St. Elmo

NI43-101 Report


• High level gold system
• .84 opt Au in .9 meter drill hole interval
• Elevated pathfinder’s Cu, Ag, Sb, Pb, AS and Zn.

Quartz veins containing silver, copper and antimony were discovered on the southwest slope of Rosebud
Mountain in 1869, and the district was expanded in 1873 to include the placer deposits along Gold Creek three miles southwest of the project. In the late 1890’s placer mining activity increased, and a drag line dredge processed about 500,000 cubic yards producing 40,000 ounces from the gravels of Gold Creek.
The St. Elmo vein was likely discovered in the 1870’s and was explored by an inclined shaft and drifts on the
125 level. Individual miners reportedly worked on the St. Elmo during the 1940’s following the high-grade zones in the vein. There is no record of this production.

In 1988 Newmont Exploration Ltd. did an extensive sampling program on the old 7500 level adit workings at the St. Elmo mine. Approximately 300 samples were collected from the rib of the cross cut to the vein and then along the hanging or footwall of the stoped areas. Assay values were quite erratic and ranged from zero to 20 oz Au/ton. There was strong correlation (0.94) between gold and silver and a 0.70 correlation between gold and lead.

1n 1990 Harrison Western Mining (HWM) explored the St. Elmo vein north of the 7,500 level crosscut and
mined approximately 1,500 tons of vein material from 230 feet of strike length. HWM calculated the average
grade of the mined material to be 0.33 oz Au/ton. There are 19 piles of this material in the pasture below the
mine, and a composite sample taken in 1996 by Neil and Associates averaged 0.22 oz au/ton, 0.27 oz Ag/ton, 1,680 ppm Pb, 210 ppm As, 0.31 ppm Hg, and 22 ppm Sb. A 795-pound sample of the mined material was sent to Hazen Research of Golden, Colorado for metallurgical testing. Hazen reported the head grade to be 2.36 oz Au/ton and 1.15 oz Ag/ton, and that 85 to 90% of the gold could be recovered with a combination of gravity and flotation.

Gold mineralization occurs as visible to microscopic-sized particles of native gold usually associated with sulfide minerals such as pyrite, chalcopyrite, enargite, digenite and covellite. The high-sulfidation state of the copper minerals in a vuggy, acid-leached, quartz vein, along with strong bleaching and quartz-sericite-pyrite alteration of the vein’s hanging wall suggest that the mineralization is the result of a high-sulfidation system. Fluid inclusion work on the quartz vein indicates a relatively low temperature of formation, 160oC. This temperature and the presence in vein structures of mixed fluorite and barite crystals which contain fine grained sulfides both suggest that the St. Elmo mine is exploring only the very upper portions of the mineralized system.

Realsection induced polarization survey on the St. Elmo, Central (saddle) and Diamond Jim areas. Results of
the survey are summarized below.

“In summary, the St. Elmo vein and silicic wallrock shows a very well defined resistive (high) feature
(order of magnitude above background). The resistivity suggests that the St. Elmo vein system is much
more extensive than previously thought.EThe total strike shown by IP survey is between 600m to
800mE.The Realsection profiles across the St. Elmo vein system suggest that the veins continue to
+300m depth.”

In 1999 MEA supervised a three-hole diamond drilling program on the property. Hole GC-01 was drilled 270o
at -45o for 202m to test the down-dip extension of the vein. It intersected 14.6m of Type 1 vein which is rich in sulfides but gold poor. Below the T1 vein the hole intersected 2.6 meters (121.9 – 124.5) averaging 5.17 gm Au/ton, and 1.9 meters (132 – 133.9) averaging 14.31 gms Au/ton within a 19.2 meter zone (121.9 – 141.1) averaging 2.24 gm Au/ton. A third zone of anomalous gold was intersected at 188 meters. The gold occurs in white quartz veins and breccia zones along with coarse-grained pyrite, chalcopyrite, tetrahedrite and other sulfosalts. Gold values for the mineralized intervals (in meters) include the following:

From
To
ppb Au
oz/ton
121.9
123.5
840
123.5
124.0
4,000
124.0
124.5
17,031
0.498
132.0
133.0
1,345
133.0
133.9
28,728
0.84
188.8
189.8
355
189.8
190.8
375

Drill hole GC-02 was drilled 270o at -52o for 195m to test the north extension of the St. Elmo vein zone approximately 150m north of hole GC-01. The hole encountered intense quartz-sericite-pyrite alteration from 99m – 195m. Within this altered zone were numerous small Type 2 veinlets. The interval from 99.5m to 157.4m was consistently anomalous in gold (+20 ppb) with intervals including:

From
To
ppb Au
103.0
103.3
200
137.5
138
175
140.0
140.8
510

Hole GC-03 was drilled 247o at -45o for 177m approximately 50m south of hole GC-01. In this hole, the St. Elmo vein system is both a sheeted-vein and a vein-stockwork system. From 118m to 165m the hole intersected 15m to Type 2 vein and vein stockwork. Gold mineralized intervals include the following:

From
To
ppb Au
oz/ton
157.2
157.7
85
157.7
158.2
6,740
0.197
158.2
158.7
30
158.7
159.2
120
159.2
159.7
835
159.7
160.2
45
160.2
160.7
90