Nugget Creek

Property Description

160-acre patented placer mine and adjacent contiguous load and placer claims that expand our current mineral properties to approximately 900-acres. Due to the historic documentation of the minerals of the area the Haines Borough has recently zoned this entire area as commercial/industrial. The property is located in the Tsirku River Valley within the Porcupine Mining District of northern Southeast Alaska near Haines.

The property includes two coalesced alluvial fans, one from Nugget Creek and one from Cottonwood Creek, which overlay ancient 1,500 foot wide elevated bench that is a remnant of the main gold bearing valley floor Tsirku Riverbed. Several bedrock incised abandoned stream bed benches are located on the mountainsides well above the present gradient of the streams that feed the fans. Reports state that the early miners claimed that those benches and ledges held higher gold values than the present stream gradient, although the uplands were never actually mined.

Access to Nugget Creek is by a 10-minute flight from Haines to our 2,100 foot airstrip or a 30-minute air boat ride from the Haines road system. Equipment and fuel is transported 6-miles up the open flat sandbars of the Tsirku River at all but the highest water conditions of the year which usually occur intermittently from mid June to mid August. We are able to drive lowboy trailers to the site. A roadway could be constructed to Nugget Creek, but it is likely an unnecessary expense.

Wally Robinson of Grubstaker LLC conducted an on site preliminary evaluation of the 160-acre patented land in the fall of 2007, and also conducted his own research of the available data relating to the mineralization of the patented 160-acres. Based on his finding Mr. Robinson had conservatively valued the patented land (160-acres) for the purpose of marketing it for placer gold extraction alone at 1.5 million dollars (when gold was $750 per ounce).

Chronological Results Summary at bottom of page.

Mineralization

Nugget Creek is located in the southern portion of a N/W trending body of mineralized slate that takes in a area approximately 10x12 miles. This area includes Porcupine and McKinley Creeks, which have similar mineralization to a lesser degree than that of Nugget Creek. Porcupine and NcKinley Creeks were extensively mined for gold in the past and mining continues today. Porcupine Creek was the site of the largest flume ever constructed in North America; over 77,000 ounces of nugget gold were recovered in the early days, and McKinley Creek is the location where 4,500 ounces nugget gold were taken from one plunge basin near the turn of the century.

The Nugget Creek bedrock slate is several thousand feet thick, rising from elevations of 600' up to 5000'. Glacier erosion has exposed underlying marble between elevations of 600' and 4000' within 1/2 mile South and West of Nugget Creek.

A cretaceous quartz diorite pluton intruded the sedimentary bedrock near Nugget Creek and is exposed in an area of several square miles, approaching to within 1/4 mile horizontal distance and 500' vertical distance of the western headwaters of Nugget Creek, and contacts the bedrock slate of adjacent Cottonwood Creek.

Nugget Creek bedrock slates have abundant grey-colored sills up to 24'' wide that are visible for hundreds of feet of elevation in the wall rock of the gorge. These sills follow the foliation of the slate which has been uplifted and turned almost vertical. The fine grained sills were highly mineralized with sulfides during formation and later fractures across width were invaded by sulfide rich quartz. In many location multiple lenticular masses of quartz free sulfides that are up to 1 1/2'' thick parallel thick within the foliation of the slate.

The slate of the Nugget Creek Gorge Wall rock is also mineralized with calcite and a gold/silver quartz sulfide deposit which takes the form of multitudes of small veinlets and extensive abundant dissemination. This mineralized zone visually extends 1,500 vertical feet and is continuous to various degrees for the 3-mile length of Nugget Creek and then over the top of the watershed past McKinley Creek and Porcupine Creek. The Nugget Creek slates have obviously been subjected to violent uplifting forces as well as multiple events of sulfide and quartz mineralization.

Some fine grained placer gold is bonded to a quartz matrix grades to .200 silver which fits the model for a large volume quartz sulfide deposit. It is not unusual for a poly metallic gold/silver quartz sulfide deposit to contain abundant coarse gold in the upper 100 to 300-feet of the deposit. If this is true at Nugget Creek the ancient elevated bedrock incised stream channels could (as the old-timers stated) contain more gold than the present stream gradient and alluvial fan, located 400' below the gorge breakout location of the ancient channel.


Although no visible source of exposed marble has been documented within the Nugget Creek drainage, white crystalline marble randomly occurs on the surface of the Nugget Creek Alluvial Fan. This suggests that at some location the erosion process has incised the Nugget Creek Gorge to a depth which exposes underlying marble. With this knowledge it can also be assumed that at least a portion of the Nugget Creek gold could be derived from a skarn deposit related to the quartz diorite intrusion. This is supported by the presence of garnets, tungsten, galena and magnetite in the black sands, as well as the large size and reported high fineness (Over .900) of some of the gold nuggets from the gorge.

Several short waterfalls with deep boulder filled plunge basins exist in the Nugget Creek Gorge and none of those basins have been tested for gold. The exposed bedrock under the high energy stream in the gorge is worn very smooth, yet an impressive amount of coarse gold remains. This suggests that bonanza style deposits, (similar to those of Mckinley Falls), could be located in the boulder filled plunge basins and in the upper reaches of the alluvial fan near the breakout of the Nugget Creek Gorge. This statement is supported by a 1986 suction dredge sampling program as well as a recreation suction miner that recovered 60 oz of gold nuggets from under a single boulder in 1989.

Bedrock placer values in the Cottonwood Creek gorge are currently unknown, although it definitely is a gold producer, and the alluvial fan test results were reported as similar to those of the adjacent Nugget Creek alluvial fan, In 1194 some platinum placer values were also reported from Cottonwood Creek, although all sampling results from Cottonwood Creek were lost with the death of Howard Hays, a one time partner of the person the property was purchased from.

Summary of Sampling and Mining History

The ancient Tsirku River Bench was intermittently subsistence drift mined; one location prior to 1928 and 3 additional drifts were constructed after that date. The alluvial fan was also subsistence mined by hydraulic methods in a separate narrow 400-foot section between 1902 and 1909. The following Government data is related to that mining project as well as the records of patent.

In 1903 an on site government geologist sampled the black sand contained 266.60 ounces of gold and 68.32 ounces of silver to the ton. The geologists also reported that the miners were not recovering this sand, only the nuggets. His report also states that pay dirt was 10-feet thick above bedrock with the total depth to bedrock under 30-feet. He stated that Gold Nuggets were also recovered from rich glacier scooped basins in bedrock under the alluvial fan and that the Tsirku River bench deposits using underground sluices and drifts and raises. (Pg 26 and 27 USGS Porcupine placer district, Alaska Charles W Wright 1904 Bulletin 236)

A sampling program was conducted in Nugget Creek gorge in 1986. Using only hand methods and a 6'' suction dredge, two separate pits were excavated which exposed a combined area of approximately 200-square feet of bedrock which produced 32-ounces of coarse gold nuggets up to 2 oz in size for an average of .16 oz Au/sq ft. These two pits were the only areas tested. Supporting documents and photos are included in our comprehensive presentation.

The area where the coarse nuggets were being recovered in 1903 is several hundred feet below the present gorge breakout location; the 1986 suction dredge sampling program occurred inside the gorge 400-feet above the present gorge breakout location. The bedrock placer gold recovered in 1903 -1909 could be lag gold from the creek, or transport gold from the ancient main river channel, or a combination of both; a fineness value that ranges from .756 gold with .207 silver to .916 gold indicates mulple sources.

Modern spot testing on the Nugget Creek alluvial fan occurred in 1994. Using a large excavator, 9 widely scattered test pits were dug in locations that represent the average topography of the fan in an area 800'x760'. This area alone represents 1,408.000 cubic yards of material that is available for processing. These test results were computed as the value of a 1-square foot vertical column, 27-feet deep - to near bedrock, which represents 1-cubic yard of the matrix of the alluvial fan at each test pit. A composite of the values of all nine test sites averages out at .058 ounces of gold to the cubic yard.

During the 1994 spot testing of bank run gravel on the fan, the previous owners diverted the creek a short distance below the breakout of the gorge and used the overburden to block off the modern channel where they intended to test mine. The creek subsequently eroded another channel almost all the way to bedrock which exposed a continuation of the ancient creek channel that is deeply incised into bedrock immediately below the breakout of the gorge. This is a prime target for mining nugget gold.

No comprehensive bedrock sampling has ever been undertaken. Previous owners stated that gold values in the rocks of the fan matrix may support a crushing operation. Reports from miners and geologists indicate that the gold is free milling, easily separating from the sulfides associated with the quartz sulfide lode source.

A total of 5 out of 5 known assays of slate bedrock showed gold & silver anomalies with gold valued at .011, .011, .021, .023 and .12; an average of the 5 assays is .037AU/ton. This indicates that very high tonnage bedrock resources could be located at Nugget Creek and the adjacent claims.

Present Mining and Exploration Activity

Three independent placer mining operations are operating seasonally in the Porcupine Mining District. Additionally a strata-form massive sulfide poly-metallic load source located 8-miles N/W from Nugget Creek/Cottonwood Creek Placer Project is scheduled for its fourth season of a comprehensive drilling program by Constantine Metal Resources LTD (The Palmer Project). This drilling project is located on trend with the quartz sulfide load source which starts at Nugget Creek and continues under McKinley and Porcupine Creeks. Geologist working at the Palmer Project concluded that tectonic plate drift along the Chatham Fault geographically disconnected this mining district and repositioned it to its present location, which is about 100 miles from its original location of the Juneau Gold Belt. This is the location where the AJ and the Treadwell, two of the largest underground gold mines in North America, operated. The current largest silver producing mine (Green Creek) is also located here. There are two underground gold mines in the development stage, the Jualin and Couer Alaska's Kensington Mine.

Basically, with Nugget Creek, we are dealing with a little known, or forgotten, placer mine that dates back to the turn of century, and until the 1900's was difficult to access. There is supporting documentation from records of patent, past owners and government and independent geologist, indication that it has tremendous potential associated with a high tonnage lode source as well as a variety of placer deposits including lag gold in the gorges, bench deposits, and two alluvial fans which overlay the old Tsirku River bench which contains transport gold. This 1,500-foot wide elevated ancient patent lists only one tunnel 100-feet long in 1928. Three additional tunnels were constructed side by side after the patent process started, but no records of production have survived. Constructing tunnels side by side indicates mineable gold at all locations.

The only reason mining stopped at Nugget Creek was economics, which is the same reason it stopped in most parts of Alaska. Nugget Creek was considered remote in the old days before modern equipment and airplanes made access easy. Even the other modern mines previously mentioned as currently operating in the Haines/Juneau area, are in the process of coming online, were actually discovered, explored and even mined to an extent shortly after the turn of the century. They were shut down many years ago but with the rising price of gold, they now employ hundreds of workers.

Estimated cubic yards available for place processing within Mineral Survey 1564 alone are 5,088,000. This does not include the proven rich resources inside of the gorge where the waterfall plunge basins are located, or the ancient elevated bedrock incised steam channels on the east side.

Additionally, the Cottonwood #2 quarter section claim contains the Cottonwood alluvial fan which coalesces with the Nugget Creek alluvial fan and doubles the material available for processing to 10,000,000 cubic yards of various grades. The Cottonwood Claim also has elevated bedrock incised stream channels on the east side of the creek that area the same age as the bedrock incised stream channels on the east side of Nugget Creek.

It is impossible to quantify the volume or grade of the lode source without a comprehensive drilling program, however, all the historic data supports that the volume of the lode source could be extremely high tonnage.

Documented Sample and Assay Results

In chronological order: documented assay results, and documented gold recovery from sample programs to date:

In 1903 an on site government geologist sampled the black sand that was being discarded from the sluice boxes that were placed on bedrock. His report states that the black sand contained 266.60 ounces of gold and 68.32 ounces of silver to the ton. At the same date he took two samples of bedrock slate which assayed .02 and .12oz Au/ton. (Pg 17 and Pg 20 USGS Porcupine place district, Alaska Charles W Wright 1904 Bulletin 236).

1986/87 200-square feet of bedrock which produced 32-ounces of coarse gold nuggets up to 2oz in size, Averaging .16 oz nugget gold per square foot.

1994: A total of 9 test pits were dug on the alluvial fan, A composite of the values of all nine test sites averages out at .058 ounces of gold to the cubic yard. (Site specific documentation from records of the previous owner).

1994: A cyanide test of the sill rock showed .018 Au/ton. Another assay showed 2.45% TI in the sill rock, which makes up almost 30% of Nugget Creek Fan. (Chemex Laboratories)

2007: A total of 5 out of 5 know assays of slate bedrock two from 1903 and 3 from 2007 by Al Gilliam showed gold and silver anomalies with gold valued at .011,.011,.021,and .12 and average of the 5 assays is .037Au/ton. (2007 assays-Chemex Laboratories).