French Gulch Daily Tonnage Increases in 2006; Company Foresees Continued Production Improvement in 2007

Production began November 10, 2006 following several months of successful test mining. Working seven days a week in the underground mine, the company’s diligent crews are developing the main decline and starting new cross-cuts that will lead to extracting additional tons of ore each day. The company is currently focusing manpower on the Lucky 7 vein. The new cross-cuts have led to the development of new drifts and new stopes to access the ore. Much of the gold in the Lucky 7 ore is visible to the eye. The grade of ore can range from 0.20 ounce/ton of gold to 6 ounces/ton of gold.

Mining crews also are continuing to further develop the main decline by drilling the main working face with the jumbo drilling unit and blasting with dynamite. The main decline, which has been constructed between the Lucky 7 vein and the Washington vein, has been enlarged 1,200 feet during the past year. Overall development of the mine during 2006 has totaled well over 3,000 feet. Developing a decline is critical because a deeper decline allows for substantially increased access to the veins. In addition, as miners go deeper in a mine, it typically leads to the discovery of higher grades of ore. High-grade mineralization is anticipated several hundred feet below where miners currently are working.

Bullion River Gold Corp. is planning 4,500 feet of new underground development in 2007 by deepening the main decline, digging more cross-cuts and developing additional drifts along the veins. “With more openings in the mine and additional hiring of crews, we can absolutely increase development,” said Peter M. Kuhn, president of Bullion River Gold Corp. The company also expects the quality of ore extracted to improve as the decline deepens.

New Heavy Equipment Rolls In

Bullion River Gold Corp. invested more than $2 million in a fleet of heavy underground and surface mining equipment in 2006. The new underground equipment includes: five 1-ton front-loading scoops, two 3.5-ton front-end loading scoops, an electric hydraulic drill jumbo, a scissor lift and four underground haul trucks. The new surface equipment includes two haul trucks, a water truck and two front-end loaders as well as a backhoe and a dozer. The investment in this equipment is paying off with improved production in the French Gulch mine.

Refurbished & Upgraded Mill Turns Rock into Gold

When the new mill superintendent for River Bullion Gold Corp. arrived at the dusty and long-abandoned mill at the French Gulch property in April 2006, he knew there was much work to do. Pipes and pumps were missing. Unit operations were disconnected. Many of the safety guards and berms for protecting the environment were not in place. Still, having the old mill on site was an advantage because permits were in good standing, and much of the main equipment and infrastructure was already in place.

The new mill superintendent also needed to quickly create an operation that could handle the processing of up to 220 tons of ore daily. The mill would use gravity and flotation methods to process the ore. To achieve that goal, the mill needed to be re-designed, and new equipment would be purchased. The company invested almost $1 million in renovating the mill and by September, the mill was ready for processing. All necessary permits and all environmental and Mine, Safety and Health Administration (MSHA) requirements were met.

The gravity method recovers 65% of 70% of the gold. The mill’s process includes two ball mills with capacity of about 220 tons per day and a new Falcon SB 750 concentrator with capacity of about 700 tons per day. When the quantity of ore recovered from the mine warrants the increase of production capability, an additional ball mill can be purchased to increase mill capacity to the full 700 tons per day. Gold not recovered through the gravity method is further processed through a flotation tank, which also was refurbished. The flotation process recovers 15% to 20% of the gold. Float concentrates are then sent out of state for custom processing.

The overall recovery rate is between 80 to 90 percent, and additional improvement is expected in 2007.

Bullion River Opens Training Program for Miners

Bullion River Gold Corp. has established extensive instruction for new miners. The training program, which consists of both classroom work and on-the-job training in the underground mine, will allow workers to safely develop a new skill while being well compensated for their efforts. Depending upon the employee’s skill level, training will last from a few months to several years. So far, 12 workers have entered the training program, with several trainees coming from the construction trades. No previous mining experience is needed to enter the program. The new training program is opening up new employment opportunities for residents and could serve as a recruiting tool to bring additional employment to the area.

An Open House Draws a Crowd

Bullion River Gold Corp. held an open house in September, and more than 240 stakeholders attended to learn more about the French Gulch mine. The company’s employees and their families were joined by investors, suppliers, vendors and local dignitaries on site at the mine and then later at a reception held in the town of French Gulch. The highlight of the tour was a gold pour at the company’s refurbished mill.

Q&A with President Peter M. Kuhn

Q: The company made huge progress in 2006. What do you see as the most important milestones of 2006?

A: First, when we began production in November, we joined a limited number of gold producing companies. While there are thousands of mining exploration companies, there are fewer than 200 mineral production companies worldwide. That in of itself is a major accomplishment. Secondly, in six months time, we refurbished and commissioned our mill. And we now have 120 highly qualified employees who are working hard to learn and understand our ore bodies so we can constantly improve production and recover a higher grade of ore.

Q: What accomplishments are you targeting for 2007?

A: Some time during the first quarter of 2007, we expect to turn profitable as a company. This is a significant achievement for a mining start-up company. We will be updating our technical reports in early 2007 on the French Gulch mine, the Mission mine and the Wenban Spring mine. To improve our production and processing, we will purchase more mining equipment. For example, we have a new crusher system on order from Brazil. Our goals for 2007 include driving new access to the veins and getting more tonnage to and through the milling process.

Q: What will be the biggest challenges for your company in 2007?

A: We face challenges each day—mining is difficult work. But our employees are dedicated, and they are determined to make our operations profitable. In 2007, we plan to purchase additional equipment and to recruit more employees. Those are always challenges during a boom in mineral mining, but we are confident we can push forward in those two areas.

Q. When can investors expect to receive production updates?

A. As with most major mineral producers, we will release our production figures quarterly in our 10Q filings. We, of course, will continue to do our best to keep investors informed of all material events and milestones as the year unfolds.