Patented Placer Mining Claim

(Private Property!!)

The approximately 73-acre Blue Lead Gold Mine (Red Dog Mine) property is located near the historic communities of “You Bet” and “Red Dog”, in the Red Dog Mining District in eastern Nevada County, California. The property is approximately eight miles east of Grass Valley and seven miles southeast of Nevada City, within the foothills of the Sierra Nevada Mountains. It is located northwest of Interstate 80 and east of State Route 174, within Township 16 North, Range 10 East, Sections 30, and Township 16 North, Range 9 East, Sections 24 of the Grass Valley U.S.G.S. 7.5 min. Quadrangle.

The site was extensively hydraulically mined during the late 1800’s to the early 1900’s, during which they recovered millions of dollars of gold. While Nevada County has produced more gold than any other county in California, the Red Dog/You Bet mining district was the richest producing district in the county.

Hydraulic mining exhumed millions of cubic yards of gravels before they suddenly ceased in the 1940s, leaving the area in a “devastated state”. Remnant hydraulic workings include mined-out gravels to bedrock, shear vertical cliff faces exceeding 160-feet high, tailing piles, and sluice channels. It is not know how much gravels remain on the properties, it is is likely in excess of a million cubic yards, most of which is the lower to basal sections. Much of the "blue lead" is remnant.

Elevations on site vary from approximately 2,570 to 2,822 feet above mean sea level.

Geology

The Red Dog/You Bet Mining District is located within the broad geologic region of California known as the Sierra Nevada geomorphic province, which includes the Sierra Nevada Mountains and the Sierra Nevada Foothills Gold Belt. The average width of the gold belt is about 75 miles and it extends over a length of about 400 miles along a northwest-southeast orientation along the western frontal slopes of the Sierra Nevada mountain range.

The Sierra Nevada are composed of an imbricated assemblage of meta-sedimentary, meta-volcanic and ocean crustal rocks that have been highly deformed by tectonic forces and intruded by granitic rocks that caused various stages of mineralization, including hydrothermal alterations, quartz veining and contact metamorphism. In the vicinity of the Red Dog/You Bet mining District, the bedrock is shale and slate of the Calaveras Formation (Carboniferous to Permian age). It is light gray to black, moderately hard to hard, moderate to highly fissile, and contains numerous discontinuous quartz veins, all of which are indicators of its torturous tectonic past.

Overlying the bedrock is a thick gravel assemblage of early Tertiary age. In some nearby areas, the gravels are overlain by a volcanic sequence of tuffs and flows, but the Blue Lead Mine area does not have these cap rocks. The gravels are interstratified, showing evidence of both slow and fast-water deposition, thus the particle size ranges from silt and sand to gravel and cobble. No boulder-sized rocks have been observed yet. The gravels are generally well cemented, making them hard to very hard, thus easily forming tall resistant cliffs when exposed.

The base of the assemblage is called the “Blue Lead”, and gets its name from the greenish-gray-blue color due to anoxic hydrologic conditions. This unit was the focus of intense historic mining activities because of its elevated gold content. Stream systems tend to concentrate the gold at the base of the deposit and this was the case at the Tertiary gravels at You Bet. However, all the gravels in the deposit contain some amount of gold

Historic Gold Production

U.S. Geological Survey geologist Waldemar Lindgren in his classic 1911 Professional Paper 73, The Tertiary Gravels of the Sierra Nevada of California, described, sampled and cataloged the Tertiary auriferous gravels throughout the Sierra Nevada. He visited hundreds of mines and interviewed numerous miners. The gravels in Nevada County, and in particular the Red Dog/You Bet area, are described in the Colfax Quadrangle section. He estimated that at the nearby Red Dog and Hawkins Canyon more that 47 million cubic yards of material had been removed by hydraulic mining, leaving over 100 million yards available for future mining. He estimated that $3 million (138,440 ounces) had been taken at You Bet diggings alone.

Note: The amount of gold contained in the gravels is reported here by the cubic yard. There are 27 cubic feet to a yard. Lindgren estimated that one ton of broken gravel is about 18 cubic feet or is about 0.667 cubic yards. The price of gold at the time of Lindgren’s report was $18.92 per ounce.

Historically, the gold contents of these deposits are lowest at the top and highest at the bottom. Lindgren reported that by far the highest gold concentrations are within the bottom three feet near the bedrock. Depending on the type of bedrock, high concentrations were also reported in the cracks and fissures of the bedrock. Drift mines would often tunnel along the gravel/bedrock contact, taking the richest portions of the deposit.

Lindgren reported that mines in the area typically got around $0.10 per yard (0.0053 ounces of gold per cubic yard) for the upper portions of the Tertiary gravel section, around $0.40 per cubic yard (0.0211 ounces of gold per yard) for the upper-middle sections, roughly $2.50 for the lower-middle section (0.1321 ounces of gold per cubic yard), and a 0.5 to 1.0 ounce per cubic yard for the bottom section on the bedrock. The bottom section values varied considerably and were dependent on several factors, including channel morphology, inside or outside river bends, bedrock type, etc. Some reports indicated several ounces per yard were common in the most favorable conditions. In a section of Tertiary gravels of the You Bet area, two workers took $85,000 in gold from a drift tunnel in five days (4,493 ounces). It was said the tunnel was less that 100 feet long and targeted the inside bend of a main channel.

Preliminary Testing

In the fall of 2007, a small 65-cubic yard test batch was run through a portable trommel system on a nearby property. The material tested was at the lower portion of the stratigraphic section, partly consisting of blue lead material and that of a dozen or so feet above it. The test took about two days to complete.

Although the accounting system for the test was crude, more than 3.5 ounces of gold was recovered (0.0538 ounces of gold per cubic yard). Panning of the tailings indicated abundant flour-gold was not recovered.

The test confirmed that 1) there was gold in the gravels tested, and 2) it was consistent the averages reported by Lindgren.

Estimated Gold Potential Calculations

It is impossible to accurately calculate the gold reserves on the property without a comprehensive testing program, consisting of drilling and bulk sampling. However, it is possible to develop a crude estimate based upon Lindgren’s general numbers and the comparable results in the preliminary test.

Say there are roughly mineable gravels on the property is about 1.0 million cubic yards and rough break downs for the yards per section, the following potential is presented:

Section	Quantity (yd3)	Grade (oz. Au/yd3)	Gold (oz.)
Upper	600,000	0.0053	3,180
Upper middle	250,000	0.0211	5,275
Lower middle	100,000	0.1321	13,210
Base	50,000	0.5000	25,000
Total	1,000,000		46,665

Dollar Value @ $1,000/oz Au  $46,665,000

Estimated average ore grade   0.0592 oz. Au/yd³

These numbers are crude but give an estimate of the gold potential on these deposits. Note that only a half-ounce per cubic yard was used for the base section and this was a low value for recoveries of that portion of the section.

Miners of the past used crude recovery techniques and Lindgren estimated that half the gold was lost during the processing. Modern recovery systems should be able to recover more than 90% of the gold, including the flour gold. If the numbers presented above are factored in by these modern recovery systems, the Chicken Point and Smith and Powel properties has a significant chance to be a premier gold mine in California.

Typical Mine Plan

The mine plan for these deposits is a relatively straightforward, phased-approach hillside operation with leapfrog-style production and reclamation procedures. Typically, it is mined in a top down fashion, using a bulldozer to rip and stockpile the material for transport to the processing facility. Prior to mining, topsoil is salvaged and stored in selected areas for use during reclamation. Once the material has been ripped, a dozer pushes the loosened material down the slope to create a surge pile at the base of the slope. A rubber-tired loader loads the gravel from the surge pile either directly into the processing facility or into a dump truck and transported to the processing facility.

The processing plant will consist of a primary classifier to direct oversized material to a waste pile. The material will then be transported via conveyor belts to a series of trommels and jigs that will wash and classify the gravels, and recover the gold. Concentrates will be further refined with a vibrating shaker table, and then stored in drums to be delivered to a certified offsite refiner.

Potential Permitting Plan

The Lead Agency for the permitting process is Nevada County. State Office of Mines and Reclamation and the State Mining and Geology Board will play key rolls in maintaining compliance with the Reclamation Plan. Other regulatory agencies will also maintain oversight capacities to ensure compliance to specific laws.

Given that the properties have been extensively mined before and that they were left in a "devastated" condition, Nevada County and the State of California would be in favor of moving a permit forward. Advanced Geologic can coordinate your mining permits. We are currently permitting a nearby mine in the same district and, therefore, have substantial experience to bring with our professional work.

While these large-scale mining permits are being procured, a smaller "exploration permit" can be arranged so that small-scale mining can be conducted.

A nearby mine owner is seeking to have the vested mining rights granted by the patents for his property acknowledged for the existing mine patents. If the vested mining rights are acknowledged, then many of the current Nevada County ordinances, rules and guidelines will not apply. This will greatly streamline the approval process.