Jonas Pearce November 19, 1999

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1999 Grand Target Mine Feasibility Study

• Jonas Pearce November 19, 1999

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Project Overview

• General Mine Site Information
• Reserve Estimation
• Mining
• Financial Analysis

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LOCATION
Kartar Road
GRAND TARGET MINE
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Environmental Concerns
EIS 700,000 31/2 Years Baseline
Studies 191,000 11/2 Years Archeology Water
Permitting 98,100 1 Year Engineering 500,
000 1 Year Total 1.5 million over 4 to
4-1/2 Years
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Environmental Concerns

• Reclamation Bond Sinking Fund 79,500 over 10
  year mine life

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Reserve Estimation

• 309 Drill Holes
• 23,287 Assay Values
• No Distribution
• ID2 Estimation Method
• Horizontal search radius 100 ft
• Vertical search radius 150 ft
• Block Size 100 X 100 X 100 ft

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Reserve Estimation

• Reserve Estimate
• Cut Off Grade 1.0 oz/ton
• 90 blocks
• 7.5 Million Tons
• 1.84 oz/ton Average Grade

• Resource Estimate
• 635 Blocks
• 53 Million Tons
• .503 oz/ton Ave. Grade

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Total Mineable Reserves
8.25 Million Tons 1.68 oz/ton Average Grade 13.8
million ounces Au
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Mining

• First Year of Production - 2006
• Mine Life - 10 Years
  
• Mining Method - Vertical Crater Retreat
• Mining Levels Range from 1300 to 2700 ft Above
  Sea Level
• Production Begins on 2100 Level
• Mining Progresses Upward

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Main Decline Plan View
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Main Decline Long Section View
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Main Decline Section View
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Underground Development
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Primary Development to Ventilation Raises
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Typical Level
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Stoping

• 100 ft long X 100 ft high X 25 ft wide Stopes
• 15 Days to Mine One Stope
• 20,900 Tons Per Stope

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Step 1 Drive top and bottom sill drifts
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Step 2 Drill 36 - 6.5 inch diameter blast holes
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Step 3 Blast and muck the 1st 14-ft slab of ore
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Step 4 Blast and muck the 2nd 14-ft round
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Step 4 Blast and muck the 3rd 14-ft round
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Step 5 Blast and muck the 4th and final 28-ft of
ore
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Backfill

• Paste Backfill
• 55 Mill Tails
• 8 Cement
• 41 Tails to Sand Ratio
• Waste Rock
• 7 Days to Backfill 1 Stope

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Ventilation

• Primary
• 1,500 hp Exhausting Fan in Ventilation Raise 2
• 425,000 cfm
• Secondary
• 15 hp Auxiliary Fans

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Auxiliary Ventilation on Working Levels
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Major Equipment

• 2 LHDs - 4.4 yd3 Bucket, Remote Control
• 4 (6) Haul Truck - 31 Ton Capacity
• 2 In-The-Hole Drills - Large Diameter Holes
• 2 Jumbo Drills - Twin Boom
• 1 Rock Bolter
• 2 ANFO Loader

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Auxiliary Equipment

• Surface
• 1 Bulldozer
• 1 Front End Loader
• 1 Grader
• 1 Water Truck
• 1 Haul Pack

• Underground
• 1 Scissor Lift
• 1 Road Builder (Grader)
• 1 Lube Truck
• 1 Utility Truck
• 1 Air Compressor - 1500 cfm
• 1 14 Man Personnel Carrier
• 7 Transport Tractors

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Production

• 2360 Tons Per Day
• 350 Days Per Year
• 2 Shifts Per Day
• 10 Hours Per Shift

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Processing

• Carbon in Pulp Mill
• 95 Recovery
• 98 Pure Gold Bullion
• Water Balance
• Water Treatment Plant
• Tailings Disposal

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Infrastructure

• Power
• Nespelem Valley Electric Co-op
• .047 kWh
• 115 kV Power Line to Mine Site
• Substation
• Compressed Air - 1500 cfm
• Diesel Fuel Price - .68/gallon
• Potable Water - Fresh Water Well

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Employment
Hourly 52 Underground Miners and Laborers 52
Surface Workers 40 Mill and Lab Personnel 5
Service Employees Average Hourly Wage 17/hr
Benefits and Bonus Salary 50 Salaried
Personnel Average Salary 68,000/year
including benefits 199 Total Employees
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Financial Analysis
Gold Price 275/oz Transportation Cost .16
per 100 lbs. Per Mile Discount Hurdle
Rate 15 Royalties 10 Gross Revenue
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Costs

• Capital Costs
• Buildings and Surface Facilities 41 million
• Equipment 2.3 million
• Studies and Permits 1.5 million
• Operating Costs
• Stoping 1.74/ton
• Development 192.80/ft

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Cost Summary
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Refining

• Johnson Mathey Refiners in Salt Lake City, Utah
• 99.99 Pure Gold Returned
• 1.00 per Troy Ounce

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Loan

• 44.5 Million Loan
• 7 Interest Rate
• Two Installments 2 Years Before Production Begins
• Payment Begins When Production Begins

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Economic Analysis

• 15 Hurdle Rate
• NPV 382 Million
• IRR 140
• Break Even Price of Gold 50/oz

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Recommendations

• Scrutinize Reserve Estimation
• Geology and Rock Mechanics
• Lower Cut Off Grade
• Production Shaft
• Other Mining Methods