms that depict:
1) gold grades on Workman’s Bench and Pringle; and 2) antimony grades on Workman’s Bench and
Pringle Bench (Figure 17.1). Some 247 assay intervals are used in the analysis. For gold, the trends
start off with a quick peak between 0.01 and 0.06 oz/ton, then level off and then break away at a
steep 70 degree slope and then level off again at about 1.1 oz/ton. There are six (6) assay values on
Workman’s Bench that exceed 1.0 oz/ton and three (3) on Pringle bench that exceed 1.0 oz/ton.
The antimony histograms for Pringle and Workman’s Bench exhibit a different pattern to the gold
grade data. For both Pringle and Workman’s Bench antimony values peak early at about 5.0 percent,
drop to a relatively flat trend beginning at about 10-15% antimony; and then continues on a
horizontal trend all the way to the maximum 65+% antimony values. Sixty one (61) or 25 percent of
the sample population exceeds 30 percent antimony. It would be difficult to assign an antimony cutoff grade unless it was purely statistical in nature.
In order to understand why the gold and antimony histograms differ, correlation coefficients were
calculated for the 2008 Workman’s Bench data, the largest data set (Figures 17.2 a, b). The
correlation coefficient between gold and antimony is 0.58. The correlation coefficient between gold
and arsenic is 0.87. It is known from inspection of core, from the mapping of underground
workings, from ore microscopy studies, and finally bench testing (Section 16 of this Report) that gold
is found in quartz-carbonate-gold-arsenopyrite veinlets that frequently form selvages around the
main stibnite structures. Gold is also found as grains in the stibnite itself. The Hazen Research 97
bench tests show that the gold grains are liberated upon grinding of the stibnite and the arsenopyrite
and gold grains bleed off in a separate train during Wiffley table testing.
Table 17.8 shows that the majority of the nine high grade gold assay intervals from Workman’s
Bench and Pringle bench are diluted when added to other assayed samples within a true and
weighted vein-fault width.
In summary the QP decided that a very high grade gold value should be capped at 1.5 ounces/ton
gold for the grade of a true sample width interval. This relatively high level does allow for the
occurrence of high grade zones if their spatial relationship shows a pattern. The high grade zones in
both 09SH 18 and 08SH18 were capped at 1.5 oz/ton gold.
One sample containing a high gold content was scrutinized. A surface sample cut in ‘A’ zone at
Trench H on Pringle Bench assayed 5.56 oz/ton gold and 8.74 percent antimony over a channel
width of 16.2 feet. This very high gold value, coupled with the high antimony value over a thick
section appears to be isolated and not connected to other high grade zones either on the surface or in
drill section. The QP judged that the results were suspect; hence, it was rejected and removed from
the resource analysis. Subsequent reanalysis by Silverado determined that the high gold value was
not reproducible. 98
Figure 17.1 Histogram plots of antimony (on left) and gold (on right) distribution from 247
assay intervals, Pringle Bench and Workman’s Bench vein-faults, Nolan Creek, Alaska. Note
that the data points are derived from submitted assay intervals and are not necessarily total
true width estimates for vein-faults. 99
Figures 17. 2 a, b Correlation coefficients for assay intervals from Workman’s Bench
(n=118); a—coefficient of 0.87 for gold versus arsenic; and b—coefficient of 0.58 for gold
versus antimony. 100
Table 17.8 Analysis of high grade, assayed gold intervals (>1.0 oz/ton), Workman’s Bench and Pringle
Bench antimony-gold deposits; data from Appendices I and II
Deposit Drill Hole/
sample
number
Intercept True
Thickness
(feet)
Gold
Grade
(oz/ton
Antimony
Grade
(%)
Comments
Workman’s Bench
‘B’ Zone
08SH32
(08SS393)
205.7-206.6 0.74 1.13 38.74 Part of a wider zone with two composites that
contain an average true thickness of 2.9 feet;
weighted average grade of composite sample
interval is 0.18 oz/ton Au
Workman’s Bench
‘A’ Zone
Channel
203808
(underground)
172.0-173.5 1.50 1.19 43.63 Measured 1.50 true thickness width
underground
Workman’s Bench
‘B’ Zone
WBUG5 S2
(underground)
199.8-200.2
taped from
control
point
0.50 1.04 50.04 Thin, 0.4 foot wide massive stibnite, vein core;
part of 3 composited samples that average 0.37
oz/ton Au
Workman’s Bench
‘A’ Zone
08SH018
(08SS255)
315.0-316.8 1.15 2.88 27.65 Part of high grade stibnite zone with visible
gold when composited with sample 08SS254,
yields an average gold grade of 1.57 oz/ton.
Workman’s Bench
‘A’ Zone
07SH14
(267394)
209.0-209.2 0.20 1.61 51.42 Part of a composited interval that has a true
thickness of 0.85 feet,
Weighted average grade of 0.64 oz/ton Au
Workman’s Bench
‘A’ Zone
08SH25
(08SS351)
374.8-376.5 1.41 2.86 43.20 1.70 foot intercept has true thickness of 11.0
inches; composited with two other samples
within ‘A’ zone interval that averages 1.07
oz/ton Au in a 2.9 foot true vein-fault
thickness.
Pringle Bench
‘A’ Zone
09SH18
(09SS109)
74.5-75.5 0.66 5.72 37.73 High grade Au zone has true width of 0.66 feet.
Combined with true vein width of 2.00 ft for
‘A’ zone., which yields a weighted average of
1.95 oz/ton Au
Pringle Bench ‘A’
Zone
09SH20
(09SS148)
205.5-206.5 0.66 1.69 2.74 Quartz-carbonate stibnite vein zone with visible
gold
Pringle Bench
‘A’ Zone
Channel
Sample in
Trench H;
(07H03)
33.0-49.2 16.2 5.56 8.74 Wide “A’ zone channel sampled—suspect
analysis rejected/removed from resource
analysis
17.6.6 Additional assay data review during Nolan resource evaluation
The data set for Silverado’s Nolan Project is comprehensive. Samples have been professionally
collected, assayed and archived by Silverado contractors and employees; i.e., see Sections 12 and 13
of this Technical Report. The QP believes the large sample suite to be accurate and can be relied
upon. However, some selected information was scrutinized by the QP. In addition to the rejection
of the high grade gold sample interval on Pringle Bench previously described, a few sample intervals
were disregarded in the resource calculations because their values were not believed to be
representative. Examples are cited below. Sample control #84-86 samples (Appendix I) at
Workman’s bench were reported to be true thickness estimates of 8.2 feet each of disseminated to
massive stibnite-bearing zones that assayed up to 30.30 % antimony and 0.22 oz/ton gold. But upon
inspection of the zones in the field by the QP, it was determined that samples may have been testing
a northwest-bearing shear along it’s rake, and not perpendicular to the high-angle northeast
structures being evaluated. Additionally no high grades of this thickness have so far been recognized
in drill holes, or in sample control directly underneath in the underground workings. This data was
not used in resource calculations. The U.S. Bureau of Land Management (USBLM) reported results
of 13 samples at surface exposures on Workman’s bench that assayed up to 61.7% antimony and
0.476 oz/ton gold. The QP attempted to see if these data points could be used but concluded they 101
were just grab samples—not representative across true widths of mineralization. He did not use this
data in resource calculations.
Owing to the oxidized and locally slumped nature of surface exposures, some trench information on
Pringle Bench was scrutinized. One channel in Trench I included a 6.5 foot true thickness of ‘B’
Zone that averaged 30.35% Sb. A similar high value over a thick ‘A’ zone occurs in Trench M. After
the QP inspected these zones in the field, he was unsure as to whether the assays could be used in
the resource analysis. The West zone that was sampled in Trench M was inspected by the QP and
assay and width information from the fresh exposure there appeared to be valid; hence that data was
used.
Core intervals from ‘A’ zone in drill hole 09SH03 exhibited evidence of contamination from up-hole
sources. Hence analytical results from that mineralized interval were not used in the resource
analysis. The ‘B’ zone was intersected in drill hole 09SH04. However, it appeared to be too far away
from other drill point intercept that depicted ‘B’ zone mineralization to be certain of it’s correlation.
‘B’ zone was not intercepted in drill hole 09SH06, which collared further to the south. Because of
these collective uncertainties, the QP doubted that additional indicated resource in ‘B’ zone could be
calculated using drill hole 09SH04 and chose not to do so.
Prior to the drilling campaigns beginning in 2006, nine RC holes totaling 2,120 feet were drilled on
Pringle and Workman’s Bench yielded numerous assayed intervals. The QP reviewed the
information and concluded that sampling was not specific or accurate enough to be used in resource
calculations. Information from one RC hole that was drilled in 2006 and was a part of the 2007-2009
core drilling program that followed was used in the analysis.
17.6.7 Specific Gravity, Cut-Off Grade, and Tonnage Factors used in the
calculation of resources at Nolan creek
In order to complete the polygonal resource calculations, the QP rigorously calculated tonnage
factors for the inferred and indicated resources presented in this Technical Report. Thrush et al
(1968) specifies specific gravity estimates for pure stibnite (4.52), for quartz gangue (2.70), and for
pelitic schist (2.66). A tonnage factor was calculated using the equation provided by Peters (1978).
Pure stibnite would have a tonnage factor of about 7.1 cu ft/ton. The tonnage factor was
individually calculated for each polygon using the equation of Peters (1978). The equation is: Tonnage
Factor=2000/specific gravity X 62.5=cubic feet per ton. Pure stibnite is 71.5 percent antimony. As an
example for polygon # 5 of A Zone (Table 17.6; Figure 17.2), which contains 29.6 percent antimony
(41.4 percent stibnite) the average calculated specific gravity of the polygonal zone is 3.89. The
tonnage factor for this polygon is 2000/3.89X62.5=8.20 cubic feet/ton. For a lower grade zone; i.e.,
polygon 29, which assays 18.19 percent antimony (25.4 percent stibnite), then the specific gravity of
the polygon is 3.82. The tonnage factor is 2000/3.82X62.5=8.39 cubic feet/ton. The QP calculated
the tonnage factor for each polygon and arrived at an average tonnage factor of 8.21 cubic
feet/ton—rounded to 8.20 cubic feet/ton for the Technical Report analysis. 102
Two control samples of mineralized vein intervals and one sample of wall rock from Workman’s
bench underwent specific gravity (SG) and absorption measurements (ASTM C 127) at the
laboratory of Shannon and Wilson Inc. in Fairbanks. Table 17.9 summarizes the results and
compares them to SG calculated using methods described above. High grade nearly massive stibnite
that assayed 56.88 percent Sb from station #203804 yielded a SG of 4.38 and a tonnage factor of
7.31. In contrast, much lower grade material from the bulk sample that assayed 9.10 percent Sb,
yielded an SG of 3.45, and a tonnage factor of 9.27. The average tonnage factor for the high and low
grade stibnite zones, which have an average assay of 33.04 percent Sb, is 8.29. These limited physical
SG measurements are consistent with SG values calculated from assay data and inferred SG of
country rock material used in the QP’s resource calculations.
Table 17.9 Specific gravity (SG) measurements (ASTM C 127) from selected mineralized intervals,
Workman’s Bench; laboratory analyses by Shannon and Wilson, Inc.
Sample # Sample Description Measured
Specific
gravity
(SG)
Absorption
(%)
Tonnage
Factor
Antimony
(%)
Appendix I
Calculated
tonnage
factor
Difference
between SG
Values (%)
203804 Massive stibnite
interval in ‘A’ Zone
4.38 0.33 7.31 56.88 7.34 0.40
HR51856-1 Bulk sample stibnite
gravity concentrate
3.45 1.50 9.27 9.20 9.31 0.43
HR51856-2 Wall Rock Gangue
from Hanging Wall,
A Zone
3.04 0.33 10.50 NA NA NA
Consistent with past Technical Reports produced by the QP for the Nolan Sb-Au lodes, a cut-off
grade of 4.0 percent ‘equivalent’ antimony was used, reflecting the dominance of Sb in the resource
values. A subsidiary factor corroborated the economic cutoff grade of 4.0 percent equivalent
antimony. Upon inspecting core and assay interval information from both Pringle Bench and
Workman’s Bench, the QP observed that a 4 percent antimony value (7 percent stibnite) generally
reflects sharp metallogenic boundaries of the mineralized veins being investigated. The drop-off at
approximately 4.0 percent antimony is apparent in most assay intervals (for example, see Appendices
I and II).
17.7 Probable reserve estimate from lode-antimony gold deposit on
Workman’s Bench
On January 1st
, 2009 (Amended June 1, 2009), the QP released the NI 43-101 Report: ‘Update of
Mineral Resource and Reserve Estimates and Preliminary Feasibility Study, Workman’s Bench
Antimony-Gold Lode Deposit, Wiseman B-1 Quadrangle, Koyukuk Mining District, Northern
Alaska, January 1, 2009, Amended June 1, 2009’. The Technical Report describes the probable
reserve estimate identified in Table 17.2 above. No new information concerning the probable
reserves has been generated for the Nolan Creek project since the release of those estimates on
January 1, 2009 Amended June 1, 2009, which are filed on SEDAR (www.SEDAR.com); also
accessed @ http://www.silverado.com/. Graphic depictions of resource blocks and data tables
that define the probable reserve are summarized in figures 17.3-17.6 and tables 17.10-17.13. 103
Figure 17.3 Surface view of Workman’s bench mineralized zones, showing locations of underground workings, 2007-2008 drill hole control (in black),
2009 drill hole control (in blue), and interpreted extensions and fault offsets of A, B, C and West Zones. 104
Figure 17.4 Probable reserve polygons for ‘A’ Zone, Workman’s bench, Nolan Creek Area 105
Table 17.10 Polygonal probable reserve block summary for ‘A’ Zone, Workman’s Bench
Polygon Tons Antimony (%) Antimony (tons) Gold (oz/ton) Gold (ounces)
1 365 4.70 17.2 0.056 20.4
2 337 4.20 14.1 0.120 40.4
3 445 22.80 101.5 1.090 485.1
4 484 22.85 110.5 1.070 517.8
5 602 29.60 178.2 1.120 674.2
6 508 23.09 116.8 0.056 28.4
7 390 50.89 198.4 1.109 432.2
8 379 31.40 119.0 1.115 422.6
9 305 28.03 85.4 0.987 301.0
10 195 13.47 26.2 0.146 28.5
11 950 22.36 212.4 0.193 183.4
12 175 27.94 48.9 1.097 191.9
13 125 10.66 13.3 0.970 121.3
14 105 16.17 33.9 0.102 10.7
15 535 19.73 105.5 0.300 160.6
16 335 31.68 106.1 0.307 102.8
17 452 34.24 154.7 0.334 150.9
18 152 24.68 37.5 0.486 73.8
19 109 21.43 23.3 0.240 26.1
20 485 24.40 118.3 0.323 156.6
21 855 24.73 211.4 0.196 167.5
22 245 19.90 48.7 0.256 62.7
23 140 17.48 24.4 0.250 35.0
24 65 16.50 10.7 0.160 10.4
25 85 18.86 16.0 0.166 14.1
26 101 18.19 18.4 0.150 15.1
27 100 15.77 15.8 0.143 14.3
28 146 14.18 20.7 0.170 24.8
29 389 36.55 141.9 0.322 125.2
30 716 35.86 256.7 0.340 243.4
31 384 23.49 90.2 0.141 54.1
32 345 23.10 79.7 0.181 62.4
33 107 24.18 25.8 0.217 23.2
34 330 32.04 106.0 0.267 88.0
35 780 39.10 304.9 0.681 531.2
36 840 36.57 307.1 0.492 413.2
37 2,050 48.74 999.0 0.416 853.0
38 2,490 48.68 1,212.0 0.453 1,128.0
39 2,300 54.59 1,255.0 0.725 1,667.0
40 459.0 21.00 96.3 0.459 210.6
41 1,180 39.43 465.0 0.201 237.0
42 550 30.66 165.0 0.130 72.0
43 185 20.50 37.9 0.106 19.6
44 820 28.02 229.6 0.114 93.4
45 353 18.14 64.0 0.107 37.8
46 697 7.93 55.2 0.123 85.7
47 998 17.53 174.9 0.101 100.7
48 157 20.93 32.8 0.106 16.6
49 140 14.49 20.3 0.056 7.8
50 450 10.80 48.6 0.098 44.1
51 135 28.76 38.8 0.140 18.9
52 100 29.58 29.6 0.130 13.0
53 85 29.60 25.1 0.120 10.2
54 454 23.74 107.8 0.171 77.6
55 423 24.02 101.6 0.516 218.2
56 228 23.02 52.5 0.463 105.6
57 235 20.02 47.0 0.413 33.6
58 338 26.46 89.4 0.463 156.4
59 564 21.44 120.9 0.526 296.6
TOTAL/AVERAGE 28,452 31.52 8,967.9 0.405 11,516.7106
Figure 17.5 Probable reserve polygons for ‘B’ Zone, Workman’s bench, Nolan Creek Area 107
Table 17.11 Polygonal block summary for ‘B’ Zone, Workman’s Bench Table 2 Polygonal Probable reserves
Calculations for ‘B’ Zone, Workman’s bench, Nolan Creek Area, Alaska
Polygon Tons Antimony (%) Antimony (tons) Gold (oz/ton) Gold (ounces)
1 185 34.32 64.0 0.298 55.0
2 237 40.13 95.0 0.618 146.0
3 175 39.36 69.0 0.507 89.0
4 475 47.50 226.0 1.105 524.0
5 590 41.42 244.0 0.652 384.0
6 574 45.32 260.0 1.060 608.0
7 195 31.32 61.0 0.425 83.0
8 289 17.59 50.8 0.154 44.5
9 830 37.15 308.0 0.802 666.0
10 675 34.97 236.0 0.724 489.0
11 116 21.73 25.2 0.123 14.3
12 79 19.76 15.6 0.130 10.3
13 160 10.10 16.2 0.313 50.1
14 186 21.60 40.2 0.451 83.9
15 487 15.25 74.2 0.430 209.4
16 875 25.54 223.4 0.317 277.3
17 95 16.51 15.7 0.241 22.9
18 331 16.06 53.1 0.244 80.8
19 209 4.59 9.6 0.067 14.0
20 107 5.16 5.5 0.070 7.5
21 145 13.82 20.0 0.063 9.1
22 155 13.58 21.1 0.050 7.8
23 365 7.98 29.1 0.160 58.4
24 385 5.65 21.7 0.083 31.9
25 567 8.30 47.0 0.310 175.8
26 269 4.77 12.8 0.256 68.8
TOTAL/AVERAGE 8,756 25.63 2,244.2 0.480 4,210.8
Table 17.12 Polygonal probable reserve Calculation for ‘West’ Zone, Workman’s Bench, Nolan Creek area,
Alaska
Polygon Tons Antimony (%) Antimony (tons) Gold (oz/ton) Gold (ounces)
1 565 2.86 16.1 0.908 513.0
2 446 2.39 10.6 0.108 48.2
3 450 3.12 14.0 0.921 414.5
4 359 2.64 9.5 0.121 43.4
5 131 3.36 4.4 0.140 18.3
6 73 9.30 6.8 0.143 10.2
7 210 9.81 20.6 0.124 26.0
8 297 18.09 53.7 0.105 31.2
9 110 19.06 20.9 0.261 28.7
10 95 12.10 11.5 0.225 21.3
11 109 14.53 15.8 0.215 23.4
12 166 13.13 21.8 0.229 38.0
13 286 18.35 52.4 0.293 83.8
14 397 11.75 46.6 0.098 38.9
15 175 21.56 37.7 0.146 25.6
16 537 19.82 106.4 0.140 75.2
17 160 23.59 37.7 0.143 22.8
18 192 35.32 67.8 0.230 44.2
19 75 31.78 23.8 0.196 14.7
20 115 21.74 25.0 0.113 13.0
21 256 25.28 64.7 0.147 37.6
TOTAL/AVERAGE 5,204 12.80 667.8 0.302 1,572 108
Figure 17.6 Probable reserve polygons for ‘West’ Zone, Workman’s bench, Nolan Creek Area 109
Table 17.13 Summary data for probable reserves in ‘A’, ‘B’ and ‘West’ Zones, Workman’s Bench, Nolan Creek
area, Alaska
Physical Parameters
For Resource
Calculations
‘A’ Zone ‘B’ Zone ‘West’ Zone Total or
Average
Total Strike Length of
Vein Used in Resource
Calculation
980 525 900 980
Maximum Depth
(Vertical) of Vein Used
in Resource Calculation
355 355 225 355
Average Sample Interval
Width
0.95 0.65 0.60 0.73
Number of Drill Hole
Intercepts and Channel
Sample Locations Used
48 22 19 89
Number of polygons Used
in Indicated Resource
Calculation
59 26 21 106
Calculated Tons of
Mineralization
28,452 8,756 5,204 42,412
Calculated Average
Grade Sb (%)
31.52 25.63 12.80 28.00
Total Tons,
Contained
Antimony
8,967.9 2,244.2 667.8 11,875
Calculated Average
Grade Gold (oz/ton)
0.405 0.480 0.302 0.408
Contained Gold
(oz)
11,516.7 4,210.8 1,572.0 17,300
(total or average figures are rounded)
17.8 Indicated Resource Estimate, Workman’s bench antimony-gold deposit
On January 1st
, 2009 (Amended June 1, 2009), the QP released the NI 43-101 Report: ‘Update of Mineral
Resource and Reserve Estimates and Preliminary Feasibility Study, Workman’s Bench Antimony-Gold Lode
Deposit, Wiseman B-1 Quadrangle, Koyukuk Mining District, Northern Alaska, January 1, 2009, Amended
June 1, 2009’. On the basis of the pre-feasibility study reported in the above referenced Technical Report, the
indicated resources on Workman’s Bench were converted into a probable reserve. A diamond drill program
on Workman’s Bench in 2009 has provided for new indicated resource estimates, which are summarized in
Table 17.3 of this Technical Report.
“Measured and Indicated mineral resources” are that part of a mineral resource for which quantity and grade
can be estimated with a level of confidence sufficient to allow the application of technical and economic
parameters to support mine planning and evaluation of the economic viability of the deposit.
During the 2009 Workman’s Bench evaluation, nine holes (9) totaling 2,663 feet in length were collared and
oriented to test shallow extensions of: 1) A-Zone, the largest of the several high grade vein-fault structures; 110
and 2) B-Zone, a subsidiary parallel structure southeast of A-Zone. Sixteen (16) polygons define the indicated
resources in both ‘A Zone’ and ‘B Zone’ vein fault structures, which aggregate 11,204 tons grading 19.7
percent antimony and 0.238 ounces/ton gold (see Table 17.3; Figures 17.7 and 17.8). The 2009 drill
intercepts used to calculate the indicated resources are adjacent to the ‘A Zone’ and ‘B Zone’ vein-faults on
Workman’s Bench which are included in the probable reserve reported in the January 1, 2009 (Amended June
1, 2009) Technical Report authored by the QP. Tables 17.14 and 17.15 provide the numerical calculations
for the indicated resource estimates within ‘A Zone’ and ‘B Zone’, Workman’s Bench, Nolan Creek area.
Table 17.14 Polygonal indicated resource block summary from 2009 Drill Program, A-Zone, Workman’s
Bench
Polygon Tons Antimony
(%)
Antimony
(tons)
Gold
(oz/ton)
Gold
(ounces)
A (1) 806 34.45 277.7 0.479 386.1
B (2) 198 18.47 36.6 0.192 38.0
C (3) 820 49.45 405.5 0.557 456.7
D (4) 215 35.80 76.9 0.349 75.0
E (5) 450 5.64 25.4 0.035 15.7
F (6) 915 20.71 189.5 0.294 269.0
G (7) 750 37.20 279.0 0.398 298.5
H (8) 614 30.96 190.1 0.285 174.9
I (9) 675 7.17 48.4 0.098 66.2
J (10) 850 19.21 163.3 0.177 150.5
K (11) 1,212 3.78 45.8 0.124 150.3
L (12) 1,225 12.00 147.0 0.150 183.8
M (13) 1,694 10.12 171.4 0.189 320.2
TOTAL 10,424 19.72 2056.6 0.248 2,584.9
Table 17.15 Polygonal indicated resource block summary from 2009 Drill Program, B-Zone, Workman’s
Bench
Polygon Tons Antimony
(%)
Antimony
(tons)
Gold
(oz/ton)
Gold
(ounces)
O (14) 430 24.28 104.4 0.093 40.0
P (15) 215 12.98 27.9 0.112 24.1
Q (16) 135 15.37 20.7 0.137 18.5
TOTAL/AVERAGE 780 19.61 153.0 0.105 82.6111
Figure 17.7 Indicated Resource polygons for ‘A’ Zone, Workman’s bench, Nolan Creek Area, based on 2009 drilling. Note location of polygon 11 from
probable reserve
112
Figure 17.8 Indicated resource polygons for B Zone, Workman’s Bench, Nolan Creek area, based in 2009 drilling 113
In terms of tonnage, the 2009 indicated resource on Workman’s Bench as summarized in Table 17.3 amounts
to a 26 percent increase of the indicated resource calculated by the QP in November, 2008, prior to it’s
conversion into a probable reserve after completion of the January 1, 2009 (Amended June 1, 2009)
Prefeasibility Study. Comparative metal grades dropped from the 2008 to 2009 estimates. The antimony
content in the 2009 indicated resource estimate is a 18 percent increase from the indicated resource base
identified in 2008. The gold content in the 2009 indicated resource estimate represents a 15 percent increase
from the indicated resource base identified in 2008.
17.9 Inferred Lode Resource Estimates, Workman’s Bench and Pringle Bench
antimony-gold deposits
On January 1st
, 2009 (Amended June 1, 2009), the QP released the NI 43-101 Report: ‘Update of Mineral
Resource and Reserve Estimates and Preliminary Feasibility Study, Workman’s Bench Antimony-Gold Lode
Deposit, Wiseman B-1 Quadrangle, Koyukuk Mining District, Northern Alaska, January 1, 2009, Amended
June 1, 2009’. The Technical Report presents inferred resource estimates for both Workman’s Bench and
Pringle Bench. New information concerning inferred resources has been generated for the Nolan Creek
project since the release of those estimates on January 1, 2009 Amended June 1, 2009, which are filed on
SEDAR (www.SEDAR.com); also accessed @ http://www.silverado.com/.
According to the CIM, an “Inferred mineral resource” is that part of a mineral resource for which quantity
and grade can be estimated on the basis of geological evidence and limited sampling and reasonably assumed,
but not verified by geological and grade continuity (Staff, 2004).
Inferred lode resource estimates for Workman’s Bench have been updated. Tables 17.16-17.19 report the
updated, inferred lode resources on Workman’s Bench. There are no changes in the inferred lode resource
estimates in ‘C’ zone and ‘West’ zone, from the January 1, 2009 Amended June 1, 2009 summary, but
modifications took place in the ‘A’ zone and ‘B’ zone, because some of these were converted to indicated
resources as the result of the 2009 drill program. For the ‘A’ zone, polygon 1 of the probable reserve was
removed and for ‘B’ zone, portions of several small polygons were constructed for the conversion of inferred
resources to indicated resources. All current and updated resource tables are listed. 114
Figure 17.9 Inferred Resource polygons for ‘A’ Zone, Workman’s bench, Nolan Creek Area
1
2
3115
Figure 17.10 Inferred Resource polygons for ‘B’ Zone, Workman’s bench, Nolan Creek Area
116
Figure 17.11 Inferred Resource polygons for ‘C’ Zone, Workman’s bench, Nolan Creek Area (unchanged) 117
Figure 17.12 Inferred Resource polygons for ‘West’ Zone, Workman’s bench, Nolan Creek Area (unchanged)
118
Table 17. 16 Polygonal Block Inferred Resource Estimate for ‘C’ Zone, Workman’s Bench, Nolan Creek
Polygon Tons Antimony (%) Antimony (tons) Gold (oz/ton) Gold (ounces)
1 98 0.05 0.5 0.055 5.4
2 84 2.96 2.5 0.103 8.7
3 234 3.83 9.0 0.054 12.6
4 325 6.74 21.9 0.103 33.4
5 201 6.72 13.5 0.080 16.1
6 98 6.50 6.4 0.085 8.3
7 314 3.26 10.2 0.049 15.4
8 216 3.49 7.5 0.079 17.1
9 351 0.03 1.0 0.160 56.2
10 538 3.79 20.4 0.157 84.5
11 146 0.29 0.5 0.070 10.2
12 85 6.22 5.3 0.123 10.5
13 173 5.98 10.3 0.210 36.3
14 74 0.05 0.5 0.157 11.6
15 140 6.54 9.2 0.213 29.8
16 313 0.59 1.8 0.183 52.3
17 787 3.79 29.8 0.184 144.8
18 55 6.77 3.7 0.127 7.0
Total/Average 4,232 3.64 154.0 0.132 560.2
Table 17.17 Polygonal Block, Inferred Resource Estimate for ‘A’ Zone, Workman’s Bench, Nolan Creek
Polygon Tons Antimony (%) Antimony (tons) Gold (oz/ton) Gold (ounces)
1 826 11.87 98.0 0.260 214.7
2 1,524 9.36 142.6 0.213 324.6
3 2,737 19.13 523.5 0.266 728.0
Total/Average 5,087 15.02 764.1 0.249 1,267.3
Table 17.18 Polygonal Block, Inferred Resource Estimate for ‘West’ Zone, Workman’s Bench, Nolan Creek
Polygon Tons Antimony (%) Antimony (tons) Gold (oz/ton) Gold (ounces)
1 164 14.03 23.0 0.069 11.3
2 152 7.44 11.3 0.068 10.3
3 774 12.38 95.8 0.075 58.1
4 643 19.49 125.3 0.067 43.1
5 595 14.86 88.4 0.055 32.7
6 2,536 10.94 277.4 0.928 2,353.4
7 470 3.64 17.1 0.107 50.3
Total/Average 5,334 11.96 638.3 0.507 2,704.4
Table 17.19 Polygonal inferred resource block summary from 2009 Drill Program, B-Zone, Workman’s Bench
Polygon Tons Antimony (%) Antimony(tons) Gold (oz/ton) Gold (ounces)
1 2,291 9.96 228.0 0.105 240.5
2 1,733 15.20 263.4 0.147 254.8
3 965 8.28 79.2 0.347 334.9
TOTAL/AVERAGE 4,989 11.44 570.6 0.166 830.2119
Table 17.20 Summary of Inferred Antimony and Gold Resources From ‘A’, ‘B’, ‘C’, and West Zones,
Workman’s Bench Lode, Nolan Creek Area.
Category Cut-Off
Grade (% Sb
Equivalent)
Quantity of
Mineralization
(Short Tons)
Grade
(% Sb)
Metal (ton
Sb)
Grade
(oz/ton Au)
Metal (oz
gold)
‘A’ Vein
Inferred
4.0 5,087 15.02 764.1 0.249 1,267.3
‘B’ Vein
Inferred
4.0 4,989 11.44 638.3 0.166 830.2
‘C’ Vein
Inferred
4.0 4,232 3.64 154.0 0.132 560.2
‘West Vein
Inferred
4.0 5,334 11.96 638.3 0.507 2,704.4
Totals 4.0 19,642 11.17 2,194.7 0.273 5,362.1
During 2009, eleven (11) drill holes totaling 2,329 feet were collared and oriented to test the ‘A Zone’ and
‘West Zone’ structures on Pringle Bench, which are the same structures that have been drill-tested on
Workman’s Bench. Figure 17.13 illustrates the surface plan of the Pringle bench that the QP used in his
resource calculations. The primary objective of the 2009 exploration program was to test deeper portions of
both ‘A’ and ‘West’ vein-faults, which previously had been drill-tested to depths of only about 150 feet below
the surface. Figures 17.14 and 17.15 illustrate the polygonal configuration of the ‘A Zone’ and the ‘West
Zone’ mineralized structures respectively. Upon the combination of the previous (2009) and current (2011)
data, twenty-three (23) polygons define an inferred resource of 12,817 tons grading 19.61 percent antimony
and 0.499 ounces/ton gold. The 2009 exploration program on Pringle Bench: 1) confirmed gold and
antimony mineralization to depths of up to 400 feet below the surface; and 2) yielded gold values that were
higher than the average content observed in the shallower portions of the vein-fault system explored in 2007.
Tables 17.21-17.25 summarize the polygonal block data for all inferred resource estimates on Pringle Bench. 120
Figure 17.13 Surface view of Pringle Bench mineralized zones, showing frill locations; 2007 (in black) and 2009 drill holes (in blue); and selected trench
control, and interpreted faulted extensions of A and West Zones; (0SH13 near 0SH12).
121
Figure 17.14 Inferred Resource polygons for ‘A’ Zone, Pringle Bench, Nolan Creek Area, based in 2009 drilling—note that polygons 1-6 are from the
estimates released in the 2009 Technical Report (Amended June 1, 2009) Estimate; Polygons A-N are from estimates released January 7, 2010. 122
Figure 17.15 Inferred Resource polygons for West Zone, Pringle Bench, Nolan Creek Area, based in 2009 drilling; note that polygons 1-8 are from
estimates released in the 2009 Technical Report (Amended June 1, 2009); polygons O.P, and Q are from estimates released January 7, 2010.123
Table 17.21 Polygonal inferred resource calculation for ‘A’ Zone, Pringle Bench, from Bundtzen (2009b)
Polygon Tons Antimony (%) Antimony
(tons)
Gold
(oz/ton)
Gold (ounces)
1 63 12.78 8.1 0.037 2.3
2 134 26.27 35.2 0.019 2.5
3 205 31.49 64.6 0.119 24.4
4 138 36.67 50.6 0.112 15.5
5 82 26.67 21.9 0.127 10.4
6 115 29.80 34.3 0.246 28.3
TOTAL/AVERAGE 737 29.13 214.7 0.113 83.4
Table 17.22 Polygonal inferred resource calculation for Pringle bench from 2009 Drill Program, A-Zone, (This
Technical Report)
Polygon Tons Antimony
(%)
Antimony
(tons)
Gold
(oz/ton)
Gold
(ounces)
A (1) 55 11.21 6.2 0.065 3.6
B (2) 311 22.51 70.0 1.953 607.4
C (3) 65 26.69 17.3 1.963 127.6
D (4) 254 28.46 72.3 0.126 32.0
E (5) 83 33.11 27.5 0.250 20.8
F (6) 1,218 30.81 375.3 0.150 182.7
G (7) 988 31.47 310.9 0.030 29.6
H (8) 314 35.32 110.9 0.023 7.2
I (9) 556 30.92 171.9 1.920 1,067.5
J (10) 1,404 27.37 384.3 1.930 2,709.7
K (11) 590 26.24 154.8 1.947 1,148.7
L (12) 886 18.56 164.4 0.076 12.5
M (13) 1,633 8.06 131.6 0.106 173.1
N (14) 664 5.93 39.4 0.110 73.0
TOTAL/AVERAGE 9,021 22.58 2,036.8 0.687 6,195.4
Table 17.23 Polygonal inferred resource calculation for ‘West’ Zone, Pringle Bench (Bundtzen, 2009b)
Polygon Tons Antimony (%) Antimony
(tons)
Gold
(oz/ton)
Gold
(ounces)
1 80 14.11 11.3 0.061 4.9
2 160 11.37 18.2 0.036 5.8
3 206 12.12 25.0 0.044 9.1
4 99 18.68 18.5 0.051 5.0
5 615 3.91 24.0 0.021 12.9
6 290 9.46 27.4 0.028 8.1
7 182 15.47 28.2 0.095 17.3
8 319 12.43 39.7 0.099 31.6
TOTAL/AVERAGE 1,951 9.86 192.3 0.049 94.7124
Table 17.24 Polygonal inferred resource calculation from 2009 Drill Program, West-Zone, Pringle Bench (This
Technical Report
Polygon Tons Antimony
(%)
Antimony
(tons)
Gold
(oz/ton)
Gold
(ounces)
O (15) 297 3.97 11.8 0.010 3.0
P (16) 505 7.15 36.1 0.014 7.1
Q (17) 378 5.85 22.1 0.018 6.8
TOTAL/
AVERAGE
1,108 6.31 70.0 0.015 16.9
Table 17.25 Total Inferred Lode Mineral Antimony-Gold Resource calculation, Pringle Bench, Nolan Creek
Resource
Category
Cut-Off
Grade
(% Sb)
Vein-Fault
Zone
Quantity
(tons)
Grade
(% Sb)
Metal
(tons Sb)
Grade
(oz/ton Au)
Metal
(oz Au)
Inferred 4.0 A (2008) 737 29.13 214.7 0.113 83.4
Inferred 4.0 A (2009) 9,021 22.58 2,036.8 0.687 6,195.4
Inferred 4.0 West (2008) 1,951 9.86 192.3 0.049 94.7
Inferred 4.0 West (2009) 1,108 6.31 70.0 0.015 16.9
Inferred
Total/Average
4.0 A and West
Zones
Combined
12,817 19.61 2513.8 0.499 6390.4
The 2009 inferred resource estimates for Silverado’s Nolan Creek properties; i.e., Workman’s Bench and
Pringle Bench, increased from what was reported by the QP in his Technical Report issued January 1st
, 2009
(Amended June 1, 2009). The inferred lode mineral total tonnage increased from 24,077 tons as inferred in
the 2009 Technical Report to 32,459 tons in this Technical Report, or an increase of about 35 percent. In
terms of in-place metal content, antimony increased from 2,997.6 tons as indicated in the 2009 Technical
Report to 4,708.5 tons in this Technical Report, an increase of 63 percent. In-place gold increased from
5,894.7 ounces as indicated in the in 2009 Technical Report to 11,752 ounces in this Technical Report, an
increase of approximately 100 percent. 125
17.10 Comparisons between the polygonal method of resource calculation
selected by the QP versus the Vulcan
TM
Block Computer method of calculating
resources
To confirm the results of the polygonal methods used in determining the resource calculations at Nolan
Creek, the QP contacted Will Robinson, E.I.T. Senior Geologist, who has experience with the VulcanTM
computer-based, block model method for estimating mineral resources. Mr. Robinson’s resume can be found
in Appendix V of this Technical Report. Robinson agreed to examine selected portions of Silverado’s data
base and calculate indicated resources using a Vulcan program. The QP supervised Robinson during the
Vulcan-Polygonal test comparison, and formatted the design of the test. But the latter ran the computer
program independently of the QP. Because of time considerations, the QP determined that the comparison
would be confined to the ‘A’ Zone in Workman’s bench, which contains the largest single block of resources
and reserves. The QP told Robinson to: 1) set a cut-off at 4% Sb equivalent; and 2) cap gold grades at 1.5
oz/ton. The following was given:
• All drill, underground, and surface (trench) information that was used to calculate polygonal
resources was forwarded to Robinson by the QP. A table containing only ‘A’ zone data was
prepared for the Vulcan estimate. All of this data was derived from Appendix I. This included drill
hole depths, precise GPS collar coordinates, drill hole intercepts from Table 11.2 of this Technical
Report; estimated true widths of mineralized vein-fault intercepts and weighted assay grades are from
this Technical Report. The data used to calculate resources within ‘A; Zone on Workman’s Bench
consists of forty (40) diamond core holes totaling 10,079 feet as well as ten (10) surface trenches and
underground channel sample data that test the ‘A’ Zone. The maximum drill hole depth is 497 feet
and the average depth is 352 feet. Spacing between drill holes and sample points varies but is moreor less isometric, averaging about 75 feet. Files created by Robinson for the Vulcan program include
COLLAR.csv, ASSAY.csv, and SURVEY.csv.
• To help facilitate the effort and reduce the time expended on the Vulcan program, the QP used the
specific gravity and tonnage factors previously calculated for the polygonal estimates for the Vulcan
resource estimates (Appendix IV). Techniques for calculating tonnage factors are in Section 17.6.7.
Past polygonal resource estimates were not given to Robinson. After discussions, Robinson wanted to
combine the 2007-2008 ‘A’ Zone data set with the 2009 ‘A’ Zone data set. In that the 2007-2008 data from
‘A’ Zone on Workman’s bench calculated an indicated resource prior to conversion into a probable reserve,
the QP judged that it was reasonable to combine the 2007-2008 and 2009 data sets. A three-dimensional
geologic solid representing the A-Zone vein was created using conventional methods in Vulcan. The solid
conforms to the upper most and lower most assay interval for drill holes and trenches contained within the
A-Zone vein. This solid was used to constrain the compositing, block model construction and resource
estimation for this study. The block model was constructed using the Vulcan 3D modeling software. The
orientation of the A-Zone block model was selected to be 45o
in order to conform to the observed trend of
mineralization. The parent block size was selected to be a uniform 10’ x 10’ x 10’. The indicated resource
estimation for the block model was conducted using the Inverse Distance Squared (ID2
) method. The search
ellipse for the estimation was selected to be 23’ x 5’ x 23’ in order to conform to the planar, steeply dipping
nature of the A-Zone vein and reflect the average spacing between composites. The sample constraints put
on this estimate were that a minimum of 1 sample was required for a given block to be estimated and no 126
more than 4 samples could be used for estimating any given block. The results of the block model estimation
can be seen in Figures 17.16 and 17.17.
Figure 17.16 Plan view image of Workman’s bench ‘A’ Zone vein-fault. Estimated blocks are shown
displaying antimony grade. Scale (squares) are 100 feet across.
Figure 17.17 Side profile view of Workman’s Bench ‘A’ Zone looking northwest. Combined assay
intervals and estimated blocks are shown displaying Sb grade.
0 50 100 200 300 400 Feet127
The indicated resources contained within the A-zone vein were calculated using the above block estimations.
Specific gravity and tonnage factor data was available for all assay intervals and was included in the resource
estimate. Although the QP mandated that a 4.0% antimony equivalent cut-off grade be used, Robinson
judged that it would be useful to the study to compare the indicated resources contained in the A-Zone vein
using cutoff grades of 0.0% equivalent Sb and 4.0 % equivalent Sb (Table 17.26). Nearly the same amount of
antimony is realized for the zero percent versus 4.0 percent Sb cutoff (1.4 percent difference), but more gold
is indicated (6.9 percent difference) in the zero percent cut-off.
Table 17.26 Indicated Resources calculated by VulcanTM that are contained in Workman’s Bench ‘A’ Zone
vein-fault from 2007-2009 exploration data
Material
Cutoff Grade
(% eq Sb)
Sb
(% eq)
Au
(oz/ton)
Total Tons Total cu ft
Tons
ANTIMONY
Ounces
GOLD
MINERALIZATION 0.0 23.15 0.275 51,713 454,833 11,972 14,221
MINERALIZATION 4.0 29.17 0.327 40,458 344,776 11,802 13,230
WASTE 4.0 1.50 0.088 11,254 110,057 169 990
Table 17.27 compares the indicated resource estimates using polygonal methods versus the indicated resource
estimates produced by the Vulcan analysis. Summary data for indicated resources of ‘A’ zone on Workman’s
Bench determined from polygonal estimates are contained in Tables 17.3 and 17.13 of this report.
At a 4.0 percent Sb cut-off, the Vulcan indicated resource volume (in tons) estimate is 4.0 percent larger; the
antimony grade is also 2.9 percent larger, but the Vulcan gold grade is 9.9 percent lower than the polygonal
indicated resource estimate. In terms of in-place metal resource, the Vulcan antimony estimate is 6.9 percent
higher than the polygonal estimate, but the Vulcan gold estimate is 6.20 percent lower than the polygonal
estimate. Stone and others (1998) have stated that resource estimates between two completely different
estimation methods can vary by 10 percent or more. The QP concludes that the polygonal resource estimate
compares favorably to the Vulcan resource estimate and that the former estimate is an accurate indication of
size and grade of mineralization in the Nolan lode system.
Table 17.27 Comparative Results of Polygonal Method used by writer, versus computer VulcanTM block model
method
Mineralized Zone Cut‐Off Sb (%) Au
(oz/ton)
Total short
Tons ore
Total Cubic
feet
Tons
Antimony
Ounces Gold
Polygonal Method, 2007‐
2008 Data, Workman’s
Bench ‘A’ Zone
4.0 % Sb
equivalent
31.52 0.405 28,452 235,867 8,967.9 11,516.7
Polygonal method 2009
Data, Workman’s Bench
‘A’ Zone
4.0 % Sb
equivalent
19.78 0.248 10,444 89,192 2,066.0 2,593.6
Total Polygonal Method,
Workman’s Bench ‘A’
zone 2007‐2009 data
4.0 % Sb
equivalent
28.36 0.363 38,896 325,058 11,033.9 14,110.3
Vulcan Estimate 2007‐
2009 data
4.0 % Sb
equivalent
29.17 0.327 40,458 344,776 11,802.0 13,230.0
Differences between
Polygonal Method and
Vulcan estimate (in %)
4.0 % Sb
equivalent
2.86+ 9.90‐ 4.02+ 5.70+ 6.90+ 6.20‐ 128
18 Other Relevant Data and Information
18.1 Prefeasibility study, Workman’s Bench antimony and gold resourcesintroduction
Silverado asked the QP to complete a prefeasibility study in order to evaluate the merits of extracting
antimony and gold from Workman’s Bench, frequently referred to in this chapter as the ‘Nolan lode
development’, using the probable reserve base demonstrated in Chapter 17 of this report. The conceptual
work plan would involve the selective underground extraction of high quality vein mineralization, processing
of ore with a nearby surface plant using gravity (and possibly flotation) technologies, recovering most of the
gold value on site at Nolan Creek, and shipping a metallurgical grade stibnite concentrate to overseas buyers;
either Asian (China) or European (Rotterdam, Netherlands) markets. Figure 18.1 provides a simplified
location map showing current and planned basic facilities described in this report.
Figure 18.1 Simplified outline illustrating mine infrastructure for proposed Nolan lode mine development.
Mining 18.2
18.2.1 Underground mine design
The 2008 underground tunneling effort (570 feet total) was designed to determine a number of important
engineering criteria for the Nolan lode project, including: 1) test thermal conditions and icing of wall rock,
which relate directly to stability (permafrost); 2) characterize wall rock fracture and structural data, tunnel size
requirements, and blasting costs; 3) help design an underground haulage mine design for the Workman’s
Bench lode; 4) collect a bulk sample of mineralization for metallurgical testing; 5) collect large bulk material
samples for environmental studies; i.e., acid rock drainage (ARD) mitigation; and 6) determine the best
approach to extract the Sb-Au vein-fault resource —by driving along ‘A’ Zone and test-mining semi-massive
stibnite quartz mineralization. The underground engineering examinations yielded valuable information,
which are incorporated into this section. 129
Figure 18.2 Simplified surface plan view, proposed Workman’s Bench underground development, with an
initial focus on ‘A’ Zone mineralization (in red).
Mining methods in the Workman’s Bench deposit selected by the QP in discussions with Silverado will
deploy a modified cut-and-fill stoping method. Figure 18.2 provides a plan view that would initially access ‘A’
Zone mineralization from the existing underground drifts and crosscuts completed in 2008. The vein
structures will be accessed through a 12-15 degree spiral decline that will provide subsurface access to the ‘A’,
‘B’, and West vein structures, but beginning with the main ‘A’ Zone, where approximately 70 percent of the
indicated resources reside. Figure 18.3 provides a plan for the spiral decline and a diagram showing how the
mineralized ‘A’ Zone vein material would be extracted. The first level would parallel ‘A’ Zone through waste
rock at a minimal width in the range of 6.5 feet to 7 feet in width and 10 feet high. Stopes will be driven at a
17% decline paralleling the vein to a depth of 150 vertical feet, then level off and driven to a lateral length of
approximately 400 feet or less, with the first level 10 feet below the level on which the first ore extraction
would take place. Once the stope is driven, the vein structure will be shot off the rib at an extracted width of
2.0 feet is mucked out for processing. Figure 18.3 illustrates the back-in concept for extraction at the
mineralized face showing the 2.0 foot wide zone of extraction. Waste would be breasted down and placed in
the level below the working face. Ore would then be shot and transported to the surface and stored for
processing. Extraction would take place from the hanging wall side of the vein structure, or from the eastern
edge of the vein. The spiral decline depicted figure 18.3 is focused on extraction of ‘A’ Zone; however, it
would also contain draw-off points to access ‘B’ and West Zones as well, which also contain indicated
resources. 130
When extraction from the entire level has been completed, mine crews will back up to the decline and breast
down the back using the waste rock as fill, gaining 10 feet in elevation and preparing the next section of the
‘A’ Zone vein to be shot off and retrieved (Figure 18.5). This process will continue until mine crews get to
the same elevation of both C and D access levels. The upward vertical limit of the extraction process will
likely depend on ground conditions, especially the presence or absence of live water (Figure 18.6). In either
case, if water is encountered or ground conditions falter, then the upward limit of mining will have been
reached. The mine method as designed will allow Silverado Mine crews to leave waste rock in the mine and
only dealing with the initial waste rock and swell factor removed and stored on the surface.
Stope access driven at 6.5 feet wide by 100 feet long by 10 feet high will result in 6,500 cubic feet (600-650
tons) of rock in place per single working level. At a 27 percent swell factor, which is what has been
experienced during the past 2 years at Nolan Creek, the in-place extracted material equals 8,500 cubic feet (of
loose broken rock. Removal of the ore at 2 feet wide by 10 feet high by 100 feet long will provide
approximately 2,000 cubic feet of additional area to accommodate the material swell factor.
Figure 18.3 Spiral decline into Workman’s Bench deposit; B-simplified diagram showing relationship of
working face in drift to mineralized vein.
131
Figure 18.4 Simplified concept of the working face, Workman’s Bench deposit.
Ground control will consist of split sets, wire mesh, and timber as needed. All of the underground workings
to date have encountered permafrost, which has resulted in exceptionally stable ground conditions. Water
has frozen into cracks, which has kept roofs, sidewalls, and working faces completely competent. Ground
temperature control will be crucial to maintaining stable underground conditions. Underground equipment
will consist of MSHA approved loaders (RDH) and haul trucks. Jack legs and pneumatic rock penetration
units will constitute the principle drill hardware used on the project.
Mine ventilation will be accomplished by deployment of a 40 hp fan placed 100 or more feet from the portal,
forcing fresh air into a 24 inch vent line run into the stoped areas. Exhaust air will return out through the
drift and out the portal, resulting in positive ventilation. This ventilation design has been successfully
deployed by Silverado during underground drift mining activities on the left limit placer benches of Nolan
Creek since 1994. It has been inspected and approved by the U.S. Mine Safety and Health Administration
(MSHA) since the time it was first deployed. Figure 18.7 illustrates the ventilation design for Workman’s
Bench.
Power supply will be located in the existing location of the mine. Mine supply facilities will be located on
Workman’s Bench. Tailings storage will be properly permitted and secured on a level, cleared-off area at
several locations of the Nolan Creek left limit bench. Transportation of the ore from the mine site to the
processing site will be by a 20 ton capacity haul trucks.
132
Figure 18.5 Side panel of proposed Workman’s Bench mine plan showing method in which previously mined levels would be back-filled
Figure 18.6 Side panel of proposed Workman’s bench mine showing sequential upward cut and fill method deployed in C and D zones 133
Figure 18.7 Ventilation design, proposed Nolan lode development.
18.2.2 Geotechnical Studies
Geotechnical studies of the Workman’s and Pringle Bench have been mainly confined to core logging by
Silverado geological contractors completed during the definition of ore zones. The QP has examined the
underground workings on Workman’s bench during April 7-10, 2008, and measured joint sets, foliation and
compositional banding, and inspected fault zones. Foliation and compositional banding strikes northeast
(025-045o
) and generally dips shallow to the southeast ranging from 05-to-015o
. At some stations,
compositional banding and foliation is horizontal. Figure 18.8 illustrates the near-horizontal nature of
compositional banding in phyllitc schist in the ‘A’ Crosscut. Northwest striking high angle faults offset the
northeast veins in small amounts.
All mineralized zones at Workman’s Bench are near-vertical ‘vein-faults’ that strike in a northeasterly
direction. Most of the northeast-striking joint sets have some silica vein selvage infilling. The northwest
striking joints and fractures have both vein filling but are also frequently barren. The main ‘A’ zone shows
slickensides in a horizontal configuration, indicating mostly lateral low angle slip planes. The ‘B’ and ‘West’
Zones also occur along fault planes, but do not show obvious evidence of lateral movement. Mine planning
takes into account the fault structure of ‘A’ Zone and has avoided driving along it’s projected surface to
prevent wall rock instability. Silverado geologist Karl Sharp is conducting a joint set survey using
underground data, which should soon be available.
Wall rocks enclosing the stibnite-quartz lodes contain significant pyrite and pyrrhotite, which could result in
Acid Rock Drainage issues (ARD). PRGCI geological contractor R.C. Swainbank estimated sulfide content
in 18 drill holes from Pringle and Workman’s bench that were completed in 2007 (Figure 18.9). Phyllitic
schist contains the highest sulfide content. The QP has recommended to Silverado that a plan of action for
lode mineral development incorporates the characterization of the material, a definition of waste rock,
geochemical testing, review of geochemical parameters present in drill core, and an implementation plan.
Silverado engaged the consulting firm SRK Consulting, Inc. to initiate ARD studies, which began in June,
2008 (see Section 18.5 of this Technical Report). 134
Figure 18.8 ‘A’ Crosscut looking southeast. Note near-horizontal phyllitic schist bands in base and roof.
18.2.3 Hydrological considerations
The Workman’s Bench deposit occupies a near-horizontal terrace level at an elevation of 1,800 feet near the
confluence of Smith Creek, a third order tributary, with Nolan Creek, a second order trunk stream. The
Workman’s Bench mineralized system trends in a northeast direction toward Smith Creek Valley. The
underground workings driven into the Workman’s Bench lode are dry. One hole, 08BT17, which is part of
the Workman’s bench evaluation, intersected “live water”. The drill hole is situated at the northeastern edge
of the drill pattern completed in Workman’s bench and does not affect the reserves assessed in this Technical
Report. The drill hole likely intersected water from Smith Creek—drilling did not advance further because it
was assumed that Smith Creek constituted a northeasterly limit of Workman’s bench due to this condition.
According to Silverado’s operational mine manager, Ray Medina (written email communication), the hole was
plugged off. The QP assumed from inspection of data that no other holes on Workman’s Bench contained
water and all drilled dry. Mr. Medina does not believe the single wet drill hole on the northeastern margin of
the defined resource is a problem, and suggests that the drill hole 08SH17 could be grouted off if necessary.
Based on observations of the drill hole data and underground mine conditions, the QP agrees with this
assessment. The other hole that drilled wet was on Pringle Bench to the northeast (07SH04). The inferred
mineral resources on Pringle Bench are not part of the pre-feasibility analysis presented in this Technical
Report. There is other evidence to corroborate the general dry nature of the bedrock subsurface. A number
of large diameter well holes were drilled in the camp vicinity in order to find a good source of water. Three
drill holes explored the Workman’s Bench area to depths of up to 400 feet, but failed to encounter water.
Left limit benches on Nolan Creek; i.e., Swede Channel and Mary’s Bench, were found to be dry during
underground drift mining of frozen placer gold deposits (see Bundtzen, 2006 a-c). 135
Figure 18.9 Core logging summary from 2007 core drilling, illustrating rock types and sulfide-bearing zones 136
Drifting under Nolan Creek above Silverado’s camp interested live water at the base of the valley, about 1.0
km from Workman’s Bench. During construction of the camp well, it was found that the water table occurs
below a permafrost substrate. Current camp water is drawn from a water well jointly owned by Silverado
and Sukapak Corporation near Wiseman and hauled by truck to camp. Silverado is currently permitted to use
waters from recycling ponds during placer mining activities, and plans to use the permitted settling ponds as a
mill water facility.
18.2.4 Waste rock management
Waste rock will be temporarily stored on lined pads on the left limit bench of Nolan Creek Valley. Final
encapsulation of these materials will take place in two possible scenarios: 1) moving waste rock back
underground in Workman’s Bench upon completion of the planned stope panels; or 2) storage in the
abandoned underground drifts of Swede Channel, Mary’s and Mary’s East placer gold deposits on the left
limit bench level of Nolan Creek (Figure 4.3). During 1994, 1999, and 2005-2007, underground drifting
removed 46,050 bank cubic yards of gravel for surface processing (Table 6.1, this Technical Report; Figures
10.2 and 10.3; Bundtzen, 2008c). Inspection by the QP of Swede and Mary’s East underground workings in
2006-2007 indicated that these workings are relatively intact although slumping have removed an estimated 10
percent of open spaces, locally. Assuming that one cubic yard equals about 2.3 tons, and assuming a 90
percent space availability, and a swell factor of about 20 percent, then the underground workings on the left
limit bench would be capable of storing approximately 85,000 tons of loose waste rock material. This would
accommodate the encapsulation of about 50,000 tons of waste. During a June, 2008 meeting between
ADNR, the USBLM, and Silverado, Steve Lundeen, the mill and tailings regulator with the USBLM,
expressed support for the concept of backfilling treated (acid neutralized), underground waste rock into the
Swede and Mary’s underground mine workings and later, Workman’s bench, because this would mitigate a
significant area of concern for ARD (R. C. Burgraff, written notes, June 17th
, 2008). Costs for this work have
been included in this analysis.
18.2.5 Mine production schedule
A mine schedule envisions the extraction and processing of approximately 42,500 tons of a calculated
probable mineral reserve that contain on average 28.0 % antimony and 0.408 oz/ton gold on Workman’s
Bench over a production period of four (4) years. Table 18.1 summarizes the production schedule.
Table 18.1 Five year mine plan, Workman’s Bench/Nolan Lode Project
Year Mining Rate Mining Duration Total Tons Comments
1 30 65 2,000 Collection of bulk
sample for
metallurgical testing
2 65 125 8,000 Initial production
3 200 125 25,000 Full scale production
4 200 125 25,000 Full scale production
5 200 125 25,000 Full scale production
Total/Average 200 125 85,000 Complete probable
reserve extraction
(1)
Sorting of mineralization prior to mill feed is anticipated;
(2)
actual tonnage of ore in probable reserve (average width=0.90
feet) is 42,500 tons. 137
The mine is designed to take out a cut 2.0 feet thick which compares with the overall average thickness of all
three indicated mineralized zones, ‘A’, ‘B’, and West Zones of about 0.90 feet true thickness. The late mine
manager Ray Medina believes that waste can be easily removed through systematic sorting prior to stockpiling
ores for mill feed. The amount of material actually extracted from the mineralized zone is approximately
twice that of the indicated resource tonnage or about 85,000 tons, with half that amount being fed to the mill.
This is considered by the QP to be the Base Case. In the Base Case, sorting will take place underground, with
excess materials handled along with the waste rock excavated during mine development. These waste
hanging and footwalls materials will not be stored for mill processing. A second scenario is envisioned
whereby waste will be handled with the ore zones and processed through the mill facility along with the
measured stibnite-quartz-gold resource base. This scenario treats the entire 2.0 feet of the excavation as ore
and hauls the material to the mill for processing, resulting in a 58 percent dilution. Both of these scenarios
are discussed and modeled in the Economic Analysis (Section 18.9) of this Technical Report.
18.2.6 Mine Operations.
Silverado possesses a permit to collect up to 1,000 cubic yards of mineralized material for testing purposes
from Workman’s Bench from the U.S. Bureau of Land Management. This work will be a follow-up of the
metallurgical work completed by Hazen. Year 1 will be devoted to the collection of the bulk sample for
metallurgical testing. This sample will either be shipped out to an outside facility or be processed on the mine
site after the initial gravity plant has been built. Permitting requirements limit activities in Year 1. However,
permits to operate the lode mine and mill facility still must be obtained (see Section 18.5, Environmental and
Social Considerations).
Year 2 is the beginning of commercial operations. Final stope configurations are completed underground,
which allows for full access to all three mineralized vein faults containing indicated resources-the ‘A’, ‘B’ and
West Zones. However, all ore to be developed for the mill during Year 2 will be derived from ‘A’ Zone.
During Years 3, 4, and 5, all three zones containing probable reserves will be accessed and developed. The
mine ventilation system will be completed to comply with MSHA safety requirements.
The QP takes into account important climactic considerations during design of the mining operation. The
key to stable underground mine conditions is to keep the subsurface in a frozen condition. Systematic
placement of thermometers will be a required element of the underground mine activities. The company will
monitor drift temperatures and will curtail mining if temperatures rise above 20o
F. That will reduce but not
necessarily eliminate the need for underground control reinforcement. Silverado’s expertise during the
mining of frozen placer gold deposits on the left limit of Nolan Creek will provide important guidance for the
Nolan lode development. Table 18.2 summarizes the annual mine activity cycle.
Mining will begin shortly after freeze-up and continue until April 1st
, the time where thawing of drifts in past
years has become a stability problem in the underground drift mines. During April and May, the Silverado
crew will ready Nolan camp for milling and exploration activities. Other seasonal summer activities will
include drilling for more resources and converting inferred resource estimates into indicated categories for
mine feasibility. 138
One day and one night shift of 2 miners each can successfully produce 125 tons per day of the probable
reserve during years 3, 4, and 5. Because the mine design features the ability to work from two faces
simultaneously (see Figures 18.5 and 18.6), ore can be drawn from different areas for mixing opportunities to
improve grade control during milling. A single crew of two can handle extraction of the metallurgical testing
when those tests occur.
Silverado contract miners will use drill technologies and haulage scheduling developed during drift mining of
left limit bench placers as well as those deployed in construction of the 2008 development drifts. The firm
Table 18.2 Annual schedule for Nolan Creek lode development when in full production
Activity Time Interval Comments
Underground mining November 10
th
-April 1 Underground Mining during winter to
reduce thermal disturbance
underground
Mill processing June 1-September 1 Taking advantage of warm summer
conditions during operations of mill
Drilling July1-September 30 Expand resource base; convert
inferred into indicated resources
Concentrate haulage July 1 to October 31 Back hauls of stibnite in tractor
trailers from North Slope oil fields
will use vehicles that will include a DuxTM DT20 Haul truck to haul ore to the surface; a Young BuggyTM to
access the narrowed vein zones; and an EimcoTM
utilty vehicle. The scenario of alternating between mining
and processing tasks allows Silverado to utilize the same personnel on a number of projects nearly
continuously throughout the year.
18.3 Processing
18.3.1 Laboratory
Mine assay requirements will be handled through commercial labs in Fairbanks. Each face shot will require
assay control, but given the relatively small size of the operation, it is more efficient to use existing facilities in
Alaska. ALS Chemex and Alaska Assay Labs offer timely services in Fairbanks. The latter can provide two
day turn-around service for fire assay gold. The former can provide fire assay gold on a one week turnaround. One lab can be used as a check lab, as has been done during exploration work on Nolan Creek (see
Sections 12-13 of this Technical Report). Sample batches can either be trucked to Fairbanks (six hour drive)
or flown in on Wright’s Air Service from Coldfoot, which has serviced Silverado’s needs for many years.
Silverado is considering the establishment of a simple check lab at the mine site. 139
18.3.2 Crushing and Conveying
Ore will be crushed and conveyed from stockpiles. Mechanical sorting will occur through removal of wall
rock from mineralized material prior to feeding material into the concentrating plant. Silverado possesses a
heavy-grade TechronTM Model #5500 conveyor belt used during processing of transporting oversize gravels
and boulders from reject sites of a placer gold washing plant facility. The conveyor operated at a rate of
about 30 cubic yards/hr or roughly equivalent to about 55 tons/hr. Ore will be crushed to 35 mesh with a
25 t/hr primary crushing unit. Later circuits, including a rod mill, will crush to -150 mesh.
18.3.3 Process Plant Layout
The processing facility (see Figure 18.10) will consist of a primary crusher followed by a three step milling and
recovery process. The bulk sample test completed by Hazen identified a need to reduce the sliming
tendencies of stibnite. The mill will deploy a rod mill instead of a ball mill to keep the initial grind to a
relatively coarse mesh (-35). The rod mill product will report to a scalping jig—producing a 1 inch product,
which in turn feeds a Denver DuplexTM jig system, producing a ¼ inch (sand-sized) product. This material is
then fed to a bank of four (4) Holman-WiffleyTM tables that will serve as the principle method to recover the
mineral product (by gravity means). The Holman-Wiffley tables units should provide for a feed of about 25
tons/hr, which, over a 10 hour shift would be capable of milling 250 tons/day and an 8 hour shift would be
capable of 200 tons/day. The QP’s discussions with Holman-Wiffley suggest that installation of a Falcon
Concentrator will improve recovery in Sb slimes (Figure 18.10).
Based on knowledge gained from the Hazen bulk sample test, the gold will likely report to an arsenopyrite
concentrate and be removed on site. Coarse stibnite at -35 mesh and larger will report to a specific stream on
the Wiffley tables, and be pulled off and bagged for shipment. For finer grinds, the stibnite might slime, thus
reducing the percent recovery. Hazen test results show good stibnite recoveries with conventional gravity
methods, but if the grind is too fine losses through sliming may result. Grind control will be key to the
process. The QP has informed Silverado that a flotation unit could significantly improve recovery if sliming
occurs. Results of processing the bulk sample by Hazen showed that 98 percent of the gold and 99 percent
of the stibnite could be recovered with the addition of a flotation circuit. Sepro Systems TM included a
flotation circuit in their preliminary mill plan for Silverado. Because permitting issues might affect timely
flotation technology deployment, Silverado has chosen to initiate production using only gravity technology.
The QP agrees with this strategy. Based on the results produced during the bulk sampling test by Hazen
Research (Schultz, 2008a,b), suggest recoveries should be approximately 85 percent for stibnite and 90
percent for gold (see Section 16, this Technical Report). Figures 18.11 and 18.12 illustrate the simple gravity
circuit in which arsenopyrite and free gold product is pulled off a cleaner 2 concentrate.
18.3.4 Process Design Criteria
The principle design criteria for the processing plant will include: 1) how gangue materials (hanging and
footwall zones; quartz vein gangue) will affect stibnite and gold recovery; 2) the relationship of arsenopyrite
to stibnite and gold mineralization; 3) how grinding size will specifically affect stibnite recovery; 4) production
of a high quality stibnite concentrate that averages 60 % or better antimony, with low trace metal 140
Figure 18.10 Mill flow sheet, Nolan Lode Project. Use of diagram with permission from Sepro SystemsTM 141
Figure 18.11 Simplified flow sheet illustrating separation of 1) arsenopyrite + free gold; and 2)
stibnite using simple gravity technologies from an array of three Deister tables; which are replaced
by Holman Woffley tables in mill design (see Figure 18.10) .
content; and 5) comparison of the gravity only plant versus a combined gravity and flotation unit. The
stibnite market requires a high purity product with low impurities. An important objective of the milling
process will be to limit the potential contamination of arsenic, mercury, and lead in stibnite concentrates
being prepared for market. Assay data from the Workman’s Bench stibnite mineralization show low contents
of lead, mercury and arsenic, the main contaminants to watch for in a stibnite product. By keeping the sizing
relatively coarse-grained but at the same time uniform, an 85 percent recovery of stibnite should be attainable.
Mineralogical work by Bart Cannon of Cannon Microprobe Inc. and the QP’s inspection of assay data
indicate that arsenic does exists in the form of locally conspicuous arsenopyrite in the vein system. Based on
the Hazen Research work, the stibnite concentrate should be clean, and with Falcon Concentrator treatment
(see Figure 18.10), will liberate most grains of crystalline arsenopyrite and gold to be recovered by gravity
separately.
Silverado has designed an MSHA-approved, ventilated room and recovery facility in the mill that will allow
for the recovery of gold on-site. This will be supplied with a WrabiTM furnace, molds, fire proof suits and
helmets, stamps, a mettle digital balance, and other apparatus need to pour dore’ bars from the furnace
apparatus. Slag will be returned to the rod mill and recycled. Silverado will draw from their experience of
pouring about 18,000 oz of gold-silver dore’ at their Grant Gold mine property during the mid-to-late 1980s.
18.3.5 Manpower
The mill will require four individuals: 1) one contractor that works at the primary feed conveyor belt and
primary crusher units; 2) an individual that manages and monitors the operations of the wifely tables; 3) an
individual that prepares the stibnite product for shipment; and 4) an individual in charge of gold recovery.
18.3.6 Consumables and Maintenance
Maintenance requirements will include motor malfunctions, shaker malfunctions, replacement of
polyurethane linings on Holman-Wifely tables that wear out with use, water pipe repairs, and lubrication of
movable parts. The manufacturers of Holman-Wifley will issue warranties for repairs.142
Figure 18.12 Illustration of the gravity separation of gold-arsenopyrite and stibnite during cleaner table test, Nolan Bulk sample, 2008143
18.3.7 Process production schedule.
Table 18.3 provides a production schedule for deployment of the plant facility. The first year is devoted to
testing, followed by mill refinement the second year and final full scale production for the last three years.
The tonnage is that of the probable mineral reserve being extracted.
Table 18.3 Base case mill production schedule
Year Mill Duration
(days)
Tonnage of Probable
Mineral Reserve
Comments
1 65 1,000 Test of large permitted bulk sample
2 125 4,000 Initial commercial rate of mill facility;
refinement of mill flow
3 125 12,500 Full production achieved
4 125 12,500 Full production achieved
5 125 12,500 Full production achieved
TOTAL/
AVERAGE
(1)
125 42,500 Processing of probable reserve,
Workman’s Bench
(1) When in full production
18.3.8 Processing Summary
Table 18.2 already provides a flow sheet that combines both mining and milling operational schedules. Year
1 will be devoted to processing of the permitted bulk sample. The QP is unsure whether or not there will be
enough of the mill facility completed to process the bulk sample on site. If not, the sample would be
transported offsite to an appropriate mill facility or organization. If there is not a mill facility on site at all,
then a smaller sample would be transported offsite.
Mill processing will commence upon the beginning of summer when water becomes easily available, which is
usually mid-May. Processing will be ended by September. Early frosts and freezing activities will commence
by late September. The seasonal operation of the facility (June 1-September 1) will insure that an adequate
water supply is maintained and summer conditions will eliminate the need to build expensive facilities to
combat the cold temperatures typical of this region.
In year 2, initial commercial production is anticipated with gold recovered on site in the mill and stibnite
shipped to off shore buyers. The first year of production will be accomplished only with gravity circuits in
the mill, due to permitting considerations (Section 18.5). It is expected that permits to operate flotation units
could be obtained by the beginning of year 2.
The refinement of the mill flow sheet should be completed by the end of year 2. Full scale production will
take place during years 3, 4, and 5. By this time the gravity (and possibly flotation) mill circuits are deployed
for maximum stibnite and gold recovery. During the final three years of production, the mill will process 88
percent of the total indicated resources available.
Top challenges during mill operations will include establishing reliable maintenance schedules and perfecting
the flow sheet so that maximum product values are realized. Establishing a flotation circuit in the future in
addition to the gravity mill, the latter of which is the planned mill recovery method, will depend on permitting
issues and costs of environmental compliance. 144
18.4 Administration, Engineering, and Infrastructure
18.4.1 Manpower Structure
Besides several discussions with contractors Ray Medina and Gil Dobbs, and Roger Burggraf and Garry
Anselmo, the QP has examined employment records and planning efforts of past Silverado test-mining
programs to assist in making employment estimates as described below (Table 18.4). The Nolan Creek lode
mine development will be managed by an experienced mine contractor. Mine engineering
consultant/manager Gilbert Dobbs will contribute significantly to engineering and project management.
Dobbs will also assist Medina with mill management during summer months. Permitting and property
management will be under the direction of Silverado director Roger Burggraf, from his office in Fairbanks,
Alaska. Payroll and all required employment paperwork will be handled out of the Fairbanks office by
Bonnie Gunn. Karl Sharp is the chief geologist for the Nolan Creek development. Five (5) experienced
underground miners who have worked on underground projects in past years, which includes one alternate,
will make up the underground mining team. At least 3 of the 5 miners will also work in the mill during the
summer season. More than 20 miners have worked for Silverado in past years. A number of these past
contractors are available for work. Silverado Chief Operating Officer Garry Anselmo will provide over site
and quality control of the project.
In addition to the core staff, the operation will need: 1) a utility man to maintain mine ventilation, haul
supplies to miners on shift, and supplies to miners coming on for a shift; 2) a laborer-equipment operator,
who will work mainly on the surface maintaining roads hauling ore to stockpiles, lubing and fueling
equipment, and assisting in camp maintenance; and 3) a qualified mechanic that will service both surface and
underground mining equipment and make sure that all equipment is kept in a safe manner. The camp will
have a full time kitchen chef plus one assistant who will make sure all staff is well fed and maintain camp
living quarters.
There will also be a need for outside contractors to assist in exploration core logging, environmental
permitting, claim maintenance and other projects as needed.
Table 18.4 Summary of core employment requirements for the Nolan Lode Project.
Position Name of Individual Number of Employees
Camp Mine Management NA 1
Engineering Management Gilbert Dobbs 1
Permitting, Land Ownership Roger Burggraf 1
Geology Karl Sharp 1
Miners NA 5
Mill Operators NA 4
(1)
Utility Man NA 1
Laborer-Equipment Operator NA 1
Mechanic NA 1
Kitchen (Chef) NA 1
Camp Assistant NA 1
Payroll (Fairbanks) NA 1
TOTAL NA 19
(1)
three of five miners will work in mill during summer months 145
18.4.2 Office, Workshops, and Stores
The existing Nolan Camp will serve as the primary infrastructure base for the Nolan lode development
project. Nolan Camp is located in the valley of Nolan Creek about 2.0 miles above the confluence with
Wiseman Creek. The original Nolan operations, including camp, buildings, machinery shops, and related
equipment, were constructed in the late 1980s. Power is produced by a diesel power plant at the camp site.
The Nolan camp was upgraded in 2002 and again in 2007 in order that underground and open-cut mining
operations could be effectively carried out. The upgrading and efforts included: 1) the purchase and
installation of a ten room housing unit; 2) the construction of engineering and geology offices; 3) the
upgrading of laboratory and sample preparation facilities; 4) the installation of a new sewage treatment
facility; 5) the construction of a new kitchen; and 6) the installation of new communications equipment,
including computer hardware. Figure 18.13 shows an aerial shot of Nolan Camp. Figure 18.1 introduced
earlier in this chapter shows the general spatial layout of camp infrastructure. The camp is capable of housing
30 workers on a full time basis.
A geological laboratory has been seasonally operated in camp. The geology lab contains sample preparation
apparatus, as well as layout space for core logging needs. A core saw is available in camp. During placer gold
mining activities, the camp maintained tight security, which contains many of the apparatus used in collection
of placer gold; i.e. several electronic MetlerTM
balances, grading screens and sorting wheels. Much of this
equipment is expected to be applicable to the Nolan Lode Project.
A heavy equipment shop has been maintained by the company for many years in order to service both
surface and underground mining equipment during test-mining in past years (Figure 18.14). The shop also
houses the camp’s current electric power plant. The camp facility has a separate area for storage of mine
lights, underground mining gear, and underground safety equipment; all will be used at Nolan camp.
Tailings have been stored on BLM approved pads at several sites in Nolan Creek valley. Silverado also has
an MSHA-approved site for storage of explosives, mainly ANFOTM, on the south edge of Ogden-Eureka
bench, on the north side of Smith Creek and about 950 feet from the current Workman’s Bench portal.
There are no explosives on site at this time.
Silverado has fuel containment facilities associated with their two 15,000 gallon capacity diesel tanks. All
gasoline is purchased in 55 gallon barrels. Both gas and diesel tanks, which are stored on liners in accordance
with ADEC specifications, are located about 100 yards west of the cafeteria and bunkhouse complex.
According to Silverado staff, the fuel storage capabilities will probably meet the needs for the planned Nolan
lode development. Shopping for camp needs usually is accomplished in Fairbanks, Alaska, about 170 miles
south and accessible by the Dalton Highway. 146
Figure 18.13 Overview of Nolan Camp
Figure 18.14. Shop facility at Nolan Camp showing mechanic working on mining equipment 147
18.4.3 Electric Power Supply
Nolan Camp currently has three small generators: a 20Kw WacklerTM and two 40 Kw Atlas CopcoTM units.
The planned mill and mine infrastructure will need additional power, about twice that is currently available at
Nolan Camp. Silverado has several generating units at their moth-balled mill facility on Ester Dome. They
include a Westinghouse 7160 generator that can generate 400 Kw of power, 500 KVA Transformer, and a
three synchronized system generator panels (type GCS), which may be sufficient for deployment needs at
Nolan Camp.
18.4.4 Water Supply
Drinking quality (potable) water is obtained from a well near Wiseman, about 5.0 miles from Nolan Camp,
and transported to camp with a water truck. Water is then pumped into three 2,500 gallon, plastic holding
tanks that are housed in the main utility room. A conventional well drilled near the camp is no longer used
because of problems encountered with permafrost, which freezes the well casing.
Tailings ponds have been constructed during seasonal mining activities and operate under a zero discharge,
100 percent recycle technology. Because the mill will operate only during the summer, these ADEC
approved, artificial water bodies will be used to supply water to the mill facility. Water needs for winter
drilling and blasting can be supplied by the existing system of storage tanks in camp, or if necessary a second
system.
18.5 Environmental and Social Considerations
18. 5.1 Federal and State Regulatory Requirements
The primary focus of the mine permitting process in Alaska is to protect the land, water, and surface
resources of the United States, the State of Alaska, and private sector land owners from adverse affects that
might be caused from mineral extraction. The listing below is that developed for the State of Alaska’s ‘Hard
Rock Mine Permit Model’ as found in Alaska Statute AS 27.05.010(b):
1) Air Quality (dust and particulate matter)
2) Biological Resources
3) Cultural Resources
4) Geologic Hazards
5) Land Use
6) Noise
7) Public health
8) Socio-Economic Resources
9) Traffic and Transportation
10) Visual Resources
11) Waste Management
12) Water Quality
13) Energy Use Impacts
An estimated ten (10) state and federal agencies will be involved in the permitting of the Nolan lode
antimony-gold project. Tables 18.5 and 18.6 provide a summary listing of State and Federal agencies that will
be involved in permitting the Nolan Lode Project. Each agency covers a sector of activity that deals with
surface and subsurface use, safety, and environmental responsibility. 148
Table 18.5 State agencies involved in permitting Nolan Lode Project
Agency Permitted/Regulated Activity
Alaska Department of Natural Resources (ADNR) 1) Design and Operating Plan
2) Drilling permit for holes or drifts>300 ft in depth
3) Miscellaneous land use permit
4) Alaska Placer Mining Application (APMA)
5) Cultural survey permit
6) Water use permit
Alaska Department of Environmental Conservation
(ADEC)
1) Air quality permit
2) Water discharge permit
3) Waste rock disposal permit
4) Storm water certificate
Alaska Department of Public Safety Fire Marshall’s Office 1) Design/Operating Plan Review Process
2) Operational Fire Safety Certificate
Alaska Department of Fish and Game (ADF&G) 1) Title 05 and 16 Authorities of the Alaska Constitution
(fish and game habitat protection)
Table 18.6 Federal agencies involved in permitting Nolan Lode Project
Agency Permitted/Regulated Activity
U.S. Bureau of Land Management (USBLM) 1) Surface lease
2) Design/operating plan
3) Plan of Operations approval
4) National Historic Preservation Act
U.S. Army Corps of Engineers (Corps) 1) Wetlands Determination
2) 404 Permit
U.S. Environmental Protection Agency (USEPA) 1) National Pollutant Discharge Elimination Permit
2) Environmental Assessment (EA) or Environmental
Impact Statement (EIS)
3) Hazardous Materials Handling Plan
4) Storm water permit
U.S. Fish and Wildlife Service (USFWS) Endangered Species Act
Federal Energy Regulatory Commission (FERC) 1) Design/Operation Plan review
2) FERC Certification
Mine Safety and Health Administration (MSHA) All regulatory actions related to safe activities in mines
Because the Nolan Lode Project occurs on federal lands, the USBLM takes the lead in reviewing the plan of
operation by producing a comprehensive environmental assessment (EA). The EA is composed of twenty
eight (28) separate parts and reviewed by the appropriate federal or state official that regulates or monitors
each activity. As discussed in Section 4.6 of this Technical Report, Silverado already possesses permits that
allow them to operate on their mineral claims, all of which will be applied to the Nolan Lode Project. They
would include an NPDES permit from the USEPA for their placer and lode operations, the annual Alaska
Placer Mine Application (APMA), which also applies to both placer and lode mineral development, a hard
rock exploration permit from ADNR, and the Plan of Operation’s Environmental Assessment (EA)
summarized above. Under Alaska Statute, Section 16.05.020, the ADF&G “manages, protects, maintains, 149
and extends the fish and game and aquatic plant resources of the State in the interest of the well being of the
state”. As such ADF&G reviewed and has approved Silverado’s mining plan along with agencies of ADNR
and requires habitat authorization. They participate directly in the USBLM-led EA process.
Table 18. 7 is a listing of the critical elements of the EA and the resource specialists that approved the Plan of
Operation for Silverado’s Nolan Creek properties. This EA was approved for mining activities that predate
the Nolan Lode development. The lead agency, the USBLM, plans to use the same format for issuing an EA
for the Nolan lode project. Due to the subarctic climate in northern Alaska and the high value placed on
water resources, the bulk of the permitting issues that will affect the Nolan Lode Project will deal with
managing water that comes in contact with mine wastes, mine surfaces, and ore processing wastes during
0operation and closure of a mine. In order to technically address the issues of water quality management and
properly permit mine operations, a group of agencies has recommended a flow sheet outlined in Table 18.8.
Table 18.7 Critical elements of the human environment considered for Nolan Creek Plan of Operation
Environmental Assessment (EA), which was approved by the USBLM for mining operations that predate the
Nolan lode development.
Critical
Element
No
Impact
May
Impact
Resource
Specialist
Critical
Element
No
Impact
May
Impact
Resource
Specialist
Air Quality X Carl Kretsinger Wild and Scenic
Rivers
X Roger Delaney
Areas of Critical
Environmental
Concern
X Ingrid
McSweeny
Wilderness X Roger Delaney
Cultural Resources X Bill Hedman Engineering X Rodd Moretz
Environmental
Justice
X Ingrid
McSweeny
Essential Fish
Habitat/Fisheries
X Carl Kretsinger
Farm Lands X Carl Kretsinger Fire X Skip Theisen
Floodplains X Carl Kretsinger Hydrology X Carl Kretsinger
Invasive, Inactive
Species
X Ruth Gronquist Mineral
Resources/Geology
X Darrel
VandeWeg
Native American
Religious Concerns
X Bill Hedman Paleontology X Bill Hedman
Soils X Carl Kretsinger Land Status X Boyce Bush
Threatened or
Endangered Species
X Tim Craig Recreation X Roger Delaney
Wastes, Hazardous
or Solid
X Susan Flora Socio-Economic
Considerations
X Ingrid
McSweeney
Water Quality,
Drinking/Ground
X Carl Kretsinger Subsistence X Tim Craig
Wetlands/Riparian
Zones
X Carl Kretsinger Vegetation X Tim Craig
Visual Resources X Carl Wetscott Wildlife Habitat X Tim Craig150
Table 18.8 Water Quality Management Objectives for Permitting and Operating Plan for Alaska Lode Mining
Projects; Adopted from Ede (2009)
Task Objective/Justification/Timing
Basic site characterization Identification of key water quality issues and establishment
of baseline work; important to begin early
Baseline Monitoring for environmental permitting Needed for monitoring and maintaining Alaska water
quality standards (WQS)
Water quality prediction Important to mitigate WQS issues
Water balance modeling for mines and mine hydrology Modeling of water flow through the mine system (area)
provides guidance for ongoing operations, and assists in
proper closure strategies.
Understanding of geotechnical issues related to water management in
permafrost (Nolan area)
Understanding freezing and thawing issues important
considerations for Nolan area
Recommended mine water treatment strategies Important to design proper treatment of suspended or
dissolved solids, metals, nitrates, and ammonia; may
include physical, chemical, and biological treatment
strategies
Silverado does carry an advantage in that Nolan Creek is classified as an industrial stream by federal agencies,
recognizing that past mining activities have modified local streams and waters. Also, Silverado has been in
compliance with regulations in past years, and have a good record with agencies (see Section 4.5 discussion in
this report). The QP judges that several key permits should be acquired in order to initiate development of
Nolan lode mining, that are in addition to those that the company currently possesses. These are listed in
Table 18.9.
Table 18.9 Initial permit goals for Silverado’s Nolan lode development. for 2009 and 2010
Agency Permit or Certificate
Alaska Department of Environmental Conservation
(ADEC)
1) Waste water discharge permit
2) Storm water discharge certificate
3) Air quality certificate
U.S. Environmental Protection Agency 1) Storm water discharge permit
Alaska Department of Public Safety Fire Marshall’s Office 1) Operational certificate
Silverado needs to develop an aggressive permitting process now so that they can carry out the project on a
predictable time line. In the QP’s opinion, based on permit monitoring he has been involved with, all of the
permit requirements as listed in Tables 18.5 and 18.6 can probably be obtained in 18-30 months if they are
applied for in the first quarter of 2009. Some water quality sampling was completed in the summer of 2008.
This year, it was announced that the ADEC will be assuming state primacy of many regulatory functions over
the USEPA; i.e., the issuance of the important NPDES permit probably by late 2010 or early 2011. This will
result in some significant changes in how mine permits will be acquired in Alaska. The change-over from
federal to state control is expected to be gradual. Silverado must research and stay in touch with these
changes and decide how they will affect their existing and future permit needs for the Nolan lode
development. 151
18.5.2 Silverado’s Base Site Characterization Program
In June, 2008, Silverado engaged SRK Consulting, Inc. (SRK) to complete a Sampling and Analysis Plan
(SAP) as part of a Metal Leaching/Acid Rock Drainage (ML/ARD) mitigation program for the Nolan Lode
project. Field work by SRK professionals took place in July, 2008 at Nolan Camp. The purpose of the site
visit was to evaluate: 1) existing weathering conditions; 2) potential of future changes in oxidation conditions;
3) mobility of regulated contaminants; and 4) any differences between tock types. SRK reviewed site geology
and examined core from 2008 drill holes. This work confirmed that sulfides occur not only in mineralized
vein-faults but also disseminated throughout the wall rock. Table 18.10 summarizes the analytical results
from the initial sampling collection program. SRK examined gangue minerals and identified siderite and
ankerite (iron-rich carbonates) but calcite was judged to be uncommon. Seven samples collected by SRK
from the existing adit waste rock, rock exposed in historic trenches, and from weathered pyritic bedrock
Table 18.10 Results of Field Rinses of samples, Nolan Lode Project; from Day and Jeffress (2008)
Sample # Sample Descriptions pH Conductivity (uS) ORP
Distilled water 4.85 9 391
Nolan 1 Phyllite near portal opening waste materials 7.02 1031 188
Nolan 2 Phyllite near portal opening waste materials 6.97 701 204
Nolan 3 Phyllite near portal opening waste materials 7.44 489 189
Nolan 6 Phyllite fines from trench near Smith Creek 7.07 3,930 208
Nolan 7 Black phyllite from trench near Smith Creek 7.33 1,751 206
Nolan 8 Salts precipitated from black phyllite 7.71 3,360 186
Nolan 9 Weathered bedrock, orange 2.48 4,170 596
for field rinse (contact) tests to evaluate the initial acid generating potential. Three samples of relatively unoxidized adit waste rock (Nolan 1-3) were not acidic (pH=6.97-7.44) although the presence of soluble
weathering products was shown by elevated conductivity. Two older trench samples (Nolan 6-7) were also
non-acidic (pH=7.07-7.33) but also showed the presence of soluble weathering. One weathered phyllite
sample was strongly acidic (pH=2.48). A significant initial conclusion of these results is that because unweathered materials are relatively neutral, the objective of an ARD mitigation plan is to minimize oxidation of
waste rock and ore materials during disposal and in-capsulation.
At the request of SRK, Silverado contractors collected samples from the underground mine workings for
further testing, which are summarized in Table 18.11. The general approach of the underground sampling
program as outlined by SRK was to target 13 feet (4 m) of true width in waste rock to evaluate variations
along mineralization. This is approximately two times the proposed mining width of 6.5 feet of waste rock
and 2.0 feet of vein materials. The samples were scheduled to be analyzed for Static Acid-Base Accounting
(ABA_PKG05), four acid digestion chemical analyses of solids (ME-MS61), and aqua-regia digestion analysis
(ME-MS41). 152
Table 18.11 Underground sampling program for ML/ARD Program, Nolan Camp, Summer, 2008
Sample # Site Description
DLRW7140811 Waste sample from vein rib, D crosscut
DLRW7140812 Waste sample from vein rib, D crosscut
DLRW714081 Waste rock samples from face, D crosscut
DLRW714082 Waste rock samples from face, D crosscut
DLRW7140821 Waste rock sample from rib near intersection of A and D crosscut
DLRW7140822 Waste rock sample from rib near intersection of A and D crosscut
DO714081 Stibnite ore samples from main vein
DO714082 Stibnite ore samples from main vein
The first phase of due diligence has led Silverado to propose a systematic analyses of 13 foot wide (4 m)
zones of most of the ore intercepts on Workman’s bench. This work will provide detailed sample control for
ABA characterization for the proposed ARD mitigation.
The preliminary conclusion reached by the initial work includes two possible scenarios: 1) disposal of mine
waste into a pit lined with crushed limestone (with a powdered teflon mix sprayed on, which sets up
immediately); and 2) waste rock and mill tailings intermixed with either crushed limestone or lime with
sufficient neutralizing capabilities will be back-filled into underground mined out areas—both the abandoned
Swede and Mary’s East drift mines and the underground cavities created during mining on Workman’s
Bench. Both approaches have the initial support of the land manager and principal regulator, the USBLM.
The QP, who has recently participated in ABA and associated ARD studies for a large mine development in
southwest Alaska, agrees that both are reasonable approaches.
Baseline monitoring for environmental permitting, water quality prediction, and water balance modeling for
mines and mine hydrology studies have all begun during the fall of 2008. At the recommendations of SRK,
three water quality sites have been sampled bimonthly from August-to-through October, 2008, with bimonthly sampling resuming in May, 2009. The sites are: 1) on Nolan Creek at the Confluence of Acme
Creek; 2) on Nolan Creek upstream from Smith Creek; and 3) Nolan Creek below Smith Creek.
Costs for the implementation of the program, for the mixing of calcareous materials with waste rock, and for
water quality monitoring have been included in the operating costs analysis of this Technical Report.
18. 5.2 Environmental and Social Costs
Nolan Creek valley has been a historic gold mining area since 1894, the discovery of which predates the
historic Klondike, Nome, and Fairbanks gold rushes. As such, mining activities has long been judged to be a
part of the local cultural heritage. Silverado has done a competent job reclaiming mined lands on their Nolan
claims, and has received recognition from regulators (Figure 18.15). The lode development being analyzed in
this study is a relatively small scale mineral extraction activity as compared with most other lode mines. Nolan
Camp is within a 10 mile wide (15 km) corridor that contains the Trans Alaska Pipeline System, which
transports crude oil from Alaska’s North Slope oil fields to a tanker terminal at Valdez to the south. 153
Figure 18.15 Reclaimed mined lands, valley of Nolan Creek, near left limit bench, 2008
Transportation and resource development projects within the pipeline corridor have received generally
positive management decisions by the principle land manager, the U.S. Bureau of Land Management.
Assuming that Silverado continues to maintain competent environmental stewardship on their mining claims,
the QP judges that the environmental and social impacts on a small part of the historic Koyukuk Mining
district should be minimal and not result in significantly negative social costs.
18. 6 Project Implementation Schedule
A project time line is suggested by the QP in Table 18.12. It takes into account several elements of this
chapter previously described, including process production schedules, mine production schedules, regulatory
requirements, and needs to gather additional technical information. The date when adequate funding is
received is not known. The QP will start the schedule in year 0, when project focus will be on planning and
permitting issues.
The key elements in adhering to the schedule outlined in Table 18.12 are: 1) acquisition of environmental
permits; and 2) acquisition of appropriate funding requirements as each level of the development is
approached. Market conditions, as will be described in the next chapters of this report, could also play a
significant role in how the project proceeds forward.
A key element in project implementation is the shipment of stibnite concentrates to market. The QP has
utilized data acquired by Silverado, and researched freight rates and availability from trucking, railroad, and
shipping firms. Twenty ton capacity tractor trailers from Lynden Transport can back haul concentrates from
Nolan to Fairbanks. From there they can either be shipped to the seaport of Seward VIA the Alaska Railroad
or shipped by truck from Fairbanks to Seattle. In either case the concentrates would be shipped via
PanamexTM freighters to either Asian or European markets. Details of stibnite shipment-to-market cost
estimates discussed in Section18.8 of this Technical Report. 154
Table 18.12 Project implementation schedule
Year Description of Activity
Year 0 Environmental permitting, project planning and acquisition of working capital for development
Year 1 1) Aggressively continue permitting time line for acquisition of needed regulatory permits and
certificates to operate lode mine (underway);
2) Implement baseline water quality study in Nolan Creek valley to assist in obtaining water
quality permits (underway);
3) Initiate an acid-base-accounting (ABA) study of underground workings and core from 2007-
2008 exploration program;
3) Collect all or part of a permitted 1,000 cubic yard bulk sample for metallurgical testing;
4) Drive decline and begin design of underground development panels; initiate production in early
winter 2009;
5) Begin construction of pilot mill facility to be directly incorporated into complete mill;
6) Send test shipment of stibnite concentrates to agreed buyers in China or Europe to assist in
marketing agreements, ectc.;
7) Continue exploration with objective of converting inferred resources to indicated resources on
Workman’s bench and Pringle bench.
Year 2 1) Infrastructure development including hauling mill components, mine equipment, and camp
upgrades to Nolan Creek;
1) During winter of year 1-2, mine 8,000 tons (65 tpd for 125 days) and stockpile ore for
processing with a focus on drawing ore from ‘A’ Zone;
2) Construction of mill facility and process 4,500 tons of ore to design/refine milling;
3) Production of byproduct gold from Wiffley tables is first commercial production of gold;
4) Beginning in July ship and deliver stibnite concentrates to offshore market; first commercial
stibnite production from mine;
5) Continue environmental monitoring of operation and tailings in-capsulation requirements
6) Continue exploration with objective of converting inferred resources to indicated resources on
Workman’s bench and Pringle bench.
Year 3 1) Winter of year 2-3 (November 10-April 1) full scale production underground mining 25,000
tons of mineralized materials; stockpiling of ore on surface; develop ‘B’ and ‘West’ Zones and put
into production schedule;
2) milling of 12,500 tons of mineralized vein rock (June 1-to-September 1); recover gold as
byproduct at mine site;
3) Beginning in July, ship stibnite concentrates to overseas markets;
4) If permit granted, consider addition of flotation technology.
5) Continue environmental monitoring, permitting and tailings in-capsulation requirements
Year 4 1) Winter of year 3-4 (November 10-April 1) full scale production underground mining 25,000
tons of mineralized materials; stockpiling of ore on surface; develop ‘B’ and ‘West’ Zones now in
full production with ‘A’ Zone;
2) Milling of 12,500 tons of mineralized vein rock (June 1-to-September 1); recover gold as
byproduct at mine site;
3) Beginning in July, ship stibnite concentrates to overseas markets;
4) If permit granted, consider addition of flotation technology; if not then discontinue option
5) Continue environmental monitoring of all aspects of operation
Year 5 1) Winter of year 4-5 (November 10-April 1) full scale production underground mining 25,000
tons of mineralized materials; stockpiling of ore on surface; develop ‘B’ and ‘West’ Zones now in
full production with ‘A’ Zone. Exhaustion of indicated resources determined this study occurs at
end of cycle;
2) Milling of 12,500 tons of mineralized vein rock (June 1-to-September 1); recover gold as
byproduct at mine site;
3) Beginning in July, ship stibnite concentrates to overseas markets;
4) Continue environmental monitoring of all aspects of operation
PROBABLE RESERVE BASE ESTABLISHED 01/01/09 EXHAUSTED
Year 6 If new reserves were not found during future exploration cycles, decommission mine operation in
compliance with ADEC and ADNR, and USEPA guidelines; 155
18.7 Capital Costs
18.7.1 Basis of estimate
The QP has acquired capital cost estimates from Silverado staff and contractors, examined Silverado financial
records, and made inquiries to private manufacturers of mine equipment and other service sector supply
outlets. Specific sources are listed in Table 18.13; most were accessed on websites. The QP exchanged
emails for representatives of companies and experienced Silverado mine contractors, who did provide capital
costs estimates for this investigation. In the selection of costs estimates (see Table 18.14), the QP also
considered the serviceability of machinery as well as initial costs. Some equipment manufacturers do not
provide service warranties in Alaska.
Table 18.13 Capital cost categories and sources for estimates
Budget Divisions Information Source
Mill Facility
(Crushing, Grinding, Flotation, Gravity Circuits)
1) Holman-Wifley Ltd.
2) Sepro SystemsTM
3) Infomine Website
4) Larox TM
5) Allmineral TM
6) FLSmidth
Underground and Surface Mining Equipment 1) Atlas Copco
2) Sandvik
3) N.C. CaterpillarTM
4) RockwellTM
5) DuxTM
6) AramineTM
7) EimcoTM
Drills 1) RockwellTM
2) Boart Longyear
Generators 1) N.C. Caterpillar
2) Westinghouse
Shop Infrastructure Improvements 1) R. Medina and G. Dobbs
2) N.C. Machinery
Pumps 1) Garmon
Fuel Truck and Water (Improvements) Raplh Seekins Ford (Fairbanks)
Camp Infrastructure Improvements 1) R. Medina and G. Dobbs
2) Whitewater Inc.
Miscellaneous Transportation (Stibnite Transport) Dalco Corporation
18.7.2 Total project capital costs estimate for Nolan Lode Project
Capital costs estimates by category are presented in Table 18.14. This total was derived from discussions
with equipment suppliers and knowledgeable Silverado contractors and employees that have worked for
Silverado for many years; i.e. Mine Manager Ray Medina, Project Engineer Gilbert Dobbs, and Silverado’s
chief permitting officer Roger C. Burggraf.
156
Table 18.14 Itemized capital cost estimates, Nolan Lode Project
Category Item Cost (USD)
Process Operation 200 TPD rated, gravity circuit mill facility
(total Sepro SystemsTM bid estimate)
$4,500,000
Mining Underground low profile Atlas Copco
Loader
$250,000
Mining U’G underground Sandvik haul truck $250,000
Mining 3 ton capacity industrial surface mine haul
truck
$150,000
Mining Surface Loader; Caterpillar (new) $180,000
Infrastructure Boom Truck (used) $40,000
Infrastructure D8N Caterpillar (used) $60,000
Infrastructure Water truck replacement $75,000
Infrastructure Fuel truck modification
(MSHA requirement)
$20,000
Infrastructure 1.4 Mw Generator (Westingshouse) $400,000
Mining 1 Jack leg and 1 jumbo drill combination
(Rockwell)
$25,000
Mining New Ventilation Fan
(Addition to Existing Fan)
$20,000
Mining New water pump (Garmon) $20,000
Infrastructure Camp Infrastructure Improvements $40,000
Infrastructure Concentrate containers for stibnite
shipments
$310,000
Infrastructure New Tires 980F Loader $25,000
TOTAL NA $6,365,000
18.7.3 Mining Capital Costs
Acquisition of a new fleet of both surface and underground mining equipment, and new drills total $895,000
or about 14.0 percent of the total. Although there is some mining equipment left from previous test-mining;
(i.e., a jumbo drill and compressor unit (see cover of this report), and a ventilation fan system, which will be
deployed), most of the mining equipment has been replaced.
18.7.4 Process Plant Capital Costs
Process plant costs total $4,500,000 or 71 percent of total capital costs. This is a packaged bid estimate
submitted for purchase and construction of the gravity mill facility.
18.7.5 Infrastructure capital costs
Infrastructure capital costs total $970,000 or 15 percent of the total capital costs. Most of this is in the
acquisition of a new power plant capable of operating the mill facility. There is a generator on site and backup units at the company facility on Ester Dome in Fairbanks. Rather than speculating whether these units
can power the mill, the QP has recommended that Silverado buy a new unit. Another significant cost is the
‘fish tote’ concentrate containers. Each container can carry 4 tons of stibnite. A full year’s production is
about 1,500 containers; each cost $210 USD. It is assumed that they will be reused/recycled. The project
capital cost estimate is significantly reduced by the existence of Nolan Camp infrastructure. Silverado
possesses a well maintained camp facility and associated infrastructure, which was rebuilt in 2002 and again in 157
2007 to accommodate test-mining activities. Included in the camp renovation was the construction of a
modern water storage and sewage treatment system at camp, as well as a 2007 computer system and updated
computer programs used by both engineering and geological staff at the mine site. The company also
possesses a road grader that is used to maintain the secondary road from Nolan Camp to the Dalton Highway
and a D-5 bulldozer used for road repair and construction. MSHA requires that the company fuel truck be
modified. The water truck passes MSHA standards. The QP obtained a cost estimate of $2.0 million for
construction of a new camp facility (which is not needed) and estimates that existing equipment to be used on
the Nolan development would cost an estimated $470,000 to replace. Hence Silverado, by possessing the
existing infrastructure at Nolan Camp, Silverado has reduced capital costs by an estimated 35 percent +/-.
18.7.6 Indirect capital costs
The QP has not factored in any indirect capital costs.
18.8 Operating Costs
18.8.1 Basis of Estimate
The QP has acquired cost capital estimates from Silverado staff and contractors, from private vendors, and
from government statistics. Table 18.15 summarizes sources of information for operating costs.
Table 18.15 Operating cost categories and sources for estimates
Budget Division Information Source
Mine Project-Related Wages 1) Company Records from 2005-2007 test-mining activities; Medina estimates
2) Alaska Department of Labor Statistics
3) Alaska Mineral Industry Report Series—2003-2008 (last 5 years)
Petroleum products (all) 1) Company Records from 2005-2007 test-mining activities
2) North Pole Refinery (bulk sales)
Surface Vehicle Repair 1) Company Records from 2005-2007 test-mining activities
2) Ralph Seekins (Ford dealer, Fairbanks)
Heavy Equipment Parts and Repair 1) Company Records from 2005-2007 test-mining activities
2) N.C. Equipment (Fairbanks)
Safety equipment and repair Arctic Fire and Repair (Fairbanks)
Ground support supplies 1) Company Records from 2005-2007 test-mining activities
2) Samson Hardware (Fairbanks)
Miscellaneous camp supplies Company Records from 2005-2007 test-mining activities
Groceries and camp condiments Company Records from 2005-2007 test-mining activities
Explosives 1) Company Records from 2005-2007 test-mining activities
2) Nalco (Fairbanks)
Lubricants (Heavy Equipment N.C. Equipment (Fairbanks
Mill supplies and repair 1) Sepro Systems
2) Wiffley-Holman Company
Concentrate Truck Haulage 1) Company Records from 2005-2007 test-mining activities
2) Lynden Transport
3) Alaska Railroad Corporation; 4) Far East Shipping Company (FESCO) 158
18.8.2 Monthly Project Operating Costs
Operating costs are subject to the times in which they operate. Silverado records that the QP has reviewed
are often monthly cost estimates. Table 18.16 summarizes total projected monthly operating costs.
Table 18.16 Project monthly and annual operating costs when in commercial production
Category Time Duration
(months)
Item (number) Unit Cost
(USD)/Month
Total
Annual
Operating
Cost from
2010-2013
Mining 4.5 Wages (5 ) $81,850 $368,325
Mining 4.5 Wages; mechanic;
surface/underground (1)
$12,730 $57,285
Mining 4.5 Wages utility man (1) $10,914 $49,113
Mining 4.5 Wages laborer,/lube man (1) $10,914 $49,113
Infrastructure 10.0 Wages cook (1) $7,000 $70,000
Infrastructure 10.0 Wages supervisor (1) $8,730 $87,300
Process Operations 4.0 Wages, mill operator (4) $50,920 $203,680
Infrastructure 3.5 Wages, stibnite shipments (1) $10,914 $55,699
Administration 10.0 Wages, Admin, Fairbanks $6,500 $65,000
Administration 12.0 Vancouver Corporate Overhead $133,333 $1,600,000
Administration 12.0 Corporate Insurance $16,666 $200,000
Mining 4.5 Petroleum Products $62,900 $283,050
Mining 4.5 Explosives $16,000 $72,000
Processing 4.0 Petroleum/Camp $4,500 $18,000
Mining 4.5 Drilling maintenance (1) $6,375 $28,690
Mining 6.0 Wages Geologist $8,730 $52,380
Environmental
Management
10.0 Wages, Mine Permitting $8,730 $87,300
Environmental
Management
NA Analyses and Permitting Costs $100,000 $100,000
Infrastructure 8.5 Ground support $6,000 $51,000
Mining and
Processing
8.5 Safety Equipment $500 $4,250
Infrastructure 8.5 Vehicle Maintenance $1,500 $12,750
Infrastructure 8.5 Shop supplies $1,500 $12.750
Infrastructure 8.5 On site consumables $3,000 $25,500
Infrastructure 10.0 Groceries $10,000 $100,000
Infrastructure 3.5 Stibnite shipment to market $290,000 $1,015,000
TOTAL NA NA $870,206 $4,668,185
Because of overlapping time intervals connected with the mining and process operations, the estimates are
monthly with time durations. The average monthly cost of $389,900 reflects the total above divided by 12.
18.8.3 Mining Operating Costs
Mine operating costs will take place during 4.5 months when in full production, which begins in Year 3.
They will amount to $960,300 or 20.5 percent of total costs. More than 2/3 of the total costs are in the form
of wages for miners and their direct support. When in full production, this amounts to $77/ton of ore. 159
18.8.4 Process Operating Costs
Processing begins in Year 2, the first commercial mine cycle. Annual operating costs will be $207,930 or just
4.4 percent of the total. Most of the costs associated with processing are up-front plant construction costs.
18.8.5 Administration Costs
Administrative costs in Table 18.9 cover wages and basic overhead, mainly management direction from the
head office. The total yearly budget of $1,865,000 amounts to about 39.9 percent of the total operating costs.
This includes corporate insurance as well as overhead generated in the Vancouver office. This estimate uses a
small mining company model discussed in Vogley (1976) that suggests that ‘Corporate Overhead’ should not
exceed 40 percent of total costs for a small producing mining company.
18.8.6 Infrastructure Costs and Sb Concentrate Haul to Market
Infrastructure costs include camp maintenance and, importantly, costs to ship stibnite concentrates to market.
Infrastructure costs amount to $1,379,199 or 29.5 percent of all costs related to the Nolan lode development
as summarized in Table 18.9. A large part of this is the estimated $1,018,000 (30% of total operating
expenses) cost of shipping the stibnite concentrate to market.
The QP has completed an analysis of how the stibnite would be shipped to market and cost estimates. The
stibnite would be placed in sealed plastic containers, known in the trade as ‘fish totes’ at the mine site. Each
‘tote’ is capable of holding approximately 4.0 tons. Tungsten concentrates from Canada are shipped in
similar containers. The totes, which are manufactured and sold by Dalco CorpTM, can be lifted with a forklift
and are water proof.
Backhauls down the Dalton Highway from the North Slope would transport the stibnite-laden totes to
Fairbanks. From there, they would either be shipped by truck directly to Seattle or be placed on the Alaska
railroad for shipment to Seward. From either Seattle or Seward, the totes would be loaded onto a PanamexTM
or a similar vessel to be shipped to Asian or European markets. Shipments from Nolan Camp to Seattle via
truck would cost $170 USD/ton. Shipment from Seattle to Dalian, China, would cost $70 USD/ton, and
from Dalian to the antimony smelter in China is $20/ton for a total of $260 USD/ton. If the concentrates
left Seward via the Alaska Railroad, about $25/ton would be added, increasing shipping rates to Asia to
$285/ton. The Russian freighting company Far East Shipping Company (FESCO) would take the
concentrates to China in either scenario. The QP used a shipping price from mine to smelter of $275
USD/ton for this analysis, representing an approximate average between the various shipping costs. .
The cheapest way to ship the stibnite would be by truck through Canada as outlined above. However, it
might be easier to have an ‘All Alaska’ route that avoids potential restrictions that might occur with shipping
mineral concentrates (which are classified as hazardous materials) through Canada. For example, from the 160
QP’s personnel experience, there have recently been border restrictions implemented for transporting
exploration samples from Yukon to preparation labs in Fairbanks. The QP has not pursued this issue.
18.8.7 Environmental management costs
Mine permitting, mitigation activities related to ARD and water quality will be an important component of
the Nolan Lode Project. Environmental management will cost $187,300 per year of about 6 percent of the
total operating costs. For each operational year, 1-5, these costs include water monitoring, environmental
permitting, and review of the environmental mitigations needs as the project progresses. Unlike other
activities, these environmental costs will begin immediately in order to get the project permitted. Also
included at the end of the mine cycle would be mine closure costs, which the QP estimates at $845,000.
18.8.8 Schedule of operating costs
Monthly and yearly estimates have been summarized in Table 18.16. Yearly cost estimates from years 1-6 are
presented in Table 18.17. Year 1 includes all start-up costs. Annual operating costs thereafter include
$45,000 required to maintain the active federal claims. The total operational costs for the Nolan Lode Project
is $28,902.740 USD, which includes closing costs. The QP believed that it was important to isolate the lode
project itself from exploration projects that are ancillary to the actual development of Workman’s Bench
lode., so they were not included. However, the exploration required to delineate resources on Workman’s
Bench, which total $710,000, will be included in the Cash Flow Analyses revealed in Section 18.9. A mine
closure estimate is included below, based on discussions with ADNR.
Table 18.17 Year-by-year summary of operating costs, Nolan Lode Project
(1)
Year Cost (USD)
1
$9,205,000
2
$4,713,185
3
$4,713,185
4
$4,713,185
5
$4,713,185
6 (Mine Closure) $845,000
TOTAL $ 28,902,740
(1) Annual costs include $45,000 for claim maintenance fees
18.9 Economic Analysis
18.9.1 Macro-Economic assumptions
Macro-economic assumptions are presented in Table 18.18. The cash flow analysis presented here follows
the approaches used by Whitney and Whitney (1981) and Newman and others (2004) for modeling the
economic feasibility of mine projects. Using established grades, the table shows annual recovery of metals
from: 1) the antimony content that will be recovered from stibnite concentrates by the buyer, and 2) the
amount of gold that will actually be recovered mostly at the Nolan mine site. Based on the results of the
Hazen metallurgical tests, the QP chose recovery factors of 0.85 for stibnite and 0.90 for gold for the Base 161
Case. These are lower than the recoveries from the flotation tests, which were approximately 100 percent for
stibnite and 98 percent for gold, but Silverado has chosen to not use flotation technology. The QP assumes
that the stibnite concentrate will average 60 percent or more antimony, an industry standard. For example, in
the QP’s review, 4,960 tons of stibnite shipped would contain 2,975 tons antimony metal. It is anticipated
that gold bars will be poured at camp.
Table 18.18 Macro assumptions, output of gold and stibnite (antimony), Nolan Lode Project.
Year Tons of
Ore
Processed
Antimony
Grade
(% Sb)
Stibnite
Recovery
factor
Shipping
grade stibnite
recovered
(tons)
Antimony
recovered
(tons)
Gold
Grade
Gold
Recovery
Factor
Gold
recovered
(oz)
1 500 28.00 0.85 198 119 0.408 0.90 184
2 4,500 28.00 0.85 1,785 1,071 0.408 0.90 1,652
3 12,500 28.00 0.85 4,960 2,975 0.408 0.90 4,590
4 12,500 28.00 0.85 4,960 2,975 0.408 0.90 4,590
5 12,500 28.00 0.85 4,960 2,975 0.408 0.90 4,590
TOTAL 42,500 28.00 0.85 16,863 10,115 0.408 0.90 15,606
18.9.2 Metal Price Forecasts
Figures 18.16 and 18.17 show the five year price averages for the price of antimony and gold, respectively.
After experiencing price declines caused by the 2008-2009 recession, both antimony and gold have
rebounded (Tables 18.16; 18.17). The average price of antimony during 2008 was $2.85 USD
(Metalprice.com). The average price of gold during 2008 was $865/ounce. By convention, a high quality
stibnite concentrate will receive an estimated 85 percent of the value of the metal. Concentrate quality
control is very important in the antimony market.
Figure 18.16 Five year antimony price in USD/lb Source: www. Metalprices.com 162
Figure 18.17 Five year gold price in USD/ounce ; source: www.Goldprice.com
In selecting metal prices for this analysis, the QP decided to assume that $2.25/lb was a reasonable price for
antimony equivalent stibnite concentrate as received at the smelter and shipped by Silverado (the four year
average price is $2.45 for stibnite at the smelter) and about 80 percent of the average 2008 realized price of
antimony. The $2.25 price assumes a $0.60 cent smelter (21 percent) charge for the realized antimony ore.
As an example, for years 3-5, Silverado will annually ship an estimated 4,960 tons stibnite that would contain
2,975 tons antimony (5,950,000 lbs). Silverado will receive $2.25/lb after 0.60 has been extracted for smelting
charges. The gross for each of these years is $13.387 million. The 21 percent smelter charge is comparable to
smelter charges for major base metals copper, lead, and nickel. As discussed in Sections 16.3 and 18.3 of this
report, a good price for the stibnite concentrate will depend on Silverado delivering a quality product.
The QP selected a price of $700/ounce gold to reflect some of the lower values that might occur during the
year. This is also roughly 80 percent of the average realized value of $865/ounce for 2008. At these
combined prices, Nolan ore after processing is worth, as received, about $1,350/ton. The gold price during
2010 and 2011 averaged about $1,200/ounce.
Antimony prices have been unstable in past years and given it’s link to industry, it might be subject to price
declines. Antimony prices reached a plateau in late 2005 and remained stable at a range of $2.75-$3.15/lb for
34 consecutive months; then dropped during 2009 and then resumed an upward trend in the first quarter of
2010. China, formerly the world’s largest producer and exporter of antimony, is now a net importer of the
minor metal. In late 2008, China has banned the export of antimony concentrates because of the industry
shortfalls that began in late 2007. The QP cannot predict future antimony prices, but assumes that, at the 163
very minimum, the price plateau established between late 2005-2008. The price during the last 2 years
averaged $6.20/pound.
18. 9.3 Royalties and Taxes
The Nolan Lode Project occurs on U.S. Federal lands. Currently, there are no royalties due from this land
base, except for annual assessment fees, and federal income tax on net profits. The Alaska State government
requires an Alaska Mining License Tax (AMLT) be calculated from the net income derived from mineral
production, regardless of underlying land ownership, and it is strictly enforced. For a mining operation, it is
computed at $4,000 plus 7.0% of the excess over $100,000 of the net income. There is, however, a 3.5 year
state holiday after production has started. The Alaska State Corporate income tax is 9.4 percent if net profit
is more than the set threshold. Hence, Silverado will be exempt from paying the AMLT for the first 3.5 years
of production, but must pay the Alaska Corporate Income Tax if the operation is profitable. U.S. Corporate
Income Taxes used in this analysis follow rates provided in the U.S. Internal Revenue tax manual. For
corporations that have recorded an annual net profit ranging between $335,000 to $10,000,000, the Federal
(US) Corporate Income Tax rate is 34 percent.
For the purpose of computing taxes in the Cash Flow analyses, both the AMHT and State Corporate Income
tax can be deducted from taxable income before computing the U.S. Federal Corporate Income Tax.
However, in no case can U.S. Federal Corporate Income Taxes be deducted from the Alaska State tax base.
This analysis is based on Alaska State and U.S. Federal Income Tax rates.
18. 9.4 Equipment Depreciation Costs
Depreciation is the loss of value of an asset over time. In this analysis, those assets include the equipment
itemized in the capital cost estimates of this Technical Report (Table 18.14). The QP reviewed various
methods for mine equipment depreciation. The most widely accepted method, according to the U.S. Internal
Revenue Service, is summarized in Whitney and Whitney (1981) and Newman and others (2004), which
describes the “Modified Accelerated Cost Recovery System” (MACRS) for depreciating mine equipment
inventory. Among the depreciation methods involving multiple equipment assets, there are four types that
are most commonly used in a depreciation analysis: 1) the Straight Line (SL) method; 2) the Limited
Declining Balance (LDB) method, 3) the Unit of Production (UOP) method, and 4) the Double Declining
Balance (DDB) method.
The SL depreciation method is a common and fairly straight-forward way of computing mine inventory
depreciation. Under the SL method, the basis of property less estimated salvage value is written off in equal
amounts over the useful life, which is generally by convention estimated to be seven (7) years. The annual
deduction for any one year is determined by dividing the adjusted worth of the property at the beginning of
the taxpayer year (less salvage value) by its remaining useful life at the time. 164
The LDB depreciation method provides for annual depreciation costs which cannot exceed 150 percent of
the applicable SL method. A uniform rate is applied each year to the unrecovered balance of the property
inventory. This type of depreciation is more realistic for mining facilities that have all new inventory, as it
allows for maximum depreciation during early years. The property cannot be depreciated below the salvage
level using the LDB method.
The UOP depreciation method is useful for any productive asset whose useful life is determined by the total
production capacity of the asset. The UOP method, which is best deployed when a number of production
units are used, is more often used in the agriculture and timber industries than in mining.
The DDB depreciation method provides capital recovery at twice the rate than what is allowed in the SL
method. It is sometimes preferred over the SL method because it allows for maximum depreciation during a
relatively short useful life. Like the LDB method, it is best applied with all-new equipment.
Because the equipment for the Nolan project is a mixture of new and used equipment, the Straight Line (SL)
method is determined by the QP to be the most straight-forward depreciation approach to be used for the
Nolan Lode Project. Using a seven (7) year depreciation cycle, the annual depreciation costs were computed
to be $909,268. Even though the mine life is predicted, with available mineable resources, to cover a six (6)
year period with year seven (7) concluding the asset write-off, the QP still determined seven (7) years to be an
acceptable lifespan (Whitney and Whitney, 1981).
18.9.5 Sunken Costs
According to Whitney and Whitney (1981), ‘Sunken Costs’ refer to those costs incurred by exploration and
development prior to a pre-feasibility study. These would include exploration drilling, underground
development, trenching, and geochemical sampling of the mineral prospect being evaluated. In the case of
the Nolan Lode Project, Sunken Costs would include the exploration drill program ($425,000), underground
drifting and channel sampling ($185,000), and other expenses, including bulk sample analysis, camp related
expenses, and geochemical analyses ($100,000). The total of $710,000 reflects the amount of investment
expended by Silverado to arrive at a pre-feasibility stage. These figures are derived from exploration that has
taken place in the last three years; i.e., 2006, 2007, and 2008. Soil, geophysics, and RC drill activities that took
place prior to 2006 are not included as the QP did not review that information. Whitney and Whitney (1981)
suggests that since: 1) the money has already been expended and is effectively lost regardless of future
outcomes; and 2) pre-development exploration expenditures are in some instances expended by another party
prior to pre-feasibility work by a successor firm, a mine feasibility study should not incorporate Sunken Costs
in a base cash flow study. The QP decided to include the Sunken Cost as an expense because: 1) Silverado
expended all of the Sunken Costs themselves on the Nolan Lode Project; and 2) Sunken Costs, along with
capital, operating, and closure costs, reflect the true amount of the total investment for the Nolan Lode
Project. 165
18.9.6 Interest Rates for Investment Capital
Money can be rented in the same way one rents an apartment, only with money, the charge is called interest
instead of rent. The total funding needed for the Nolan Lode Project is the sum of the capital costs,
operating costs, and closing costs, which equals $28,902,740. A quote of the interest rates from several
Alaska banks being charged for large corporate loans; i.e., Denali State Bank, Key Bank, and Mount McKinley
State Bank, all in Fairbanks, Alaska, USA, indicates a current range from 4.0-to-6.0 percent compounded
annually for this size of funding, which has been the norm for the last 12-14 months. The QP performed
Net Present Value (NPV) analysis using both interest rates to better show how varying interest rates can
affect the present worth of the mine.
18.9.7 Base Cash Flow Study
Organization of the graphics in this chapter follows the recommended format of Newman, Eschenbach, and
Lavell (2004) for developing a cash flow analysis for hardrock mining operations. The Base Case cash flow
for this study includes the following: 1) Annual Costs, which include pre-development exploration costs,
capital investment, operations and maintenance costs, and closure costs; 2) revenues gained from the sale of
antimony concentrates; 3) revenues gained from the sale of gold; 4) before tax cash flow (BTCF), which is
monetary gains from mineral sales minus the annual cost of operations; and 5) equipment depreciation, which
for this analysis we assume an equipment functional life of seven (7) years. An annual maintenance fee of
$45,000 is included to maintain Silverado’s federal mining claims.
The required rate of return is the amount of money that an investor needs to earn in order to justify
investment in a new project. The Net Present Value (NPV) is the sum of the net cash flows for every year of
the life of the Nolan Lode project, after being discounted at the specified interest rate. The Internal Rate of
Return (IRR) identifies the implicit return that is generated by the Nolan lode project. The IRR takes the
cash flow and the time value of money into account. Stated in terms of NPV, IRR is the discount rate which
will set the NPV equal to zero for the Nolan lode project. Some describe the IRR as the project’s ‘earning
power’ and use it as the basis for establishing the average rate of return from all available investment
opportunities. In order to determine the IRR, the QP first calculated the Net Present Value (NPV) of the
investment being considered. By setting the NPV to zero, one is then able to obtain an Internal Rate of
Return (IRR) for the specified cash flow being examined.
Table 18.18 provides for basic economic assumptions. Table 18.19 provides a Base Case cash flow analysis
for the Nolan Lode development. It incorporates annual costs, gains in the sale of antimony and gold, a 166
before tax cash flow (BTCF), and the depreciation schedule previously described in Section 18.9.4. We
assume that realized prices are $2.25/lb for antimony and $700/oz for gold as discussed previously. The
Base Case cash flow study assumes low ore dilution, 85 percent recovery Sb, 90 percent recovery gold, a
straight line (SL) depreciation of equipment, and annual costs that total $4,713,185 when in full production.
Table 18.20 presents a rate of return analysis incorporating taxes, mine equipment depreciation, sunken costs,
mine lease costs, and the assumptions summarized above. About 77 percent of the mine’s gross value is
antimony whereas 23 percent is from gold sales. The NPV, using a 4.0 percent interest on investment,
amounts to $7,589,441. The NPV, using a 6.0 interest rate on investment, is $6,478,071. The IRR is
calculated to be 31.2 percent for the Base Case cash flow study.
18.9.8 Alternative Cash Flow Calculations
The QP has presented several other scenarios that factor in changes that affect economic performance. They
reflect differing assumptions concerning recovery rates and wall rock dilution. In particular the QP decided
to assume alternate economic flow sheets that incorporate lower metal recoveries, and a 50 percent dilution
of vein and wall rock materials. Specific alternative cash flow models are:
1) Assume dilution of ore (2.0 foot wide zone of extraction), 85 percent recovery of antimony, and 90
percent recovery of gold.
Dilution means the proven mineral reserve is combined with quartz-carbonate gangue and minor wall rock
external from the stibnite-quartz-gold vein. An overall average of 58 percent dilution would occur during the
mine life. The entire diluted zone would be transported to the surface and run through the mill. As a result
of this, ore dilution, mining and milling costs, as well as associated infrastructure elements, increase from
$4,713,185 to $5,387,623, giving an annual increase of $674,438 to cover increased costs of hauling diluted
ores to stockpile and treating them in the mill during the commercial productive years. Tables 18.21 and
18.22 summarize the basic cash flow and rate of return analyses respectively from the dilution alternative.
The recovery factors of 85 percent for antimony and 90 percent for gold are the same as the Base Case
summarized in Tables 18.18 and 18.19. The NPV, using a 4.0 percent interest on investment, amounts to
$7,101,281. The NPV, using a 6.0 interest rate on investment, is $6,061,684 . The IRR is calculated to be
29.2 percent, which is about a 2.0 percent reduction from the Base Case.
2) Assume No Dilution Rate (same as Base Case; but reduction of metals recovered to 80 percent for
antimony and 85 percent for gold
This scenario assumes a lower rate of metal recovery than assumed for the Base Case, or a 5 percent
reduction for both metal commodities. Obviously mine costs stay the same as the Base Case but total gross
values of antimony are reduced from $45,871,000 to $43,577,450 or a reduction of $2,293,550. Gross gold 167
sales are reduced from $10,924,200 to 10,377,990, a reduction of $546,210. Tables18.23 and 18.24 summarize
the base cash flow and rate of return analysis, respectively. The NPV, using a 4.0 percent interest on
investment, amounts to $7,167,401. The NPV, using a 6.0 interest rate on investment, is $6,130,057. The
IRR is calculated to be 29.3 percent, which is about a 1.9 percent reduction from the Base Case and about
the same when inferring ore dilution scenario above.
3) Assume dilution (2.0 foot zone of extraction) from Base Case and the lower metal recoveries; 80 percent
antimony recovery and 85 percent gold recovery
This scenario assumes both the dilution during mining and milling methods as described in alternative (1)
above and a 5 percent reduction in metal recovery, as described in alternative (2) above. This equates to the
same reduction of gross metal values as in 2) above; i.e., $43,577,450 in total antimony sales and $10,377,990
in total gold sales during the life of the project. This scenario also results in increased annual project costs
calculated for 1) above ; i.e., $5,387,623. Tables18.25 and 18.26 summarize the base cash flow and rate of
return analysis respectively. The NPV, using a 4.0 percent interest on investment, amounts to $5,723,273.
The NPV, using a 6.0 interest rate on investment, is $4,795,530 . The IRR is calculated to be 25.2 percent,
which is a reduction of 6.0 percent from the Base Case. 168
Table 18.19 Base Case cash flow analysis Nolan Lode Project
(1)
Year Annual Cost Sb‐Gains Au‐Gains
Before Tax Cash
Flow (BTCF) Depreciation
0 $710,000 $0 $0 ($710,000) $0
1 $9,205,000 $889,000 $128,800 ($8,187,200) $909,286
2 $4,713,185 $4,819,500 $1,156,400 $1,262,715 $909,286
3 $4,713,185 $13,387,500 $3,213,000 $11,887,315 $909,286
4 $4,713,185 $13,387,500 $3,213,000 $11,887,315 $909,286
5 $4,713,185 $13,387,500 $3,213,000 $11,887,315 $909,286
6 $845,000 $0 $0 ($845,000) $909,286
(1)
Annual Cost values include $45,000/year for Federal Lode Mining
Claims
Table 18.20 Rate of return analysis for base case incorporating taxes, mine equipment depreciation, sunken, and mine lease costs, using 85 percent
recovery Sb and 90 percent recovery gold
Year
Before Tax
Cash Flow
(BTCF) Depreciation
Taxable
Income
Alaska
Mining
License Tax
AK Corporate
Income Tax
Fed. Corp.
Inc. Tax Total Tax
After Tax
Cash Flow
(ATCF)
0 ($710,000) $0 ($710,000) $0 $0 $0 $0 ($710,000)
1 ($8,187,200) $909,286 ($9,096,486) $0 $0 $0 $0 ($9,096,486)
2 $1,262,715 $909,286 $353,429 $0 $33,222 $120,166 $153,388 $1,109,327
3 $11,887,315 $909,286 $10,978,029 $0 $1,031,935 $3,732,530 $4,764,465 $7,122,850
4 $11,887,315 $909,286 $10,978,029 $765,462 $1,031,935 $3,732,530 $5,529,927 $6,357,388
5 $11,887,315 $909,286 $10,978,029 $765,462 $1,031,935 $3,732,530 $4,871,322 $7,357,388
6 ($845,000) $909,286 ($1,754,286) $0 $0 $0 $0 ($845,000)
NPV
(i=4%) $7,589,441
NPV
(i=6%) $6,478,071
IRR
31.2%169
Table 18.21 Cash flow analysis assuming dilution (2.0 foot zone of extraction) of mill-run ore
(1)
Year Annual Cost Sb‐Gains Au‐Gains
Before Tax Cash
Flow (BTCF) Depreciation
0 $710,000 $0 $0 ($710,000) $0
1 $9,205,000 $889,000 $128,800 ($8,187,200) $909,286
2 $5,387,623 $4,819,500 $1,156,400 $588,278 $909,286
3 $5,387,623 $13,387,500 $3,213,000 $11,212,878 $909,286
4 $5,387,623 $13,387,500 $3,213,000 $11,212,878 $909,286
5 $5,387,623 $13,387,500 $3,213,000 $11,212,878 $909,286
6 $845,000 $0 $0 ($845,000) $909,286
(1)
Annual Cost values include $45,000/year for Federal Lode Mining Claims
Table 18.22 Rate of return analysis assuming dilution (2.0 foot zone of extraction) of mill run ore.
Year
Before Tax
Cash Flow
(BTCF) Depreciation
Taxable
Income
AK Mineral
License Tax
AK Corp. Inc.
Tax
Fed. Corp. Inc.
Tax Total Tax
After Tax
Cash Flow
(ATCF)
0 ($710,000) $0 ($710,000) $0 $0 $0 $0 ($710,000)
1 ($8,187,200) $909,286 ($9,096,486) $0 $0 $0 $0 ($8,187,200)
2 $588,278 $909,286 ($321,009) $0 $0 $0 $0 $588,278
3 $11,212,878 $909,286 $10,303,592 $0 $968,538 $3,503,221 $4,471,759 $6,741,119
4 $11,212,878 $909,286 $10,303,592 $718,251 $968,538 $3,503,221 $5,190,010 $6,022,867
5 $11,212,878 $909,286 $10,303,592 $718,251 $968,538 $3,503,221 $5,190,010 $6,022,867
6 ($845,000) $909,286 ($1,754,286) $0 $0 $0 $0 ($845,000)
NPV
(i=4%) $7,101,281
NPV
(i=6%) $6,061,684
IRR =29.2 170
Table 18.23 Cash flow analysis assuming 80 percent recovery of Sb and 85 percent recovery of gold
(1)
Table 18.24 Rate of Return analysis Assuming 80 percent recovery of Sb and 85 percent recovery of gold
Year
Before Tax
Cash Flow
(BTCF) Depreciation
Taxable
Income
AK Mineral
License Tax
(AMLT)
AK Corp. Inc.
Tax
Fed. Corp. Inc.
Tax Total Tax
After Tax
Cash Flow
(ATCF)
0 ($710,000) $0 ($710,000) $0 $0 $0 $0 ($710,000)
1 ($8,238,090) $909,286 ($9,147,376) $0 $0 $0 $0 ($8,238,090)
2 $963,920 $909,286 $54,634 $0 $5,136 $7,425 $23,711 $940,209
3 $11,057,290 $909,286 $10,148,004 $0 $953,912 $3,450,321 $4,404,234 $6,653,056
4 $11,057,290 $909,286 $10,148,004 $707,360 $953,912 $3,450,321 $5,111,594 $5,945,696
5 $11,057,290 $909,286 $10,148,004 $707,360 $953,912 $3,450,321 $5,111,594 $5,945,696
6 ($845,000) $909,286 ($1,754,286) $0 $0 $0 $0 ($845,000)
NPV
(i=4%) $7,167,401
NPV
(i=6%) $6,130,057
IRR
=28.8%
Year Annual Cost Sb‐Gains Au‐Gains
Before Tax Cash
Flow (BTCF) Depreciation
0 $710,000 $0 $0 ($710,000) $0
1 $9,205,000 $844,550 $122,360 ($8,238,090) $909,286
2 $4,713,185 $4,578,525 $1,098,580 $963,920 $909,286
3 $4,713,185 $12,718,125 $3,052,350 $11,057,290 $909,286
4 $4,713,185 $12,718,125 $3,052,350 $11,057,290 $909,286
5 $4,713,185 $12,718,125 $3,052,350 $11,057,290 $909,286
6 $845,000 $0 $0 ($845,000) $909,286
(1)
Annual Cost values include $45,000/year for Federal Lode Mining Claims171
Table 18.25 Cash Flow analysis with Dilution (2.0 foot zone of extraction) and Assumed 80 Percent Sb Recovery and 85 Percent Au Recovery
(1)
Year Annual Cost Sb‐Gains Au‐Gains
Before Tax Cash
Flow (BTCF) Depreciation
0 $710,000 $0 $0 ($710,000) $0
1 $9,205,000 $844,550 $122,360 ($8,238,090) $909,286
2 $5,387,623 $4,578,525 $1,098,580 $289,483 $909,286
3 $5,387,623 $12,718,125 $3,052,350 $10,382,853 $909,286
4 $5,387,623 $12,718,125 $3,052,350 $10,382,853 $909,286
5 $5,387,623 $12,718,125 $3,052,350 $10,382,853 $909,286
6 $845,000 $0 $0 ($845,000) $909,286
(1)
Annual Cost values include $45,000/year for Federal Lode Mining Claims
Table 18.26 Rate of Return analysis Assuming dilution (2.0 foot zone of extraction) and 80 percent recovery of Sb and 85 percent recovery
Year
Before Tax
Cash Flow
(BTCF) Depreciation
Taxable
Income
AK Mineral
License Tax
AK Corp. Inc.
Tax
Fed. Corp. Inc.
Tax Total Tax
After Tax
Cash Flow
(ATCF)
0 ($710,000) $0 ($710,000) $0 $0 $0 $0 ($710,000)
1 ($8,238,090) $909,286 ($9,147,376) $0 $0 $0 $0 ($8,238,090)
2 $289,483 $909,286 ($619,804) $0 $0 $0 $0 $289,483
3 $10,382,853 $909,286 $9,473,567 $0 $890,515 $3,221,013 $4,111,528 $6,217,325
4 $10,382,853 $909,286 $9,473,567 $660,150 $890,515 $3,221,013 $4,771,678 $5,611,175
5 $10,382,853 $909,286 $9,473,567 $660,150 $890,515 $3,221,013 $4,771,678 $5,611,175
6 ($845,000) $909,286 ($1,754,286) $0 $0 $0 $0 ($845,000)
NPV
(i=4%) $5,723,273
NPV
(i=6%) $4,795,530
IRR =
25.2%172
18. 9.9 Sensitivity Price Analysis
Commodity price sensitivities always affect the economic viability of a planned mineral development. Base
and minor metal commodities peak during times of high demand and fall during economic downturns. The
current world economic climate has contributed to uncertainties. Gold price has remained high despite the
current economic downturn. In order to evaluate the sensitivities of price fluctuation and their effect on the
economic viability of the Nolan Lode Project, the QP has computed four scenarios where in each the price of
gold and antimony are varied from the Base Case of $700/ounce for gold and $2.25/pound for antimony.
Assumptions presented in the Base Case Cash Flow Analysis remain the same except, of course, commodity
price (see Table 18.19 and 18.20) are used in the all of these comparisons.
1) Assume gold price at $900/ounce and antimony at $3.00/pound.
This price scenario assumes a 33 percent increase in the received value of antimony and a 28 percent increase
in the assumed value of gold from the Base Case prices of $700/ounce gold and $2.25/pound antimony
(Tables 18.27, 18.28). The NPV, using a 4.0 percent interest on investment, amounts to $16,621,010. The
NPV, using a 6.0 interest rate on investment, is $14,794,444. The IRR is calculated to be 59.0 percent.
2) Assume gold price at $600/ounce and antimony at $3.00/pound
This price scenario assumes a 33 percent increase in the received value of antimony from the Base Case and a
14 percent decrease in the assumed value of gold from the Base Case prices of $700/ounce gold and
$2.25/pound antimony (Tables 18.29, 18.30). The NPV, using a 4.0 percent interest on investment, amounts
to $14,553,235 . The NPV, using a 6.0 interest rate on investment, is $12,900,598. The IRR is calculated to
be 53.0 percent, a modest reduction from scenario (1) above despite a 33 percent reduction in gold price.
3) Assume gold price @ $600/ounce and antimony at $1.00/pound.
This price scenario assumes a 14 percent decrease in gold price from the Base Case Cash Flow but a 55
percent drop in antimony price from the Base Case (Tables 18.31, 18.32). The NPV, using a 4.0 percent
interest on investment, is a negative -$4,568,567 . The NPV, using a 6.0 interest rate on investment, is also a
negative -$4,653,862. Under this scenario, the Nolan Lode Project would only become feasible with an
unrealistically high IRR. Therefore, at the stated mineral prices, the IRR is N/A and the Nolan Lode
becomes unfeasible to develop.
4) Assume gold price at $900/ounce and antimony at $1.00/pound.
This price scenario assumes a 55 percent drop in antimony price from the Base Case, but a 28 percent
increase in the price of gold from the Base Case (Tables 18.33, 18.34). The NPV, using a 4.0 percent interest
on investment, is a negative -$2,309,577. The NPV, using a 6.0 percent interest rate on investment, is a
negative -$2,579,421. The IRR is N/A and the Nolan Lode Project is unfeasible to develop.173
Table 18.27 Cash Flow Price Sensitivity Analysis Using Prices of $900/ounce gold and $3.00/pound antimony (price paid at smelter)
(1)
Year Annual Cost Sb‐Gains Au‐Gains
Before Tax Cash
Flow (BTCF) Depreciation
0 $710,000 $0 $0 ($710,000) $0
1 $9,205,000 $1,188,000 $165,600 ($7,851,400) $909,286
2 $4,713,185 $6,426,000 $1,486,800 $3,199,615 $909,286
3 $4,713,185 $17,850,000 $4,131,000 $17,267,815 $909,286
4 $4,713,185 $17,850,000 $4,131,000 $17,267,815 $909,286
5 $4,713,185 $17,850,000 $4,131,000 $17,267,815 $909,286
6 $845,000 $0 $0 ($845,000) $909,286
(1)
Annual Cost values include $45,000/year for Federal Lode Mining Claims
Table 18.28 Rate of Return Price Sensitivity Analysis Using Prices of $900/ounce gold and $3.00/pound antimony (price paid at smelter)
Year
Before Tax
Cash Flow
(BTCF) Depreciation
Taxable
Income
AK Mineral
License Tax
AK Corp. Inc.
Tax
Fed. Corp. Inc.
Tax Total Tax
After Tax
Cash Flow
(ATCF)
0 ($710,000) $0 ($710,000) $0 $0 $0 $0 ($710,000)
1 ($7,851,400) $909,286 ($8,760,686) $0 $0 $0 $0 ($7,858,400)
2 $3,199,615 $909,286 $2,290,329 $0 $215,291 $778,712 $994,003 $2,205,612
3 $17,267,815 $909,286 $16,358,529 $0 $1,537,702 $5,561,900 $7,099,602 $10,168,213
4 $17,267,815 $909,286 $16,358,529 $1,142,097 $1,537,702 $5,561,900 $8,241,699 $9,026,116
5 $17,267,815 $909,286 $16,358,529 $1,142,097 $1,537,702 $5,561,900 $8,241,699 $9,026,116
6 ($845,000) $909,286 ($1,754,286) $0 $0 $0 $0 ($845,000)
NPV
(i=4%) $16,621,010
NPV
(i=6%) $14,794,444
IRR =
59.0%174
Table 18.29 Cash Flow Price Sensitivity Analysis Using Prices of $600/ounce gold and $3.00/pound antimony (price paid at smelter) with recovery of 85
percent antimony and 90 percent gold
(1)
Year Annual Cost Sb‐Gains Au‐Gains
Before Tax Cash
Flow (BTCF) Depreciation
0 $710,000 $0 $0 ($710,000) $0
1 $9,205,000 $1,188,000 $110,400 ($7,906,600) $909,286
2 $4,713,185 $6,426,000 $991,200 $2,704,015 $909,286
3 $4,713,185 $17,850,000 $2,754,000 $15,890,815 $909,286
4 $4,713,185 $17,850,000 $2,754,000 $15,890,815 $909,286
5 $4,713,185 $17,850,000 $2,754,000 $15,890,815 $909,286
6 $845,000 $0 $0 ($845,000) $909,286
(1)
Annual Cost values include $45,000/year for Federal Lode Mining Claims
Table 18.30 Rate of Return Price Sensitivity Analysis Using Prices of $600/ounce gold and $3.00/pound antimony (price paid at smelter) with recovery of
85 percent antimony and 90 percent gold
Year
Before Tax
Cash Flow
(BTCF) Depreciation
Taxable
Income
AK Mineral
License Tax
AK Corp. Inc.
Tax
Fed. Corp. Inc.
Tax Total Tax
After Tax Cash
Flow (ATCF)
0 ($710,000) $0 ($710,000) $0 $0 $0 $0 ($710,000)
1 ($7,906,600) $909,286 ($8,815,886) $0 $0 $0 $0 ($7,906,600)
2 $2,704,015 $909,286 $1,794,729 $0 $168,705 $610,208 $721,553 $1,925,103
3 $15,890,815 $909,286 $14,981,529 $0 $1,408,264 $5,093,720 $6,501,984 $9,388,831
4 $15,890,815 $909,286 $14,981,529 $1,045,707 $1,408,264 $5,093,720 $7,547,691 $8,343,124
5 $15,890,815 $909,286 $14,981,529 $1,045,707 $1,408,264 $5,093,720 $7,547,691 $8,343,124
6 ($845,000) $909,286 ($1,754,286) $0 $0 $0 $0 ($845,000)
NPV
(i=4%) $14,553,235
NPV
(i=6%) $12,900,598
IRR =
53.3%175
Table 18.31 Cash Flow Price Sensitivity Analysis Using Prices of $600/ounce gold and $1.00/pound antimony (as received at smelter) with 85 percent
recovery of antimony and 90 percent recovery of gold
(1)
Year Annual Cost Sb‐Gains Au‐Gains
Before Tax Cash
Flow (BTCF) Depreciation
0 $710,000 $0 $0 ($710,000) $0
1 $9,205,000 $396,000 $110,400 ($8,698,600) $909,286
2 $4,713,185 $2,142,000 $991,200 ($1,579,985) $909,286
3 $4,713,185 $5,950,000 $2,754,000 $3,990,815 $909,286
4 $4,713,185 $5,950,000 $2,754,000 $3,990,815 $909,286
5 $4,713,185 $5,950,000 $2,754,000 $3,990,815 $909,286
6 $845,000 $0 $0 ($845,000) $909,286
(1)
Annual Cost values include $45,000/year for Federal Lode Mining Claims
Table 18.32 Rate of Return Price Sensitivity Analysis Using Prices of $600/ounce gold and $1.00/pound antimony (as received at smelter) with 85 percent
recovery of antimony and 90 percent recovery of gold
Year
Before Tax
Cash Flow
(BTCF) Depreciation
Taxable
Income
AK Mineral
License Tax
AK Corp. Inc.
Tax
Fed. Corp. Inc.
Tax Total Tax
After Tax
Cash Flow
(ATCF)
0 ($710,000) $0 ($710,000) $0 $0 $0 $0 ($710,000)
1 ($8,698,600) $909,286 ($9,607,886) $0 $0 $0 $0 ($8,698,600)
2 ($1,579,985) $909,286 ($2,489,271) $0 $0 $0 $0 ($1,579,985)
3 $3,990,815 $909,286 $3,081,529 $0 $289,664 $1,047,720 $1,337,384 $2,653,431
4 $3,990,815 $909,286 $3,081,529 $212,707 $289,664 $1,047,720 $1,550,091 $2,440,724
5 $3,990,815 $909,286 $3,081,529 $212,707 $289,664 $1,047,720 $1,550,091 $2,440,724
6 ($845,000) $909,286 ($1,754,286) $0 $0 $0 $0 ($845,000)
NPV
(i=4%) ($4,568,567)
NPV
(i=6%) ($4,653,862)
IRR = N/A176
Table 18.33 Cash Flow Price Sensitivity Analysis Using Prices of $900/ounce gold and $1.00/pound antimony (as received at smelter) with 85 percent
recovery of antimony and 90 percent recovery of gold
(1)
Year Annual Cost Sb‐Gains Au‐Gains
Before Tax Cash
Flow (BTCF) Depreciation
0 $710,000 $0 $0 ($710,000) $0
1 $9,205,000 $396,000 $165,600 ($8,643,400) $909,286
2 $4,713,185 $2,142,000 $1,486,800 ($1,084,385) $909,286
3 $4,713,185 $5,950,000 $4,131,000 $5,367,815 $909,286
4 $4,713,185 $5,950,000 $4,131,000 $5,367,815 $909,286
5 $4,713,185 $5,950,000 $4,131,000 $5,367,815 $909,286
6 $845,000 $0 $0 ($845,000) $909,286
(1)
Annual Cost values include $45,000/year for Federal Lode Mining Claims
Table 18.34 Rate of Return Price Sensitivity Analysis Using Prices of $900/ounce gold and $1.00/pound antimony (as received at smelter)
Year
Before Tax
Cash Flow
(BTCF) Depreciation
Taxable
Income
AK Mineral
License Tax
AK Corp. Inc.
Tax
Fed. Corp. Inc.
Tax Total Tax
After Tax
Cash Flow
(ATCF)
0 ($710,000) $0 ($710,000) $0 $0 $0 $0 ($710,000)
1 ($8,643,400) $909,286 ($9,552,686) $0 $0 $0 $0 ($8,643,400)
2 ($1,084,385) $909,286 ($1,993,671) $0 $0 $0 $0 ($1,084,385)
3 $5,367,815 $909,286 $4,458,529 $0 $419,102 $1,373,405 $1,792,507 $3,432,813
4 $5,367,815 $909,286 $4,458,529 $309,097 $419,102 $1,268,312 $1,996,511 $3,123,716
5 $5,367,815 $909,286 $4,458,529 $309,097 $419,102 $1,268,312 $1,996,511 $3,123,716
6 ($845,000) $909,286 ($1,754,286) $0 $0 $0 $0 ($845,000)
NPV
(i=4%) ($2,309,577)
NPV
(i=6%) ($2,579,421)
IRR = N/A177
18.9.10 Cash Flow Summary
Table 18.35 summarizes the NPV at 4.00 percent, the NPV at 6.00 percent, and the IRR for the eight (8)
scenarios. After performing the cash flow analysis it was determined that the four economically feasible
scenarios for the Nolan Lode Project include: 1) the Base Case; 2) reduced metal recovery; 3) dilution of the
ore; and 4) reduced metal recovery coupled with dilution of ore. For all four of these scenarios, generated
NPV values indicate an acceptable return on investment.
Commodity price sensitivity is the most important variable. Antimony price clearly drives the Nolan Lode
Project. Every one dollar change in antimony price will add or subtract $11.1-12.2 million to overall
profitability, depending on assumed interest rates. Because antimony accounts for greater than 75 percent of
the value of the mine product, the price stability of this specialty metal and the realized price Silverado
receives for the Sb product will be key to the success of the Nolan Lode Project.
Gold price variance has a much lesser effect on profitability than changes in antimony prices. Every one
hundred dollar (USD) change in gold price will add or subtract approximately $800,000-$940,000 of
profitability for the Nolan gold project (Figure 18.18). In order for the gold production at the Nolan Lode
Project to cover operating expenses, total capital costs, and closing costs, the gold price would have to reach
approximately $1,850 USD/ounce.
Table 18.35 Cash Flow Analysis Summary Illustrating Variance in Economic Assumptions , Nolan Lode Project
NPV @ i=4% NPV @ i=6% IRR (%)
Base Case $7,589,441 $ 6,478,071 31.2
No Dilution with 0.80 Recovery Sb; 0.85
Recovery Au $7,167,401 $6,130,057 29.3
Ore Dilution; Base Case Recoveries $7,101,281 $6,061,684 29.2
Ore Dilution with 0.80% Recovery Sb; 0.85%
Recovery Au $5,723,273 $4,795,530 25.2
Sb@$1/lb ‐ Au@$600/oz ($4,568,567) ($4,653,862) N/A
Sb@$1/lb ‐ Au@$900/oz ($2,309,577) ($2,579,421) N/A
Sb@$3/lb ‐ Au@$600/oz $14,553,235 $12,900,598 53.3
Sb@$3/lb ‐ Au@$900/oz $16,621,010 $14,794,444 59.0178
Figure 18.18 Price sensitivity diagrams for value of antimony as received (top graph) and value of gold (bottom
graph), Nolan Lode Project
18. 9.11 Changes in NPV With Respect to Interest on the Base Case
A final variable was examined to determine the effect of changing interest rates on the NPV. Theoretically,
the X intercept should coincide with the computed IRR value. From Figure 18.19, the data confirms that the
IRR for the Base Case is approximately 31-32 percent. It suggests that the Nolan Lode Project would
continue to exhibit an acceptable NPV even with significant increases in interest rates required for capital. 179
Figure 18.19: Variations in NPV With Respect to Changing Interest Rates
Interest
Rate (%) NPV
0 $12,007,091
2 $10,405,877
4 $8,997,585
6 $7,756,923
8 $6,662,257
10 $5,695,031
12 $4,839,290
14 $4,081,276
16 $3,409,099
18 $2,812,459
20 $2,282,411
30 $390,685
33.1 ($5,359)
18.9.12 Cautionary Factors
Other factors that will affect the economics of the Nolan Lode Project include:
1) Unanticipated penalties at the antimony smelter in China (or Europe) caused by low concentrate quality;
i.e., excessive arsenic, lead or other impurities;
2) Unexpected economic problems associated with transport of stibnite to market from Nolan Camp;
3) Less than anticipated recovery of gold and stibnite from the mill facility;
4) Unanticipated problems encountered during underground mining activities such as wall rock stability, wall rock dilution,
water underground and uncontrolled temperature issues;
5) Regulatory issues, including environmental compliance, permit delays or significant unanticipated safety violations.
Of these, management of wall rock dilution is probably the most important variable at Nolan Creek,
especially in vein-faults as have been evaluated. If dilution cannot be managed, then excessive waste rock
might be recovered along with the ore which negatively affects the overall economic recovery of the mineral
resource. The existing data base suggests that there is regularity to the strike and rake of the mineralized 180
zones that have been drill-tested. Never-the-less, the zones must be carefully surveyed in order to predict
how dilution can be minimized in the narrow zones of extraction (2.0 feet) being envisioned in this process.
In the judgment of the QP, it will be important to maintain wall rock integrity through the maintenance of
frozen (permafrost) conditions. One advantage that exists at Nolan Creek is the near-vertical dips on the
mineralized zones. To illustrate, Manns and Ellington (1992) compare the dilution issues associated with two,
vein-type gold mines that contain similar overall resources in terms of tonnage and gold grade estimates. At
the Orostar Mine, the mineralized vein-fault that was developed was nearly vertical. The developed zone
exhibited fault offsets and was not always predictable, but it was still possible to separate ore from waste
during mining and a greater than 90% grade was maintained. In contrast, at the Scadding deposit, the
mineralized zones dipped variably, sometimes at low angles; consisted of irregular pods of mineralization, and
exhibited diffuse cut-off grade zones that could not be easily recognized. As a result head grade at the mill
resulted in much lower assay grades within the latter deposit. Dilution management was the key factor in
comparing the economic performance of the two projects.
In the QP’s final judgment, dilution and the other listed factors cannot not be accurately described until more
data can be acquired—likely during development activities. They constitute risks associated with any mineral
development project that must be identified, characterized and resolved or mitigated when they arise.
181
19 Interpretations and conclusions
19.1 Lode antimony-gold mineralization
Since World War II, prospectors, gold miners, and government geologists recognized antimony (gold)
deposits in Smith Creek valley. Although small scale production of stibnite occurred during the war due to
the strategic nature of antimony (i.e., Joesting, 1942), very little exploration was done until the early 1990s,
when Silverado conducted shallow drilling tests of Workman’s Bench.
In 1999, the USBLM began a soil sampling program on the left limit hill slope of Nolan Creek Valley, with
the obvious focus on searching for the lode source of the coarse placer gold nuggets recovered by Silverado
and others during test mining of placer gold deposits. Elevated gold, arsenic, and other anomalies were found
in soils above the placer workings, which led Silverado to initiate a more focused lode exploration program
during 2002 to 2003.
The airborne geophysical data acquired by USBLM led to the recognition of a series of resistivity lows
trending in a northeast direction for approximately 4,500 ft and over a width of about 600 ft. This became
known as the ‘Solomon Shear Zone’, a term adopted by Silverado to describe the northeast-striking zone
interpreted to be a series of high angle fault structures and possibly a lode source for placer gold. The
resistivity lows are coincident with a series of arsenic, antimony, and gold in soil anomalies along the same
trend, and including both Pringle Bench and Workman’s Bench.
Silverado believes that there are two distinct auriferous structural trends, the gold-bearing, antimony-quartz
veins that are fairly well documented in the general Smith Creek area and gold-quartz-arsenopyrite Fortresstype veins exposed on the ridge between Hammond River and Nolan Creek, with up to 0.24 oz/ton Au, and
29.09 percent antimony in the nearby Saddle area. Northeast structures of the first type contain antimony,
arsenic, and sparse gold anomalies, however, the latter type appear to reflect weak arsenic and gold
concentrations in isolated sampling lines. The QP concurs with the structural interpretation presented by
Silverado, but believes that more soil samples should be collected to the north and east of the limits of the
2007-2008 program before drill-testing as there is not enough data to determine the significance of these
anomalies.
Significant new lode exploration took place from 2007-2009, when Silverado:
• Expanded the soil and resistivity grid along the Solomon Shear Zone (a combination of
Workman’s and Pringle Benches and Hillside target areas);
• Initiated a soil and geophysical survey in the Fortress Trend about 2 mi northeast of the mouth
of Smith Creek; and
• Conducted a systematic diamond core drill program on Workman’s Bench and Pringle bench.
The 2007-to-2009 drilling program demonstrated that the vein and stockwork veins at both Workman’s
Bench and Pringle Bench are persistent along strike, occur within a 120 ft to 350 ft wide, can be found to a
minimum vertical extent of about 450 ft, and a strike length of up to 3,500 ft. Lode exploration by Silverado
at Nolan Creek must still be regarded as a first phase program that needs to be built upon with tighter drill
hole collar spacing, deeper drill holes, and exploration along the strike of the known antimony-gold
structures. A key issue that can only be resolved by more exploration is determining how extensive the system
is in terms of depth, width, metal zonation, metallurgy, and wall rock studies. 182
Silverado has defined the Pringle Bench and Workman’s Bench areas with a total of 21,447 feet in 72
diamond drill holes. During analysis of the drilling data and subsequent underground exploration, Silverado
noted that stibnite bearing zones on the Workman’s Bench property contained zones of massive stibnite
locally up to 15 inches thick with good values of antimony and gold.
The QP reviewed data density, data reliability, metallurgical testing, environmental studies and the overall
exploration program in the various Sections of this Technical Report. He concludes that the overall
exploration is sound. Quality control was carefully adhered to and the drill density and design is of a
character that allowed for the calculations of resources and reserves on Silverado’s Nolan Creek properties as
has been summarized in this Technical Report.
On January 1st
, 2009 (Amended June 1, 2009), the QP released the NI 43-101 Report: ‘Update of Mineral
Resource and Reserve Estimates and Preliminary Feasibility Study, Workman’s Bench Antimony-Gold Lode
Deposit, Wiseman B-1 Quadrangle, Koyukuk Mining District, Northern Alaska, January 1, 2009, Amended
June 1, 2009’. The Technical Report describes the probable reserve estimate identified in Table 17.2 above.
No new information concerning the probable reserves or, importantly, ‘other relevant information and
information’ previously provided to demonstrate economic viability of the probable reserve, has been
generated for the Nolan Creek project since the release of those estimates on January 1, 2009 Amended June
1, 2009, which are filed on SEDAR (www.SEDAR.com); also accessed @ http://www.silverado.com/.
During 2009, Silverado’s diamond drill core program was designed to: 1) explore shallower level of
Workman’s Bench southwest of the underground workings driven in 2008; and 2) test deeper levels of the
Pringle Bench vein-fault system and provide for vertical extensions of the shallow inferred resource estimate
previously reported. The 2009 program adds confidence that the mineralized vein-fault system on Pringle
Bench and Workman’s bench can be directly linked across Smith Creek. ‘A Zone’ was clearly recognized, as
well as ‘West Zone’ and possibly B Zone and C Zone. The strike length can now be traced for a total length
of 3,500 feet and for a depth of 450 feet +/-, with the depth estimate limited by the capabilities of the small
drill being used. There appears to be no evidence of significant fault offsets of the main northeast-striking
vein-fault zones. Several minor left lateral slip faces with offsets on the order of 10-12 feet were recognized
on both Workman’s Bench and Pringle Bench (see Figures 17.1; 17.4).
Drilling conducted during 2009 added modest amounts of indicated and inferred resources of antimony and
gold to the Workman’s Bench deposit. In terms of tonnage comparisons, the 2009 indicated resource
calculation amounts to 28 percent of the amount of indicated resource (in tons of mineralization) reported in
November 2008, prior to it’s conversion into a probable reserve. The 2009 exploration program increased
the inferred lode mineral resource from 24,077 tons of inferred mineralization to 34,206 tons of inferred
mineralization or a 42 percent increase in tonnage and significant increases in the amount of contained metal.
No new probable reserves have been added.
19.2 Placer gold mineralization
On July 29th
, 2008, the QP released the NI 43-101 Report ‘Estimation of Lode and Placer Mineral
Resources, Nolan Creek, Wiseman B-1 Quadrangle, Koyukuk District, Northern Alaska’, which describes
inferred gold resources in placer deposits held by Silverado in the Nolan Creek area (Bundtzen, 2008c). No
new interpretations or conclusions concerning placer gold resources have been generated for Nolan Creek
project since the release of those estimates in July, 2008, which are filed on SEDAR (www.SEDAR.com); also
accessed @ http://www.silverado.com/. 183
20 Recommendations
20.1 Lode exploration and development
A relatively small but high grade probable reserve estimate of lode antimony and gold on Workman’s Bench
in the Nolan Creek area, Wiseman District, Alaska, was reported in the NI43-101 Technical Report released
January, 2009 (Amended June 1, 2009). The resource and reserve estimates provided in that report were
based on all information acquired to the end of 2008. In 2009, a 5,000 foot diamond core drill program
added modest amounts of inferred and indicated resources to the Workman’s Bench and Pringle Bench
mineralized vein-fault structures. Besides the modest increases in resource estimates, there has been no
additional information on the Nolan Lode Property such as environmental base line work, surface and
underground engineering investigations, or metallurgical work. In the QP’s opinion, completing a new
prefeasibility study on the property is not justified unless the program of work outlined below indicates there
is significant new information. The QP believes that the primary focus of Silverado in the near term will be
to acquire new information on several fronts in order to better judge the best direction that the Nolan lode
project should take as it proceeds toward development. The following outline is designed to reach those
objectives.
Metallurgical Testing Collect a series of bulk samples on the Workman’s Bench and Pringle Bench lode systems
The 415 pound bulk sample collected in 2008 by the QP and processed by Hazen Research in Colorado
yielded promising results concerning the beneficiation of the antimony-gold mineralization for the Nolan lode
project (see Section 16 of this Technical Report). That bulk sample was collected underground from the
main ‘A Zone’ on Workman’s Bench. Silverado possess a permit to collect up to 1,000 cubic yards of
material to conduct metallurgical work. However, additional permitting may be required to actually process
that amount of material. Instead, the QP suggests that four (4) additional bulk samples of vein-fault
mineralization be collected: 1) another bulk sample from ‘A’ zone on Workman’s bench using both
underground and surface exposures and selected core where available; 2) a bulk sample ‘B’, West, and ‘C’
zones on Workman’s bench; 3) a bulk sample from ‘A’ Zone on Pringle Bench; and 4) a bulk sample from
other mineralized zones on Pringle Bench. Collecting more metallurgical data will allow Silverado to continue
to refine their mill-plans and provide increased confidence to a potential market for their stibnite-gold
concentrate products.
Environmental Baseline Characterization Program Continuing to improve on the environmental baseline work
should be an important priority for the Nolan lode project. Workman’s Bench is frozen and there is no
evidence that the mineralization has been oxidized. Underground control indicates the ground is dry.
Silverado initiated a base line characterization program during 2008 by contracting SRK Consulting, Inc.
(SRK) to review site geology, examine core, and begin a sampling program. Their work confirmed that the
nature of sulfide mineralization in both ore shoots and wall rock. SRK collected samples from surface
showings, including existing trenches and from the portal area for pH, and Conductivity values. An early
significant conclusion is that un-weathered materials have a neutral pH; hence an ARD mitigation plan should
be aimed at minimizing oxidation of waster rock and ore materials during disposal and in-capsulation of
material. Silverado should advance baseline studies through investigations of geochemical characterization,
meteorological precipitation, hydrological steam run-off (including storm water) prediction and mixing zone
potential. Large samples taken underground should be run using acid-base accounting procedures. In 184
similar fashion, selected core of both mineralized vein and wall rock material from representative drill holes
along strike and at depth should be split for the expressed purpose of acid-base accounting analyses.
Additional Engineering Geology Investigations Completion of a joint study with core stress testing at University of
Alaska laboratory Section 18 outlined the engineering studies completed during the driving of underground
workings on Workman’s Bench. In order to improve the data base and understanding on wall rock behavior
during underground work, a comprehensive joint and fracture could be completed, using logs already
available in Silverado files, as well as new joint measurement studies by a designated engineering geologist. In
addition, ASTM tensile stress measurements could be completed at a facility at the University of AlaskaFairbanks, which can be made available for contracted uses. The QP has used this lab in past years.
Completion of this work will help confirm what is already known about rock behavior as well as add
information, if modifications need to be made for underground extraction techniques.
Infill Drilling Complete an additional 15,000 feet of deep drilling on Workman’s Bench with a larger diameter
drill. Figure 20.1 illustrates a proposed drill program. The QP suggests 15 drill holes, each oriented at 45-50
degrees to the southeast and each being 1,000 feet in length and evenly spaced apart in a similar manner to
the collar plan deployed during the 2008 and 2009 drill programs. Silverado should orient at least half of the
holes to check drill trajectory. Workman’s Bench should be the top priority because it contains the best
chance thus far known for documenting consistent widths and grades of stibnite-quartz mineralization. Drilltesting the zone of inferred mineralization under the probable reserve in ‘A’ zone should be given a high
priority. Figure 20.1 illustrates a drill plan for Workman’s Bench that the QP believes would address these
priorities. A secondary drill priority would be to drill-test Pringle Bench. To date lode resources are only
inferred within this block. Figure 20.2 illustrates a testing program that would examine the potential for
significant mineralization on Pringle Bench.
20.2 Placer exploration and development
On July 29th
, 2008, the QP released the NI 43-101 Report ‘Estimation of Lode and Placer Mineral Resources,
Nolan Creek, Wiseman B-1 Quadrangle, Koyukuk District, Northern Alaska’, which describes inferred gold
resources in placer deposits held by Silverado in the Nolan Creek area. Recommendations were made
concerning exploration and development of Silverado’s placer gold resources (Bundtzen, 2008c). No new
information concerning placer gold resources or recommendations have been generated for Nolan Creek
project since the release of those estimates in July, 2008, which are filed on SEDAR (www.SEDAR.com); also
accessed @ http://www.silverado.com/. 185
Figure 20.1 Priority 1 2011work program for Workman’s Bench, illustrating drill pattern to be used (in blue),
and past drill collars and intercepts (in black and red); from Karl Sharp Files 186
Figure 20.2 Priority II 2011 program for Pringle Bench, illustrating drill pattern to be used; from Karl Sharp files 187
20.3 Budget requirements
Table 20.1 provides a budget estimate that would take place over 4.0 months, with 2 weeks allowed for
preparing and demobilization of the camp facility. Cost estimates for personnel are estimated from Silverado
records of past employment on the Nolan property, and professional contractor rates; i.e., SRK Consulting
and Hazen Research. The cost estimate for the drilling are from Silverado records and the QP’s recent past
experience with drill programs. Analytical costs are based on inspection of analytical catalogs and discussions
with ALS Minerals Inc. personnel in Fairbanks. The total multi-disciplinary program amounts to $2,064,620
USD. Broken down, the costs (and percentage of the total) are: 1) metallurgical investigations—$57,450
(2.8%); 2) environmental baseline work--$136,550 (6.6%); 3) engineering geology—20,000 (0.9 %) 4) infill
drilling $1,725,000 (83.6%); and 5) administration and technical staff--$125,620 (6.1%). Even though drill
costs dominate, the metallurgical, environmental, and engineering geology investigations are considered by
the QP to have high priorities. Silverado will use its own surface truck fleet for transport to camp. No
overhead charges are included in the budget.
Table 20.1 Project budget estimate for Nolan lode development
Task Itemized costs Cost in USD (rounded)
Metallurgical Investigation--
Collection of 4 Bulk Samples
Access underground workings, surface
collections; 2 people @ $600/day for 10 days
$12,000
Shipment of metallurgical samples
to outside facility (Colorado)
1) Transport from Wiseman to Fairbanks--$450;
2) Shipment to Colorado via Lynden Transport;
$2.00/pound; 2,500 pounds $5,000
$5,450
Metallurgical testing $10,000/sample 4 samples; includes summary
report by contractor
$40,000
Baseline Environmental work—
consulting report
15 days @ $175/hr 8 hours a day, two
professionals
$42,000
Baseline environmental work—
collection of underground/surface
samples
15 days at $175/hr for senior consultant; 10 days
at 115/hr for consultant 8 hours/day; 2 people
$69,600
Baseline environmental work—
splitting of core
Technical worker $400/day to split 2,500 feet of
core for 30 days—for acid base accounting
$12,000
Baseline environmental work—
analytical expenses
Estimated 100 acid-base accounting tests @
$125/sample (ALS Minerals)
$12,500
Shipment of samples to Lab Wiseman to Fairbanks $450 $450
Engineering Geology Study Engineering geologist @b $10,000/month 2
months
$20,000
Infill drilling—Workman’s Bench 15,000 feet @ $65/foot (QP estimate) $975,000
Infill drilling--Pringle Bench 11,000 feet @ $65/foot (QP estimate) $715,000
Infill drilling--Geochemical
Analyses
Au, Sb, Hg, Pb, As; plus 35 element; $35/sample
interval); 1,000 assay intervals
$35,000
Admin/staff Exploration permits
and regulatory oversight
One position; 2.5 months $14,940
Admin/staff (Fairbanks) One position; 4.0 months $15,500
Admin/staff Exploration geologist One position; 4.0 months $20,000
Admin/staff Core splitter One position 4.0 months $10,000
Admin/staff Camp manager One position; 4.0 months $30,000
Admin/staff Cooking; cleaning,
laundry, room maintenance)
Two positions; 3.0 months $18,000
Admin/staff Petroleum products $1,500/monthly costs estimate; 4.0 months $6,500
Admin/staff Groceries for 4
months
$2,670/month for all food condiments $10,680
TOTAL NA $2,064,620188
21 Dates and Signatures
Name of Report:
Update on Lode Mineral Resource and Reserve Estimates, Antimony‐Gold Lode Deposits, Nolan Creek,
Wiseman B‐1 Quadrangle, Koyukuk Mining District, Alaska, July 9
th
, 2011.
Date of Report:
July 9
th
, 2011
Issued by: Silverado Gold Mines, Ltd.
July 9
th
, 2011
___________________________________________________________________________________
Thomas K. Bundtzen P. Geo., BS, MS, AIPG Certified Professional Geologist #10912, Alaska Registered
Professional Geologist #652189
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Silverado Staff (Eden), 2008a, Workman’s bench Drilling and Underground Exploration Program 2007-2008,
Horizontal Plan View Map, October 21, 2008; one sheet at scale 1:1,000
Silverado Staff (Eden), 2008b, Workman’s bench Drilling and Underground Exploration Program 2007-2008,
Vertical Section 1, S1-S1’, October 21, 2008 scale: one inch=50 feet
Silverado Staff (Eden), 2008c, Workman’s bench Drilling and Underground Exploration Program 2007-2008,
Vertical Section 2, S2-S2’, scale: October 21, 2008, scale one inch=50 feet
Silverado Staff (Eden), 2008d, Workman’s bench Drilling and Underground Exploration Program 2007-2008,
Vertical section 3, S3-S3’, October 21, 2008, scale: one inch=50 feet
Silverado Staff (Eden), 2008e, Workman’s bench Drilling and Underground Exploration Program 2007-2008,
Vertical section 4, S4-S4’, October 21, 2008, scale: one inch=50 feet
Silverado Staff (Eden), 2008e, Workman’s bench Drilling and Underground Exploration Program 2007-2008,
Vertical section 5, S5-S5’, scale: one inch=50 feet
Silverado Staff (Eden), 2008f, Workman’s bench Drilling and Underground Exploration Program 2007-2008,
Vertical section 1, A-A’, May 2, 2008 scale: one inch=50 feet
Silverado Staff (Eden), 2008g, Workman’s bench Drilling and Underground Exploration Program 2007-2008,
Vertical section 2, B-B’, June 6, 2008 scale: one inch=50 feet
Silverado Staff (Eden), 2008h, Workman’s bench Drilling and Underground Exploration Program 2007-2008,
Vertical section 3, C-C’, May 2, 2008, scale: one inch=50 feet
Silverado Staff (Eden), 2008i, Workman’s bench Drilling and Underground Exploration Program 2007-2008,
Vertical section 4, D-D’, May 2, 2008, scale: one inch=50 feet 195
Silverado Staff (Eden), 2008j, Workman’s bench Drilling and Underground Exploration Program 2007-2008,
Vertical section 5, E-E’, May 2, 2008, scale: one inch=50 feet
Silverado Staff (Eden), 2008k, Workman’s bench Drilling and Underground Exploration Program 2007-2008,
Vertical section 6, F-F’, May 2, 2008, scale: one inch=50 feet
Silverado Staff (Eden), 2008l, Workman’s bench Drilling and Underground Exploration Program 2007-2008,
Vertical section 7, H-H’, June 6, 2008, scale: one inch=50 feet
Silverado Staff (Eden), 2008m, Pringle bench Drilling and Underground Exploration Program 2007, Vertical
section 7, H-H’, February 8, 2008, scale: one inch=100 feet
Stone, J.G., Dunn, P.G., and Sheahan, P., 1998, Ore Reserve Estimates in the Real World: Society of Economic
Geologists Special Publication Number 3, Second Edition, Citizens Printing Company, Littleton, Colorado,
160 pages
Storrar, C.D., 1981, South African Mine Valuation: Chamber of Mines of South Africa: Johannesburg, SA, 470
pages.
Tchapko, Vitali, 1995, Placer and hardrock gold deposits in the Central Kolyma area, Magadan region,
Northeast Russia, in, Bundtzen, T.K., Fonseca, A.L., and Mann, Roberta, eds., Geology and Mineral Deposits
of the Russian Far east: Alaska Miners Association Special Symposium Volume 1, p. 29-35.
Thrush, P.W., and staff, 1968, A Dictionary of Mining, Mineral, and Related Terms: U.S. Bureau of Mines, 1269
pages.
Turner, D.L., Forbes, R.B., and Dillon, J.T., 1979, K-Ar geochronology of the southern Brooks Range,
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23 Certificates
THOMAS K. BUNDTZEN
Pacific Rim Geological Consulting, Inc.
P.O. Box 81906, Fairbanks, Alaska 99708
Phone 907-458-8951 Fax 907-458-8511 Email Bundtzen@mosquitonet.com
As the author of the technical report entitled “Update on Lode Mineral Resource and Reserve Estimates,
Antimony-Gold Lode Deposits, Nolan Creek, Wiseman B-1 Quadrangle, Koyukuk Mining District”, dated
July 9th
, 2011 prepared for Silverado Gold Mines, Ltd., (the “Technical Report”), I hereby certify that:
1) I am currently a consulting economic geologist and President of Pacific Rim Geological Consulting, Inc., P.O.
Box 81906, 4868 Old Airport Road, Fairbanks, Alaska 99708, USA, which is an Alaska, USA ‘S’ corporation;
2) I am a graduate of the University of Alaska-Fairbanks, with a B.S. degree from the School of Mineral
Engineering (1973). I am also a graduate of the University of Alaska-Fairbanks, with a M.S. Degree in
Economic Geology (Department of Geology and Geophysics, 1981);
3) I am Certified Professional Geologist CPG-10912 with the American Institute of Professional Geologists
(AIPG), and Registered Geologist #652 with the State of Alaska;
4) I am currently a member of the Society of Economic Geology (since 1980; and 1998), the Geological Society of
America (since 1974), the American Association for the Advancement of Science (since 1982), the Alaska
Miners Association (since 1975), the Alaska Geological Society (since 1990), the Yukon Chamber of Mines
(since 1995), the Prospectors and Developers Association of Canada or PDAC (since 1999), and Secretary of
the Alaska Mining Hall of Fame Foundation (AMHF)--since 1997; I was elected President of the AMHF in
2010;
5) From November, 2003, to November, 2005, I served as Statewide President of the Alaska Miners Association;
6) Since receiving my Bachelors Degree, I have practiced the field of economic geology for 34 years in Alaska, the
Russian Far East, Europe, and New Zealand. I have published reports and geological maps with the State of
Alaska, Division of Geological and Geophysical Surveys, the U.S. Geological Survey, and the Journal of
Economic Geology, and Journal of Geology. I have studied the economic geology of antimony deposits in
Alaska, the Russian Far East and Yukon, and focused on this subject during completion of thesis work in the
Kantishna and Fairbanks areas of Alaska;
7) On May 15th, 2007, I received an appointment from Dr. Douglas Goering, the UAF Dean of the College of
Engineering and Mines: Affiliate Faculty of Geological Engineering with the Institute of Northern Engineering,
Mineral Industry Research Laboratory.
8) During 1994-1995, I was the principal minerals specialist on a State of Alaska team that helped resolve the
Alaska Mental Heath Trust (AMHT) lawsuit. With a team of others, I evaluated the economic viability of
numerous metallic mineral deposits that occurred on disputed AMHT lands. This work included critical
examination of private pre-feasibility studies, validity of stated mineral reserve estimations, stated capital mine
costs, operating costs, State and Federal tax burdens, projected gross royalty receipts, mill recovery factors, ore
dilution, mine life, concentrate smelter charges, commodity price trends, gross metal values (GMV), Net
Smelter Return (NSR) values, and Net Present Value (NPV) and other economic factors. My efforts helped
resolve the 15 year old lawsuit, which was dismissed in 1995;
9) During 2002-2003, I conducted a ‘Mineral in Character’ analysis for specific mineral lands for the Alaska Office
of the Attorney General (AG). The disputed mineral lands contained aggregate and sand and gravel, which
were judged important to the state of Alaska for road maintenance issues. I designed an exploration project,
drill-tested the deposits in question, calculated an indicated resource from the drilling, submitted samples for 197
ASTM material testing, and researched past extraction activities and mining and quarrying costs. PRGCI
analyzed all acquired information and conducted a pre-feasibility study that examined the economics of
developing and mining the resource. My study indicated that the resources in question was ‘Mineral in
Character’ as defined by U.S. law and helped prove the AG’s position;
10) In 2005, I was appointed to the ‘Pogo Stakeholders Group’ by Alaska’s Commissioner of Natural Resources,
Thomas Irwin. I am the mining/geological engineering person on this six-member team, which meets twice
each year to tour the Pogo gold mine project site in an over site capacity. With a team of others, I have viewed
underground mining activities, which have included mine design, extraction and dilution issues. The QP has
also viewed the mill operations, and has acquired an understanding of the complex water quality issues that the
project encounters, and the overall federal and State environmental permitting procedures that are required for
operation of the Pogo underground gold mine;
11) From 2004-2006, I managed a project designed to test low grade CaCO3 resources for acid mitigation and
overall Acid Base Accounting (ABA) for the large mining project at Donlin Creek, southwest Alaska. The
project documented a very large CaCO3 resource capable of mitigating wall rock acidity, ARD issues, and use
of the low grade CaCO3 resource in a second stage neutralization of tailings. Involved designing an ABA
analytical structure, and work on CaCO3 minerals;
12) During my career with the Alaska Department of Natural Resources(ADNR), I completed geological mapping
and mineral resource investigations on some Silverado properties described in this Technical Report. The
author of this technical report visited Nolan Creek in 1994, when Silverado was producing placer gold from the
Mary’s underground and Ogden-Eureka open cut placer deposits, and witnessed Silverado’s placer gold
processing activities. The purpose of the 1994 trip was to observe Silverado’s gold production activities, which
were subsequently described in the official State of Alaska, Minerals Report series (Bundtzen et al, 1996). In
1999, I sampled and mapped stibnite-gold lodes on Smith Dome and in Smith Creek basin, which constitutes a
part of Silverado’s lode claim group in the area. My 1999 work in the Koyukuk Mining District was completed
on behalf of North Star Exploration Inc., a junior mining company then based in Denver, Colorado. From
November 14
th
to 15
th
, 2004, the QP visited Silverado’s operation at Nolan Creek, where he examined current
infrastructure, and discussed with Silverado geologists Brian Flanigan and Edward Armstrong technical
databases stored on the property. I technically reviewed Silverado’s exploration and placer mining activities on
the left limit bench of Nolan Creek and at Workman’s Bench during 2006 to 2008 and produced a series of
reports for Silverado (Bundtzen 2006 a, b, c; 2008 a, b, c). During April 22 to 24, 2008, I examined stibnite
mineralization in the Workman’s Bench underground workings, collected channel samples to cross-check those
collected by Silverado geologists, mapped the geological features, and acquired a large bulk sample for
laboratory testing. During June 13
th
to 14
th
, and September 29-30, 2008, I examined all mineralized intercepts
from the 2007 core drilling program on Workman’s Bench and examined and sampled surface exposures of
stibnite mineralization also on Workman’s Bench. The author of this technical report examined selected
mineralized intercepts from the 2009 program;
13) I have been involved with either direct application or in technical review of various resource estimates using
polygonal, krigging and block model resource estimation methods for mineral deposits in Alaska and the
Russian Far East.
14) I have read the definition of “qualified person” set out in Canadian National Instrument 43-101 (NI43-101)
and certify that by reason of my education and affiliation with professional organizations (as defined by NI43-
101), and past relevant work experience, I fulfill the requirements to be a “Qualified Person” for the purposes
of NI43-101, and am also qualified to complete this report under rules stated by the United States Securities
and Exchange Commission;
15) My last personal inspection of the Nolan Creek Property was on August 20
th
, 2010 for part of that day;
16) I am responsible for all chapters of this Technical Report;
17) The QP is independent of Silverado Gold Mines, Ltd., pursuant to section 1.4 of the Instrument;
198
18) I have read the instrument and Form 43-101F1 (the “Form”) and the Technical Report has been prepared in
compliance with the Instrument and the Form;
SIGNED AND DATED in Fairbanks, Alaska, for this Technical Report on July 9
th
, 2011
Thomas K. Bundtzen, P. Geo., BS, MS, CPG-10912, ABSLN #279639, Alaska Registered Geologist #652
President, Pacific Rim Geological Consulting, Inc. 199
APPENDIX I: Summary of Relevant Sample Data Used in Calculation of all Categories of Sb and Au Resources from
Workman’s Bench That are Described in this Technical Report; Including Relevant Trace Element Data
Sample
Control #
Drill Hole #
(Assay Intervals)
Underground or
Surface Channels
Stibnite Target
Vein Zone
From
(feet)
To (feet) Width
(feet)
Estimated
True
Width
Sb (%) Au (oz/t) As (ppm) Hg
(ppm)
Pb
(ppm)
Brief Description
1 08SH02
(08SS47)
West of ‘A’
Zone
160.0 160.6 0.6 0.50 23.30 0.031 2520 0.30 24.0 Quartz‐Stibnite vein
about 2.0 inches wide
(visual by QP)
2 08SH02
(08SS51)
‘A’ Zone 186.5 187.5 1.0 0.70 37.92 0.091 15.0 0.72 <0.2 5.5 inch (true thickness)
quartz‐stibnite vein
with semi‐massive
stibnite also in
remaining zone
3 08SH02
(08SS52)
‘B’ Zone 193.0 193.8 0.8 0.58 7.11 0.190 3260 0.59 10.3 2 parallel quartz stibnite
veins about 4.5 inches
true width with sch
4 08SH03
(08SS67‐68)
West of ‘A’
Zone
41.4 42.5 1.1 1.00 37.91 0.301 0.8 0.45 1.4 Sheared stibnite‐quartz
zone; about 1.0 foot
true thickness; textures
5 Including
(08SS67)
West of ‘A’
Zone
41.4 42.0 0.6 0.45 42.05 0.420 <0.01 1.38 <0.2 Sheared nearly massive
stibnite; about 0.45 foot
true thickness
6 08SH03
(08SS80)
‘A’ Zone 115.9 117.0 1.1 0.91 26.73 0.410 139 0.40 5.1 Several closely spaced,
quartz‐stibnite veins at
vertical orientations.
7 08SH03
(08SS81)
Hanging wall ‘A’
zone
117.0 117.5 0.5 0.41 0.07 0.360 8560 1.26 20.6 Hanging wall trace
stibnite in quartz
8 08SH03
(08SS82)
‘B’ Zone 130.3 130.9 0.6 0.49 13.65 0.130 188 0.41 17.6 Stibnite‐quartz vein
zone with siderite
9 08SH03
(08SS88)
Zone not
designated
161.5 162.0 0.5 0.41 0.01 0.140 >10000 0.37 9.8 Arsenopyrite‐rich
quartz vein with trace
of stibnite
10 08SH03
(08SS93)
‘C’ Zone 195.5 196.1 0.6 0.41 0.70 0.130 9930 0.15 56.1 Quartz‐stibnite zone; 10
% Sb2S3 (QP inspection)
11 08SH01B
(08SS13)
‘West’ Zone 33.8 35.2 1.4 0.92 53.44 0.280 <0.1 0.30 5.0 Massive stibnite with
only minor quartz; QP
estimate is 11.0 inches
true width of vein
12 08SH01B
(08SS14)
‘A’ Zone’
Footwall
95.7 96.4 0.7 0.42 28.69 0.230 110 0.36 1.2 5 inch thick, vertical
quartz‐stibnite 3 inches
of massive stibnite
13 08SH01B
(08SS15)
Main ‘A’ Zone 98.2 101.3 3.0 2.49 18.43 0.130 248 0.28 1.3 quartz‐stibnite veins;
with locally massive
stibnite over 3.0 feet200
Sample
Control #
Drill Hole #
(Assay Intervals)
Underground or
Surface Channels
Stibnite Target
Vein Zone
From
(feet)
To (feet) Width
(feet)
Estimated
True
Width
Sb (%) Au (oz/t) As (ppm) Hg
(ppm)
Pb
(ppm)
Brief Description
14 08SH01B
(08SS18)
Hanging Wall
‘A’ Zone
108.0 108.5 0.5 0.41 26.05 0.020 5.9 0.21 1.1 2.0 inch massive
stibnite with quartz
15 08SH01B
(08SS23, 08SR52,
08SS24)
‘B’ Zone 139.0 142.2 3.2 2.65 12.22 0.015 300
535
100
3.67
0.37
0.30
1.2
19.2
0.7
Massive stibnite veins
with quartz; Sb grade
over 3.2 feet
16 Including
(08SS24)
‘B’ zone 141.6 142.2 0.6 0.49 19.87 0.010 100.5 0.3 0.7 Thickest stibnite‐quartz
vein (4 inches)
17 08SH01B
(08SS33)
‘C’ Zone 198.7 199.2 0.5 0.41 17.86 0.210 610 0.16 0.9 2.0 inch semi‐massive
stibnite vein in quartz
gangue.
18 08SH15
(08SS192)
‘West Zone 84.0 85.7 1.7 1.10 10.55 0.141 1,220 0.57 0.7 Stibnite‐quartz zone
with slickensides
19 08SH15
(08SS196‐197)
‘A’ Zone 113.0 117.0 4.0 2.58 23.06 0.028 527 0.87 <0.02 Semi‐massive stibnite
over wide zone
20 08SH15
(08SS206‐208
‘B’ Zone 182.5 190.7 8.2 4.80 6.25 0.092 2836 0.31 <0.02 Diffuse zone of stibnite‐
bearing stockwork
21 08SH15
(08SS209)
‘C’ Zone ? 194.6 196.2 1.6 0.94 0.89 0.050 7620 0.29 18.3 Weak zone with thin
stibnite veins
22 08SH14
(08SS211)
‘West’ Zone 56.5 57.0 0.5 0.41 4.02 0.008 742 0.18 2.0 1.0 inch quartz‐stibnite‐
carbonate vein
23 08SH14
(08SS212)
Zone not
Designated
88.3 92.0 3.7 3.07 0.27 0.180 >10000 0.23 6.9 Arsenopyrite‐rich
quartz vein zone
24 08SH14
(08SS216)
‘A’ Zone 108.5 109.2 0.7 0.60 0.06 0.010 3000 0.31 9.0 Notes from 09/27/08
visual by QP indicate
40% stibnite in a zone
0.6 feet wide true
thickness
25 08SH14
(08SS218)
‘B’ Zone 121.0 122.0 1.0 0.83 0.25 0.260 4270 0.27 24.6 Disseminated stibnite
ion quartz vein vertical
orientation (QP
estimate)
26 08SH14
(08SS226)
‘C’ Zone 179.2 179.9 0.7 0.58 1.75 0.040 4320 0.44 81.2 Vuggy Quartz vein with
stibnite (30%) of total.
27 08SH14
(08SS227)
Possible ‘C’
Zone Extension
183.8 184.3 0.6 0.50 0.02 0.190 >10000 0.29 41.5 Arsenopyite rich quartz
vein about 3 inches
thick; plus trace stibnite
grains (QP estimate)
28 08SH17
(08SS240‐241)
‘A’ Zone 285.0 288.3 3.3 1.91 0.00 0.160 8080 0.30 4.6 Wide zone of
stibnite=bearing quartz
veins (3); stockwork
type zone201
Sample
Control #
Drill Hole #
(Assay Intervals)
Underground or
Surface Channels
Stibnite Target
Vein Zone
From
(feet)
To (feet) Width
(feet)
Estimated
True
Width
Sb (%) Au (oz/t) As (ppm) Hg
(ppm)
Pb
(ppm)
Brief Description
29 Including
(08SS241)
‘A’ Zone 287.6 288.3 0.9 0.52 4.63 0.230 >10000 0.24 5.6 4 inch zone of stibnite‐
quartz vein; 25 percent
Sb2S3 (QP estimate)
30 08SH17
(08SS242)
‘B’ Zone 299.3 299.9 0.6 0.35 13.63 0.200 28.5 1.02 <0.2 0.75 inch of massive
stibnite on quartz vein
31 08SH17
(08SS243)
‘C’ Zone 311.8 312.9 1.1 0.64 0.01 0.120 >10000 0.30 8.9 Visual by QP: contains
10% Sb2S3—not in
assay results
32 08SH16
(08SS228)
West of ‘west’
Zone
156.0 157.0 1.0 0.83 0.93 0.092 9340 0.37 12.8 Quartz‐stibnite vein
about 4 inches thick
33 08SH16
(08SS229)
‘West’ Zone 197.0 198.0 1.0 0.83 1.11 0.020 2370 0.28 13.7 Quartz‐stibnite vein 4
inches thick
34 08SH16
(08SS231)
‘A’ Zone 233.7 234.7 1.0 0.83 1.64 0.053 7910 0.17 21.2 Quartz vein with 5‐8%
stibnite as
disseminations; vein is 6
inches thick
35 08SH16
(08SS235)
‘B’ Zone 309.5 310.5 1.0 0.83 0.00 0.390 1000 0.28 9.6 Quartz vein with
abundant arsenopyrite
in vein selvages
36 07SH01
07SS06)
‘A’ Zone Main
Vein
201.00 202.00 1.0 0.83 9.37 0.211 2250 NA NA Semi‐Massive stibnite
with quartz stockwork
37 07SH01
(07SS08‐12)
‘B’ Zone 223.50 242.50 19.00 15.77 3.24 0.091 3020 NA NA Quartz –stibnite vein
stockwork zone in four
distinct zones.
38 Including
(07SS10)
‘B’ Zone 237.40 242.50 6.00 4.81 8.81 0.191 1250 NA NA Two main stibnite‐
quartz stockwork; each
18 inches thick
39 Including
(267392)
‘B’ Zone 238.40 238.90 0.50 0.41 28.69 0.023 NA NA NA Massive stibnite in core
40 Trench (W399) ‘A’ Zone Main
Vein
NA NA 1.20 1.20 50.63 0.240 NA NA NA Furthest trench sample
on surface
41 07SH18
(07SS194‐97;
SR378‐79)
‘West’ Zone 46.5 53.5 7.0 3.26 1.24 0.029 325 NA NA Stibnite bearing
stockwork zone; core
contains stibnite lenses
42 Including
(07SR379)
‘West’ Zone 52.7 53.5 0.8 0.67 7.94 0.058 160 NA NA Stibnite bearing
stockwork zone; core
43 08SH16
(08SS228)
‘West’ Zone 156.0 157.0 1.0 0.83 0.93 0.090 9340 0.37 12.8 Quartz carbonate vein
with stibnite grains and
arsenopyrite
44 08SH16
(08SS229)
‘A’ Zone 197.0 198.0 1.0 0.83 1.11 0.020 2370 0.28 13.7 Disseminated stibnite in
6 inch quartz vein202
Sample
Control #
Drill Hole #
(Assay Intervals)
Underground or
Surface Channels
Stibnite Target
Vein Zone
From
(feet)
To (feet) Width
(feet)
Estimated
True
Width
Sb (%) Au (oz/t) As (ppm) Hg
(ppm)
Pb
(ppm)
Brief Description
45 08SH32
(08SS375‐379)
‘West’ Zone 171.5 177.5 6.0 3.20 6.23 0.085 See
below
See
below
See
below
Wide zone (true
width=3.2 feet) of
quartz‐stibnite‐
carbonate veinlet zone.
46 Including
(08SS375‐376)
West Zone 171.5 172.8 1.6 1.32 14.63 0.110 See
below
See
below
See
below
Wide zone of quartz‐
stibnite veins
47 Including
(08SS375)
‘West Zone 172.8 173.3 0.5 0.41 21.24 0.180 578 1.57 5.1 Semi‐massive stibnite
vein zone
48 Including
(08SS379)
West Zone 176.0 177.5 1.5 1.24 12.62 0.060 337 0.46 5.1 Three flecks of gold
noted during logging
not reflected in assays
49 08SH32
(08SS380)
‘A’ Zone
hanging wall
177.5 179.5 2.0 1.66 0.04 0.010 320 0.26 46.7 Visual by QP: 20%
stibnite and 80% quartz;
true thickness=0.95
feet; Sb2S3 not
reflected in assays
50 08SH32
(08SS385)
‘A’ Zone
Hanging Wall
186.5 188.0 1.5 1.24 1.22 0.275 1490 0.21 10.3 Quartz carbonate vein
with stibnite grains and
trace arsenopyrite
51 08SH32
(08SS292‐394
‘A’ Zone 203.7 209.5 5.8 2.90 8.20 0.180 >10000
18.2
7600
0.28
7.22
0.26
3.9
0.2
5.6
Wide zone (true
thickness=2.9 feet) of
stibnite‐bearing quartz
vein mineralization
52 Including
(08SS393)
‘A’ Zone 205.7 206.6 0.9 0.74 38.74 1.130 18.2 7.22 0.2 Strong zone of stibnite‐
quartz mineralization
53 08SH32
(08SS396)
‘B’ Zone 212.0 213.5 1.5 1.24 0.09 0.030 5250 0.23 13.5 5% percent Sb2S3 in
large quartz stock work
54 08SH33
(08SS411)
‘West ’ Zone 162.0 167.0 5.0 4.15 2.70 0.040 2140 0.59 23.9 Wide stockwork vein
zone contains
disseminated Sb2S3
55 08SH33
(08SS426‐427)
‘A’ Zone 242.0 243.2 1.2 1.00 14.74 0.030 68.5 0.29 1.2 Wide zone (true
thickness=1.00 feet) of
stibnite‐quartz
mineralization
56 Including
(08SS426)
‘A’ Zone 242.0 242.6 0.6 0.49 19.68 0.040 68.5 0.29 1.2 Disseminated to locally
massive stibnite in
quartz vein zone
57 203797 ‘A’ Zone 166.20 167.70 1.50 1.50 0.36 0.036 67 ND 275 NW fracture adjacent to
‘A’ Zone
58 08SH13
(08SS177)
Zone not
designated
17.8 18.3 0.5 0.32 13.16 0.025 20.4 2.1 <0.2 Quartz‐stibnite zone
with locally 50% Sb2S3203
Sample
Control #
Drill Hole #
(Assay Intervals)
Underground or
Surface Channels
Stibnite Target
Vein Zone
From
(feet)
To (feet) Width
(feet)
Estimated
True
Width
Sb (%) Au (oz/t) As (ppm) Hg
(ppm)
Pb
(ppm)
Brief Description
59 08SH13
(08SS179)
‘West’ Zone? 121.3 126.7 5.4 3.40 1.99 0.138 >10000 0.31 11.8 Significant wide zone
(true thickness=3.4
feet) with Sb+Au
60 08SH13
(08SS182)
‘A’ Zone 187.5 188.8 1.3 1.00 22.15 0.061 308 0.17 1.3 Thick quartz‐stibnite
zone stibnite lense
61 08SH13
(08SS184‐85)
‘B’ Zone 208.4 212.2 3.8
2.43
6.21 0.061 2050
4410
0.53
0.19
14.0
18.4
Wide zone of stockwork
stibnite‐quartz vein
62 Including
(08SS184)
‘B’ Zone 208.4 209.9 1.5 0.96 6.97 0.26 2050 0.53 14.0 Stibnite lobes in wide
63 08SH13
(08SS188)
‘C’ Zone 250.6 252.6 2.0 1.28 0.07 0.050 5760 0.12 24.5 Quartz carbonate veins
(3) with isolated stibnite
64 203405 ‘West’ Zone 138.0 139.5 1.5 1.50 41.20 0.110 NA NA NA Semi‐massive stibnite in
quartz gangue
65 203789 ‘West’ Zone 40.5 42.0 1.5 1.50 22.48 0.556 4152 NA 141 In wall of connecting
drift; true thickness
66 203808 A Zone 172.0 173.50 1.50 1.50 43.64 1.19 52 NA <0.2 Nearly massive stibnite
with quartz
67 WBUG3 S1 ‘A’ Zone 172.9 173.32 0.42 0.42 52.10 0.676 0.5 NA 1.1 Massive stibnite core
68 WBUG3 S2 ‘A’ Zone 172.9 173.32 0.42 0.42 58.89 0.329 <0.1 NA 0.5 Massive stibnite core
69 WBUGG3 S3 ‘A’ Zone 172.9 173.32 0.42 0.42 60.90 0.031 3010 NA 18.2 Massive stibnite core
70 WBUGG3 S4 ‘A’ Zone 172.9 173.32 0.42 0.42 55.71 0.451 1.3 NA 0.4 Massive stibnite core
71 WBUGG3 S5 ‘A’ Zone 172.9 173.32 0.42 0.42 11.10 0.444 2520 NA 4.5 Massive stibnite core
72 WBUG8‐ S2 ‘A’ Zone 182.9 183.32 0.42 0.42 58.76 0.145 0.7 NA 0.2 Massive stibnite core
73 203802 ‘A’ Zone 114.0 116.50 2.50 2.50 37.78 0.076 68 NA <0.2 ‘A’ Zone in south drift
74 203810 ‘B’ Zone 183.0 183.5 0.5 0.50 41.00 0.696 66 NA <0.2 Nearly massive stibnite
with quartz gangue;
south drift
75 203791 ‘B’ Zone 199.1 200.35 0.50 0.50 39.73 0.362 1163 NA <0.2 Nearly massive stibnite
with hanging wall; north
drift
76 WBUGG8 S1 ‘A’ Zone NA NA 0.42 0.42 57.52 0.359 1 NA <0.2 Massive stibnite
77 WBUG5 S2 ‘B’ Zone 199.8 200.22 0.42 0.42 50.04 1.040 0.7 NA <0.2 Massive stibnite in vein
core
78 WBUG8 S3 ‘B’ Zone NA NA 0.42 0.42 58.02 0.696 2.5 NA <0.2 Massive stibnite core
79 203795 ‘A’ Zone 40.00 41.50 1.50 1.50 40.35 0.357 52 NA <0.2 Semi‐Massive stibnite‐
quartz vein
80 203488 ‘B’ Zone 122.00 123.2.0 0.65 0.65 18.05 0.039 NA NA NA Semi‐Massive stibnite‐
quartz vein
81 WBUG9 S1 ‘B’ Zone 124.00 124.42 0.42 0.42 33.92 0.084 18.8 NA <0.2 Semi‐Massive stibnite‐
quartz vein204
Sample
Control #
Drill Hole #
(Assay Intervals)
Underground or
Surface Channels
Stibnite Target
Vein Zone
From
(feet)
To (feet) Width
(feet)
Estimated
True
Width
Sb (%) Au (oz/t) As (ppm) Hg
(ppm)
Pb
(ppm)
Brief Description
82 WBUGG9 S2 ‘B’ Zone NA NA 0.42 0.42 17.34 0.130 459 NA 0.4 Semi‐Massive stibnite
83 WBUGG5 S3 ‘C’ Zone NA NA 0.42 0.42 13.38 0.031 2530 NA 3.8 Semi‐Massive stibnite
84 WBUGG9 S4 ‘B’ Zone NA NA 0.50 0.50 7.34 0.513 5590 NA 2.3 Semi‐massive stibnite
85 203804 B Zone Vein 218.0 218.45 0.45 0.45 56.88 0.033 NA NA NA Massive stibnite vein
86 203450 A Zone 68.00 69.50 1.50 1.50 57.02 0.012 NA NA NA Massive Stibnite vein
87 203409 B Zone Vein 172.00 172.45 0.45 0.40 51.41 0.372 NA NA NA Massive Stibnite
88 Trench J (52) A Zone Main
Vein on Surface
151.0 159.2 8.2 8.20 30.30 0.140 NA NA NA Semi‐massive stibnite
89 Trench J A Zone Main
Vein on
Surface
159.2 167.4 8.2 8.20 1.72 0.220 NA NA NA Disseminated stibnite
90 Trench J Surface B Zone 167.4 175.6 8.2 8.20 11.70 0.037 NA NA NA Semi‐massive stibnite
91 267397 Main ‘A’ Vein;
surface
171.4 172.25 0.85 0.85 36.51 0.793 67 NA 275 Massive Stibnite
92 Trench J Surface B Zone 175.6 183.8 8.2 8.20 29.30 0.120 NA NA NA Semi‐massive stibnite
93 Trench J Zone between A
and B Veins
183.80 192.00 8.2 8.20 2.56 0.016 NA NA NA Disseminated stibnite
94 Trench J ‘B’ Zone 192.00 201.80 9.8 9.80 14.05 0.016 NA NA NA Semi‐massive stibnite
95 Trench J West Vein on
Surface
35.0 43.2 8.2 8.20 1.70 0.040 NA NA NA West Vein as seen in
2008 drill hole;
Mainly quartz with
stibnite clots
96 08SH18
(08SS250)
Interpreted
‘West’ Vein
276.0 277.0 1.0 0.64 0.01 0.037 NA NA NA Arsenopyrite‐rich
quartz vein about 1.3
feet thick; half assayed
97 08SH18
(08SS254)
‘A’ Zone 313.0 315.0 2.0 1.27 0.15 0.102 3,420 0.23 6.5 Footwall zone with
disseminated
arsenopyrite in selvages
98 08SH18
(08SS255
‘A’ Zone 315.0 316.8 1.8 1.15 27.65 2.88 27.1 3.21 0.5 High grade quartz‐
stibnite vein with visible
Au; high Au assay
99 WBUG1‐S2 ‘A’ Zone 138.80 139.22 0.42 0.42 64.34 0.030 NA NA NA Massive stibnite near
hanging wall
South drift
100 07SH15
(07SR193;
07SS171)
‘West’ Zone’ 127.0 130.5 3.5 2.59 0.25 0.035 1,000 268 11.2 Disseminated stibnite in
quartz
101 07SH15
(07SS173‐175;
SR208)
‘A’ Zone 192.0 197.8 5.80 4.29 4.07 0.104 912 NA 3.6 Disseminated stibnite;
with zones of massive
stibnite 5 in. thick
102 07SH15
(07SR217‐220)
‘B’ Zone 242.00 247.80 5.80 3.95 3.45 0.060 982 NA 5.5 Quartz stibnite
stockwork vein zone 205
Sample
Control #
Drill Hole #
(Assay Intervals)
Underground or
Surface Channels
Stibnite Target
Vein Zone
From
(feet)
To (feet) Width
(feet)
Estimated
True
Width
Sb (%) Au (oz/t) As (ppm) Hg
(ppm)
Pb
(ppm)
Brief Description
103 Including
(07SS179)
‘B’ Zone 245.3 245.8 0.60 0.49 34.51 0.554 138 NA 3.1 Semi‐Massive stibnite
with quartz gangue
104 07SH15
(07SS180)
‘C’ Zone 253.3 253.8 0.5 0.41 9.69 0.056 922 NA 2.0 Disseminated stibnite in
quartz
105 08SH12B
(08SS166)
‘West’ Zone 180.4 180.9 0.5 0.41 6.94 0.050 1,060 0.36 0.3 Quartz vein 8 inches
thick with stibnite
106 08SH12B
(08SS168‐170)
‘A’ Zone 204.1 209.0 4.9 3.62 6.99 0.107 1,936 0.36 1.0 Stibnite‐bearing quartz
vein and hanging wall
107 Including
(08SS168)
‘A’ Zone 204.1 205.0 0.90 0.72 7.05 0.05 1,345 0.35 1.5 Base of hanging wall
108 Including
(08SS170)
‘A’ Zone 208.1 209.0 0.9 0.72 20.97 0.220 10.8 0.47 <0.2 Semi‐massive stibnite
vein with euhedral
quartz gangue
109 08SH12B
(08SS173)
‘B’ Zone 236.3 236.8 0.5 0.40 0.40 0.030 2930 0.19 69.1 Thin, 3 inch thick quartz
vein with stibnite grains
110 08SH12B
(08SS175)
‘C’ Zone 250.0 251.7 1.7 1.36 0.01 0.040 2720 0.31 10.4 Quartz veon zone (true
thickness=1.2 feet)
trace stibnite.
111 08SH12B
(08SS176)
‘West Zone’ 179.8 180.4 0.6 0.41 0.01 0.029 4130 0.13 2.3 Veinlet zone in footwall
of ‘West Zone’ contains
arsenopyrite and trace
stibnite
112 07SH14
(07SS157‐
159;SR117)
‘West’ Zone 161.6 172.0 10.4 7.80 4.99 0.056 2470 NA NA Stibnite stockwork vein
zone
113 Including
(07SS159)
‘West’ Zone 166.2 167.6 1.4 1.05 29.23 0.224 201 NA NA Semi‐Massive stibnite
lense
114 07SH14
(07SS166)
‘A’ Zone 208.6 209.6 1.0 0.80 6.42 0.242 7000 NA NA Stibnite stockwork vein
zone
115 Including
(267394)
‘A’ Zone 209.0 209.15 0.15 0.10 51.42 1.610 1100 NA NA Thin massive stibnite
lense
116 07SH14
(07SS168)
‘B’ Zone 240.0 240.5 0.5 0.40 8.81 0.160 621 NA NA Thin stibnite stockwork
vein zone
117 07SH14
(07SS169)
‘C’ Zone 257.7 258.7 1.0 0.8 0.152 0.071 5,580 NA ND Disseminated Sb and As
118 08SH11
(08SS155)
‘West’ Zone 184.7 185.4 0.9 0.58 3.55 0.073 2670 0.17 2.4 Stibnite bearing quartz
vein about 5 inches
119 08SH11
(08SS156‐158)
‘A’ Zone 193.0 197.0 4.0 2.56 8.12 0.184 6700
1710
389
0.22
0.21
0.13
7.5
3.7
0.7
Stibnite bearing quartz
vein about 2.5 feet
(RCS notes)206
Sample
Control #
Drill Hole #
(Assay Intervals)
Underground or
Surface Channels
Stibnite Target
Vein Zone
From
(feet)
To (feet) Width
(feet)
Estimated
True
Width
Sb (%) Au (oz/t) As (ppm) Hg
(ppm)
Pb
(ppm)
Brief Description
120 Including
(08SS157)
Footwall of ‘A’
Zone
193.6 194.5 0.9 0.58 10.02 0.120 1710 0.21 3.7 Footwall zone of ‘A’
Vein is part of system
below, separated by 1.0
feet of wall rock.
Abundant AsPy
121 Including
(08SS158)
‘A’ Zone 196.2 197.0 0.8 0.51 10.36 0.330 389 0.13 0.7 Main ‘A’ zone
characterized by
sheared fine‐grained
stibnite (QP)
122 08SH11
(08SS159)
‘B’ Zone 225.3 226.1 0.8 0.51 11.20 0.700 984 2.01 1.6 Quartz‐stibnite zone
with 2.0 inch massive
stibnite vein; As sulfides
abundant in margins
123 08SH11
(08SS160)
‘C’ Zone? 275.8 276.8 1.0 0.65 11.36 0.040 7790 0.11 6.5 Quartz‐stibnite vein
with 25% stibnite.
124 07SH13
(07SS140)
‘West’ Vein 38.5 39.3 0.8 0.66 2.34 0.074 >10000 NA 7.8 Thin quartz stibnite vein
3 inches thick
125 07SH13
(07SS144)
‘A’ Zone 133.0 134.5 1.5 1.24 0.05 0.230 3740 NA 4.2 True thickness of quartz
vein is 1.2 feet stibnite
vein (log notes)
126 07SH13
(07SS146‐48)
‘B’ Zone 196.0 200.0 4.0 2.80 3.37 0.040 1315
7170
172
NA 5.0 Stibnite bearing
stockwork zone; core
contains stibnite zones
127 Including
(07SS146)
‘B’ Zone 196.0 196.5 0.5 0.40 7.79 0.031 1315 NA 19.6 Stibnite bearing
stockwork zone; core
contains stibnite zones
128 Including
(07SS148)
‘B’ Zone 199.5 200.0 0.5 0.40 19.09 0.100 172 NA <0.2 Stibnite bearing
stockwork
129 08SH22
(08SS308)
West of ‘West’
Zone
204.5 205.5 1.0 0.64 0.72 0.016 2100 0.07 14.6 Stockwork vein with
stibnite xtals
130 08SH22
(08SS309)
‘West’ Zone 215.0 222.0 7.0 4.00 0.46 0.017 636 0.09 10.0 Thick zone of quartz
vein stockwork with six
vein zones
131 08SH22
(08SS312‐313)
‘A’ Zone 226.0 227.5 1.5 1.20 13.10 0.080 1705 0.12 1.4 Quartz‐stibnite
mineralization true
thickness=1.2 feet
132 Including
(08SS313)
‘A’ Zone 227.5 228.0 0.5 0.35 18.97 0.120 1110 0.14 0.6 Semi‐massive stibnite
core of vein
133 08SH22
(08SS318)
‘B’ Zone 252.8 253.3 0.5 0.35 0.02 0.140 >10000 0.18 20.8 Quartz‐carbonate vein
zone with trace stibnite.207
Sample
Control #
Drill Hole #
(Assay Intervals)
Underground or
Surface Channels
Stibnite Target
Vein Zone
From
(feet)
To (feet) Width
(feet)
Estimated
True
Width
Sb (%) Au (oz/t) As (ppm) Hg
(ppm)
Pb
(ppm)
Brief Description
134 08SH24
(08SS333)
‘West’ Zone 99.0 100.0 1.0 0.80 19.58 0.090 703 1.73 5.7 75 degrees steep SE
135 08SH24
(08SS335)
‘A’ Zone 118.7 119.4 0.7 0.56 11.05 0.060 1285 0.85 11.8 Quartz‐stibnite zone
with massive stibnite
lenses 2.5 inches thick
136 08SH24
(08SS341‐342)
‘B’ Zone 204.1 205.5 1.4 1.12 15.13 0.250 >10000 0.32 8.9 Thick zone of quartz‐
stibnite mineralization;
vertical true
thickness=1.1 feet
137 Including
(08SS342)
‘B’ Zone 204.9 205.5 0.6 0.48 28.72 0.340 37.3 0.68 0.3 Semi‐massive stibnite
vein about 4 inches
thick
138 08SH24
(08SS343)
‘C’ Zone 265.0 267.0 2.0 1.10 0.064 0.110 >10000 0.15 57.1 Thick quartz vein zone
(true thickness=1.1
feet) with stibnite
grains.
139 08SH07
(08SS100)
‘West’ Zone 171.5 172.0 0.5 0.40 3.95 0.060 4340 0.2 2.1 Quartz‐stibnite
mineralized vein (3
inches)
140 08SH07
(08SS101)
Zone not
designated
175.0 175.5 0.5 0.40 3.43 0.011 773 0.2 2.1 Thin quartz vein with
stibnite
141 08SH07
(08SS102)
Zone not
designated
181.5 182.0 0.5 0.40 17.54 0.020 33.8 0.95 2.8 2.0 inch massive
stibnite in two veins;
142 08SH07
(08SS104)
‘A’ Zone 185.2 185.7 0.5 0.40 11.28 0.020 102 0.9 3.1 2.0 inch massive
stibnite in two veins;
143 08SH07
(08SS106)
‘A’ Zone
Hanging Wall
201.0 202.0 1.0 0.80 0.03 0.300 >10000 0.29 9.9 Steep quartz‐carbonate
veins with minor
stibnite and
arsenopyrite
144 08SH07
(08SS111)
‘B’ Zone 221.0 222.0 0.8 0.64 21.10 0.149 378 1.14 0.9 Contains 4.0 inch thick
massive stibnite in
quartz‐stibnite zone 1.0
feet thick (visual
estimate by QP)
145 08SH07
(08SS115)
‘C’ Zone? 250.0 250.5 0.5 0.40 0.01 0.040 6090 0.2 5.5 Vug‐rich quartz vein
with AsPy in selvage
zones
146 08SH10
(08SS147)
‘West’ Zone 90.2 91.6 1.4 1.16 4.39 0.280 5370 0.26 18.8 Thick gold‐bearing vein
with isolated lenses of
stibnite
147 08SH10
(08SS148)
Footwall ‘A’
Zone
104.4 105.1 0.7 0.58 4.41 0.050 6200 0.23 21.2 Quartz‐carbonate vein
with minor stibnite \208
Sample
Control #
Drill Hole #
(Assay Intervals)
Underground or
Surface Channels
Stibnite Target
Vein Zone
From
(feet)
To (feet) Width
(feet)
Estimated
True
Width
Sb (%) Au (oz/t) As (ppm) Hg
(ppm)
Pb
(ppm)
Brief Description
148 08SH10
(08SS149)
‘A’ Zone 106.3 107.0 0.7 0.58 20.36 0.100 512 1.48 4.0 8 inch thick stibnite
quartz vein (visual
estimate by QP)
149 08SH10
(08SS150)
‘B’ Zone 188.4 189.2 0.8 0.64 25.00 0.120 112.5 1.56 3.6 8 inch thick stibnite‐
quartz vein with 55%
Sb2S3 (visual estimate
by QP)
150 08SH10
(08SS151)
‘C’ Zone 290.8 291.5 0.7 0.58 0.08 0.014 1620 0.16 5.4 Quartz vein 3 inches
thick with stibnite
grains
151 08SH23
(08SS326)
‘A’ Zone 194.5 195.5 1.0 0.80 18.24 0.520 798 0.48 2.9 Quartz‐stibnite vein
with 8 inches of true
vein thickness
152 07SH16
(07SS183‐186)
‘A’ Zone 238.1 243.1 5.0 4.15 1.79 0.045 1090 NA 3.1 Stibnite bearing
stockwork zone; core of
massive stibnite zones
153 Including
(267396)
A Zone Vein
Wall
242.8 243.3 0.5 0.41 42.72 0.170 NA NA 4.2 Massive stibnite in core
(QP check sample)
154 07SH16
(07SS186)
‘ B’ Zone 245.3 245.8 0.5 0.41 23.24 0.030 42.7 NA 19.9 Semi‐massive stibnite
zone in larger
155 07SH16
(07SS192)
‘C’ Zone? 366.0 366.5 0.5 0.41 0.12 0.035 1510 NA 2.1 Thin quartz vein with
stibnite grains
156 08SH20
(08SS285
West of ‘A’ Vein 212.0 217.0 5.0 4.0 0.10 0.000 41.2 0.41 18.2 Zone of quartz veinlets
with trace stibnite
157 08SH20
(08SS287)
‘A’ Vein 242.6 243.3 0.7 0.56 3.32 0.030 3250 0.11 1.0 Quartz=stibnite vein
with 10% Sb2S3
158 08SH20
(08SS291)
‘B’ Vein? 278.8 279.8 1.0 0.80 0.01 0.044 4340 0.28 46.3 Quartz‐aspy vein zone;
no stibnite recognized
159 08SH20
(08SS294)
‘C’ Vein? 329.5 330.0 0.5 0.40 0.02 0.062 >10000 0.16 93.3 Quartz aspy vein zone;
no stibnite recognized
160 08SH08
(08SS119)
‘West’ Zone 347.9 348.6 0.7 0.56 5.77 2.68 >10000 0.54 8.7 4.0 inch wide massive
stibnite in phyllitic
schist with only minor
quartz gangue (visual
estimate by QP)
161 08SH08
(08SS122)
Footwall of ‘A’
Zone
375.0 375.5 0.5 0.40 34.77 0.610 73.2 8.12 1.1 Massive stibnite lense 7
inches wide (true
thickness=5 inches);
with 50% quartz (visual
estimate by QP)209
Sample
Control #
Drill Hole #
(Assay Intervals)
Underground or
Surface Channels
Stibnite Target
Vein Zone
From
(feet)
To (feet) Width
(feet)
Estimated
True
Width
Sb (%) Au (oz/t) As (ppm) Hg
(ppm)
Pb
(ppm)
Brief Description
162 08SH08
(08SS123‐124)
‘A’ Zone 378.4 381.2 2.8 2.25 18.29 0.183 2,919 0.41 1.1 Massive stibnite lense 6
inches thick with 50%
quartz gangue (visual
estimate by QP)
163 Including
(08SS123)
Hanging Wall
‘A’ Zone
380.0 381.2 1.2 0.96 46.02 0.050 39.8 0.42 1.1 Hanging Wall of ‘A’
Zone contains quartz‐
stibnite stockwork
164 08SH08
(08SS126)
‘B’ Zone 405.2 405.7 0.5 0.40 0.03 0.014 3490 0.27 5.8 Weal quartz vein
mineralization
165 08SH19
(08SS275)
‘West’ Zone? 148.5 149.0 0.5 0.40 1.76 0.005 84.9 0.48 4.3 Weak quartz stibnite
vertical vein
166 08SH19
(08SS281‐283)
‘A’ Zone 217.0 219.5 2.5 2.07 19.13 0.138 2750
13.1
0.28
4.28
2.3
0.3
Wide zone of stibnite‐
Quartz stockwork
mineralization
167 Including
(08SS281)
‘A’ Zone
Footwall
217.0 217.5 0.5 0.41 22.75 0.030 26.7 0.92 0.3 Two 1.0 inch thick
massive stibnite‐quartz
veins
168 Including
(08SS283)
Main ‘A’ Zone 218.5 219.5 1.0 0.83 34.61 0.350 13.1 4.28 0.3 Two stibnite + quartz
veins with 3 flecks of
visible gold (visual
estimate by QP)
169 08SH29
(08SS355)
‘A’ Zone 347.0 348.0 1.0 0.83 0.02 0.000 146 0.01 32 Quartz‐carbonate vein
with trace stibnite—Sb
not reflected in assay
results
170 08SH21
(08SS301)
Footwall to ‘A’
Zone
305.0 305.5 0.5 0.40 16.96 0.040 263 0.24 0.5 Stibnite plus quartz
euhedral vein; cuts
schist vertically
171 08SH21
(08SS302)
Main ’A’ Zone 305.5 307.0 1.5 1.20 63.47 0.080 3.1 3.65 <0.2 Massive stibnite 13
inches true thickness—
no gangue; most
impressive zone
observed
172 08SH21
(08SS305)
Hanging Wall to
‘A’ Zone
312.7 313.5 0.7 0.56 30.20 0.410 101 8.46 0.2 Quartz‐stibnite vein;
same pattern as
08SH08
173 08SH21
(08SS306)
‘B’ Zone 317.0 317.7 0.7 0.56 27.10 0.190 72.7 0.54 0.4 Vertical quartz‐stibnite
vein
174 08SH21
(08SS307)
‘B’ Zone 317.7 318.7 1.0 0.80 4.85 0.020 2150 0.17 13.8 Disseminated zone in
hanging wall.210
Sample
Control #
Drill Hole #
(Assay Intervals)
Underground or
Surface Channels
Stibnite Target
Vein Zone
From
(feet)
To (feet) Width
(feet)
Estimated
True
Width
Sb (%) Au (oz/t) As (ppm) Hg
(ppm)
Pb
(ppm)
Brief Description
175 08SH25
(08SS346)
‘West’ Zone? 40.8 41.3 0.5 0.41 1.07 0.040 >10000 0.3 120 Quartz vein with
disseminated stibnite
and >3% arsenopyrite
176 08SH25
(08SS351)
‘A’ Zone 374.8 376.5 1.7 1.41 43.20 2.860 367 1.81 0.5 11 inch true thickness
of massive stibnite with
no gangue—additional
quartz in selvages; 70
% Sb2S3 and the rest
quartz (visual estimate
by QP)
177 08SH25
(08SS352‐353)
Hanging Wall of
‘A’ Zone
376.5 378.5 2.0 1.66 4.46 0.140 3080 0.41 7.4 A total of four (4)
stibnite‐quartz veins
each about 1.5 inches
thick; with arsenopyrite
178 Including
08SS352
Hanging Wall of
‘A’ Zone
376.5 377.0 0.5 0.41 4.45 0.214 5630 0.35 15.6 Gold enriched portion
of wider intersection
179 08SH31
(08SS369)
‘West’ Zone 272.0 273.5 1.5 1.09 0.010 0.090 >10000 0.09 3.3 Weak quartz vein
mineralization with
trace stibnite.
180 08SH26
(08SS398)
Footwall of ‘A’
Zone
334.5 335.0 0.5 0.37 1.04 0.260 >10000 0.09 3.6 Several quartz‐sulfide
veins with stibnite veins
181 08SH26
(08SS399)
Interpreted ‘A’
Zone
337.0 337.5 0.5 0.37 3.59 0.070 6700 0.14 7.2 Quartz‐stibnite vein
with about 10% stibnite
182 08SH26
(08SS400)
Hanging Wall
‘A’ Zone
340.5 341.0 0.5 0.37 4.91 0.030 3250 0.13 52.7 Quartz‐stibnite vein
zone with 12‐14%
Sb2S3
183 08SH26
(08SS403)
‘B’ Zone? 352.0 359.0 7.0 5.11 0.01 Trace 82.4 0.04 5.6 Swarm of quartz veins
with isolated grains of
stibnite.
184 08SH09
(08SS138)
‘A’ Zone 346.4 347.4 1.0 0.80 5.85 0.090 3020 0.51 3.1 Quartz‐stibnite vein
with about 10% Sb2S3;
(visual estimate by QP)
185 08SH09
(08SS139)
‘A’ Zone
Hanging Wall
350.5 351.2 0.7 0.56 0.01 0.084 5890 0.33 2.4 Quartz vein with trace
stibnite
186 08SH09
(08SS140)
‘B’ Zone 366.2 366.7 0.5 0.40 0.08 0.031 2240 0.17 19.7 Quartz vein with
disseminated stibnite
(visual estimate by QP)211
Sample
Control #
Drill Hole #
(Assay Intervals)
Underground or
Surface Channels
Stibnite Target
Vein Zone
From
(feet)
To (feet) Width
(feet)
Estimated
True
Width
Sb (%) Au (oz/t) As (ppm) Hg
(ppm)
Pb
(ppm)
Brief Description
187 08SH27
(08SS407)
‘A’ Zone 346.0 347.0 1.0 0.80 0.01 0.010 3860 0.07 36.6 Quartz vein with
isolated grains of
stibnite and 0.35%
arsenic
188 09SH01
(09SS01)
‘B’ Zone 114.2 114.8 0.6 0.50 13.90 0.071 475 0.79 0.50 One inch wide massive
quartz‐stibnite vein
with 80% stibnite
189 09SH01
(09SS02)
‘A’ Zone
Hanging Wall
178.2 181,1 2.9 2.40 0.03 0.058 6,310 0.22 4.1 Vuggy coarse quartz
veins with trace
disseminated sulfides
190 09SH01
(09SS03)
‘A’ Zone 181.1 182.0 0.9 0.75 <0.01 0.072 7,730 0.25 2.5 Dense quartz vein
swarm with trace
stibnite and
arsenopyrite
191 09SH01
(09SS04)
West Zone 189.9 190.6 0.7 0.58 0.07 0.126 6,680 0.27 8.9 3.25 inch thick vuggy
quartz‐stibnite vein
192 09SH02
(09SS019)
‘A’ Zone 160.3 162.0 1.7 1.36 5.64 0.035 2,310 0.27 0.9 Quartz carbonate
stibnite stockwork
193 09SH02
(09SS020)
‘A’ Zone
Hanging Wall
162.0 162.9 0.9 0.72 0.18 0.035 4,560 0.37 15.6 Quartz‐stibnite breccias
vein; analytical Sb
content lower than
visual in core
194 09SH02
(09SS021)
‘A’ Zone
Hanging Wall
162.9 164.6 1.7 1.36 3.05 0.042 3,790 0.40 29.1 Two vertical quartz‐
stibnite veins 0.75
inches thick; 0.30 foot
carbonate vein
195 09SH03
(09SS035
‘A’ Zone
hanging wall
164.1 164.6 0.5 0.40 0.35 0.012 NA NA NA 3/8 inch qtz +Sb; 30%
stibnite—over‐drilled
196 09SH03
(09SS036)
‘A’ Zone 168.0 168.6 0.6 0.40 0.80 0.019 NA NA NA <1/2 inch qtz‐Sb; 80%
stibnite‐over ‐drilled
197 09SH04
(09SS039‐040)
‘B’ Zone 145.0 148.7 3.7 2.75 1.57 0.169 5,130 0.90 2.6 Quartz‐carbonate veins
and quartz‐stibnite
breccias—
contamination from
hanging wall
198 09SH04
(09SS047)
‘A’ Zone 193.6 195.8 2.2 1.62 3.71 0.002 415 0.24 3.4 Abundant quartz
carbonate stibnite veins
199 09SH04
(09SS048)
‘A’ Zone 195.8 196.3 0.5 0.37 1.65 0.190 2,170 0.37 15.7 Similar to 09SS047 but
more disseminated
arsenopyrite212
Sample
Control #
Drill Hole #
(Assay Intervals)
Underground or
Surface Channels
Stibnite Target
Vein Zone
From
(feet)
To (feet) Width
(feet)
Estimated
True
Width
Sb (%) Au (oz/t) As (ppm) Hg
(ppm)
Pb
(ppm)
Brief Description
200 09SH05
(09SH022)
‘A’ Zone 276.2 276.7 0.5 0.30 47.29 0.217 2.9 1.16 0.7 Hanging wall of massive
stibnite vein;
arsenopyrite in hanging
wall (see cover photo)
201 09SH05
(09SS023)
‘A’ Zone 276.7 278.3 1.6 1.30 69.21 0.251 <0.1 1.63 0.2 Massive stibnite vein
(see cover photo)
202 09SH05
(09SS024)
‘A’ Zone 278.3 278.8 0.5 0.30 39.53 0.389 17.9 0.79 1.3 Footwall contact zone
containing massive
stibnite arsenopyrite
203 09SH06
(09SS054)
‘A’ Zone 214.3 215.3 1.0 0.75 36.24 0.061 12.3 15.70 0.4 Massive stibnite up to
3 inches thick within
sheared carbonate‐
stibnite vein swarms
204 09SH07
(09SS058)
‘A’ Zone
Hanging wall
216.2 217.0 0.9 0.62 34.00 0.648 45.7 3.74 0.2 Quartz‐stibnite veins,
locally massive
205 09SH07
(09SS059)
‘A’ Zone 218.0 219.6 1.6 0.93 47.97 0.780 3.6 7.02 2.9 One foot wide massive
stibnite‐quartz vein
with fine grained
sheared stibnite
206 09SH08
(09SS060)
‘A’ Zone 278.6 279.7 1.1 0.64 55.38 0.566 <0.1 12.15 0.7 0.64 feet wide (true
width) massive stibnite
vein with 85% massive
stibnite
207 09SH09
(09SS063)
Hanging wall of
‘A’ Zone
165.5 166.5 1.0 0.83 0.09 0.060 5,800 0.27 3.4 Quartz‐stibnite
stockwork veins; more
visual stibnite than
analytical Sb
(discrepancy?)
208 09SH09
(09SS064‐065)
‘A’ Zone 169.0 172.3 3.3 2.00 2.20 0.090 8,380 0.26 14.5 Broken, chaotic quartz‐
stibnite vein zone with
Sb veins 0.5‐1.5 inches.
True width is 2.0 ft; part
of larger chaotic zone
6.8 feet wide (from
165.5‐172.3 ft)213
APPENDIX II Summary of Relevant Sample Data Used in Calculation of Inferred Sb and Au Resources from Pringle Bench
that are described in this Technical Report.
Sample
Control
#
Drill Hole #
(Assay
Intervals)
Underground
or Surface
Channels
Stibnite
Target Vein
Zone
From
(feet)
To
(feet)
Width
(feet)
Estimated
True
Width
Sb (%) Au
(oz/ton)
As
(ppm)
Hg (ppm) Pb (ppm) Brief Description
1 Trench I
(07112‐07113)
West of
‘West’ Zone
90.2 95.1 4.9 4.9 14.64 0.030 NA NA NA Multiple thin stibnite quartz
veins vertical
2 Trench I
(0715)
‘West’ Zone 100.6 102.7 2.1 2.1 26.23 0.230 NA NA NA Semi‐massive stibnite‐quartz
vein; vertical; true width is
1.8 feet
3 Trench I
(07120)
‘A’ Zone 132.2 133.4 1.2 1.2 30.03 0.044 NA NA NA Trench exposure shows
vertical vein
4 Trench I
(0714)
‘B’ Zone 157.4 163.3 5.9 5.9 30.35 0.035 NA NA NA Semi‐massive stibnite in
quartz vein about 1.5 feet
thick.
5 Trench I
(07129)
‘C’ Zone 189.6 190.2 0.6 0.6 22.92 0.040 NA NA NA Thin, semi‐massive stibnite
quartz vein steeply dipping
6 Trench I
(07159)
East of ‘C’
Zone
428.0 428.2 0.2 0.2 48.07 0.020 NA NA NA Massive stibnite near vertical
gash vein with <5.0% quartz
7 Trench I
(07166)
East of ‘C’
Zone
472.3 472.6 0.3 0.3 59.52 0.010 NA NA NA Massive stibnite near vertical
gash vein with <5.0% quartz
8 Trench I
(07176)
East of ‘C’
Zone
540.2 540.4 0.2 0.2 64.76 0.010 NA NA NA Massive stibnite near vertical
gash vein with <5.0% quartz
9 07SH08
(07SS71‐73)
‘B’ Zone 45.0 46.5 1.5 1.25 5.62 0.069 NA NA NA Vertical stibnite‐quartz vein
10 Including
(07SS71)
‘B’ Zone 45.0 45.5 0.5 0.42 12.60 0.140 NA NA NA Vertical stibnite‐quartz vein
11 07SH08 West Zone? 147.0 148.0 1.0 0.83 0.31 0.052 NA NA NA Disseminated stibnite with
arsenopyrite
12 07SH08
(07SS75)
‘A’ Zone 78.25 79.25 1.0 0.80 40.80 0.212 NA NA NA Nearly massive stibnite in
quartz gangue true thickness
=0.8 feet
13 07SH09
(07SS90)
‘B’ Zone 46.75 47.75 1.0 0.83 8.78 0.020 NA NA NA Vertical stibnite‐quartz vein;
twinned from 07SH08
14 07SH09
(07SS93)
‘A’ Zone 80.0 80.5 0.5 0.42 33.51 0.391 NA NA NA Nearly massive stibnite in
quartz gangue true thickness
=0.4 feet; twinned interval in
07SH08
15 07SH09
(07SS95)
‘West’ Zone
?
86.0 86.5 0.5 0.42 10.78 0.044 NA NA NA Disseminated stibnite in
quartz214
Sample
Control
#
Drill Hole #
(Assay
Intervals)
Underground
or Surface
Channels
Stibnite
Target Vein
Zone
From
(feet)
To
(feet)
Width
(feet)
Estimated
True
Width
Sb (%) Au
(oz/ton)
As
(ppm)
Hg (ppm) Pb (ppm) Brief Description
16 Trench M
(07M08‐
07M10)
‘West’ Zone 114.8 116.9 2.1 2.10 19.90 0.035 NA NA NA ‘West’ Zone of semi‐massive
stibnite plus quartz; true
thickness=0.7 feet
17 Trench M
(07M13)
‘A’ Zone 121.4 127.9 6.5 6.50 35.11 0.000 NA NA NA Semi‐massive stibnite in
phyllite gangue zone
18 Trench M
(07M17)
‘B’ Zone 127.9 141.0 13.1 13.1 1.45 0.020 NA NA NA Continuous chip through Sb‐
bearing veinlet zone.
19 07SH07
(07SS49)
‘B’ Zone 30.0 31.0 1.0 0.83 7.11 0.023 NA NA NA About 12% stibnite in
euhedral quartz gangue
20 07SH07
(07SS52)
‘A’ Zone 65.0 66.0 1.0 0.83 14.88 0.338 NA NA NA Interpreted ‘A’ Zone of semi‐
massive stibnite plus quartz
mineralization; true
thickness=0.7 feet
21 07SH07
(07SS61)
‘West’ Zone 132.5 133.0 0.5 0.42 0.29 0.022 NA NA NA Stibnite in quartz vein
22 07SH06 ‘A’ Zone 18.3 19.3 1.0 0.83 60.03 <0.005 NA NA NA Massive stibnite lense 6
inches thick
23 07SH06
(07SS44)
‘West Zone’ 36.8 37.3 0.5 0.42 8.28 0.028 NA NA NA Disseminated stibnite in
quartz carbonate vein
24 07SH06
(07SS46)
‘West
Zone”
42.0 42.5 0.5 0.42 6.88 <0.005 NA NA NA Disseminated stibnite in
quartz carbonate vein
25 07SH05
(07R548)
West Zone 112.0 115.0 3.0 2.22 2.97 <0.005 NA NA NA Silicified zone with
disseminated stibnite
26 07SH02
(07SS15)
‘A’ Zone 39.5 40.5 1.0 0.83 19.56 0.020 NA NA NA Quartz‐stibnite vein with
thermal metamorphic
textures (6 inches thick; QP
examination)
27 07SH02
(07SS18)
‘West’ Zone 51.5 52.5 1.0 0.83 0.21 0.015 NA NA NA Disseminated stibnite in
quartz vein; with
arsenopyrite
28 Trench ‘D’
(06ST001‐002)
‘West’ Zone 67.0 67.5 0.5 0.50 27.86 0.090 NA NA NA High angle, semi‐massive
stibnite veins (3) in schist215
Sample
Control
#
Drill Hole #
(Assay
Intervals)
Underground
or Surface
Channels
Stibnite
Target Vein
Zone
From
(feet)
To
(feet)
Width
(feet)
Estimated
True
Width
Sb (%) Au
(oz/ton)
As
(ppm)
Hg (ppm) Pb (ppm) Brief Description
29 Trench ‘D’
(06ST030‐032)
‘A’ Zone 85.0 86.5 1.5 1.50 14.95 0.037 NA NA NA Disseminated stibnite in
quartz vein; with
arsenopyrite
30 07SH02
(07SS24‐25)
West Sb‐Au
vein
183.5 187.5 4.0 2.5 1.05 0.019 NA NA NA Wide zone with vein zone
about 2.5 feet in true
thickness; stibnite
disseminations in quartz
31 Including
(07SS24)
West Sb‐Au
vein
183.5 186.5 3.0 2.0 1.70 0.017 NA NA NA Vein zone about 2.0 feet in
true thickness; stibnite
disseminations in quartz
32 07SH04
(07SS30)
West Zone 108.5 109.0 0.5 0.42 6.05 0.004 NA NA NA Disseminated stibnite in thin
quartz zone quartz
33 07SH03
(07SS219)
‘A’ Zone 17.5 18.4 0.9 0.75 3.83 0.054 NA NA NA Quartz‐stibnite vein with
thermal metamorphic
textures (6 inches thick; QP
examination)
34 07SH03
(07SS220)
West Zone 34.6 35.1 0.5 0.50 0.84 0.005 NA NA NA Disseminated stibnite in thin
quartz zone quartz
35 Trench F
(06ST061)
West of
‘West’ Zone
200.0 200.3 0.3 0.30 20.18 0.748 NA NA NA Steep, stibnite‐quartz vein
36 Trench F
(06ST063)
‘West’ Zone 315.0 315.3 0.3 0.30 8.43 0.090 NA NA NA Steep, stibnite‐quartz vein
37 Trench F
(06ST066)
‘A’ Zone 350.0 350.3 0.3 0.30 17.42 0.120 NA NA NA Quartz‐stibnite vein with
thermal metamorphic
textures (6 inches thick; QP
examination);
Definitive observation for ‘A’
Zone
38 Trench F
(06ST071)
‘C’ Zone 435.0 435.3 0.3 0.30 46.33 0.040 NA NA NA Thin stibnite vein in schist
39 06SH01
(06SH153)
‘A’ Zone 275.0 280.0 5.0 4.15 2.50 0.050 NA NA NA RC Program with stibnite‐
quartz zone identified.
40 06SH01
(06SH150)
‘B’ Zone 250.0 255.0 5.0 4.15 0.93 0.030 NA NA NA Disseminated stibnite in thin
quartz zone
41 09SH11
(09SS077)
West Zone 10.7 11.4 0.7 0.58 38.51 0.807 36.2 1.51 1.7 Massive stibnite 0.5 feet
thick
42 06STO30‐
032)
Trench H West Zone 85.0 86.5 1.50 1.50 14.90 0.050 NA NA NA Continuous Chip216
Sample
Control
#
Drill Hole #
(Assay
Intervals)
Underground
or Surface
Channels
Stibnite
Target Vein
Zone
From
(feet)
To
(feet)
Width
(feet)
Estimated
True
Width
Sb (%) Au
(oz/ton)
As
(ppm)
Hg (ppm) Pb (ppm) Brief Description
43 09SH11
(09SS078)
‘A’ Zone 29.0 30.0 1.0 0.83 10.25 0.122 1,120 0.12 2.2 Quartz‐stibnite vein 0.6 feet
of a 1.5 foot vein of massive
stibnite recovered
44 09SH12
(09SS080)
Footwall ‘A’
Zone
17.0 17.5 0.5 0.42 7.20 0.041 3,370 0.23 0.4 Broken quartz‐stibnite vein
45 09SH12
(09SS081)
‘A’ Zone 20.0 21.5 1.5 1.25 32.10 0.052 39.9 0.34 0.2 One foot of massive stibnite
and 0.5 feet of stibnite‐
quartz stockwork
46 09SH13
(09SS085)
‘A’ Zone 233.0 237.8 4.8 2.78 8.91 0.045 1,260 0.33 2.1 Two foot wide (true width)
zone of braided quartz‐
stibnite veins
47 09SH14
(09SS086)
‘B’ Zone 43.2 44.7 1.5 1.25 36.60 0.008 0.7 0.18 4.3 0.3 foot wide quartz‐stibnite
vein with 50% fine grained
sheared stibnite—like ‘A’
Zone
48 09SH14
(09SS088)
‘A’ Zone 112.5 113.5 1.0 0.83 50.94 0.019 1.2 2.44 1.2 Massive stibnite with
oxidation‐‐kermesite
49 09SH14
(09SS089)
West Zone 129.5 130.0 0.5 0.30 6.94 0.011 1,430 0.21 3.6 Braided quartz‐stibnite vein
swarm
50 09SH15
(09SS092)
‘B’ Zone 13.0 13.7 0.7 0.41 15.25 0.156 2,170 0.22 1.6 Sheared quartz‐stibnite zone
possible caught in fault zone
51 09SH15
(09SS095)
‘A’ Zone
hanging
wall
156.0 157.0 1.0 0.58 3.32 0.057 7,880 0.30 61.1 Two parallel quartz‐stibnite
veins with semi‐massive
stibnite
52 09SH15
(09SS096)
‘A’ Zone 162.5 163.5 1.0 0.58 35.48 0.030 75.3 0.46 1.3 One foot wide zone of
quartz‐stibnite
mineralization; 4 inches
massive stibnite‐‐sheared
53 09SH16
(09SS098)
‘A’ Zone
branch
152.0 153.0 1.0 0.74 8.20 0.015 1,110 0.24 3.5 Over‐drilled quartz‐stibnite
vein
54 09SH16
(09SS099)
‘A’ Zone 156.0 157.0 1.0 0.74 10.16 0.039 2,210 0.49 7.9 Broken quartz‐stibnite vein
55 09SH16
(09SS100)
West Zone
160.5 161.5 1.0 0.74 5.77 0.071 8,290 1.04 18.2 0.3 feet quartz‐stibnite vein
56 09SH18
(09SS116‐
117)
‘A’ Zone
hanging
wall
72.5 74.5 2.0 1.33 3.30 0.009 990 0.15 14.1 Quartz‐carbonate stibnite
veins in hanging wall of ‘A’
zone217
Sample
Control
#
Drill Hole #
(Assay
Intervals)
Underground
or Surface
Channels
Stibnite
Target Vein
Zone
From
(feet)
To
(feet)
Width
(feet)
Estimated
True
Width
Sb (%) Au
(oz/ton)
As
(ppm)
Hg (ppm) Pb (ppm) Brief Description
57 09SH18
(09SS109)
‘A’ Zone 74.5 75.5 1.0 0.66 37.73 5.72 6.9 0.32 <0.2 Quartz‐stibnite vein with
coarse visible gold, 0.8 feet
true thickness
58 09SH18
(09SS122‐
123)
West Zone 109.5 111.5 2.0 1.33 4.11 0.016 NA NA NA Braided quartz stibnite
veinlets
59 09SH19
(09SS132)
‘A’ Zone 173.8 174.7 0.9 0.50 32.50 0.330 34.2 0.85 0.6 Semi‐massive stibnite with
granoblastic textures
60 09SH19
(09SS137)
West Zone 215.5 216.5 1.0 0.52 7.95 0.033 1,635 0.27 10.7 Braised quartz‐antimony
vein stockwork
61 09SH20
(09SS148)
‘A’ Zone 205.5 206.5 1.0 0.50 2.74 1.690 8.560 0.30 11.2 Quartz‐carbonate‐stibnite
vein with visible gold
62 09SH20
(09SS150)
‘A’ Zone
footwall
223.0 224.0 1.0 0.50 11.48 0.044 NA NA NA Massive stibnite‐quartz
zones to 6 inches; with
carbonate
63 09SH20
(09SS152)
Offset? ‘A’
Zone
footwall
272.0 273.0 1.0 0.50 11.08 0.055 NA NA NA Massive stibnite‐quartz
zones to 6 inches; with
carbonate
64 09SH20
(09SS155)
West Zone 324.5 325.5 1.0 0.50 27.29 0.010 42 0.34 1.0 Massive stibnite‐quartz
zones to 6 inches; with
carbonate
65 09SH20
(09SS156)
West Zone
extension
335.0 338.0 3.0 1.74 9.75 0.135 1,675 039 8.1 Numerous braided quartz‐
stibnite veinlets within 2.5
foot true thickness zone;
interpreted offset
66 Channel
Sample in
Trench H;
(07H03)
‘A’ Zone 33.0 49.2 16.2 16.2 8.74 5.56 NA NA NA Wide “A’ zone channel
sampled—suspect analysis
rejected
218
Appendix III Measured interval and true thickness estimates in feet from ‘high grade’ vein‐faults from drill
holes and channels samples used in resource analyses, Workman’s Bench, and Pringle Bench Nolan Properties
November, 2008; Updated December, 2009
(1)
Drill
Hole/Control
Point
Sample
Interval
Thickness
West Zone,
Workman’s
Estimated
True
thickness
West Zone
Workman’s
Sample
Interval
Thickness,
‘A’ Zone,
Workman’s
Estimated
True
thickness
‘A’ Zone
Workman’s
Sample
Interval
Thickness,
‘B’ Zone,
Workman’s
Estimated
True
thickness
‘B’ Zone
Workman’s
Sample
Interval
Thickness,
‘C’ Zone,
Workman’s
Estimated
True
thickness
‘C’ Zone
Workman’s
Sample
Interval
Thickness
West Zone,
Pringle
Estimated
True
thickness
West Zone
Pringle
Sample
Interval
Thickness
‘A’ Zone,
Pringle
Estimated
True
thickness
‘A’ Zone
Pringle
06SH01 NI
(2)
NI 5.00 3.70
07SH02 1.00 0.83 1.00 0.83
07SH03 0.50 0.42 0.90 0.72
07SH04 0.50 0.42 0.50 0.42
07SH05 3.00 2.22 NI NI
07SH06 0.50 0.42 1.00 0.83
07SH07 0.50 0.42 1.00 0.83
07SH08 1.00 0.83 1.00 0.83
07SH09 0.50 0.42 0.50 0.42
07SH10 NI NI NI NI
07SH11 NI NI NI NI
07SH12 NI NI NI NI
09SH10 NI NI NI Ni
09SH11 0.70 0.58 1.00 0.83
09SH12 NI NI 2.00 1.67
09SH13 NI NI 4.80 2.78
09SH14 0.50 0.30 1.00 0.83
09SH15 NI NI 2.00 1.16
09SH16 1.12 0.74 1.12 0.74
09SH17 NI NI NI NI
09SH18 2.00 1.33 3.00 1.99
09SH19 1.0 0.52 0.90 0.50
09SH20 1.00 0.50 1.00 0.50
Trench H 1.50 1.50 NI NI
Trench F 0.30 0.30 0.30 0.30
Trench D 0.50 0.50 1.50 1.50
Trench M 2.10 2.10 6.50 6.50
Trench I 2.10 2.10 1.20 1.20
07SH01 NI NI 1.00 0.83 6.00 4.81 NI NI
Trench W399 NI NI 1.20 1.20 NI NI NI NI 219
Drill
Hole/Control
Point
Sample
Interval
Thickness
West Zone,
Workman’s
Estimated
True
thickness
West Zone
Workman’s
Sample
Interval
Thickness,
‘A’ Zone,
Workman’s
Estimated
True
thickness
‘A’ Zone
Workman’s
Sample
Interval
Thickness,
‘B’ Zone,
Workman’s
Estimated
True
thickness
‘B’ Zone
Workman’s
Sample
Interval
Thickness,
‘C’ Zone,
Workman’s
Estimated
True
thickness
‘C’ Zone
Workman’s
Sample
Interval
Thickness
West Zone,
Pringle
Estimated
True
thickness
West Zone
Pringle
Sample
Interval
Thickness
‘A’ Zone,
Pringle
Estimated
True
thickness
‘A’ Zone
Pringle
203797 NI NI 1.50 1.50 NI NI NI NI
203405 1.50 1.50 NI NI NI NI NI NI
203789 1.50 1.50 NI NI NI NI NI NI
203808 NI NI 1.50 1.50 NI NI NI NI
WBUGG3 S1S5 NI NI 0.42 0.42 NI NI NI NI
WBUG 8‐S2 NI NI 0.42 0.42 NI NI NI NI
203802 NI NI 2.50 2.50 NI NI NI NI
203810 NI NI NI NI 0.50 0.50 NI NI
203791 NI NI NI NI 0.50 0.50 NI NI
WBUG5‐S2 NI NI NI NI 0.50 0.50 NI NI
203795 NI NI 1.50 1.50 NI NI NI NI
203488 NI NI NI NI 0.65 0.65 NI NI
WBUG9 S1 NI NI NI NI 0.42 0.42 NI NI
WBUG5 S3 NI NI NI NI NI NI 042 0.42
203804 NI NI NI NI 0.45 0.45 NI NI
203450 NI NI 1.50 1.50 NI NI NI NI
203409 NI NI NI NI 0.45 0.45 NI NI
267397 NI NI 0.85 0.85 NI NI NI NI
07SH13 0.80 0.66 1.50 1.24 4.00 2.80 NI NI
07SH14 1.40 1.05 1.00 0.80 0.50 0.40 NI NI
07SH15 0.50 0.41 0.50 0.41 5.80 3.95 0.50 0.41
07SH16 NI NI 5.00 4.15 0.50 0.41 0.50 0.41
07SH17 NI NI NI NI NI NI NI NI
07SH18 0.80 0.67 NI NI NI NI NI NI
08SH01A Redrill Redrill Redrill Redrill Redrill Redrill Redrill Redrill
08SH01B 1.40 0.92 3.00 2.49 3.20 2.65 0.50 0.41
08SH02 0.60 0.50 1.00 0.70 0.80 0.58 NI NI
08SH03 1.70 1.45 1.60 1.32 0.60 0.49 0.50 0.41
08SH04 NI NI NI NI NI NI NI NI
08SH05 NI NI NI NI NI NI NI NI
08SH06 NI NI NI NI NI NI NI NI
08SH07 0.50 0.40 0.50 0.40 0.80 0.64 0.50 0.40
08SH08 NI NI 2.80 2.25 0.50 0.40 NI NI
08SH09 NI NI 1.00 0.80 0.50 0.40 NI NI
08SH10 1.40 1.16 0.70 0.58 0.80 0.64 0.70 0.58 220
Drill
Hole/Control
Point
Sample
Interval
Thickness
West Zone,
Workman’s
Estimated
True
thickness
West Zone
Workman’s
Sample
Interval
Thickness,
‘A’ Zone,
Workman’s
Estimated
True
thickness
‘A’ Zone
Workman’s
Sample
Interval
Thickness,
‘B’ Zone,
Workman’s
Estimated
True
thickness
‘B’ Zone
Workman’s
Sample
Interval
Thickness,
‘C’ Zone,
Workman’s
Estimated
True
thickness
‘C’ Zone
Workman’s
Sample
Interval
Thickness
West Zone,
Pringle
Estimated
True
thickness
West Zone
Pringle
Sample
Interval
Thickness
‘A’ Zone,
Pringle
Estimated
True
thickness
‘A’ Zone
Pringle
08SH11 0.90 0.58 4.00 2.56 0.80 0.51 1.00 0.65
08SH12B 0.50 0.42 4.90 3.62 0.50 0.40 1.70 1.36
08SH13 5.40 2.90 1.30 0.83 3.80 2.43 2.00 1.28
08SH14 0.50 0.41 0.72 0.72 1.00 0.83 0.70 0.58
08SH15 1.70 1.10 4.00 2.58 8.20 4.80 1.60 0.94
08SH16 1.00 0.83 1.00 0.83 1.00 0.83 1.00 0.83
08SH17 NI NI 3.30 1.91 0.60 0.35 1.10 0.64
08SH18 1.00 0.64 3.80 2.42 NI NI NI NI
08SH19 0.50 0.40 2.50 2.07 NI NI NI NI
08SH20 5.00 4.00 0.70 0.56 1.00 0.80 0.50 0.40
08SH21 NI NI 2.00 1.60 1.70 1.36 NI NI
08SH22 7.00 4.00 1.50 1.20 0.50 0.35 NI NI
08SH23 NI NI 1.00 0.80 NI NI NI NI
08SH24 1.00 0.80 0.70 0.56 1.40 1.12 2.00 1.10
08SH25 0.50 0.41 3.70 3.48 NI NI NI NI
08SH26 NI NI 0.50 0.37 NI NI NI NI
08SH27 NI NI 1.00 0.80 NI NI NI NI
08SH28 NI NI NI NI NI NI NI NI
08SH29 NI NI 1.0 0.83 NI NI NI NI
08SH31 1.50 1.09 NI NI NI NI NI NI
08SH32 6.00 3.20 3.50 2.90 5.80 2.90 1.50 1.24
08SH33 5.00 4.15 1.20 1.00 NI NI NI NI
09SH01 0.70 0.58 3.80 3.15 0.60 0.50 NI NI
09SH02 NI NI 4.30 3.44 NI NI NI NI
09SH03 NI NI 0.62 0.48 NI NI NI NI
09SH04 NI NI 2.70 1.99 3.70 2.75 NI NI
09SH05 NI NI 2.60 1.90 NI NI NI NI
09SH06 NI NI 1.00 0.75 NI NI NI NI
09SH07 NI NI 3.40 2.75 NI NI NI NI
09SH08 NI NI 1.10 0.64 NI NI NI NI
09SH09 NI NI 3.30 2.00 NI NI NI NI
AVERAGES 1.86
(n=27)
1.31
(n=27)
1.90
N=50
1.52
(n=50)
1.71
(N=33)
1.25
(n=33)
0.98
(N=17)
0.71
(n=17)
1.05
(n=19)
0.85
(n=19)
1.77
(n=21)
1.38
(n=21)
(1)
Does not include estimates from ’B’ and ’C’ zones on Pringle Bench
(2)
No intercept or assay control221
Appendix IV Tonnage Factors for ‘A Zone’, Workman’s Bench—Vulcan Test
Sample
Control #
Drill Hole or
Underground/
Surface Sample
Control
Specific
Gravity (SG)
Tonnage
Factor
(cubic ft/short
ton)
2007‐2008 Data
2 08SH02 3.95 8.10
6 08SH03 3.74 8.55
13 08SH01B 3.59 8.90
24 08SH14 3.25 9.84
19 08SH15 3.67 8.73
29 08SH17 3.33 9.61
34 08SH16 3.28 9.75
36 07SH01 3.42 9.38
40 Trench (W399) 4.18 7.65
51/52 08SH32 3.68 8.69
55 08SH33 3.52 9.09
60 08SH13 3.66 8.74
86 203450 4.30 7.44
79 203795 3.99 8.02
66 203808 4.05 7.90
91 267397 3.92 8.16
67 WBUG3 S1 4.21 7.60
87 203409 4.20 7.61
76 WBUGG8 S1 4.31 7.42
73 203802 3.95 8.10
88 Trench J 52 3.81 8.39
98 08SH18 3.76 8.51
101 07SH15 3.33 9.60
108 08SH12 3.64 8.77
114/115 07SH14 3.53 9.03
119 08SH11 3.40 9.41
125 07SH13 3.25 9.84
131 08SH22 3.49 9.16
135 O8SH24 3.45 9.27
142 08SH07 3.46 9.25
147/148 08SH10 3.62 8.80
151 08SH23 3.58 8.91
153 07SH16 4.03 7.93
157 08SH20 3.31 9.66
161/162 08SH08 3.74 8.55
166‐168 08SH19 3.75 8.53
169 08SH29 3.25 9.84
170/171 08SH21 4.13 7.74
176/178 08SH25 3.93 8.12
181 08SH26 3.31 9.65
184 08SH09 3.36 9.47
179 08SH31 3.25 9.84
2009 Data
189/190 09SH01 3.25 9.84
192 09SH02 3.35 9.55
198/199 09SH04 (composited) 3.31 9.64
200/201/202 09SH05 (composited) 4.37 7.32
203 09SH06 3.92 8.16
204/205 09SH07 (composited) 4.00 7.98
206 09SH08 4.27 7.48
208 09SH09 3.29 9.72222
Appendix V Resume of Will Robinson 223224
Appendix VI Claim Update Summary, Nolan Creek Area225226227
228
229
230231
232
233234235236237238239
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