AZTEC AND KYLA PROPERTIES, NEVADA

Aztec
Location: The Aztec property is located four kilometres to the southwest of the Goldfield mining district in Esmeralda County and consists of 56 claims totalling 450 hectares. This mining district, in concert with the Northumberland, Manhattan, Round Mountain, Gold Hill and Tonopah mining districts, lie along the Round Mountain Goldfield Trend (“RMGT”). Over 17 million ounces of gold have been produced along the RMGT since discovery, with 4.2 million ounces from Goldfield alone. Further reserves and resources of over 5 million ounces along the RMGT have been reported.

Exploration History: Aztec was prospected previous to the 1980s, but there are no good records of this activity. Beginning in the 1980s, numerous companies drilled widely spaced shallow holes on different parts of Aztec; records are incomplete, but most holes were very shallow (with exception, to less than depths of 240ft). Many holes drilled by U.S. Borax and Kennecott Exploration returned long intervals with anomalous gold values; other companies reported encouraging results. One hole intersected 8.7g Au/t over 5 feet at depth of 55 feet on a NE trending structure. A soil sampling program of limited extent (2,000 feet by 500 feet) completed by U.S. Borax outlined strong N and NE trending gold anomalies (50 – 360 ppb Au), all open along strike. Drilling and mapping defined a dome-like pervasively altered and mineralized rock feature within the central part of Aztec; its total extent has not been determined because of alluvial cover.

Geology and Mineralization: Outcrop at Aztec is predominantly Tertiary silicified crystal tuff; one area within the north part of the property that is underlain by Paleozoic silicified carbonates (jasperoid). Quaternary gravels cover much of the property. Observed mineralization in the tuff is “drusy quartz coating and fillings with abundant fine veinlets of chalcedonic and crystalline quartz”; jasperoid replacement bodies and tectonic breccias are present within the carbonates. A typical epithermal suite of elements (e.g. As, Sb, Hg and Ag) can be found with the gold mineralization.

Exploration: Kinbauri has completed a systematic (60mx30m) multi element geochemical soil survey over the northwest sector of the property; the samples were analyzed for Au plus 34 elements. The survey defined a major gold anomaly (30-729 ppb) which trends north-south (1200 m x 250 m) and includes major anomalous northeast striking components; coincident anomalies are present in other elements. The anomalies reflect the north-south belt of alteration/gold mineralization and the northeast trending fabric of Au-bearing faults, fractures and quartz veins. The samples were also subjected to enzyme leach analyses to assist in tracing the Au mineralization under the thick gravels, which surround a central mineralized ridge having thin cover.

Drill Targets: Several targets for drilling have been defined at Aztec by the geochemical work, prospecting and previous drilling; the targets being high grade feeder and/or replacement gold zones. These targets will probably be at a shallow depth in spite of being hidden by extensive post-mineral cover. A blast-hole trenching program has been recently completed (results pending) to confirm the trends of mineralization suggested by the soil geochemical surveys and the drill hole priorities.

Kyla
Location: The Kyla property is located 50 km south of the McCoy/Cove mining complex (“McCoy/Cove”), which is reported to have had production of 115 million ounces of silver and 3.5 million ounces of gold and consists of 59 claims totalling 397 hectares. McCoy/Cove and the property are believed to lie on or adjacent to northwest-trending fracture systems west of, and sub parallel to, the Eureka/Battle Mountain Trend.

Geology and Mineralization: Kyla hosts Tertiary volcaniclastic rocks at surface with widespread silicification, including a sinter cap, and anomalous gold values: outcrops of jasperoid contain values of up to 0.8g Au/t. These highly silicified gold-bearing rocks outcrop along northeasterly-trending high angle faults and probably represent a halo overlying higher grade gold mineralization.

Exploration: Kinbauri plotted and contoured historical rock chip assay values to determine (i) the most auriferous part of the sinter cap and (ii) any trends within rock chip gold anomalies. The rock chip gold anomalies show a dominant northeasterly trend, paralleling projected structures. A secondary east-west trending components, parallels similar trending faults. Available soil geochemistry values were plotted and contoured for Au, As, Ag and Hg to further verify the mineralization trends. For the most part it mirrors the rock chip data; however a secondary NE-trend in the Au, As and Hg anomalies appears to be present to the west of the dominant rock chip anomaly. Drill hole logs were also re-examined; holes showing the strongest gold mineralization are 300m apart in the area of the highest gold values in exposed bedrock. This area also shows the thickest sinter cap of 45 to 97m. Here, highly silicified volcanics are underlain by hydrothermally altered ( argillized) volcaniclastic rocks.

Drill Targets: Two possible drill targets have been identified. They underlie the argillaceous strata and sinter cap and are associated with northeast and east trending faults:
1) veins and stock-works within the Tertiary volcaniclastic rocks adjacent to the feeder zones; and
2) replacement deposits within receptive Paleozoic strata underlying Tertiary volcaniclastic rocks at shallow to moderate depths, again adjacent to feeder zones.
Moderately deep holes will be required to intercept targets associated with the feeder zones in both the Tertiary volcanic rocks and the Ordovician basement rocks.

Uranium Prospect: Kyla also covers an uranium prospect where drilling in the 1970s outlined a number of continuous, albeit narrow, beds, which yielded 0.02 to 0.09% U308 (according to the historic records). Grades need to be confirmed and the potential for ISL needs to be determined.