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Betty Claim Drill Rig - Nov. 2006
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By Mineral Property Option Agreement dated April 2, 2004 between the Company and Craigmont, the Company acquired the option to explore, develop and acquire the base and precious metal resources upon the mineral claims, mining leases and fee simple titles comprising the formerly operating Craigmont Mines property. Under the Agreement the Company, upon exercise of the option, would be entitled to all base and precious metal resources while Craigmont retains all rights to magnetite, hematite and other industrial mineral resources.
The Company has taken steps to register, with the Land Titles Office, its interest in the use of the surface of the fee simple properties to conduct exploration, development and mining operations.
To maintain the option, the Company is obliged to expend not less than $500,000 upon exploration and development activities in each of the initial two years. Exercise of the option is achieved and the Company becomes owner of all base and precious metal resources upon production of a Bankable Feasibility Report recommending the initiation, once again, of mining operations.
In the event of the re-initiation of commercial mining activities, Craigmont is entitled to a royalty calculated as 2% of Net Smelter Returns if, and only if, a copper resource or resources are identified exceeding, in aggregate, 300,000 tons of ore having an average grade of not less than 1% copper equivalent.
History of the Craigmont Mine
The Craigmont Mine was shut down in 1982 as a policy decision of management. Over its operating life, the mine produced 36,750,000 tons of ore averaging 1.28% copper. Immediately prior to closure, with copper selling at $0.60 per pound, the mine was operating profitably. Management's criteria for assessing additional mineral resources were inherently limiting including a 0.7% Cu grade cut off, severe depth limitation and the assumption that no new capital would be spent to retool facilities to permit processing different ore types. Craigmont's internal reports note that an anomaly located at its western boundary was in the correct geological setting to have the same size potential as the original ore bodies. The report of a Craigmont engineer identified five possible associated zones, one of which reportedly contained 269,260 tons of ore grading 1.68% Cu and noted that minerals left in the Sub-Level Cave could hold up to 50 million pounds of copper.
Exploration Program
On April 13, 2004, the Company began developing its exploration plan by assembling former senior Craigmont engineers and geologists. Reassembly of all available data, plans and professional opinions, including reserve calculations, was a critical first step in undertaking the current reassessment.
The Company engaged Jeff Stibbard, P. Eng., of JDS Energy & Mining Inc., to lead the current process of re-evaluation and to develop an exploration plan. Mr. Stibbard is an experienced manager of major mining projects. Recently he served as General Manager Mining at the $1.5 billion Albian Sands project near Fort McMurray. Prior to that assignment, he was Mine Manager during the design and building of the Ekati diamond mine.
Given the rationale for closure, the data available respecting existing reserve potential, the current price of copper, and new technologies, the Company is very positive about the potential presented by the option to explore, develop and acquire the base and precious metal resources upon the Craigmont Mine property. The fact that the site is currently licensed for mining operations removes prospective barriers and diminishes the prospective gap between the potential production of a Feasibility Study and the initiation of mining activities.
On January 20 and 21, 2005 the company added, by staking, substantially to the dimensions of the Craigmont property. 55 new cells on the south property added 1350 acres. 51 new cells on the northern boundary added another 2300 acres. Each of the new acquisitions overlie sites where past exploration or development has revealed showings.
BlueRock Resources Joint Venture
By Mineral Property Option Agreement concluded with BlueRock Resources Ltd. (formerly Better Resources) on April 20, 2005, the Company acquired the right and option to earn an undivided 50% proportionate interest in the 5 Betty claims. The Betty claims are contiguous to the Craigmont claims to the northwest and are considered important in that they may host a an extension of the ore zone previously identified upon the Craigmont property as the" Embayment Area. Clifford C. Rennie, P. Eng., Chairman of BlueRock Resources Ltd. (formerly Better Resources), had the first look at Craigmont in 1957 for Placer and following Placer's entry into Craigmont remained as exploration supervisor and then senior geologist until 1966. His faith in the possibility of additional high grade copper scarn deposits on the western Craigmont claims and the Betty claims led to Better Resources Ltd acquiring the claims in 1981 and since maintaining them as a valuable exploration proposition.
Magnetite Skarns-Craigmont Property
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