Location and History
The French Gulch Project is located 15 miles northwest of Redding in Shasta County, northwestern California, and contains a series of under explored high-grade, mesothermal gold-bearing quartz veins. Historic underground mining at the Property's Washington and Niagara mines from 1852 through 1950 yielded an estimated 185,000 ounces of gold. During the mid 1990's, private companies mined approximately 19,000 ounces of gold at the Washington mine from ore grading about 1 opt Au, including 8,800 tons grading 1.13 opt Au.
Property
French Gulch (Nevada) Mining Corp., a wholly owned subsidiary of Bullion River Gold Corp., controls approximately 2.3 square miles of patented and unpatented mining claims. The patented claims and most of the unpatented claims are under lease with an option to purchase, with some of the unpatented claims owned directly by French Gulch Mining/Bullion River Gold Corp. French Gulch Mining Corp. has exercised its option to purchase the property and has commenced making payments to the owner until the purchase price of $1.5M has been paid.
Geology and Mineralization
The Project is within the central portion of the French Gulch Mining District, with historic gold production from placers and underground vein mining estimated at between 800,000 and 1,500,000 ounces. The district covers an area about 9 miles long in an easterly direction by about 1.5 miles wide. The district has been the largest gold-producing area in the Klamath Mountains province of southwestern Oregon and northwestern California, and it contains the highest vein gold grades in the province. Steeply dipping, mesothermal gold-bearing quartz veins occur within a section of greenstone and overlying black shales. Dikes are common along the veins and are locally mineralized and strongly altered. The veins contain variable amounts of free coarse gold, pyrite, arsenopyrite, galena, and sphalerite. Veins in the district are known to cover a vertical extent of at over 2000 feet.
Veins and Underground Workings
At the Washington mine, a series of at least six steeply dipping gold-bearing quartz veins occurs across a width of at least 800 feet and a strike length of at least 2,000 feet. Mineralization has been mined over a vertical range of 500 feet along ore shoots, but remains open at depth and along strike. A number of historic small underground workings were developed on 6 levels, covering a vertical range of about 450 feet, but most of the workings were driven along a single vein, the Washington. In 1990, a significant new vein, called the Lucky-7, was discovered along the only accessible crosscut in the mine. It was this vein that yielded the 19,000 ounces of high-grade gold in the mid 1990's as noted above. Only one level (the I Level) is currently accessible along the Washington vein. This level was driven from the east and is the lowest level along the vein. The I Level intersected the east edge of the main Washington vein ore shoot, which is at least 675 feet long at higher levels in the mine. At its eastern edge, one stope yielded 649 tons grading 1.2 opt Au, and Bullion River sampling in this area has recovered vein material grading as high as 3.8 opt Au.
The Niagara mine workings, 4,000 feet west of Washington, are inaccessible. One ore shoot was mined for 800 feet down dip; the main portion reportedly averaged 2.4 opt Au over 4-10 foot widths, 200 feet of dip extent and 400 feet in strike. Additional high-grade veins on the property were developed by historic underground mining; including the Scorpion, Montezuma, and Centennial vein systems.
Potential
The recent discovery of the Lucky-7 vein in 1990, points to the significant exploration potential of the property as a whole. There has been very limited exploration drilling from surface and underground. The Washington and Lucky-7 veins in the Washington mine contain important ore shoots that remain open to depth. In addition, field evidence and historic data indicate that significant potential exists for additional high-grade veins on the property, particularly along strike of the Washington and Niagara mine areas.
In the recently mined Lucky-7 vein in the Washington mine, channel samples across the vein (collected by previous operators) showed consistently high grades over a strike length of 120 feet and a dip extent of 220 feet. Of 149 samples collected along the main ore shoot, the average grade was 2.79 opt Au across an average width of 4.6 feet and 78 of the samples graded above 1 opt Au.
Recent sampling and mapping by Bullion River Gold have been consistant with prior operators results. For example, an undeveloped vein within a dike 1,300 feet south of the Washington mine workings assayed 4.2 opt Au across 1 foot and represents a new exploration target. Several vein occurrences with minimal development 2,200 feet west of and along strike with the Washington mine veins suggest continuity along strike. Altered dikes and veining are exposed 1500 feet along strike of the Niagara mine veins. Ongoing surface core drilling in January '06 intercepted three new veins at depth, which confirms multiple, parallel veins along the strike extension of the Niagara vein system.
Mine Development
Bullion River Gold began an aggressive program of underground core drilling and surface reverse-circulation drilling in January 2005. This was to test the down-dip projection of ore shoots at the Washington mine as well as to test for vein extensions along strike. In December 2005, Bullion River Gold broke ground to open the portal and install the 1550-foot long underground decline access tunnel, which will serve as the main production access. The decline provides access to the previously drilled Lucky 7#, #2, Santa Maria and Washington veins.
During 2006, access was gained to the 2153 level on the Lucky 7 vein. Test mining of ore during 2006 from the Lucky 7 vein and the I-Level Washington vein produced 1,281 ounces of gold from a combination of low grade development ore and high grade vein material.
During 2007, important development projects were completed. A new 432' crosscut was driven from the main declines in a northern direction to crosscut the Washington/Dean veins(Washington Crosscut). High grade gold mineralization was encountered in several previously unknown veins. A decline was driven east from the end of the Washington crosscut for 256' and connected to the existing I-Level to provide a second exit as well as allowing discharge of ventilation air. Several exploration drifts followed the Washington and Dean veins and two new ore shoots were developed.
In October of 2007 the mining method was enhanced by using narrow vein mining methods to minimize the mixing of waste rock with ore (dilution). This resulted in an immediate, significant increase in ore grades. From Oct 1st through Dec 31, 2007, the head grade of ore from the mine increased to .68 ounces of gold per ton. During 2007, 5,858 ounces of gold were recovered from 15,284 tons of ore.
During the 1st Quarter of 2008, exploration and development continued at the Washington Mine. Almost one thousand ounces of gold were recovered from 1,424 tons of ore resulting in an average head grade of .775 ounces per ton (with 90% recoveries). Also during the first quarter of 2008, an underground diamond drilling program was initiated and results are expected during the 2nd Quarter.
The mine currently has 35 employees working 5 days per week.
Additional development will advance from the new decline system to access the Niagara Mine as well as provide drill stations to explore the largely untested area outside of the known portions of the Washington and Niagara Mines. This area is thought to have exciting exploration potential.
Mill
There is a 150 tpd mill on the property that was refurbished and improved in 2006/2007. A new crushing plant was installed during 2007. The mill circuit consists of a jaw and cone crusher, two Denver ball mills, flotation and gravity concentrators, a tailings thickener and concentrate filters. The mill is in good operating condition and gold recoveries are at 90%. In the future, mill tailings will be mixed with concrete and used as ground support in the mine. The mill has a crushing circuit conservatively rated at 200 tons per day and the rest of the mill could be up-graded to 200 tons per day with additional investment.
Gold production is approximately 60% in dore bars sold to a refinery and 40% in gold concentrates sold to a smelter.
Environmental Permitting
All major operating permits were issued to prior operators and are all currently in place. All major permits are in the process of being updated and, in some cases, expanded to reflect operational changes. As our operation grows and changes, permits will be amended as required on an ongoing basis.
Future Plans
The future of all underground mines rests upon the success of continued exploration and development of economic gold reserves. Our goal for 2008 is to advance exploration and development activities while maintaining a base level of production. There is a significant gold resource indicated in the property and we will continue to define and develop this resource. Diamond drilling will continue to be a priority and we are currently advancing a new exploration crosscut(5060 level) into the west fault area that has never been explored. It's clear from the mining we have done that the Lucky 7 ore shoot may be much thicker than previously estimated. Significant unmined gold reserves may exist in areas that were previously mined too narrow by past operators not recognizing the wide gold enriched porpherys in the walls of the veins. We will also strive to develop other past producing mines located on our property in order to increase available ore sources to the mill.
We believe that 2008 will be a year of major achievements in the development of this high grade gold mine.