Millennium Mining Company

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Millennium Mining Company

• Falcon Project

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Overview

• 80 million ton copper/molybdenum deposit
• Located in Southwestern New Mexico
• Total Project Costs 170 million
• Operating cost per ton ore 6.03
• Operating cost per pound copper 0.49
• NPV at 0.50 is 2,184,251
• Total Capital Expenditures 133 million

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Terms of Reference

• Price of Copper 0.82 per pound
• Price of Molybdenum 3.50 per pound
• Estimation Inverse Distance Squared
• First Year of Production 2007
• Life of Mine 15 years
• Ore Tons Mined Daily 15,000
• Stripping Ratio 0.5191
• Processing Flotation and Concentration

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Project Location

• Grant County, New Mexico
• 35 miles Northwest of Silver City
• Open Pit Gila National Forest
• Dump and Tailings Dam Private Land
• Average Pit Elevation 5300 feet
• Average Annual Temperature 64.3 degrees
• Average Rainfall 14.9
• Average Snowfall 12

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Location of Falcon Project
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Geology and Rock Mechanics

• Falcon Project Geology Provided
• Bulk-type, low-grade, primary sulfide deposit
• Granodiorite and Altered Andesite Host
• Area Relatively Free of Joints and Fractures
• No Major Faults in Mine Area
• Pit Slope Angle Assumed to Be Near Angles of
  Local Mines

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Resource Estimation

• 79 drill holes
• 1856 samples
• Constrained to all blocks containing copper
• Constrained to digital terrain model
• Method Inverse Distance Squared
• Block Size 100 X 100 X 50
• Cut-off Grade 0.40 Copper

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Mining Pre-Production

• Baseline Study 1 year, 1 million
• EIS 3 years, 5 million
• Permitting 1 year, 1.15 million
• Construction Period 2 years, 37.6 million
• Includes
• Road Construction 426,600
• Building Site Preparation 7,018
• Power Line 500,000
• Tailings Dam 36.6 million

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Mining Schedule

• First Year of Production 2007
• Life of Mine 15 years
• Mining Method Open-Pit
• Tons Mined Per Year 5,337,500
• Operation Days Per Year 350
• Operation Shifts 2 8-hour shifts per day
• Total Ore Tons 80,021,801 tons
• Total Waste Tons 41,515,004 tons

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Mining Pit Parameters

• Average Grade Copper 0.57
• Average Grade Molybdenum 0.043
• Internal Dilution Rate 10
• Tonnage Factor 12.5 ft3/ton
• Overall Pit Slope Angle 55 degrees
• Bench Face Angle 65 degrees
• Bench Height 50 feet

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Mining Pit Parameters

• Haul Road Width 100 feet in pit, 65 feet out of
  pit
• Maximum Gradient 10
• Elevation of North Pit Rim 5500 feet
• Elevation of South Pit Rim 5050 feet
• Length of Haul to Dump 3000 feet
• Length of Haul to Crusher 4500 feet

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Mining Drilling

• Ingersoll-Rand DM-H Blasthole Drill
• Total Hole Depth 57.4 feet
• Hole Diameter 9-7/8
• Holes Drilled Once Per Week
• Holes Drilled Per Week
• Years 1-5 50 holes
• Years 6-10 45 holes
• Years 11-15 72 holes

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Mining Blasting

• Blasting Contracted to Titan Energy and Tech
  Services from Santa Fe, New Mexico
• Contract Includes All supplies, ANFO, Explosives
  Truck Operator
• Contract Cost 7.05 per loaded foot
• Blasting Day Every Thursday

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Mining Loading and Hauling

• Loading Equipment 2 Hitachi EX3500LP Hydraulic
  Shovels 23 yd3 bucket
• Hauling Equipment CAT 785C Haul Trucks (4 in
  years 1-10, 7 in years 11-15)
• Length of Waste Haul 3000 feet
• Length of Ore Haul 4500 feet
• Rolling Resistance 3

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Mining Support Equipment

• D11R Track Dozer
• 834B Rubber Tire Dozer
• 16H Motor Grader
• 777D Converted Water Truck
• 426C Backhoe/Loader
• Lube, Fuel and Tire Service Trucks
• Reclamation Equipment
• Mobile Light Plants

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Mining Waste Dump

• Maximum Height 200 feet
• Design Slope 2.5 to 1
• Waste Swell Factor 70
• Width of Dump 2000 feet
• Length of Dump 2210 feet

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Mining Tailings Dam

• Walls designed on three sides
• 30-foot flat bench on top of dam
• Design Slope 2.5 to 1
• Maximum Height 200 feet
• Dam Construction Contracted at 1.80 per cubic
  yard of dam material
• Total Dam Construction Cost 36.6 million

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Personnel

• Non-Union Mine
• 98 Employees Annually (Years 1-10)
• 108 Employees Annually (Years 11-15)
• Benefits Included in Salary 34 for Hourly, 37
  for Salaried
• Dual Training for Some Employees
• Two Waste Shovel Operators Trained to Drill
• Two Truck Crews Trained to Load Blast

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Environmental

• Total Surface Disturbance 2240 acres
• Air Quality Dust Suppression on all Roads
• Ground Water De-watering unnecessary,
  Contamination monitored through wells
• Zero-Discharge Permit for Water
• Stream Diversion Around Waste Dump
• Endangered Plants and Animals
• Close Proximity to Gila River
• Nature Conservancy

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Reclamation

• Roads, Building Sites, Dump and Dam will be
  Re-Contoured and Re-Vegetated
• Re-Vegetation Done According to Seed Recipe
  Provided
• Evaporative Cap Placed Over Dump to Prevent Acid
  Mine Drainage
• Topsoil Placed Over Tailings Dam
• Reclamation Expected Cost 10 million

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Financial Development Costs

• Development Costs 70 Costed to the Year
  Incurred, 30 Straight-Line Depreciation
• Development Includes
• Road Construction
• Building Site Preparation
• Power Line
• Tailings Dam
• EIS/Baseline/Permitting

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Financial Capital Costs

• Total Capital Expenditures 133 million
• Includes Equipment, Mill, Office Building, Lab,
  Warehouse, Substation, Fuel Tanks
• Light Vehicles Replaced Every 2 Years
• Heavy Equipment Replaced Every 5 Years
• Drill and Shovels Replaced in Year 8
• Buildings and Mill Equipment Not Replaced

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Financial Operating Costs

• Total Yearly Operating Costs for Equipment 4.1
  million (Years 1-10) and 5.3 million (Years
  1-15)
• Total Yearly Operating Costs for Mill 13.8
  million (2.63 per ton)
• Blasting Operating Costs From 700,000 to 1
  million Depending on Number of Holes
• Hourly Wages 2.7 million (Years 1-10) and 3.1
  million (Years 11-15)
• Salaried Wages 2.7 million (Years 1-10) and
  2.8 million (Years 11-15)

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Financial Operating Costs

• Permitting Annual Monitoring and Renewal Fees
  183,500
• Reclamation Sinking Fund Established to Have 10
  million Necessary at End of Life
• Required Yearly Deposit to Sinking Fund 368,000
  (Assumed Interest Rate 8)

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Financial Revenue

• Copper Shipped to Hidalgo Smelter
• Price of Copper 0.82 per Pound
• Molybdenum Shipped Within 100 Miles
• Price of Molybdenum 3.50 per Pound
• Transportation of Concentrate 0.05 per Ton-Mile
• Smelter Fees Paid as Percentage of Mineral
  Recovered

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Financial Cash Flow

• Working Capital Estimated as 50 of the First
  Years Operating Costs (12.3 million)
• Royalties None are Paid
• Depletion Percentage Depletion Method Used (15
  for Copper and 22 for Molybdenum)
• Depreciation Method Modified Accelerated Cost
  Recovery Schedule
• Loan 50 of Total Project Cost, Paid Over 5
  Years at 8 Interest
• Taxes All State and Federal Taxes Were
  Calculated According to Relevant Tax Laws

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Financial Analysis

• Rate of Return could not be calculated due to
  possibility for dual rates of return
• Net Present Value is positive with a value of
  2.1 million at 0.50
• Does not meet the minimum hurdle rate of return
  set at 15 for investors
• Operating Cost per Ton 6.03
• Operating Cost per Pound of Copper 0.49

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Recommendations

• Further Investigation of Mitigating Factors
• Whittle Optimization of Open-Pit Design
• Investigate Smaller Bench Size
• Further Geologic Research
• In-Depth Look at Mill Capital Costs
• Final Location for Molybdenum Shipment
• Further Reclamation Planning
• Precise Water Table Location
• Further Drilling Around Outside of Deposit
• Further Drilling Within Deposit Boundaries

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Questions Regarding the Falcon Project?

• Millennium Mining Company