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The Lowry Deposit (Fig. 2) lies 1.2 kilometers (0.75 miles) west of U.S. Highway 89 and consists of at least five copper mineralized zones. Of these, the Lowry Middle Zone is a tabular layer of copper-cobalt-silver mineralization reaching up to 79 meters thick with high concentrations of chalcopyrite (copper-iron sulfide) concentrated within fragmental, silicified and dolomitized shale and carbonate. Individual drill holes contain as much as 2.8% Cu over 50.9 meters drilled thickness. The deposit dips gently to the south, lies at depths ranging from 265 to 718.5 meters below surface, and measures 600 meters by 300 meters in plan. The northeast trending Rose fault down drops the southeast portion of the zone, where two holes extend the zone by about 100 meters. These holes have not been offset further east or south. The Lowry Middle Zone contains an undiluted Inferred Resource of 294 million pounds of copper at a copper grade of 2.6% copper and a new resource estimate based on recent infill drilling is expected in Q2, 2013. More drilling is required to bring any of the other copper mineralized zones to the Inferred Resource category.
These deposits are amenable to underground mining, an approach consistent with the desires of the landowners and community. Community and regional support for the project is high due to the strong desire for jobs in this economically challenged rural Montana area. Permitting activities are ongoing using highly knowledgeable Montana-based consulting groups together with the in-house team. Base-line and other key studies for permitting are carried out in close cooperation with the Montana Department of Environmental Quality to ensure high quality and complete permit applications.
Black Butte Copper Mineral Resource Statement as of November 1, 2012Table 1 - Undiluted Measured and Indicated Resources at Black Butte Copper, MT, USA----------------------------------------------------------------------------UNDILUTED MEASURED RESOURCES - Johnny Lee Deposit---------------------------------------------------------------------------- Estimated Metal Grades Estimated Contained Metal -------------------------------------------------------- Cu Cutoff Tonnes Cu Co Au Ag Cu Lbs Co Lbs Au Ag Ozs (%) (000) (%) (%) (g/t) (g/t) (Millions) (Millions) Ozs (000)----------------------------------------------------------------------------Upper Zone 1.60 2,659 2.99 0.118 0.007 16.3 175 6.9 598 1,393--------------------------------------------------------------------------------------------------------------------------------------------------------UNDILUTED INDICATED RESOURCES - Johnny Lee Deposit---------------------------------------------------------------------------- Estimated Metal Grades Estimated Contained Metal ------------------------------------------------------- Cu Cu Lbs Co Lbs Cutoff Tonnes Cu Co Au Ag (Mill- (Mill- Au Ag Ozs (%) (000) (%) (%) (g/t) (g/t) ions) ions) Ozs (000)----------------------------------------------------------------------------Upper Zone 1.60 6,520 2.77 0.125 0.009 15.5 398 18.0 1,887 3,249----------------------------------------------------------------------------Lower Zone 1.50 2,387 6.40 0.033 0.304 4.5 337 1.7 23,330 345----------------------------------------------------------------------------TOTAL 8,907 3.74 0.10 0.088 12.6 735 19.7 25,217 3,594--------------------------------------------------------------------------------------------------------------------------------------------------------UNDILUTED MEASURED AND INDICATED RESOURCES - Johnny Lee Deposit---------------------------------------------------------------------------- Estimated Metal Grades Estimated Contained Metal ---------------------------------------------------------- Tonnes Cu Co Au Ag Cu Lbs Co Lbs Au Ag Ozs (000) (%) (%) (g/t) (g/t) (Millions) (Millions) Ozs (000)----------------------------------------------------------------------------Upper and Lower Zones 11,566 3.57 0.10 0.069 13.4 910 26.6 25,815 4,987----------------------------------------------------------------------------TOTAL 11,566 3.57 0.10 0.069 13.4 910 26.6 25,815 4,987----------------------------------------------------------------------------Table 2 - Undiluted Inferred Resources at Black Butte Copper, MT, USA----------------------------------------------------------------------------UNDILUTED INFERRED RESOURCES - Johnny Lee Deposit---------------------------------------------------------------------------- Estimated Metal Grades Estimated Contained Metal ------------------------------------------------------ Cu Cu Lbs Co Lbs Cutoff Tonnes Cu Co Au Ag (Mill- (Mill- Au Ag Ozs (%) (000) (%) (%) (g/t) (g/t) ions) ions) Ozs (000)----------------------------------------------------------------------------Upper Zone 1.60 1,255 2.52 0.102 0.008 15.2 70 2.8 323 613----------------------------------------------------------------------------Lower Zone 1.50 205 5.33 0.025 0.207 4.1 24 0.1 1,364 27----------------------------------------------------------------------------TOTAL 1,460 2.91 0.09 0.036 13.6 94 2.9 1,687 640--------------------------------------------------------------------------------------------------------------------------------------------------------UNDILUTED INFERRED RESOURCES - Lowry Deposit---------------------------------------------------------------------------- Estimated Metal Grades Estimated Contained Metal ------------------------------------------------------ Cu Cu Lbs Co Lbs Cutoff Tonnes Cu Co Au Ag (Mill- (Mill- Au Ag Ozs (%) (000) (%) (%) (g/t) (g/t) ions) ions) Ozs (000)----------------------------------------------------------------------------Middle Zone 1.60 5,139 2.60 0.12 0.009 14.6 294 14 1,487 2,412----------------------------------------------------------------------------TOTAL 5,139 2.60 0.12 0.009 14.6 294 14 1,487 2,412--------------------------------------------------------------------------------------------------------------------------------------------------------UNDILUTED INFERRED RESOURCES - Johnny Lee and Lowry Deposits---------------------------------------------------------------------------- Estimated Metal Grades Estimated Contained Metal ---------------------------------------------------------- Tonnes Cu Co Au Ag Cu Lbs Co Lbs Au Ag Ozs (000) (%) (%) (g/t) (g/t) (Millions) (Millions) Ozs (000)----------------------------------------------------------------------------Johnny Lee 1,460 2.91 0.09 0.036 13.6 94 2.9 1,687 640----------------------------------------------------------------------------Lowry 5,139 2.60 0.12 0.009 14.6 294 14 1,487 2,412----------------------------------------------------------------------------GRANDTOTAL 6,599 2.67 0.11 0.015 14.4 388 16.9 3,174 3,052----------------------------------------------------------------------------Notes:1. Mineral Resources have been classified according to the "CIM Standards on Mineral Resources and Reserves: Definitions and Guidelines" (December 2005). The preliminary economic assessment contained herein is preliminary in nature and includes inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves and there is no certainty that the preliminary economic assessment will be realized.2. It cannot be assumed that all or any part of an Inferred Resource will be upgraded to an Indicated Resource, or that an Indicated Mineral Resource will be upgraded to a Measured Resource, as a result of continued exploration. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the Mineral Resources will be converted into Mineral Reserves. Mineral Resources are global in situ totals.3. For the Johnny Lee Upper Zone, cutoff grade calculation is based on assumed metal prices of $2.75/lb for copper and an 81% recovery. A mining cost of $US $59.00/tonne, processing costs of US $16.00/Tonne, and G&A costs of U.S. $5.00/tonne were assumed to form the basis for the resource cut-off determination. For the Johnny Lee Lower Zone, cutoff grade calculation is based on an assumed metal price of $2.75/lb. for copper and an 84% Cu recovery. A mining cost of US $50/tonne, processing costs of US $16/tonne, G&A costs of US $5.00/tonne, and refining costs of US $5.53/tonne, were assumed to form the basis for the resource cut- off determination. Note: these costs differ from those used for the cash flow model in the PEA.4. Mineral resource tonnage and contained metal quantities have been rounded to reflect the accuracy of the estimate, and thus the numbers may not sum due to rounding.
