Basin Gulch, Montana
In conforming to SEC regulations, some words in David Brown's summary, such as "ore" and "reserves," have been removed or reworded.
A very large open-ended gold and silver system in Montana was discovered by Rauno Perttu and been partly explored by 323 reverse circulation and core drill holes, totaling approximately 90,000 feet, plus 17,000 feet of trenches. Most of the holes were shallow, and largely pattern-drilled for an open-pit reserve. The system contains multiple areas of mineralization, and an open-ended defined resource of more than two million ounces of mostly low-grade disseminated gold and silver, with local shallow higher grade breccias and inferred veins. The system covers a known area in excess of 2,600 acres, and appears to be related to other mineralized areas in the local area. Approximately $3.6 million was spent on this exploration, which was focused on identifying a large open-pit minable reserve.
The most exciting target on the property is a nested diatreme complex (overlapping volcanic breccia pipes) that extends over a minimal area of 2,600 feet by 3,300 feet. This diatreme complex has not been drilled to depth, and may contain high-grade gold and silver mineralization in a deeper "boiling zone". The diatreme complex is characterized by overall low-grade gold and silver mineralization and local high-grade mineralization. Nearby shallow much smaller diatreme zones appear to be adjacent outliers to the main diatreme complex. These outliers are associated with an inferred controlling fault zone that may also be an important control for the main diatreme and for some of the inferred veins. Two of these smaller diatremes appear to contain near-surface "boiling zones", and contain high-grade gold and silver mineralization.
In the middle of the historic exploration program, Montana passed a law that made it difficult to develop a large open-pit gold mine, and at the same time, gold prices became depressed. At that time, companies had little interest in high-grade underground minable resources. As a result, the project was sidelined.
Known Gold Resource
Recently, several conditions have changed to make Basin Gulch an exciting exploration target. Gold prices have increased dramatically. Attitudes toward mining have improved in Montana. Discovery and development of very large and very profitable underground mines, primarily in Nevada, have made formerly disdained underground mines very attractive to mining companies. Aultra recognized that Basin Gulch has major mining potential under current Montana law and had the historic exploration information reviewed by an independent consulting geologist. The geologist concluded the existing data show that the following gold resource is minable under current law:
"approximately 426,135 ounces of combined Probable and Proven gold for the resources in Blocks A and B only, for the Basin Gulch site calculated directly from the drilling data. If 20% is removed to represent uncertainty, this number is approximately 341,000 ounces of gold. Also adding to this conservative approach is that the silver content was not converted to gold equivalency and added to the gold calculated above. In some places on the Basin Gulch prospect, the measured silver was well in excess of 10 opt." (highlighted emphasis added herein).
The consulting geologist did not complete reserve estimates for the other areas where drilling occurred. These areas also encountered strong mineralization, but he did not feel the drilling was on close enough centers to use for reserve estimation. It is important to understand that none of the historic drilling or trenching was designed to look for higher grade selectively mineable or underground mineable resources, although several strong exploration targets were identified. This means that Aultra's current primary exploration targets at Basin Gulch have been identified but are not yet included in the above reserve figures. Aultra believes resources discovered in these exploration targets would be minable under Montana mining law. The potential size of the exploration targets is theoretically several million ounces.
Aultra plans selected additional confirmation and exploration drill holes, prior to test mining of selected shallow higher grade gold and silver zones. The initial test holes are planned for an area that contains a mineralized breccia zone which locally assayed up to 70 ounces per ton of free gold and an adjacent shallow secondary diatreme zone that contains gold values as high as an ounce per ton in its core.
2008 Work Plan for Basin Gulch
Basin Gulch, Montana: Aultra plans to permit and drill a limited number of confirmation holes in previously identified high-grade gold structures at its advanced Basin Gulch, Montana gold property. This program is planned to begin in the spring, with the snow melt.
The company plans to drill five holes into two known high-grade breccia zones that are in an area in which early test mining is contemplated.
The company plans up to ten additional exploration/evaluation holes along a large structure, informally called the BG fault zone. This zone is known to contain high-grade gold values to in excess of an ounce per ton, and extends for more than a mile through the area of known gold mineralization.
If sufficient money is raised, a limited number of deep drill holes will be completed into the Basin Gulch diatreme complex to initially test for high-grade gold, which is postulated from understanding of the property geology to have been deposited at a specific geological setting within the diatreme. This postulated diatreme gold reserve, if found, could be very large.
Recovery testing: Historic testing showed aspects to the Basin Gulch gold that could be important to future gold recovery.
Much of the gold appears to be free (not encapsulated), and was quickly recovered in leach tests. This suggests that it could be recoverable by simple floatation. Further, historic testing of the Basin Gulch property demonstrated the presence of coarse gold in key portions of the property. The historic testing suggested an overall increase in gold content of more than 40% in bulk assays versus standard fire assays, based on 1,000 gram and larger samples. This coarse gold was recovered by gravity methods.
Aultra plans to conduct recovery testing of the gold by a combination of froth floatation and gravity methods. If sufficient gold is recoverable by a combination of gravity and floatation, permitting would be much easier, because no chemicals, such as cyanide, would be needed. These non-chemical recovery methods are also relatively inexpensive.
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