Drumlummon Gold Mine, Montanna
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Transcript of Drumlummon Gold Mine, Montanna
Last Updated May 26, 2010
Drumlummon Mine Project
Marysville, Montana
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Safe Harbor
The following presentation may include certain “forward-looking statements” within the meaning of the United States Private Litigation Reform Act of 1995 and applicable Canadian Securities Laws. All statements, other than statements of historical fact, included in the presentation, including, without limitation, statements regarding potential mineralization and reserves, exploration results, and future plans and objectives of RX Exploration Inc., are forward-looking statements. Words such as “expect”, “anticipate”, “estimate”, “may”, “will”, “should”, “intend”, “believe” and other similar expressions are forward-looking statements. Forward-looking statements are not guarantees of future results and conditions but rather reflect our current views with respect to future events and are subject to risks, uncertainties, assumptions and other factors, and actual results and future events could differ materially from those anticipated in such statements. There can be no assurance that such forward-looking statements will prove to be accurate.
Some of the important factors that could cause actual results to differ materially from our expectations are disclosed under the heading “Risk Factors” and elsewhere in documents filed from time to time with the Canadian provincial securities regulators. We base our forward-looking statements on information currently available to us and we do not assume any obligation to update them, except as required by law.
An additional Cautionary Note to Investors – In the event that we use certain terms in this presentation, such as “resource”, “measured resource”, “indicated resource” and “inferred resource”, U.S investors are cautioned that, while such terms are recognized and required by Canadian Securities Laws, the United States Securities and Exchange Commission does not recognize them. Under U.S. standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination has been made. U.S. investors should not assume that all or any part of measured or indicated resources will ever be converted into reserves. In addition, “inferred resources” have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Accordingly, information concerning descriptions of mineralization in this presentation may not be comparable to information made public by companies that are subject to the SEC’s Industry Guide 7.
Corporate Overview
RX Exploration Inc.'s strategy is to re-examine mineral projects within North America that have previously reached advanced exploration, underground development or past gold or silver production.
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Share Capital
1 As of May 25, 2010
Listing CNSX
Symbol “RXE”
Recent share price1 CAD $0.65/share
52 week low–high CAD $0.165–$0.65
Shares outstanding 109 million – basic
196 million – fully diluted
Market capitalization CAD $70 million
Cash CAD ~$6 million
Share ownership
RX Management (~15%)
Funds (May 2010) Sprott Asset Management (4.6% basic or ~ 5.1% fully diluted)
Conditionally approved for Tier 1 listing on TSX-V – refer to May 25, 2010 Press Release
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The RX Team
Directors John F. O’Donnell, B.A. (Econ.), L.L.B., Chairman Murray R. Nye, Director, President, CEO Maxwell A. Polinsky, B.Comm. (Hon.), Director, CFO Edward L. Ellwood, MBA, Director William J. Fisher, P.Geo., Director John A. Ryan, CGA, Director Paul V. Teodorovici, Director
Technical New Millenium Mining & Contracting LLC – Mine Operator L. Joseph Bardswich, P. Eng. – Mining Engineer Harold (Mike) Gunsinger – Underground Consultant Ben Porterfield, M.Sc. – Consulting Geologist
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Drumlummon Mine Project Overview
One of the largest past gold producers in the western USA with reported total production of US$29,000,000 @ US$20 – US$35 oz/gold (from 1881 – 1910)
Originally financed by the Rothschilds. Lawsuit disrupted production in early 1900’s and deeper levels have remained flooded since 1901
Developed at numerous levels to 1,600 feet with 2 shafts, power and year round road access
“Bonanza” style epithermal deposit which can produce high grades over large widths
RX consolidated the project and commenced exploration in 2007
April, 2010 - bulk sampling commenced
May, 2010 - 1,000 ton per day permitted mill leased
Exploration ongoing
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The Drumlummon Mine, Marysville MontanaMarysville, MT is located 25 miles North-West of Helena, Montana’s capital city.The Mill is located in Philipsburg, MT, 114 miles by road South-West from Marysville.
Philipsburg
Marysville
HELENA
Drumlummon Mine and Mill Locations
History of the Marysville Mining District
Mine Discovery Production* (Au, Ag)
Comments
Drumlummon 1876 $29,000,000, 1.1 – 1.2 mt
Average 0.5 oz/t Au
Bald Butte Prior to 1886 $3,500,000 Vein width to 22 ft
Gloster Prior to 1880 $3,500,000 Free gold; cp + py
Bald Mountain 1875 $3,500,000 Cut-off 0.25 oz/t Au, to 15 ft wide
Shannon 1885 $2,700,000 Veins 7 – 14 ft wide
Belmont 1878 $2,500,000 Veins 2 – 10 ft wide
Empire 1880 $2,500,000 Reportedly averaged $30/t in Au, Ag, Cu, and Pb
Penobscot 1873 $1,230,000 Quartz-carbonate with free gold and silver
Blue Bird-Hickey
n.a. $600,000 Veins from 4 – 12 ft, free gold and silver
*From NI 43-101 report. 8
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400 Level
1600 Level
700 Level
History of the Drumlummon Mine
D Block
Charly Vein
Xmas Vein
D-block
~ Late 1800’s
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History of the Drumlummon Mine
1876: Drumlummon deposit discovered by Thomas Cruse
1883 - 1901: Montana Co. puts mine into production. Loses claim dispute in 1901 and floods mine to 400 foot level.
1902 – 1910: Production continues above 400 foot level by Montana Co. while claim appeals in progress. Loses appeal.
1910 - 1929: St Louis Company takes ownership. Leases mine periodically. Production sourced above the 400 foot level. Market crash of ’29 stops production.
1941 - 1951: Montana Rainbow Co. dewaters and restarts production in 1946. Mill burns down in 1950 and production ceases. Rebuilding the mill not economically viable.
2007: RX consolidates all land claims, initiates surface drilling, completes NI 43-101 report. Begins underground rehabilitation.
2008: Charly Vein system discovered
2010: RX reopens the mine
35,6
85 o
z Au
388,
375
oz A
g
775,
000
oz A
u eq
26,4
53 o
z Au
140,
393
oz A
g
21,2
84 o
z Au
138,
773
oz A
g
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Drumlummon Property Map Original Drumlummon property (outlined in black below):
26 patented mining claims (290 acres) and 68 staked claims (1,390 acres) Bald Butte properties (adjacent to SW boundary, not yet shown on map)
22 patented claims and 50 federal claims covering ~ 1,000 acres
Strike of D
rumlummon V
eins.
Area re
mains open (“
blue sky”)
A
A’
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400 Level
1600 Level
700 Level
Drumlummon TodayDiagrammatic Illustration of Mineral Zones Outlined by RX to Date.
1000 Level
D Block
Charly Vein
Xmas Vein
D-block
500 level cross-cut through Charly Vein
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Drumlummon TodayThe existing workings are being utilized to explore and re-develop the Drumlummon
9 Hour Workings
South
Surface
Drumlummon Workings Surface Setup
Previously Disputed Ground
Xmas VeinShaft No.2
Sha
ft N
o.1
1600 Level
1000 Level
700 Level
400 Level
Charly Vein
A A’
9 Hour Workings
Xmas Vein
South North
Exploration
Target
Exploration
Target
Exploration
Target
Exploration
Target
Drumlummon Workings
Charly Vein
400 Level
700 Level
Sha
ft N
o.1Shaft No.2
1000 Level
1600 Level
Previously Disputed Ground
Drumlummon Development philosophy“Drill for Structure…”
57.821.16.8
(true width 3 m)16.59.7DDH 10-115
45.219.768.0
(true width 3 m)12.34.3DDH 10-120
572.641.13.776.873.2DDH 09-102
1,821.39.92.43.61.2DDH 08-29
380.651.82.3145.5143.2DDH 08-28
350.433.51.8125.6123.8DDH 08-26
1,393.044.12.9125.8122.9DDH 08-15
1,081.437.81.8121.4119.5DDH 08-05
Silver
(g/t)
Gold
(g/t)
Width
(m)
To
(m)
From
(m)
Drill Hole
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Drumlummon Development philosophy“… drift for Grade”
1904 g/t55.6 opt107.2 g/t3.13 opt2.3 metres7.4 ft
Silver - AverageGold - AverageTotal Width
2.7 opt0.52 opt12 inches
0.04 opt0.03 opt18 inches
126.7 opt4.47 opt12 inches
10.8 opt5.57 opt12 inches
37.0 opt2.50 opt23 inches
202.1 opt7.84 opt12 inches
Silver (Ag)Gold (Au)Composite Sample Width
Channel Samples Across Charly Vein Cross-cut
April, 2010 – Underground Ramp Crosses Charly Vein – Returns 3.13 oz (41 g/t) GOLD & 55.6 oz (1,901 g/t) SILVER Over 7.4 Foot Vein Width (refer to April 12, 2010 Press Release)
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Charly Vein Resource – November, 2008 NI 43-101 Report
Grade AgGrade Au
12.3
16.6
7.3
12.2
(oz/t)
0.45
0.48
0.53
0.39
(oz/t)
1,915,56070,70342215.6155,518Total Inferred Resource
804,34123,41456916.548,494C
291,05321,09725018.239,740B
820,16626,19241813.467,284A
Ounces
Ag
Ounces
Au(g/t)(g/t)
Tonnage400E Vein
NI 43-101 Compliant Inferred Resource calculated from 59 drill holes drilled into the Charly Vein System at November, 2008
A cutoff mining width of 5 feet was used as well as a minimum grade of 0.1 oz/t Au
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Near-Term Exploration Potential
Objectives : Consolidate medium-term mine plan and drill/drift on multi-million ounce gold/silver potential along strike and at depth
Continue exploration of D Block, Charly Vein and newly discovered mineralization to upgrade known resource Charly vein remains open to the north, south and at depth; may
represent the extension of the partially mined high-grade Xmas Vein.
Continue rehabilitating historical workings over 1500 m. to the south in order to access and drill “Previously Disputed Ground” and beyond This ground was never mined due to the historic claim dispute
New drill stations in the hanging wall of the Charly vein enables exploration of new and existing targets laterally as well as at depth
Additional land has been acquired adjacent to the Drumlummon property for future exploration
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Fully Permitted Leased Mill
1,000 ton per day mill leased from May, 2010 to December, 2010 to conduct bulk metallurgical and processing test-work
Located 114 miles from the mine at Philipsburg, MT and accessible by paved highway ($20.50 per ton hauling cost)
Two separate 500 ton per day circuits including crusher, regrind mills, gravity and flotation circuits
Includes fully permitted tailings storage facility
Lease cost is $30,000 per month plus $30 per ton milling fee
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Permitting and Community Relations
RX has received all permits and exemptions required for production:
Approval of exploration license including water discharge by the Montana Department of Environmental Quality
Approval of small miner exemption which permits the company to mine so long as surface operations do not exceed five acres
Approval of the alternative mine rescue capabilities by the U.S. Mine Safety and Health Administration
Approval of the ventilation, escape and evacuation plan by the U.S. Mine Safety and Health Administration
RX has been conducting regular Town Hall meetings to encourage community involvement and has addressed all of the concerns of the people of Marysville
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Bulk Sampling and Exploration Schedule
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406 – 138 Portage Ave. EastWinnipeg, Manitoba
CanadaR3C 0A1
T: (204) 989-2434 F: (204) 989-2433
Drumlummon – A Golden Future for a Historic Mine