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2022 | February Update


2022 FEBRUARY UPDATE Greetings from the mine, Allow us to bring you up to date on the status of the Bates Hunter and Becker Bates Mines as well as the Golden Gilpin Mill. There’s a lot going on and we want to share with you exciting developments and challenges that remain.

BATES HUNTER UPDATE Things at the mine are moving along quite well. We made the very important connection between the Becker Bates and the Bates Hunter shafts and have completed the rehabilitation needed. Take a look here at the map which details, rich pockets of gold. As we’ve been working underground we’ve been digging out and removing tons of material. So far we have about 915 tons of rock stored above ground in super sacks. We estimate that there are at least 10,000 tons of commercially viable stope material still in place and available without even touching the gold still locked in veins. You may be asking what is stope fill? Think of a stope as the tunnel that miners dig as they follow a vein looking for significant mineable gold. The Bates Hunter and Becker Bates mines are replete with historical stopes which we have been reopening and repositioning. The stope fill is all the loose rock that has been left behind. What makes this stope fill viable? We recently conducted an offsite test (more about that later) of 24 super sacks of stope fill (an average of 1.5 tons per sack) to gain valuable information on the processing characteristics of our material and their value in the market. We are very pleased to report that the 24 sacks yielded 14 ounces of gold (12.44 grams per ton). This is exciting news. It is a significant find and is proof of concept of the value of thousands of tons of material that are literally sitting on the ground waiting for us to bring up. Here is one reason we are so excited by this result. Although we describe our gold in terms of troy ounces per ton, most of the world deals in grams per tonne (metric ton), not ounces per ton. One of the richest gold mines in the world is the Mponeng Gold Mine in South Africa. That mine averages 8 grams per tonne. Closer to home, the largest gold mine in North America is the Goldstrike Mine in Nevada. It averages 3.4 grams per ton for open pit and 8.5 grams per ton for underground ore. We can now confirm that our stope fill loose rock has greater average gold content than some of the richest mines in the world. And as for our assays of gold deposits, we’ve had results of more than 100 grams per ton. Bottom line – our work underground, our assayresults, and finally these 14 ounces reinforce our conviction that the “richest square mile on earth” still has a lot to give.



GOLDEN GILPIN MILL UPDATE The mine has moved along right on schedule. Once we fixed up the water filtration and the head frame, replaced rotting timbers and reopened stopes, and made connections between stopes and mines, there just isn’t a lot of equipment we still need. It’s plenty of hard work, and pretty low tech. But the mill involved reconstructing an old building and rehabilitating complex milling equipment that hasn’t been operated in decades. On the outside, we needed to regrade land, build outbuildings for processing the ore, and even rebuild the bridge that crosses the creek from the highway. Unlike the mine, we depend on third party contractors, electricians, mechanics and the like for a great deal of the work. Because of the age of the equipment, most parts can’t be purchased off the shelf but have to be specially ordered or designed and built. We would have been right on schedule to get the mill into operation but for the crushing effects of Covid-19 and supply chain issues that accelerated in the 4th quarter and still continue. Each industry has been hit in different ways. The lack of chips hurt the auto makers. Lockdowns decimated the restaurant and entertainment business. We have had our own unique problems. Consider the following:

  • Specialty goods produced only in China sat in warehouses and on ships for months past expected delivery dates.

  • Entire Colorado municipal departments closed down or went virtual. What should have been easy processes like simple signoffs on building plans took months.

  • Finding subcontractors has been challenging. For example, we are using a company in New Jersey for the bridge. It was the only company in the entire United States that had any availability. Similarly, grading and cement contractors were booked for months. Electrical subcontractors are turning away work.

  • More than half of our crews had Covid and missed substantial work time.

  • Costs have shot up. Our cement, lumber, labor, parts and steel prices have all dramatically increased since we prepared our first budget.

In each instance that impacted us and for every problem encountered we have been proactive and made adjustments as needed. We have readjusted timelines and have developed some work arounds regarding the supply chain problems. We are continuing to find creative ways to solve each and every challenge one day at a time. We remain opportunistic. In just the last month we were alerted about a mill in Idaho Springs that was being put up for lease as the owner was having financial problems. We immediately tied up the property and rushed out to Colorado to conduct due diligence (in -3 temperatures). Unfortunately we discovered that things were not as represented and this mill would not help us. However, we’ve had better luck elsewhere. There is a mill (smaller then the Golden Gilpin) that is being put into service and is looking for business. That is the mill where we ran the test that produced the 14 ounces of gold. We are now taking a hard look at this mill to determine whether it has the daily capacity to be of material value to us. Processing the 24 bags we sent over took three days. That is ok for a test but not for production. We are waiting to determine if they can get to a commercially viable rate. If this works out, we could see revenue while the Golden Gilpin is being completed. So stay tuned for more news on this opportunity as well as any others that we find!

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This report may be deemed to contain “forward-looking” statements. We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and we are including this statement for the express purpose of availing ourselves of the protections of such safe harbor with respect to all of such forward-looking statements. Examples of forward-looking statements include, but are not limited to (i) projections of revenues, income or loss, earnings or loss per share, capital expenditures, growth prospects, dividends, capital structure and other financial items, (ii) statements of plans and objectives of ours or our management or Board of Directors, including the introduction of new products or services, or estimates or predictions of actions by customers, suppliers, competitors or regulating authorities, (iii) statements of future economic performance and (iv) statements of assumptions underlying other statements and statements about us or our business.

 

Our ability to predict projected results or to predict the effect of any legislation or other pending events on our operating results is inherently uncertain. Therefore, we wish to caution each reader of the report to carefully consider specific factors, including competition for products, services and technology; the uncertainty of developing or obtaining rights to new products, services or technologies that will be accepted by the market; the effects of government regulations and other factors discussed herein because such factors in some cases have affected; and in the future (together with other factors) could affect, our ability to achieve our projected results and may cause actual results to differ materially from those expressed herein.

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