We have acquired mineral prospects for exploration in Nevada mainly for target commodities of gold and silver, and formerly copper. The prospects are held by both patented and unpatented mining claims owned directly by us or through legal agreements conveying exploration and development rights to us. Most of our prospects have had a prior exploration history, which is typical in the mineral exploration industry. Most mineral prospects go through several rounds of exploration before an economic ore body is discovered, and prior work often eliminates targets or points to new ones. Also, prior operators may have explored under a completely different commodity price structure or technological regime. Mineralization which was uneconomic in the past may be ore grade at current market prices when extracted and processed with modern technology.
The Company currently controls three mineral properties in Nevada including Eureka, Paiute, and Seven Troughs (Figure 1).
We acquired the Eureka Project as part of our acquisition of Staccato Gold Resources Ltd. (“Staccato Gold”) and its wholly owned subsidiary, BH Minerals USA, Inc. (“BH Minerals”), in June 2010. Eureka comprises an area of 18,464 acres (~29 square miles) within the Battle Mountain – Eureka Mineral Trend. The property’s northern boundary is located approximately 1 mile south of the town of Eureka, Nevada, in Eureka County.
The Eureka Project is situated in the southern part of the Eureka mining district, within T19N, R53E and unsurveyed T17N and T18N, and R53E. The property is also within the bounds of the United States Geological Survey (“USGS”) 1:24,000-scale 7.5-minute topographic series maps of the Pinto Summit and Spring Valley Summit quadrangles.
The Eureka Project (Figure 2) includes the Lookout Mountain, Windfall and Oswego trends. Gold mineralization generally occurs along three north-to-south trending zones, each approximately 3 to 4 miles (4.8-6.5 km) in strike length. Each of these mineralized zones is open and will require additional in-fill and step-out drilling. There are also other early-stage prospects on the property.
Historical production of gold in the district included approximately 112,000 oz at the Windfall Mine, which began operation in 1975 (Russell, 2005). An additional 17,700 oz of gold was produced from the Lookout Mountain Pit which operated in 1987 (Cargill, 1988, Jonson, 1991).
Timberline pays federal and county claim maintenance fees on the Eureka Project. The federal claim fees are due to the BLM before September 1 of each year, and the county fees are due to Eureka County on November 1 of each year. All unpatented mining claims on the Eureka property have been located under the General Mining Laws of the United States on US Bureau of Land Management (“BLM”) managed lands.
We have the right to explore and develop the Lookout Mountain target subject to a mining lease agreement dated August 22, 2003 with Rocky Canyon Mining. The lease was amended on June 1, 2008 to extend the term to 20 years from June 1, 2008, and thereafter for as long as minerals are mined on the project. Advance royalty payments are $6,000 per month, or $72,000 per year. Timberline fulfilled a $1.5 million work commitment on the Lookout Mountain target stemming from the amended lease agreement. A 3.5% NSR royalty, plus a 1.5% NSR royalty capped at $1.5 million (excludes Trevor and Dave claims) exists on the Lookout Mountain claims.
During the year ended September 30, 2012, Timberline acquired the Windfall patented claims in a transaction of cash and shares valued at $500,000. There is a 4% NSR royalty on these claims.
The Secret Canyon/Oswego, South Ratto, and New York Canyon claim groups are owned by Timberline, subject to royalty agreements. NSR royalties of 2% exist on the projects for claims located within one mile of the Windfall Patented claims. A small portion of the Heiro-Syracuse claim group is subject to an additional 1% NSR royalty.
The Hoosac and North Amselco claims are owned by Timberline and were under lease to Royal Crescent Valley, LLC, a subsidiary of Royal Gold, Inc. until July 2021, at which time they terminated the lease. Until the termination of the lease in July 2021, Royal Gold maintained BLM lease payments and Eureka County fees on the Hoosac and North Amselco claim groups.
U.S. Highway 50 passes to the east of the Eureka Project and access is gained by heading south out of Eureka on the highway and connecting with unpaved local roads, some of which are periodically maintained by Eureka County. The turnoff for the New York Canyon claim group is about a half mile south of Eureka on U.S. Highway 50 and is an unpaved road running up New York Canyon on the east side of the claim group.
The Windfall group and the northern parts of the Hoosac and Lookout Mountain groups are accessed by the Windfall Canyon Road and its westward extension (the former haul road for the Lookout Mountain Mine), which turns southwest from the highway approximately 2 miles south of Eureka. This road is of uncommon quality and scale for rural Nevada due to its construction as a mine haul road at considerable cost in 1980s dollars.
The southern parts of the Eureka Project are accessed by traveling approximately 8 miles south of Eureka on U.S. Highway 50 to South Gate, then 1 mile south-southwest on the Fish Creek Valley Road to the unimproved Secret Canyon Road, then northwest to the southern part of the Hoosac claims. Many dirt tracks within the Eureka property allow additional access.
The terrain on the Eureka Project is rugged, with high ridges, steep canyons, and narrow valleys. Elevations range from 7,000 to 9,000 feet (2,100-2,400 m). Ridges show abundant bedrock exposures, slopes and valleys are typically covered by soil and alluvium. Sagebrush abounds in lower-elevation areas while juniper and piñon pine cover the higher elevations. Grasses and shrubs grow on the highest ridge tops. The climate of the project area is semi-arid with the area receiving moderate winter snows and occasional summer thunderstorms, with heavy rain from time to time during otherwise hot and dry summers. In winter, access is not maintained off the paved roads and November snow commonly lingers until April.
Summer temperatures usually consist of many consecutive days over 90º F (32.2º C), and temperatures can reach as high as 100º F (37.8° C) or more. Winter temperatures generally range from as cold as below 0º F (-17.8ºC) to, more commonly, in the 20º to 35ºF (-6.67º to 1.7 º C) range. Precipitation amounts vary from year to year, averaging about 10.0 inches (25.4 cm) for the area. Several feet of snow may accumulate on the property during the winter months.
The Eureka Project is situated in north-central Nevada in an area with established mining infrastructure. Transmission power lines serve Eureka from the north. All essential services such as food and lodging are available in Eureka, including dockage for shipments of heavy equipment. A small airport at Eureka is available for private air transport. Railroad access is also available in the area. The gold mines of north-central Nevada continue to produce a significant portion of the world’s gold, and skilled miners and mining professionals are available in Eureka, and 100 miles to the north in Carlin, Elko, and Spring Creek. Permitting a mining operation in Nevada has been a process with which local, state, and federal regulators are very familiar and generally cooperative.
The reader should note that discussions in this document pertaining to assay results and concentrations of gold mineralization span many years and reporting standards have changed considerably over that time. References to historical reports of assay results or the grade (concentration) of gold mineralization may cite results in troy ounces of gold per short ton of rock, which will be abbreviated “opt”. More recent gold assay or concentration data will be reported in this document as grams of gold per tonne (metric) of rock, which will be abbreviated “g/t”. In most cases when discussing modern data, we make an effort to cite the unit conversion, which is on the basis of 1.00 opt = 34.286 g/t. We may also cite other historic work in the original US customary system of units, but modern work will be reported in metric units with conversions to US customary in most instances.
The Eureka Project has excellent potential for continued exploration success. Based on the work of previous companies and by Timberline, gold mineralization at the Lookout Mountain target is currently defined over a structural-stratigraphic corridor that extends up to 4.3 miles (7 kilometers) in strike length. This corridor hosts several areas of drill-indicated gold, and the potential for discovery of additional mineralization is strong. The Lookout Mountain mineralization itself is open for expansion at depth and along strike.
From 2010 through 2013, the exploration work programs totaled approximately $9,000,000 on the Eureka Project. The work during that period delivered sufficient data to support a mineral resource estimate at Lookout Mountain (including a technical report compliant with Canadian National Instrument 43-101 (“NI 43-101”)), conduct initial gold recovery studies, initiate environmental baseline investigations, better understand the controls of mineralization, and to outline additional exploration drill targets. In summary, these objectives were met in the 2010-2013 exploration by completion of the following:
The mineral resource was modeled and estimated by MDA by statistical evaluation of available drill data utilizing geologic interpretations provided by Timberline. The geologic interpretations were used to constrain gold mineral domains on vertical cross sections spaced at 50- to 100-foot intervals across the extent of the Lookout Mountain mineralization. The cross sections were rectified to the mineral-domain interpretations on level plans spaced at 10-foot intervals, allowing the geostatistical analysis of the modeled mineralization to aid in the establishment of estimation parameters, and interpolating grades into a three-dimensional block model.
The final drill results of the 2011 exploration program were successfully incorporated into the updated mineral resource and NI 43-101 compliant “Updated Technical Report on the Lookout Mountain Project, Eureka County, Nevada, USA” issued by MDA on May 31, 2012 (“2012 Technical Report”). As a result of the 2011 exploration program, the mineralized zone at Lookout Mountain was successfully extended 600 feet (183m) to the south of the existing mineral deposit, and mineralization was also expanded along the west margin of the deposit. Results from Lookout Mountain, and from the South Adit area, significantly increased the reported mineralization at the Lookout Mountain Deposit.
Assay results from drilling during the 2012 and 2013 exploration program were incorporated into another update to the resource and NI 43-101 compliant “Updated Technical Report on the Lookout Mountain Project, Eureka County, Nevada, USA” issued by MDA on April 11, 2013 (“2013 Technical Report”).
The Lookout Mountain Deposit is a large “Carlin-type” gold system with a defined gold resource (see 2013 Technical Report) and drill-indicated mineralization that extends over a north-to-south trend of approximately 3 miles (~ 5 km). The MDA gold resource estimate includes 508,000 oz (Measured & Indicated) and 141,000 oz (Inferred) as summarized below (Table 2) at the noted cut-off grades.
Table 2. Lookout Mountain Gold Resource (1)(2)(3)
Resource Category | Tons | Tonnes | Gold (opt) | Gold (g/t) | Gold Ounces |
Measured | 3,043,000 | 2,761,000 | 0.035 | 1.200 | 106,000 |
Indicated | 25,897,000 | 23,493,000 | 0.016 | 0.549 | 402,000 |
Measured & Indicated | 28,940,000 | 26,254,000 | 0.018 | 0.617 | 508,000 |
| | | | | |
Inferred | 11,709,000 | 10,622,000 | 0.012 | 0.411 | 141,000 |
Notes:
| (1) | 0.006 opt (0.21 g/t) cut-off applied to oxidized material to capture mineralization potentially available to open pit extraction and heap leach processing. 0.030 opt (1.03 g/t) cut-off applied to unoxidized material to capture mineralization potentially available to open pit extraction and lower heap leach recoveries or sulfide processing. |
| (2) | Rounding may cause apparent discrepancies. |
| (3) | The effective date of the Lookout Mountain updated gold resource is February 20, 2013. |
| The full MDA Resource Estimate with various cut-off grades can be seen at: http://timberlineresources.co/wp-content/uploads/2015/07/LookoutMt_-43-101_2013.pdf. |
Gold mineralization near the historical open pit at Lookout Mountain (Figure 3) includes multiple intercepts ranging from approximately 0.1 to 2.25 opt gold (3.4 to 77.14 g/t) (see Table 3 and news releases dated July 10, 2018 and Dec 1, 2020 at http://timberlineresources.co/press-releases). The mineralization is associated with extensive zones of fault breccias, collapse breccias, and with orpiment and realgar (arsenic sulfides) which are commonly found in major Carlin-type gold deposits.
Exploration activities at the Eureka Project, including Lookout Mountain, were curtailed during 2014 due to the limited availability of capital. In fiscal 2015, Timberline drilled three holes to the east of the Lookout Mountain resource and confirmed a 2012 partial drill intercept of higher-grade gold mineralization at depth in hole BHSE-152 (Figure 3). The geology in the hole stratigraphically correlates well with gold intercepts occurring up-dip in the resource area. The host rocks tend to be carbonaceous collapse breccias and jasperoid with pyrite (and sometimes arsenic sulfides) at the contact between the Cambrian-aged Dunderberg and Hamburg formations. The four intercepts are thought by Timberline geologists to be mineralogically consistent with higher-grade occurrences as recognized in deeper levels of many Carlin-type gold systems. One of the strongest intercepts from the 2015 drilling included 65 feet (19.8 m) @ 0.09 opt gold (3.09 g/t), including 25.2 feet (7.7 m) @ 0.146 opt gold (5.02 g/t) in BHSE-171 (Table 3). This new zone of higher-grade gold, downdip from the Lookout Mountain Resource, would become known as the Water Well Zone (WWZ).
Figure 3. Lookout Mountain Geology and High-Grade Gold Zone Including Drilling through FY 2021
Table 3. Representative High-Grade Gold Drill Intercepts through 2020 from the Lookout Mountain Resource Area
Drill Hole | From (meters) | To (meters) | Length (meters)(1) | Gold (g/t) (2) | Au GT (gram*meters) |
BH05-01 | 82.3 | 102.1 | 19.8 | 11.79 | 233 |
including | 83.8 | 91.4 | 7.6 | 21.98 | 167 |
BH05-03 | 58.8 | 59.8 | 1.0 | 76.80 | 77 |
BH06-02 | 135.7 | 143.9 | 8.2 | 12.40 | 102 |
BH06-07 | 123.8 | 151.8 | 28.0 | 7.44 | 208 |
BH06-10 | 0.0 | 15.2 | 15.2 | 18.40 | 280 |
BH06-13 | 45.1 | 46.0 | 0.9 | 50.30 | 45 |
BH06-13 | 117.4 | 124.9 | 7.5 | 9.51 | 71 |
BH06-16 | 0.0 | 10.0 | 10.0 | 12.90 | 129 |
BHSE-029C | 119.2 | 136.9 | 17.7 | 12.00 | 212 |
BHSE-032 | 42.7 | 45.7 | 3.0 | 14.60 | 44 |
BHSE-034 | 41.2 | 42.7 | 1.5 | 15.80 | 24 |
BHSE-037C | 67.7 | 68.0 | 0.3 | 27.80 | 8 |
BHSE-064 | 39.6 | 45.7 | 6.1 | 3.19 | 19 |
BHSE-066 | 25.9 | 30.5 | 4.6 | 4.95 | 23 |
BHSE-066 | 88.4 | 93.0 | 4.6 | 8.53 | 39 |
BHSE-067 | 51.8 | 56.4 | 4.6 | 3.63 | 17 |
BHSE-076 | 6.1 | 48.8 | 42.7 | 1.43 | 61 |
including | 7.6 | 10.7 | 3.1 | 11.52 | 35 |
BHSE-096 | 32.0 | 94.5 | 62.5 | 1.48 | 92 |
including | 36.6 | 45.7 | 9.1 | 3.73 | 34 |
BHSE-102 | 41.2 | 70.1 | 29.0 | 1.89 | 55 |
including | 59.4 | 62.5 | 3.1 | 13.15 | 40 |
BHSE-104 | 33.5 | 86.9 | 53.3 | 1.18 | 63 |
including | 67.1 | 73.2 | 6.1 | 12.19 | 74 |
BHSE-126C | 9.5 | 14.1 | 4.6 | 33.10 | 152 |
BHSE-151C | 152.7 | 163.6 | 10.9 | 3.63 | 40 |
Including | 154.2 | 156.9 | 2.6 | 35.63 | 93 |
BHSE-176 | 21.3 | 36.6 | 15.2 | 10.09 | 154 |
BHSE-186 | 4.6 | 10.7 | 6.1 | 5.21 | 32 |
BR-1 | 10.7 | 22.9 | 12.2 | 14.50 | 177 |
BR-1 | 19.8 | 22.9 | 3.1 | 45.10 | 140 |
BR-19 | 10.7 | 13.7 | 3.0 | 12.70 | 38 |
BR-19 | 19.8 | 22.9 | 3.1 | 45.10 | 140 |
BR-19 | 67.1 | 71.7 | 4.6 | 11.10 | 51 |
BR-19 | 117.4 | 137.2 | 19.8 | 10.90 | 216 |
BR-26 | 134.2 | 140.2 | 6.0 | 11.10 | 67 |
EFL-4 | 29.0 | 30.5 | 1.5 | 9.30 | 14 |
EFL-5 | 0.0 | 1.5 | 1.5 | 8.60 | 13 |
LM-05 | 0.0 | 19.8 | 19.8 | 8.90 | 176 |
LM-13 | 3.1 | 4.6 | 1.5 | 12.30 | 18 |
RTC-201 | 0.0 | 14.0 | 14.0 | 10.90 | 153 |
RTC-201 | 17.4 | 19.8 | 2.4 | 17.30 | 42 |
RTR-020 | 6.1 | 7.6 | 1.5 | 17.80 | 27 |
RTR-044 | 0.0 | 19.8 | 19.8 | 11.60 | 230 |
RTR-044a | 0.0 | 3.1 | 3.1 | 9.94 | 31 |
RTR-044a | 25.9 | 27.4 | 1.5 | 10.60 | 16 |
RTR-048 | 54.9 | 56.4 | 1.5 | 13.70 | 21 |
RTR-049 | 33.5 | 35.1 | 1.6 | 163.00 | 261 |
RTR-049 | 73.2 | 76.2 | 3.0 | 28.10 | 84 |
RTR-059 | 29.0 | 32.0 | 3.0 | 20.60 | 62 |
RTR-071 | 0.0 | 13.7 | 13.7 | 9.71 | 133 |
RTR-095 | 7.6 | 19.8 | 12.2 | 12.60 | 154 |
RTR-098 | 0.0 | 13.7 | 13.7 | 12.70 | 174 |
RTR-133 | 71.7 | 76.2 | 4.5 | 17.40 | 78 |
RTR-134 | 126.5 | 143.3 | 16.8 | 12.00 | 202 |
RTR-153 | 9.2 | 18.3 | 9.1 | 11.10 | 101 |
RTR-153 | 73.2 | 74.7 | 1.5 | 12.30 | 18 |
RTR-156 | 16.8 | 18.3 | 1.5 | 10.30 | 15 |
RTR-159 | 4.6 | 7.6 | 3.0 | 8.57 | 26 |
RTR-163 | 18.3 | 19.8 | 1.5 | 31.50 | 47 |
RTR-180 | 111.3 | 114.3 | 3.0 | 11.70 | 35 |
RTR-181 | 80.8 | 102.1 | 21.3 | 9.09 | 194 |
RTR-190 | 144.8 | 160.1 | 15.3 | 11.30 | 173 |
RTR-191 | 134.2 | 147.9 | 13.7 | 19.10 | 262 |
RTR-258 | 152.4 | 155.5 | 3.1 | 14.10 | 44 |
(1) Drill thickness – True widths of drill intercepts have not been determined |
(2) g/t: grams/tonne |
Timberline also completed a six-hole RC drill program on the Windfall target in 2015. The drilling successfully tested the on-strike, offset, and down-dip extensions of gold mineralization that was previously mined at Windfall. The drill holes were completed over a strike length of approximately 3,000 feet (914 m) and intersected gold mineralization consistent with that reported from historic drilling in the area, highlighted by drill hole BHWF-40, which intersected 80 feet (24.9 m) at 0.09 opt (3.09 g/t) of gold including a subsection of 20 feet (6.1 m) @ 0.26 opt (8.91 g/t) of gold.
During the continued difficult commodities environment of fiscal years 2016 and 2017, the Company did no drilling or significant field work at the Eureka Project. During fiscal year 2018, we conducted internal geologic reviews of the project, with a focus on higher grade (>3 g/t) gold mineralization that is associated with extensive zones of fault breccia, as well as carbonaceous collapse-breccia. The team also compiled and reviewed historical geophysical data. This included property-wide magnetics and three lines of shallow induced polarization/resistivity (IP) data from 1992. These data defined three north-to-south trending anomalies at Lookout Mountain that are partially coincident with the high-grade gold drill intercepts and faults. In addition, a single line of historical controlled source audio magneto-telluric (CSAMT) data which crosses the Lookout Mountain open-pit area was also evaluated.
The review of historical data led to design and completion of a detailed gravity survey around Lookout Mountain. The gravity data correlates well with structures identified in the CSAMT and with magnetic signatures and geologic mapping. Together the data outline a graben-like feature, the west boundary of which is extensively drilled and approximately coincident with the existing north-to-south trending gold resource at Lookout Mountain. The central portion of the graben had been tested only locally on the west side by four closely-spaced holes (BHSE-152, -171, -172, -173) at the Water Well Zone, all of which contain relatively high-grade gold. The eastern margin of the graben is marked by the major Dugout Tunnel Fault, which separates down-faulted Ordovician rocks from older Cambrian rocks to the east.
Additional field work in 2018 was also completed at the Windfall target. Work there focused on collection of 40 rock chip samples in and between the historical Rustler, Windfall, and Paroni Pits. Highlights included 10 samples with greater than 0.029 opt (1.0 g/t) and 6 greater than 0.088 opt (3.0 g/t) gold, up to a maximum of 0.382 opt (13.1 g/t) gold. In total, 17 samples assayed greater than 0.007 opt (0.250 g/t), documenting the extensive zone of gold mineralization.
During fiscal year 2019, field activities were re-initiated upon entering into the Lookout Mountain LLC Agreement with PM & G Mines, Inc. (“PM&G”) to fund advancement of exploration with an initial focus on the high-grade mineralization in the vicinity of the Lookout Mountain open pit. Initial work entailed a continuation of re-logging of historical drill core in the resource area, where drilling had delineated a northwest-southeast trend of high-grade gold (defined as drill hole intercepts of ≥ 0.10 opt or ~3 g/t) (Figure 3). This high-grade gold area has a strike length of approximately 500 feet (~150m) within the pit area and is up to 250 feet (~60m) wide. It includes relatively flat lying to moderate dipping gold-bearing zones at multiple elevations, including some exposure in the historical pit. The gold mineralization is constrained, at least in part, by stratigraphy and zones of decalcified collapse breccias in the Dunderberg formation. The breccias locally contain the minerals orpiment and realgar (arsenic sulfides).
In addition to relogging historical drill core, a professional land survey was completed in the Lookout Mountain pit area by a Nevada licensed land surveyor. The work was designed as part of a QAQC assessment of historical drill collar data with results to facilitate advancing the project spatial controls to standards required for mine planning, resource modelling and engineering.
In early FY2020, the Company filed with the BLM an amended work plan to the 2009 BLM Plan of Operations for Lookout Mountain. The amended work plan proposed bonding with an additional 9 acres of proposed disturbance beyond the existing 28 acres of disturbance. The increased bond will permit construction of up to 249 drill sites and 28,657 feet of road access in the immediate area of the Lookout Mountain open pit. The work plan was subsequently approved in mid-2020.
During the third quarter of FY 2020, PM&G resigned from the joint venture because they failed to meet the minimum earn-in investment requirements. As a result, the planned drill program did not take place. However, upon completion of a financing in August 2020, the Company submitted additional bond capital of $246,013 to the BLM in preparation for renewed drilling at the Lookout Mountain target.
Twelve RC drill holes totaling 8,000 ft (2,438 m) were completed in FY 2020 within or near the resource area to confirm historical intercepts and as in-fill in mineralized areas (Figure 4). Five of the RC holes were drilled as offsets to the 2015 WWZ discovery drilling. The program continued into early FY2021 with completion of an additional three core holes totaling 4,477 ft (1,365 m). The core holes were completed east of the resource area to test an IP anomaly and down-dip extensions of WWZ mineralization. The core holes did not reach their target depths and were terminated due to drilling difficulties.
In late 2020 and early 2021 Timberline announced additional drill results of high-grade gold inside the existing resource and to the east in the WWZ (Figure 3) (see Company news releases dated December 1, 2020 and January 7, 2021). Highlights included:
| · | Hole BHSE-176 intercepted near surface high-grade gold mineralization, 15.24m averaging 10.09 g/t, beginning at 21.34m downhole depth, including 9.14m of 16.31 g/t, which included 3.05m of 31.40 g/t. |
| | |
| · | Holes BHSE-177 and 178 encountered shallow oxide gold within the existing resource, including 18.29m of 0.87 g/t (from surface), 48.77m of 1.00 g/t, and 59.44m of 0.63 g/t. |
| | |
| · | Holes BHSE-180, 181, and 182 confirmed northward and down dip extensions of mineralization beyond the Lookout Mountain pit, including gold intercepts of up to 18.29m of 1.58 g/t in the latter of these holes. |
| | |
| · | Hole BHSE-184 drilled 18.29m @ 0.93 g/t gold in the shallow sub-surface below the historical pit. |
| | |
| · | Hole BHSE-186 intercepted 6.10 m of near surface high-grade gold (5.21 g/t) and a separate, broader zone (25.91 m) at 0.77 g/t mineralization at further depth within the pit area. |
| | |
| · | Hole BHSE-187 encountered 7.62 m of 4.49 g/t gold outside the existing resource area within a broader zone of 32.00 m at 1.82 g/t. |
Figure 4. Lookout Mountain Resource Area 2020-2022 Drilling
A schematic cross section view from just south of the historical Lookout Mountain pit shows the geology of the resource and WWZ areas (Figure 5). Much of the Lookout Mountain gold resource is associated with the east-dipping Highwall Fault and the east-dipping contact between the Dunderberg formation and the underlying Hamburg formation. Timberline geologists have noted significant multi-staged collapse brecciation at the contact that likely accounts for the development of porosity and permeability. The mineralizing fluids exploited fault zones and favorable horizons as evidenced by associated intense silicification, sulfidation, and carbonaceous replacement. The resulting jasperoid contains abundant fine sooty pyrite and oftentimes, the arsenic sulfide minerals orpiment and realgar. Jasperoid is present as irregular pods and masses of silicification at various levels within the Dunderberg formation, replacing beds and forming locally cross-cutting veins and veinlets. East of the Lookout Mountain resource, the gold mineralization tends to be localized in the basal 10 to 40m of the Dunderberg, which may or may not be silicified.
The shale and limestone above the gold mineralization often demonstrate calcite veining that passes into zones of argillic alteration. The Hamburg formation dolomite below the contact is usually pervasively oxidized, weakly mineralized and variably decalcified and, in many areas, completely “sanded” by removal of all interstitial calcite.
Figure 5. Schematic Cross Section through Lookout Mountain and Graben Zone
As the rock units dip to the east, the mineralization in the WWZ is east, downdip and open from the 2013 gold resource area. The basal Dunderberg formation host is well understood and the 2021 drilling successfully intercepted mineralization approximately where expected.
The Timberline team applied geophysics in conjunction with geologic mapping and 3D modeling of drill data to develop targets beyond the resource area for drill testing. A district-scale gravity survey was extended from the Lookout Mountain area over the Eureka property block in the quarter ending December 31, 2021 (Figure 6). In his interpretation and reporting of the gravity data, Jim Wright of Wright Geophysics (Elko, NV) recognized the presence of multiple structures and alteration zones that are consistent with the architecture of a Carlin-type gold district.
In late 2021, the Company also retained Simcoe Geoscience Limited to complete a 28 line-km IP survey on the Lookout Mountain Trend. IP geophysics is useful for identifying rocks that are rich in sulfide minerals (such as pyrite) and carbonaceous material, both of which can be enriched in Carlin-type gold systems. The 2021 survey followed-up on sulfides and carbonaceous material encountered in some of the deeper drill holes in 2020. Strong north-south trending IP anomalies were identified within the central part of the graben zone at Lookout Mountain. A second IP survey of 25 line-km was completed by Zonge Geosciences, Inc. (Zonge), which identified similar IP anomalies in the Windfall area farther northeast. Zonge also completed a CSAMT survey along four lines totaling 19 line-kilometers with lines transecting major target areas at the WWZ, West Lookout, Oswego, Rocky Canyon, South Lookout - South Adit, and at Windfall. The additional resistivity data generated from the CSAMT provided enhanced insights into the alteration, faults, and host rock stratigraphy. The combined new geophysical data generated significant improvements in the Company’s three-dimensional model of the gold targets at Eureka.
The gold systems at the Eureka Project often come to the surface where faults and altered rocks yield soil geochemical anomalies in gold and pathfinder elements. Each of the three major trends at Eureka is reflected in gold anomalies in Timberline’s historical soil geochemical dataset. During the summer of 2021, Timberline collected approximately 900 soil samples across the northeastern portion of the Eureka property, which had never been covered by previous workers. The 2021 survey employed new ultra-trace level multi-element analyses of the samples, offering a wider range of elements and much higher sensitivity. We also engaged Mary Doherty of International Geochemical Consultants, LLC (IGC) to integrate the new data with the approximately 5,750 historical samples and statistically level the dataset for new interpretation work. The resulting maps provide near-complete soil geochemical coverage over the northern two thirds of the Eureka Project. The new maps and interpretation provided by IGC recognized numerous distinct soil anomalies consistent with Carlin-type gold geochemistry, particularly emphasizing the Lookout, Windfall, and Oswego trends. The soil data also mapped silver-lead-zinc anomalies consistent with carbonate-replacement type deposits (CRD), best developed in the far northeast of the property at New York Canyon. Modern interpretation tools have helped the team map the major NNW trends and crosscutting NW-SE and NE-SW structures (Figure 7). It is clear from the data that silver and gold mineralization is likely to extend well beyond existing drilling in several areas.
Figure 6. Eureka Project 2020 – 2021 Geophysical Surveys
Figure 7. Soil Geochemistry Factor Map Area showing Normalized Au+As+Sb data
Drilling resumed at Eureka in July 2021, though the program was broken into two parts based on availability of drills and drill crews. Drilling began in July with several RC drillholes and then a diamond core rig commenced work in October 2021. In total, the program included 3,495 meters (11,465 feet) of core and 6,536 meters (21,444 feet) of RC drilling. In some cases, the Company employed RC drilling for the upper portions of the holes (pre-collars) and drilled core through the deeper target zones (core tails). The primary targets for this program were step-outs around earlier gold intercepts and selected fault zones in the WWZ as well as the IP anomaly in the Graben Zone east of the WWZ (Figure 8). We added a few drill holes at Oswego late in the program when surface sampling results became available.
The program was successful at expanding the footprint of the new mineralized zone and its average grade and thickness. One of the holes also encountered the first significant silver-lead-zinc (CRD type) intercepts reported from the central portion of the project. Most of the 2021 drilling program was reported during the first quarter of 2022, and the highlights include:
| · | BHSE-212C: 41.1m at 5.03 g/t Au, including 19.8m at 9.49 g/t Au; |
| · | BHSE-220C: 44.2m at 4.10 g/t Au, including 12.2m at 9.18 g/t Au; |
| · | BHSE-192C: 24.4m at 3.85 g/t Au, including 4.6m at 8.35 g/t Au; and |
| · | BHSE-206C: 202.7m at 5.28 g/t silver (Ag), including 56.4m at 9.69 g/t Ag, 0.17% Zn, and 0.11% Pb |
The most important finding from the 2021 drilling campaign was confirmation of the consistency of Carlin-type gold mineralization at the basal contact of the Cambrian aged Dunderberg formation with the Cambrian Hamburg formation. The Dunderberg and its basal contact is the primary host of the gold in the Lookout Mountain deposit, and its downdip continuation is highly mineralized in the WWZ as well. The Hamburg is a thick limestone that is variably altered to dolomite and often subject to solution collapse; the resulting volume loss has also caused the collapse of the overlying Dunderberg. The contact zone is converted into an almost ubiquitous breccia body over a large area at Lookout and the WWZ. This breccia varies from approximately five to more than 40 meters thick, and it was an excellent host for the hydrothermal fluids that deposited the gold.
The 2021 drilling encountered thick and high-grade (>3 g/t) gold over a north-south corridor spanning more than 400 meters, as defined by the intercepts in BHSE-220C in the north and BHSE-212C in the south. Using a long section view that extends that trend southwest into the Lookout Mountain resource area, one can see that the Dunderberg-Hamburg contact is mineralized with gold for more than 1 kilometer (Figure 9). The thickness and grade vary, but gold and associated Carlin-type pathfinder elements are enriched in every drillhole that penetrates the contact. As recorded in Table 4, some of the new WWZ intercepts from the 2021 drill program are among the richest on the project when expressed as grade-thickness in gram – meters of gold (thickness of interval multiplied by the average gold grade of the interval).
There were also important advances in the understanding of structural geology, stratigraphy, alteration, and geologic controls on the gold mineralization in the WWZ resulting from the 2021 drill program. This was due in large part to the increased use of core drilling instead of RC drilling. This came about because Timberline geologists tested RC vs core drilling at the north end of the WWZ. Drilling in this area with an RC rig encountered an area of higher than usual groundwater inflow (BHSE-205). The resulting samples from the RC rig appeared to be visually favorable, including extreme alteration and abundant sulfide minerals. The assays from that interval were highly enriched in gold, but the grades were lower than expected based on the observed geology. We brought in the diamond core rig to twin the RC hole with core (BHSE-220C) – the two vertical holes were collared just over 2 meters apart. The same mineralized zone was encountered with the core rig, but the results were quite different.
Not only was the mineralized zone somewhat thicker as reported from core, but the grade was much higher. The literature and anecdotal reports from Nevada commonly cite differences between RC and core samples of 10 – 20%. After canvasing other experienced Nevada geologists, we also heard reports of more extreme discrepancies of 75 – 100%. Such differences are generally ascribed to the possibility that high rates of groundwater inflow to a drillhole could wash away very fine-grained gold-bearing phases such as sooty pyrite and/or clay minerals. These fine mineral phases can be very gold-rich. Some RC rigs are forced to change bits in wet drilling conditions, and it's accepted by many industry experts that tri-cone bits suffer greater sample loss and contamination than hammer bits. In this case, the results from drill core were markedly different from the RC results:
| · | BHSE-205 (RC): 36.6m at 1.06 g/t gold |
| · | BHSE-220C (core): 44.2m at 4.1 g/t gold |
It is important to note that the discrepancy between sampling results by RC and core drilling is not always so extreme. Additional work during 2022 suggests that core drilling generally yields higher grade-thickness of gold, but this is sometimes because the core drilling appears to more accurately reflect true thickness of the mineralized zones. The comparisons of gold grade between the two methods may be very similar. See below in the review of the 2022 exploration program for more discussion and additional graphics.
Figure 8. Lookout Mountain Gold Resource Area and Graben Zone with Major Faults, IP anomalies, and 2021 Drill Holes in Target Areas
Figure 9. Long Section from Lookout Mountain Resource through Water Well Zone
Table 4. Summary of Drillhole Intercepts in the Water Well Zone (2015 - 2021)
Drill Hole | From (meters) | To (meters) | Length (meters)(1) | Gold (g/t) (2) | Au GT (gram*meters) |
BHSE-152 | 312.4 | 317.0 | 4.57 (at TD) | 4.72 | 22 |
BHSE-171 | 301.8 | 327.7 | 25.9 | 2.54 | 66 |
including | 301.8 | 318.5 | 16.8 | 3.41 | 57 |
including | 310.9 | 317.0 | 6.1 | 5.46 | 33 |
BHSE-172 | 272.8 | 321.7 | 48.9 | 3.26 | 159 |
including | 274.3 | 274.5 | 0.2 | 4.88 | 1 |
BHSE-173 | 285.0 | 304.8 | 19.8 | 2.29 | 45 |
including | 289.6 | 298.7 | 9.1 | 2.91 | 27 |
BHSE-187 | 266.7 | 292.6 | 25.9 | 2.18 | 56 |
including | 266.7 | 274.3 | 7.6 | 4.49 | 34 |
BHSE-193 | 248.4 | 268.2 | 19.8 | 1.38 | 27 |
including | 248.4 | 253.0 | 4.6 | 2.10 | 10 |
BHSE-194 | 301.8 | 312.5 | 10.7 | 2.36 | 25 |
including | 301.8 | 306.4 | 4.6 | 3.20 | 15 |
BHSE-195 | 259.1 | 272.8 | 13.7 | 2.02 | 28 |
including | 269.8 | 272.8 | 3.1 | 4.56 | 14 |
BHSE-198 | 219.5 | 242.4 | 22.9 | 1.11 | 25 |
BHSE-204 | 161.5 | 167.6 | 6.1 | 2.85 | 17 |
including | 161.5 | 164.6 | 3.1 | 4.88 | 15 |
BHSE-205 | 138.7 | 175.3 | 36.6 | 1.06 | 39 |
BHSE-209 | 324.6 | 333.7 | 9.1 | 1.21 | 11 |
including | 326.1 | 330.7 | 4.6 | 2.07 | 10 |
BHSE-210C | 255.1 | 264.2 | 9.1 | 1.34 | 12 |
including | 255.1 | 261.2 | 6.1 | 1.86 | 11 |
BHSE-211C | 229.2 | 239.9 | 10.7 | 2.96 | 32 |
including | 229.2 | 232.3 | 3.1 | 6.26 | 19 |
BHSE-212C | 316.1 | 357.2 | 41.1 | 5.03 | 207 |
including | 317.6 | 345.0 | 27.4 | 7.30 | 200 |
including | 317.6 | 337.4 | 19.8 | 9.49 | 188 |
including | 317.6 | 323.7 | 6.1 | 16.90 | 103 |
including | 328.3 | 335.9 | 7.6 | 8.03 | 61 |
BHSE-220C | 140.8 | 185.0 | 44.2 | 4.10 | 181 |
including | 140.8 | 163.7 | 22.9 | 6.24 | 143 |
including | 151.5 | 163.7 | 12.2 | 9.18 | 112 |
(1) Drill thickness – True widths of drill intercepts have not been determined |
(2) g/t: grams/tonne |
While exploration at Eureka during 2021 focused on the Lookout Trend and nearby WWZ, the team also returned to the Oswego target (approximately 1 kilometer east – See Figure 3) during the fourth quarter of the year. Timberline geologists collected 67 rock samples from a systematic chip, channel, and trenching campaign at the Oswego gold occurrence. The sampling extended along a 65-metre exposed fault scarp, where historical grab sample results had indicated the presence of high-grade gold. The mapping and sampling in the area identified the Trench Fault as a splay of the Dugout Tunnel Fault. The fault zone hosts an outcrop of oxidized and pervasively silicified rocks that is up to 10 meters high and stretches for more than 60 meters in a northwesterly direction. The results of the channel and trench samples were very positive and are summarized in Table 5.
Table 5. Summary of Oswego Channel Sample Gold Assay Results (No cutoff grade applied)
Sample Set | No. Samples3 | Meters | Estimated True Thickness (m) | Au (g/t) | Oxide/ Sulfide1 |
North Trench | 9 | 13.7 | 8.22 | 1.68 | Oxide |
including | 1 | 1.5 | 0.9 | 9.05 |
Central Trench | 7 | 10.7 | 10.7 | 3.63 | Oxide |
including | 4 | 6.1 | 6.1 | 6.25 |
South Trench | 7 | 10.7 | 10.7 | 2.41 | Oxide |
including | 3 | 4.6 | 6.1 | 3.77 |
North Channel | 17 | 25.9 | Unknown | 14.42 | Oxide |
including | 5 | 7.6 | 23.16 | Oxide |
2Gap Sample | 1 | 1.5 | 9.88 | Oxide |
Gap Sample | 1 | 1.5 | 6.01 |
South Channel | 18 | 27.4 | 12.02 | Oxide |
Notes: 1 57 of 67 samples were re-analyzed for gold by cyanide leach (method Au-AA13). Average estimated gold recovery by cyanide leach was 93% when compared to fire assay AA or gravimetric finish. 2 Due to limited access for safety considerations, only two samples were collectable in a 12m gap between the North and South Channel samples. 3 Six additional surface outcrop samples west of the South Channel returned no significant gold |
Figure 10. Geologic Map of the Oswego Gold Occurrence with Channel Sample Locations and Results
The strong results from surface sampling at Oswego came just in time to allow adjustments to the 2021 drill program such that eight RC holes totaling 767 meters could be drilled there. Several of the drill holes at Oswego encountered significant near-surface gold mineralization, much of which appears to be oxidized (See Figure 10). The most significant new gold intercepts from these holes included:
| · | 35.1m at 2.32 g/t gold (oxide) from 6.1m depth in BHSE-213, including 19.8m at 3.93 g/t gold from 7.6m depth; |
| · | 13.7m at 1.31 g/t gold from 3.0m depth in BHSE-215, including 6.1m at 2.49 g/t gold from 9.1m depth; and |
| · | 9.1m at 1.72 g/t gold from surface and 12.2m at 1.22 g/t gold from 15.2m depth in BHSE-214. |
The strong gold endowment at Oswego is considered important as Timberline’s geologists recognize that the mineralized fault is associated with the eastern margin of the Graben Zone (Figure 8). The fact that some of the mineralization is near-surface and oxidized is also potentially important for future development plans on the project. However, the Oswego mineralization has also been shown to be tightly structurally controlled and (so far) difficult to follow to depth or along strike.
Exploration by Timberline Resources in 2022
The success of the 2021 exploration campaign significantly upgraded the Water Well Zone due to repeated drill intercepts of thicker (> 15 meters) and higher grade (>3.0 g/t) gold mineralization. The 2022 drill campaign continued with a focus on the WWZ, but also included exploration holes farther north and south along the Lookout Trend and at Oswego. The program included 20 holes totaling 6,367 meters, approximately 65% of the meterage was with diamond core as opposed to RC (Figure 4). At the time of this writing, results from several drill holes are still pending. The most significant results from 2022 came from the WWZ. Highlights included (using a 0.3 g/t gold cutoff grade):
| · | BHSE-221C: 6.1m at 1.83 g/t gold from 332.8m depth, including |
| | o | 1.5m at 3.59 g/t gold from 335.9m depth; |
| · | BHSE-223C: 39.0m at 1.71 g/t gold from 259.7m depth, including |
| | o | 28.3m at 1.97 g/t gold from 259.7m depth, and including |
| | | ■ | 5.9m at 3.71 g/t gold from 259.7m depth; |
| · | BHSE-224C: 30.5m at 2.56 g/t gold from 317.6m depth, including |
| | o | 18.4m at 3.80 g/t gold from 317.6m depth, and including |
| | | ■ | 3.35m at 13.36 g/t gold from 331.3m depth; |
| · | BHSE-226C: 22.8m at 4.29 grams per tonne (g/t) gold from 339.9m depth, including |
| | o | 7.6m at 11.56 g/t gold from 342.9m depth; |
| · | BHSE-230C: 3.1m at 10.88 g/t gold from 288.6m depth; |
| · | BHSE-238C: 16.8m at 2.64 grams per tonne (g/t) gold from 178.9m depth, including |
| | o | 4.6m at 4.45 g/t gold from 182.0m depth; |
| · | BHSE-239C: 9.4m at 1.09 g/t gold from 194.5m depth; and |
| · | BHSE-239C: 3.1m at 3.77 g/t gold from 439.5m depth. |
Two holes in the southern part of the WWZ encountered significant mineralization. This drilling expanded the high grade (>3 g/t) WWZ gold mineralization for another 75 meters farther south to a total of approximately 475m, and the system remains open to the south and southeast.
Drilling at the north end of the WWZ tested the northward extension of mineralization beyond hole BHSE-220C (drilled in the 2021 program) and exploration targets farther north in a younger Silurian-Ordovician terrane (Figure 11). Three of the holes in the northern part of the WWZ encountered significant gold mineralization, while two holes intersected notable silver-lead-zinc mineralization (Figure 12). Although the WWZ mineralization at the Dunderberg-Hamburg contact appears to be cut-off or down dropped by a major fault on the north, there are lesser intercepts in BHSE-236 and BHSE-239C indicating that Carlin-type gold mineralization does extend into the younger rocks north of the major Relay Zone fault.
The silver intercepts from the 2022 drilling in the northern WWZ are summarized below (using a cut-off grade of 1.0 g/t for silver):
| · | BHSE-221C: 35.1m at 10.1 g/t silver from 329.8m depth; |
| · | BHSE-237C: 79.2m at 8.2 g/t silver from 297.8m depth; and |
| · | BHSE-237C: 30.5m at 12.2 g/t silver from 393.8m depth. |
These drill holes constitute Timberline’s first test of the major fault zone that cuts through the northern part of the Lookout Mountain and Water Well deposits. The significant silver intercepts in this area confirm the presence of overlapping gold and silver systems in this area. The Rocky Canyon Target, to the north of the Lookout Mountain resource area, also includes a mix of significant gold and silver intercepts. These are not isolated occurrences in the Eureka District, as i80 Gold Corp has been reporting significant silver and Carlin-type gold intercepts from the Ruby Hill Mine during 2022. Other explorers have also reported gold and silver intercepts in the same general area of their projects. However, these new silver intercepts in the Relay Zone were completely blind before drilling, and they appear to be the southernmost indication of a possible CRD system in the Eureka District.
Drill hole BHSE-237C cut more than 200m of strongly enriched silver, as did previously reported hole BHSE-206C (see press release dated March 24, 2022). The maximum silver assays in these intervals are 120 and 145 g/t over narrow widths. The silver is correlated with anomalous lead and zinc, up to 1% over narrow widths, and low levels of anomalous gold. These polymetallic zones are often associated with intrusive dikes of granitic composition. These characteristics are consistent with CRD type mineralization, and it is noteworthy that neither the known occurrences of intrusive rocks nor the huge IP anomaly in the underlying graben have been well drilled. These are only the first holes into a new type of target along the Lookout Trend.
The Company is currently attempting to collect age dates on intrusive rocks from the Relay fault zone that may be associated with the silver mineralization. Elsewhere in the district, similar units have been determined to be of Cretaceous age, the likely age of the silver deposits for which Eureka became famous.
This phenomenon of overlapping mineral systems is an important characteristic of the major Carlin type gold districts of Nevada. The Carlin Trend and Cortez District both include multiple ages of mineralization, including earlier silver and base metal events. Recent exploration success from i80 Gold Corp and these early indications from Timberline are providing supporting evidence that the Eureka District will follow suit.
The 2022 drilling also included three holes at the Oswego target where some drill success has been had in the wake of high-grade surface gold sampling reported in 2021. At the time of this Annual Report, assays are pending for these drill holes.
Figure 11 – Plan View of 2022 Drilling with Water Well Zone, North Lookout, and Rocky Canyon |
The 2022 drilling of the WWZ successfully expanded the zone to a footprint of 475m north-south and up to 125m east-west. The WWZ remains open to the south and downdip to the east. A total of 23 drillholes have now passed through the mineralized host horizon where it averages 17.8m thick with an average gold grade of 2.97 g/t. There were several intervals within the WWZ footprint ranging from 3 to 41.1m thick in which the gold grade was higher than 4.5 g/t. The expanded footprint of the zone, if demonstrated to have continuity, has the potential to significantly grow the Lookout Mountain Resource.
A significant outcome of the 2022 drilling campaign was an improved understanding of the structural geology of the WWZ. Timberline geologists identified a number of faults that were not previously known. In some cases, the faults appear to control higher-grade, and in other cases, the faults have offset the host rocks and therefore appear to cut off the mineralization. The newly updated cross sections shown in Figures 12 and 13 reflect the improved understanding of the geology of the WWZ. The zone still appears to have good continuity, as alteration and anomalous gold are consistently present at the key contact, but the controls on higher-grade gold are sometimes difficult to determine.
As drilling approaches the major Relay fault zone to the north, the cross section through the WWZ shows a high density of faults (blue lines on the section). There is an upthrown block that is bounded and cut by several faults. The upthrown section hosts the high-grade intercept reported in BHSE-220C early in 2022, and the high-grades through that interval may be related to the presence of low-angle faults. These faults explain why follow-up drilling in BHSE-221, BHSE-237, and BHSE-238 failed to intersect the same thickness and quality of gold mineralization. The majority of the faults that cut the Dunderberg-Hamburg contact have not been drill tested, nor have the deeper sections of that contact to the east.
Figure 12 Cross Section Looking North through Northern WWZ (Line 4363275N)
The southern end of the WWZ is host to the best hole yet drilled into the zone, BHSE-212C. Here, as in the northern part of the zone, the drilling indicates that mineralization is more than 40m thick, including a high-grade interval near the top of the zone spanning 19.8m that averaged 9.49 g/t gold (Figure 13). There are differences in the WWZ between north and south. For instance, the strong gold zone starts at only 140m below surface in the north, whereas the key horizon begins at greater depth in the south, 316m below surface. The Dunderberg-Hamburg contact is the primary host throughout the WWZ, but increased drilling has revealed that the high-grade interval in BHSE-212C is associated with a trough, or topographic low, in the top of the Hamburg. This is contrary to the relative topographic high in the top of the Hamburg exhibited in the north.
During 2022, Timberline drilled offsetting holes around BHSE-212C with varying results. BHSE-226C extended the zone to the south by 75m with an intercept of 22.8m averaging 4.29 g/t gold, whereas BHSE-230C encountered thinner, but still strong, mineralization to the north (8.7m at 2.01 g/t gold and 3.1m at 10.88 g/t gold). At the time of this writing, the Company is still awaiting final results from other holes in the area, to the west and east primarily. It is again apparent that the gold zone in the WWZ is consistent but variable. Evidence from the drilling to date at WWZ suggests that the main gold zone pinches and swells, and the controls on the thicker and higher-grade sections are primarily related to faults.
Figure 13 Cross Section Looking North through Southern WWZ (Line 4362875N)
Another important learning from Timberline’s 2022 drill program was that RC drilling can yield satisfactory results in the WWZ, but core drilling does appear to return (at least somewhat) thicker and higher grade than RC over the same intervals. The Company has now conducted three such tests and the results were not entirely consistent. During 2021, Timberline reported that a comparison between RC hole BHSE-205 and core hole BHSE-220C resulted in much higher-grade gold assays over greater width by core when compared to the RC. However, this year’s test compared two more core holes with RC holes, but the holes weren’t exactly twins due to approximately 25m deviation by both RC holes. BHSE-223C (core) was drilled close to BHSE-187 (RC); and BHSE-224C (core) was drilled close to BHSE-209 (RC). As reported in a Company news release dated September 14, 2022, one of the pairs compared very well, while the other comparison was markedly different.
Figure 14 shows the 2021 test of BHSE-205 vs 220 alongside the 2022 test of BHSE-187 vs 223. In the case of 205 vs. 220, the results show few similarities. The distribution of gold grade between the core and RC holes is quite different, particularly with respect to the central part of the interval that was consistently high grade in the core hole. In fact, the RC samples did not return any +10 g/t gold assays. Whereas both the grade distribution and absolute gold assay values compare much better between BHSE-187 and 223. The richest part of the interval is near the top in both cases, but the RC samples yielded higher gold maxima in the assays. The Timberline technical team has concluded that RC drilling can be effective at WWZ, so long as the drill has sufficient compressor capacity and is operated by an experienced team.
Figure 14 Comparison of RC vs Core Drilling Tests at WWZ
Historic Exploration: 2005 to 2010 (Staccato Gold)
Staccato Gold (“Staccato”) advanced exploration of the Eureka Project and completed drilling between 2005 and 2007, and in follow-up initiated a comprehensive work program in June 2008 which included geologic modeling of all drilling results. This modeling included structural and stratigraphic controls to mineralization, additional density determinations, and new drilling and metallurgical test data. Results of this work were incorporated into subsequent exploration work completed since 2008.
From 2005 to 2007, core drilling programs at Lookout Mountain completed by Staccato Gold provided data to better define stratigraphy in the higher-grade breccia-hosted gold zones at the Lookout Mountain pit and discovered new areas of mineralization. The core drilling program demonstrated the stratabound nature of gold mineralization in thick zones of collapse breccia within the Ratto Ridge structural zone. Former Timberline director, David Mathewson, was a consulting geologist for Staccato during this period, leading much of the core logging and development of the geological model at Lookout Mountain. Metallurgical and other technical characteristics of known mineralization were also investigated at Lookout Mountain.
An exploration Plan of Operations was prepared by Staccato and was approved in 2009 by the BLM and the State of Nevada Department of Environmental Protection (“NDEP”) for the Lookout Mountain Trend. The Plan of Operations called for approximately 266 acres of disturbance that can be accessed for use in a phased approach and covers the entire structural corridor. The Plan of Operations allowed ground disturbance to complete additional infill, metallurgical, and exploration drilling necessary to advance the development of the Lookout Mountain Deposit and other targets along the trend.
In October 2009, Staccato also initiated work at the Windfall Target including detailed mapping and sampling programs and completed a ten-hole drill program totaling 8,030 feet (2,448 m). The drilling program focused on testing the extent of gold mineralization below the Windfall and Rustler open pits, located approximately 3 miles northeast of the main Lookout Mountain mineralized area.
Results from the surface mapping program, review of historical production and geologic maps, and drilling indicated that high-grade gold is locally controlled within cross structures cutting the main Windfall fault zone, at the contact between the Hamburg Dolomite and Dunderberg Shale. The 2009 drill program tested approximately 3,600 feet (1,097 m) of strike length of the Windfall fault zone with wide spaced drilling. The Windfall fault zone is part of an extensive mineralized structural trend which extends for over 17,000 feet (5,182 m) based on historical data.
All holes in the 2009 exploration program encountered thick intercepts of low-grade gold (holes 5–12) or anomalous gold mineralization (holes 13 and 14) within the Windfall fault zone. The offset and exploration holes as drilled define the Windfall Fault as a 150 to 200-foot (46 – 61 m) wide zone striking roughly north-to-south and dipping approximately 60 degrees to the east, containing two or more significant zones of mineralization.
Five of the ten holes were drilled as offsets to follow up on the high-grade gold intercept drilled in hole 4, which intersected 75 feet (23 m) at 0.153 opt gold, and five other holes were drilled to test the strike and dip extent of the Windfall fault zone. Several thick intercepts of gold mineralization were returned, including 135 feet (41 m) at 0.011 opt gold in hole 7, 135 feet (41 m) at 0.016 opt gold in hole 8, 115 feet (35 m) at 0.010 opt gold in hole 9, and 100 feet (30.5m) at 0.018 opt gold in hole 11.
A secondary hanging wall structure identified by the mapping program was also encountered in drill holes 7, 8, 11, and 13 and is characterized by strong silicification and decalcification of Windfall Formation and Dunderberg Shale in the hanging wall side of the fault, with Dunderberg Shale and Hamburg Dolomite on the footwall side. Drilling indicates a down to the east offset of the Dunderberg – Hamburg contact. This secondary structure represents an attractive and untested target at depth.
Historical Exploration: 1970s to 1990s
On the Windfall, Hamburg Ridge, and New York Canyon claim groups, Bill Wilson of the Idaho Mining Corp, then Windfall Venture, later Norse-Windfall, initiated reconnaissance mapping, soil and rock chip sampling, trenching, and drilling in the early 1970s. He noted that the original underground Windfall Mine, which was discovered in 1908 and produced approximately 65,000 tons of “invisible gold” mineralized rock grading 0.368 opt, was a Carlin-type sediment-hosted disseminated gold occurrence. Wilson’s work emphasized the east side of Hamburg Ridge and the Windfall Trend, where he drilled conventional air rotary holes. The drill holes were generally from 50 to 250 feet deep. Six of Wilson’s original forty-three Z-holes intersected gold mineralization exceeding 0.02 opt gold. This success led to infill drilling and the development of the Windfall open pit mine in 1975, and soon thereafter, the Rustler and Paroni open pit mines. Gold was extracted in a heap-leach operation from sanded and silicified dolomite and silicified shale.
No geologic maps exist from this period other than a few maps compiled from USGS work. Although many drill hole location maps are archived in the files of Century Gold Corp., the coordinates for many drill hole collars are not available, very few collars are visible in the field, and assay data from infill drilling is poorly documented.
Table 5. Summary of Historic Drilling on Eureka Project
Company | No. Drill Holes | Period | Target Area | |
Norse-Windfall | 63 | 1970s – 1980s | Hoosac/Windfall |
Amselco | 8 | Mid-1980s |
Tenneco | 18 | 1989-1991 |
Pathfinder | 18 | 1993 |
Pathfinder/Cambior | 36 | 1995-1996 |
Amselco | 296 | 1978-1985 | Lookout Mountain |
Windfall Group | 20 | 1986 |
EFL Gold Company | 10 | 1990 |
Barrick Gold | 40 | 1992-1993 |
Echo Bay | 70 | 1994-1995 |
Significant exploration on the Eureka property occurred during the drilling programs mounted during the 1980s and 1990s. The table below summarizes historic drilling by company, era, and focus of their exploration. These data are compiled from historic company reports and, in many cases, have been at least partially validated with the presence of drill cuttings or core in the Company’s inventory. These drilling programs were conducted concurrent with and guided by geologic mapping, geochemical rock and soil sampling programs, and air and ground geophysics. Geological mapping and geochemical programs were very successful in discovering target areas characterized by permissive structures and traces of gold with arsenic, antimony, and mercury anomalies in soil and rock.
The methods of collection and analyses of some historical soil and rock samples were not always available in the data, but it is likely that the samples were collected, documented, prepared, and analyzed to the standards of professional diligence and analytical techniques applicable at the time. The importance of a geochemical-geological exploration approach is evidenced by the fact that the drilling of many such anomalies resulted in significant indications of disseminated gold mineralization. The Windfall, Rustler, and Paroni Deposits on the Windfall claims and the Lookout Mountain Deposit were discovered by drilling soil and rock anomalies in permissive structural and stratigraphic settings. Drill testing of several geochemical anomalies in permissive geological settings has also resulted in the discovery of several additional promising zones of gold mineralization on the Hamburg Ridge, Windfall, and Lookout Mountain claim groups. As yet, these zones have not been fully tested.
Amselco Exploration began exploring the Lookout Mountain project in 1978, conducting extensive geologic mapping, soil and rock sampling and an initial 15-hole reverse circulation (“RC”) drilling program which tested gold mineralization along the Ratto Ridge Fault and associated geochemical anomalies and jasperoids developed along the north-to-south trending Ratto Ridge. This drilling discovered significant sediment-hosted disseminated gold mineralization at depth. Amselco drilled 296 holes between 1978 and 1985, also discovering five areas of gold mineralization along Ratto Ridge which contain partially developed gold resources. These areas are located at South Lookout Mountain, Pinnacle Peak, Triple Junction, South Ratto Ridge, and South Adit. In 1986, while Amselco was in process of becoming BP Minerals, Amselco management optioned the Lookout Mountain Deposit to a joint venture of three companies, which then owned Norse-Windfall Mines.
In 1990, EFL Gold Mines took bulk samples from the floor of the Lookout Mountain pit. These samples returned assay values ranging from 0.10 to 0.135 opt gold. EFL also drilled nine holes, two of which penetrated 500 feet (152 meters) into the floor of the pit, that showed both oxide and sulfide gold mineralization.
During the period 1992-1993, Barrick Gold completed geologic mapping, took more than 500 soil samples to expand and fill in Amselco’s soil grid, and drilled 42 widely spaced holes, primarily along Ratto Ridge. Drilling targeted favorable stratigraphy at depth near fault intersections. Nevada Gold discovered that geochemical anomalies were apparently controlled by E-NE and N-NW to NW trending cross structures which intersect the north-to-south trending Ratto Ridge Fault. Much of the Nevada Gold work focused on the potential in Cambrian Dunderberg Shale and Hamburg Dolomite east of the Ratto Ridge Fault, and potential in the Devonian Nevada Group, especially the Bartine Limestone west of the fault. Outcrops of Bartine Limestone in the area show weak gold mineralization, strong alteration, and anomalous pathfinder element geochemistry. Nevada Gold drilled 42 holes to a maximum depth of approximately 1,300 feet (400 meters) and encountered several gold intercepts.
Work by Barrick Gold also included airborne and ground geophysics and a stratigraphic and geochemical study in conjunction with geologic mapping to develop and prioritize several target areas. Approximately 800 rock samples were collected and had high-quality multi-element analyses at MB Associates in California and Activation Laboratories in Canada. However, their work on the various geological and geochemical targets, or additional drilling in areas of known mineralization previously discovered by Amselco, apparently found insufficient mineralization to meet Barrick Gold’s objectives. It should be noted that the potential for mineralization west of the Ratto Ridge was not significantly explored during this period.
Echo Bay (1993-95) not only worked Ratto Ridge but also acquired additional ground to the north, south, and southwest. They conducted mapping, sampling, and scattered drilling in the area, exploring deep high-grade potential in the Cambrian Dunderberg Shale and Hamburg Dolomite, and testing Devonian Nevada Group targets west of the Ratto Ridge Fault. Echo Bay drilled several promising holes, including drill hole EBR 27, which intersected 110 feet (34 m) grading 0.043 opt gold in the Dunderberg, and drill hole EBR-9 which intersected 115 feet (35 m) grading 0.043 opt gold in the Nevada Group. Offsets of EBR-9 found 90 feet grading 0.028 opt gold, and another hole, which was lost before reaching planned depth, found 45 feet (14 m) of 0.024 opt gold. Further offsets of EBR-9 and several widely spaced holes averaging 1,000 feet (305 m) deep (EBR 15, 16, 17, 18, and 20) found some anomalous gold along Ratto Ridge but no major intercepts. Eventually, the Echo Bay project totaled 104 RC holes. Faced with depletion of budgets with no significant exploration success, the decline in gold prices and large land payments, Echo Bay decided to drop the property.
Paiute Project
The Paiute Project (formerly referred to as the ICBM Project) is located 6.5 miles due west of Battle Mountain, in the Battle Mountain Mining District, Lander and Humboldt Counties, Nevada. The property consists of 1,346 acres (2.1 square miles) on BLM-administered lands.
Timberline originally acquired the project in 2010 through acquisition of Staccato Gold, who controlled the project as a non-core asset along with the flagship Eureka Project. Staccato controlled the project through an earn-in joint venture (JV) agreement with Lac Minerals (LAC), a subsidiary of Barrick Gold. Timberline acted as operator of the project through November 2013 earning a 73.7% interest in the project, with LAC holding the remaining interest.
Historical exploration demonstrated that gold mineralization is present on the property in styles of mineralization currently being mined elsewhere in the Battle Mountain district including at the Fortitude/Phoenix complex to the south and Lone Tree to the west. An analysis of historical data led to recognition that the property also has porphyry copper-gold characteristics similar to Newmont’s nearby historical Copper Basin mine.
Although Timberline controlled the project, as a non-core asset no exploration was completed between 2010 and December, 2013. In December of 2013, Timberline and LAC entered into an agreement with Americas Gold Exploration, Inc. (AGEI) to continue exploration at the project. Under the terms of the agreement, AGEI could earn up to a 51% ownership position in the property and the joint venture by making certain exploration expenditures over a four-year period. If AGEI earned an initial 51% interest, LAC agreed to withdraw from the Joint venture in exchange for a 5% Net Proceeds royalty and to amend the agreement allowing AGEI to increase its equity interest by 19% for a total of 76.6% by making additional exploration expenditures with Timberline retaining the balance of ownership. AGEI also assumed the role as operator of the joint venture.
On August 14, 2018 Timberline finalized the re-acquisition of the property from AGEI along with the contiguous Elder Creek property as part of a two-property acquisition from AGEI. Timberline re-assumed the operator’s position in the underlying property.
The underlying JV with LAC is an earn-in agreement and as a result of previous qualifying expenditures by Timberline, AGEI and previous owners, Timberline currently controls 76.1% ownership of the project after 2018-2020 expenditures. LAC’s parent company, Barrick, is now the operator of Nevada Gold Mines (NGM), a Nevada joint venture between Barrick and Newmont. NGM operates the nearby Fortitude/Phoenix Complex and Lone Tree Mines. Terms of the continued earn-in are as follows:
| · | No mandatory work commitments are included; |
| · | As operator, Timberline proposes work budgets with a 30-day option for pro-rata participation by LAC; |
| · | If LAC chooses to not participate, ownership dilutes on a pro-rata basis (based on $300,000 earn-in for 60% of the project); and |
| · | If diluted project equity reaches 10% or less, LAC converts to a 2% NSR royalty. |
On November 28, 2018 the Company announced completion of a NI 43-101 Technical Report on the Paiute copper-gold project. The report provides a comprehensive description of the project. The Paiute Project has no known reserves, as defined under Regulation S-K Subpart 1300, and the proposed program for the property is exploratory in nature.
Exploration and Mining History
Battle Mountain Gold Company and its predecessors held the Paiute property through the early 1990s and drilled nine RC holes within the current claim block. A best intercept of 100 feet (30.5 m) with 925 ppb gold was noted in their drilling.
LAC re-located the claims in late 1992 and conducted basic field work in 1993 that included geologic mapping, rock and soil sampling, and ground magnetics. In late 1994 they completed a nine-hole RC drilling program to test the main soil anomalies on the property. One drill hole reported 20 feet (6.1 m) of 0.038 opt (1.18 g/t) gold from 20 to 40 feet (6.1 - 12.2 m) that was associated with a narrow vein-like structure in the Harmony Formation.
Pathfinder Exploration joint ventured the property from LAC in early 1995 and completed infill mapping and sampling and target definition. First pass drilling intersected a 200 feet (61m) zone of 411 ppb gold in drill hole ICBM-95-1 within a quartz-actinolite-sulfide veined granodiorite stock or sill. Follow-up RC drilling by Pathfinder in 1996 was highlighted by hole 96-5 which intersected sericitized, chloritized, amphibole-rich monzonite/granodiorite porphyry with secondary biotite from 450-490 feet (137.1 – 179.8m). Mineralization within the last 15.1 feet (4.6 m) of the hole averaged 0.035 opt Au (1.24 g/t) and was accompanied by increased silicification and sulfides (chalcopyrite, pyrite, arsenopyrite).
Petrographic work by Larson (1996) identified silicified, sulfidic (pyrite, chalcopyrite), quartz/calcite veined quartz monzonite porphyry, Cambrian sandstone/quartzite (Harmony Formation) and diabase lithologies, along with a skarn dominant monzonite or granodiorite porphyry with “significant percentages of pyrite, chalcopyrite, and chalcocite”.
Geology of the Paiute Project Area
In the Paiute Project area, the Dewitt Thrust Fault places Ordovician Valmy Formation cherts and shales on top of Cambrian Harmony Formation quartz- and feldspathic-sandstones and shales, which are locally calcareous. The Harmony Formation is intruded by seven Cretaceous to Tertiary age granitic to granodioritic intrusives. An older Devonian or Ordovician diabase intrusive is exposed in the southwest part of the project and surrounding area.
At Paiute, the granitic to granodiorites intrusives occur as high-level plugs, stocks, dikes and sills. Thermal metamorphism associated with the intrusions produced hornfels, quartzite and skarn in the Harmony Formation sediments. Hydrothermal alteration associated with the intrusions consists of argillization, silicification, quartz veining/stockwork that is accompanied by zones of hydrous iron oxides as fracture fillings, disseminations, and occasional gossans. Chlorite and actinolite occur locally within quartz veins and may represent retrograde metamorphism. Quartz veining occurs throughout the project area and increases in intensity within the alteration zones.
A series of echelon structures and sub-parallel faults define a strong N 10-20° E - striking structural zone through the central part of the property that extends approximately 16,500 feet in length and up to 1,500 feet in width. This fault zone is well defined by field mapping and is the dominant northeast trending feature. Secondary northwest and north striking faults cut the northeast-striking structures. Locally, the structures are occupied by granodiorite porphyry dikes. The structures are typically altered and mineralized.
Previous explorers of the Paiute Project have collected 1,283 soil samples and 301 rock samples in the area and analyzed many of them for 14 elements. Copper, gold, arsenic and bismuth trace element anomalies in soils and rocks occur along the N10-20°E structural zone. A north-northwesterly (N20°W)-trending zone of elevated copper and gold occurs where increased fracturing and actinolitic alteration of the rocks is spatially associated with intrusives near Pathfinder drill-hole 96-5.
Garwin (2014) described the major styles of mineralization in the Paiute area as calc-alkaline, porphyry copper-gold, and gold-bearing structurally controlled vein systems. The main gold mineralized zone on the property is coincident with the N10-20°E structural zone.
Where the rock is not oxidized, fresh disseminated and vein pyrite is pervasive throughout the project area. Pyrite is the most abundant sulfide and occurs within the bleached zones coincident with alteration and structural zones. Pyrrhotite is nearly as abundant as pyrite and occurs both within and adjacent to alteration and structural zones. Arsenopyrite appears to be closely related to alteration and occurs only within the alteration zones.
2018-2019 Timberline Exploration
Exploration expenditures for FY 2018 were limited to geological field reviews, rock grab sampling and assays to characterize surface mineral showings. In addition, an application was submitted to the BLM, with receipt thereafter, of an approved Notice of Intent (NOI) to allow disturbance related to construction of drill roads and pads. The BLM approved the application and the property is fully permitted for road construction and drilling. Work during FY2019 included continued data compilation and review in preparation for drilling planned for FY2020.
Paiute Project Activity during Fiscal Year 2020:
Drilling at Paiute was initiated in the 1st quarter of FY2020, and with assay results announced on January 16, 2020 for our first two drill holes. Drilling intercepted long intervals of disseminated gold mineralization in granodiorite porphyry and metamorphosed sandstone (Figure 15, Table 6). Both RC holes were terminated in hard, silicified and mineralized rock.
Hole PCRC 19-01 intercepted 125 feet (38 m) grading 0.012 opt (0.36 g/t) gold with associated pyrrhotite-pyrite-arsenopyrite in silicified, metamorphosed arkosic sandstone. The hole bottomed in 160 ft (49 m) of silicified granodiorite porphyry. The previously identified 2 km-long gold “Lone Tree-type” structural zone remains largely untested below the 500 feet (152m) depth of historic drilling and is entirely untested over an interval of approximately 500 meters along the trend of the zone. The structural zone includes surface rock chip samples which previously returned multiple values greater than 1.0 g/t of gold including two samples over 0.322 opt (10 g/t) gold and one sample with 1.38 opt (42.9 g/t) gold and 16.9 opt (527 g/t) silver (see Company news release dated May 24, 2018 at http://timberlineresources.co/press-releases).
Table 6. 2019 Drill Hole Assay Results
Drill Hole | From (feet) | To (feet) | Interval (feet) | From (meters) | To (meters) | Interval (meters) | Au (g/t) | Ag (g/t) | As (ppm) | Ba (ppm) | S (%) |
PCRC19-01 | 295 | 420 | 125 | 89.9 | 128.0 | 38.1 | 0.356 | 0.4 | 673 | 266 | 1.5 |
including: | 340 | 420 | 80 | 103.6 | 128.0 | 24.4 | 0.442 | 0.5 | 968 | 185 | 1.9 |
PCRC19-02 | 0 | 710 (TD) | 710 | 0.0 | 216.4 | 216.4 | 0.271 | 0.5 | 72 | 849 | 0.3 |
including: | 0 | 40 | 40 | 0.0 | 12.2 | 12.2 | 0.606 | 0.9 | 292 | 648 | 0.0 |
| 110 | 140 | 30 | 33.5 | 42.7 | 9.1 | 0.488 | 0.5 | 43 | 872 | 0.1 |
| 150 | 230 | 80 | 45.7 | 70.1 | 24.4 | 0.514 | 0.4 | 27 | 1123 | 0.2 |
| 190 | 215 | 25 | 57.9 | 65.5 | 7.6 | 1.123 | 0.6 | 12 | 1280 | 0.2 |
| 280 | 390 | 110 | 85.3 | 118.9 | 33.5 | 0.359 | 0.3 | 39 | 720 | 0.2 |
| 490 | 500 | 10 | 149.4 | 152.4 | 3.0 | 0.511 | 0.1 | 30 | 1070 | 0.2 |
| 525 | 545 | 20 | 160.0 | 166.1 | 6.1 | 0.340 | 0.2 | 20 | 598 | 0.3 |
| 610 | 640 | 30 | 185.9 | 195.1 | 9.1 | 0.400 | 1.0 | 33 | 1023 | 0.8 |
| 685 | 710 | 25 | 208.8 | 216.4 | 7.6 | 0.478 | 0.8 | 38 | 680 | 0.6 |
*True thickness of drill intercepts is unknown. **TD: drill hole total depth |
PCRC 19-02 twinned and deepened historical hole ICBM-95-06, which intercepted gold mineralization within highly silica-altered, sulfide-poor (trace – 1% pyrite) granodiorite porphyry. The hole intercepted multiple zones of gold mineralization in granodiorite porphyry and metamorphosed arkosic sandstone, including 40 ft (12 m) of 0.020 opt (0.61 g/t) gold, 80 ft (24 m) of 0.016 opt (0.51 g/t) gold, 25 ft (8 m) of 0.036 opt (1.12 g/t) gold, and 25 ft (8 m) of 0.025 opt (0.48 g/t) gold over its 710 feet (216 m) length and bottomed in mineralization. The mineralization in PCRC 19-02 expands on multiple intercepts in nearby historic holes (see Table 7). Management believes that the Paiute Project has the potential for bulk-mineable, open-pit gold mineralization based on the near surface thicknesses and gold grades drilled to date.
During FY 2020 year the Company also acquired historical IP and magnetic geophysical survey data to further guide future drill targeting of the under-tested structural zone and largely un-tested porphyry gold targets.
Timberline has conducted no work on the Paiute Project during fiscal years 2021 or 2022, but all BLM and county claim fees have been paid in full.
Figure 15. Paiute Project Geology and Primary Target Areas
Table 7. Summary of Historic Porphyry-Hosted Drilling Gold Assay Results
Drill Hole | From (feet) | To (feet) | Interval (feet) | From (meters) | To (meters) | Interval (meters) | Au (g/t) |
ICBM 95-1 | 260 | 295 | 35 | 79.2 | 89.9 | 10.7 | 0.831 |
| 320 | 350 | 30 | 97.5 | 106.7 | 9.1 | 0.552 |
| 385 | 460 | 75 | 117.3 | 140.2 | 22.9 | 0.462 |
ICBM 96-3 | 45 | 65 | | 13.7 | 19.8 | 6.1 | 0.431 |
| 345 | 370 | 25 | 105.2 | 112.8 | 7.6 | 0.497 |
| 405 | 415 | 10 | 123.4 | 126.5 | 3.0 | 1.000 |
| 480 | 580 | 100 | 146.3 | 176.8 | 30.5 | 0.962 |
ICBM 96-3C | 221 | 246 | 25 | 67.4 | 75.0 | 7.6 | 0.626 |
| 455 | 465 | 10 | 138.7 | 141.7 | 3.0 | 1.276 |
| 475 | 505 | 30 | 144.8 | 153.9 | 9.1 | 0.609 |
| 996 | 1001 | 5 | 303.6 | 305.1 | 1.5 | 3.655 |
ICBM 96-4 | 340 | 370 | 30 | 103.6 | 112.8 | 9.1 | 0.683 |
ICBM 96-5 | 90 | 100 | 10 | 27.4 | 30.5 | 3.0 | 0.741 |
| 320 | 350 | 30 | 97.5 | 106.7 | 9.1 | 0.377 |
| 575 | 590 | 15 | 175.3 | 179.8 | 4.6 | 1.501 |
3899 | 10 | 180 | 170 | 3.0 | 54.9 | 51.8 | 0.695 |
3632 | 0 | 100 | 100 | 0.0 | 30.5 | 30.5 | 0.945 |
| 350 | 400 | 50 | 106.7 | 121.9 | 15.2 | 0.55 |
4062 | 30 | 60 | 30 | 9.1 | 18.3 | 9.1 | 0.460 |
| 220 | 260 | 40 | 67.1 | 79.2 | 12.2 | 0.644 |
4006 | 95 | 145 | 50 | 29.0 | 44.2 | 15.2 | 0.483 |
| 280 | 300 | 20 | 85.3 | 91.4 | 6.1 | 0.948 |
3206 | 210 | 280 | 70 | 64.0 | 85.3 | 21.3 | 0.493 |
Seven Troughs Project
During the year ended September 30, 2012, Timberline announced the acquisition from CIT Microprobe Holdings, LLC (California Institute of Technology) (“CIT”) of CIT’s interest in 3,900 acres (6.1 square miles) of patented and unpatented mining claims comprising the majority of the Seven Troughs gold mining district near Lovelock, Nevada. Our acquired interest is as lessee under the terms of a 50-year lease, originally executed in 1975. Terms of the purchase agreement included a cash payment of $50,000 and a 2-percent NSR production royalty reserved to CIT. While the Company is certain of its rights and obligations under the lease, the lessor’s identification has become somewhat clouded over the years due to passing of the early lessor principal to the agreement and a lack of full clarity as to all the eventual inheritors of the property. We have met our obligations under the lease and have located and secured agreements with the heirs to acquire any of their residual rights. We are moving to have the agreements adjudicated appropriately. We have the option to purchase one-half of the NSR production royalty for $1 million.
Seven Troughs is an epithermal gold district recognized as yielding some of the highest gold production grades in Nevada history through small-scale operations in the early 20th century. We believe the district has the potential to host a large precious metals system similar to the high-grade gold and silver veins of Japan's world-renowned Hishikari epithermal gold mine.
We are under no obligation to make exploration expenditures at Seven Troughs. Since acquiring the property, we have compiled historical mine workings data and completed limited geologic mapping, and geochemical sampling within the district. The Company conducted no significant work on the ground during fiscal years 2020, 2021, or 2022, but all BLM and county claim fees have been paid in full. During FY2022, the Company entertained queries from outside parties about the project’s availability and hosted visitors on site.
On April 26, 2022, the Company entered into a Memorandum of Agreement with Normandy Gold Limited (“NDY”) to grant NDY a 12-month exclusive option to enter into an earn-in joint venture agreement with the Company regarding the Seven Troughs property. Subject to negotiation and execution of a definitive agreement, the option may provide NDY with the opportunity to solely fund $5,000,000 of exploration over 6 years, make cash payments of $250,000 and issue 2,000,000 NDY shares to the Company to ultimately earn a 75% interest in the property.
Earn-In Period:
To earn an initial 51% interest in the project, NDY must spend $2,000,000 in exploration expenditures and make cash payments of $250,000, as follows:
| · | $100,000 of committed expenditures within the first 12 months from exercising the exclusive option; |
| · | $500,000 of expenditures (an additional $400,000) within 24 months from exercising the exclusive option; |
| · | Payment to the Company of $100,000 in cash at 24 months from exercising the exclusive option or at such time as the Company demonstrates receipt of full title in the Seven Troughs claims, whichever is later; |
| · | $2,000,000 of expenditures (an additional 1,500,000) within 36 months from exercising the exclusive option; and |
| · | Payment to the Company of $150,000 in cash at 36 months from exercising the exclusive option. |
During the Earn-In Period, NDY will be the operator of the project and be responsible for payment of annual federal and county claim fees. NDY may withdraw from the Earn-In after spending $100,000, or if the transfer of claims ownership to the Company is not successfully completed within 24 months of commencement of the Earn-In Period.
Joint Venture Period:
Upon completion of the Earn-In Period, NDY will hold 51% interest and the Company will have the option (for a period of up to 60 business days) to elect to fund and participate in a Joint Venture on the basis of its 49% interest in the project.
If the Company elects not to participate or fails to provide such notice within the 60-business day period, NDY can earn an additional 24% interest (for a total interest of 75%) in the project by:
| · | spending $3,000,000 in exploration expenditures within three years from commencement of the joint venture, and |
| · | Issuing the Company 2,000,000 common shares in the stock of NDY. |
The Company received $50,000 of the initial cash payment in May 2022 and recorded it as a reduction to mineral rights during that period.
New York Canyon:
On August 23, 2022, the Company purchased one patented mining claim, comprising of a total of 13.77 acres commonly known as the South Wales #1 patent within the New York Canyon claim block, from Newmont Capital Limited for a total of $41,310. In conjunction with this purchase, the Company granted a 1.5% net smelter return royalty to the seller.
On September 28, 2022, the Company purchased five patented mining claims, comprising of a total of 28.82 acres commonly known as the Tiger Lilly, Eureka Giant, Southern Cross, Maria and Best & Belcher patents with and near the New York Canyon claim block, from the University of Nevada, Reno Foundation for a total of $86,460. In conjunction with this purchase, the Company granted a 1.5% net smelter return royalty to the seller. Two of the patented claims are not within the New York Canyon claim block, but will be included with this designation on the Company’s claims record references.
During the fourth quarter of fiscal 2022 and first quarter of fiscal 2023, the Company purchased an interest in three patented claims within the New York Canyon claim block, from private parties. In conjunction with the purchase, the Company granted a 0.5% net smelter return royalty to the sellers. The combined purchase price will be capitalized in the first quarter of fiscal 2023 as a mineral property on the Company’s balance sheet.
Wolfpack Gold Properties
With the acquisition of Wolfpack Gold (“WPG”), we acquired nine mineral properties in Nevada and one in California. We conducted a due diligence review on each property, including organization of the historical data and review of exploration work completed to-date. As of September 30, 2022, only claims on one property (Trail) have been retained, as they are contiguous with our Eureka project.
In 2017, we sold our property and royalty interests in various unpatented claims that were under lease to Pershing Gold. In addition, we sold various other royalty interests that WPG had retained through previous transactions in four other properties.
Overview of Regulatory, Economic and Environmental Issues
Hard rock mining in the United States is a closely regulated industrial activity. Mining operations are subject to review and approval by a wide variety of agencies at the federal, state, and local level. Each level of government requires applications for permits to conduct operations. The approval process always involves consideration of many issues including but not limited to air pollution, water use and discharge, noise issues, and wildlife impacts. Mining operations involve preparation of environmental impact studies that examine the probable effect of the proposed site development. Federal agencies that may be involved include: the USFS, BLM, EPA, NIOSH, MSHA, and FWS. Individual states also have various environmental regulatory bodies, such as Departments of Ecology and Departments of Environmental Quality. Local authorities, usually counties, also have control over mining activity.
Gold, silver, and copper are mined in a wide variety of ways, both in open pit and underground mines. Open pit mines require the gold deposit to be relatively close to the surface. These surface mineable deposits tend to be lower grade (such as 0.01-0.03 opt gold) and are mined using large, costly earth moving equipment, usually at very high tonnages per day. Modern open pit mines are typically very large excavations that require extensive engineering, planning, reclamation, and permitting.
Some open pit operations for gold in which the ores have bene oxidized involve heap leaching as a metallurgical method to remove the gold. Heap leaching involves stacking the ore on pads which are lined with an impenetrable under-surface, then sprinkling the ore with a weak cyanide solution to extract the gold. The gold-impregnated solution is collected and the gold recovered through further processing. Most new gold discoveries contain ores that are not suitable for heap leach processing. Often this is because the gold is associated with sulfide minerals such as pyrite. Extensive metallurgical testing is required to determine the optimum method for treating such ores, but sulfide ore deposits almost always require complex milling and processing plants.
Underground metal mines generally involve higher-grade ore bodies. Less tonnage is mined underground, and generally the higher-grade ore is processed in a mill or other refining facility. An underground mine may have much less visual impact on the land, but the mine design is complex and requires intensive study and careful engineering.
Gold processing plants often generate tailings (the residual material left behind after recovery of the gold-bearing minerals), which require permitted and engineered disposal facilities or tailings ponds. Mines and processing plants also often require extensive water treatment, which again will necessitate extensive interaction with the community and regulators during permitting
Capital costs for mine, mill, and tailings pond construction can, depending upon the size of the operation, run into the hundreds of millions of dollars. These costs are factored into the profitability of a mining operation. Metal mining is sensitive to both cost considerations and to the value of the metal produced. Metals prices are set on a worldwide market and are not controlled by the operators of the mine. Changes in currency values or exchange rates can also impact metals prices. Changes in metals prices or operating costs can have a huge impact on the economic viability of a mining operation.
Environmental protection and remediation are increasingly important parts of mineral economics. Estimated future costs of reclamation or restoration of mined land are based principally on legal and regulatory requirements. Reclamation of affected areas after mining operations may cost millions of dollars. Often governmental permitting agencies are requiring multi-million-dollar bonds from mining companies prior to granting mining permits, to ensure that reclamation takes place. All environmental mitigation tends to decrease profitability of the mining operation, but these expenses are recognized as a cost of doing business by modern mining and exploration companies.
Mining and exploration activities are subject to various laws and regulations governing the protection of the environment. These laws and regulations are continually changing and are generally becoming more restrictive. We conduct our operations so as to protect the public health and environment and believe our operations follow applicable laws and regulations in all material respects. We have made, and expect to make in the future, expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures.
Every mining activity has an environmental impact. In order for a proposed mining project to be granted the required governmental permits, mining companies are required to present proposed plans for mitigating this impact. In the United States, where our properties are located, no mine can operate without obtaining a number of permits. These permits address the social, economic, and environmental impacts of the operation and include numerous opportunities for public involvement and comment.
We intend to focus on exploration and discovery of mineral resources. If we are successful, the ore bodies discovered will be attractive to production companies, or we will potentially bring the ore bodies to production ourselves. The mining industry, like agriculture, is a fundamental component of modern industrial society, and minerals of all sorts are needed to maintain our way of life. If we are successful in finding an economic ore body, be it gold or silver, sufficient value is expected to be created to reward our shareholders and allow for all production and reclamation expenses to be paid ourselves or by the actual producer to whom we convey, assign, or joint venture the project.