Mine Development Program
The Countess decline ramp to the South Vein has been completed, and a spiral ramp system is being developed in the footwall of the South Vein resource area. Ramping down in spirals from the existing Countess decline will proceed from the 3940' level to the 3490' level. Concurrently, a 10 foot by 13 foot incline ramp will be driven from the Big Creek #4 Portal to connect with the Countess spiral. When complete, the second opening to the surface will allow ventilation and serve as a secondary escapeway. The ramp spirals will provide access for test drifting for grade and morphology of mineralization at multiple elevations within the South Vein resource area to determine the continuity, potential for enhancement, and parameters of the mineralization to guide further drilling and drifting.
A paste backfill plant will be constructed near the Big Creek #4 Portal.
The Company has a joint venture with the New Jersey Mining Company to mill the Crescent Mine's ore. Mill expansion, including equipment installation and fabrication of structures and conveyors, is nearing completion. Mine Fabrication and Machine, a business unit of the company's wholly owned subsidiary, United Mine Services, Inc., is performing much of the mill construction. Commissioning has begun, and milling of stockpiled ore is expected to start in May 2012. The joint venture agreement gives the Company an exclusive right to 7,000 tonnes per month of milling capacity, with first rights on additional unused capacity.
The mill is located less than four miles from the Crescent Mine and will initially process ore from test drifting on the South Vein currently stockpiled at the mill. Concentrates produced by the milling of the underground drifting-produced mineralization will be sold to Formation Metals U.S. under an agreement signed in December 2011. Formation's refinery is less than three miles from the mill, virtually eliminating hauling costs.
Ore from underground test drifting and stoping is expected to provide cash flow which will offset the cost of exploration development. Projected cash flow will cover the cost of expanding the Crescent deposit and avoid the need for further equity offerings during the period of the Plan.