Transcript Document
Near Term Gold and Silver Production in North America June 2009
Safe Harbor
The following presentation may include certain “forward-looking statements” within the meaning of the United States Private Litigation Reform Act of 1995 and applicable Canadian Securities Laws. All statements, other than statements of historical fact, included in the presentation, including, without limitation, statements regarding potential mineralization and reserves, exploration results, and future plans and objectives of RX Exploration Inc., are forward-looking statements.
Words such as “expect”, “anticipate”, “estimate”, “may”, “will”, “should”, “intend”, “believe” and other similar expressions are forward-looking statements. Forward-looking statements are not guarantees of future results and conditions but rather reflect our current views with respect to future events and are subject to risks, uncertainties, assumptions and other factors, and actual results and future events could differ materially from those anticipated in such statements. There can be no assurance that such forward-looking statements will prove to be accurate.
Some of the important factors that could cause actual results to differ materially from our expectations are disclosed under the heading “Risk Factors” and elsewhere in documents filed from time to time with the Canadian provincial securities regulators. We base our forward-looking statements on information currently available to us and we do not assume any obligation to update them, except as required by law.
An additional Cautionary Note to Investors – In the event that we use certain terms in this presentation, such as “resource”, “measured resource”, “indicated resource” and “inferred resource”. U.S investors are cautioned that, while such terms are recognized and required by Canadian Securities Laws, the United States Securities and Exchange Commission does not recognize them.
Under U.S. standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination has been made. U.S. investors should not assume that all or any part of measured or indicated resources will ever be converted into reserves. In addition, “inferred resources” have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically.
Accordingly, information concerning descriptions of mineralization in this presentation may not be comparable to information made public by companies that are subject to the SEC’s Industry Guide 7.
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Share Capital
Listing Symbol Recent share price 1 52 week low –high Shares outstanding Market capitalization Cash Share ownership CNSX “RXE” CAD $0.36 / share CAD $0.10
–$0.72 59.8 million – basic 96.4 million – fully diluted CAD $21.5 million CAD $250,000 RX Management (~20%) The company will be applying for listing on the TSX Venture Exchange.
All of the company’s filings are current.
1 As of June 11, 2009 3
Drumlummon Gold Project Marysville, Montana
Drumlummon Mine, Late 1800’s
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The Drumlummon Mine, Marysville, Montana
Marysville, Montana is located 25 miles Northwest of Helena, Montana’s capital city.
MONTANA Lewis and Clark County Lincoln Marysville Helena
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History of the Drumlummon Mine
The well documented history of the Dumlummon mine provides RX with detailed information including historic resources, assay maps, and historic drill plans. RX continues to leverage this information to guide its exploration program.
1876 1883 1901 1946 1950 1979 2007
The Drumlummon deposit is discovered by Thomas Cruse.
Montana Co. acquires the Drumlummon claims and produces $16 million of gold and silver by 1901.* Montana Co. enters dispute with neighboring property over claim boundaries and is ordered to cease mining activities in disputed ground. Montana’s neighbor wins the dispute despite several Montana and US Supreme Court appeals between 1901 and 1910. Mine seized by sheriff and delivered to neighbor. Neighbor has insufficient funds to operate mine. Mine closes and floods to the 400 level. Property fragments. W.R. Wade restarts the Drumlummon mine dewatering to the 800 level.
The Drumlummon mill burns down and mining ceases. No economic custom milling and smelting can be arranged in a $35 per ounce gold environment.
Goldsil Mining acquires the claims and drills several high grade holes. Goldsil loses claims when financing collapses due to ‘Black Monday’, October 1987.
RX Exploration conducts due diligence, consolidates all land claims, initiates surface drilling, completes NI 43-101 report and commences underground rehabilitation by late 2007. RX Exploration is the first company to consolidate all the mining claims including the “previously disputed ground” under one contract since the early 1900’s.
*$16mm of production was at a gold price of $20.67 per ounce.
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Drumlummon Mine Property Map
The property consists of 26 patented mining claims (290 acres) and 68 staked claims (1,390 acres).
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2008 Progress
RX completed rehabilitation of 400 level to the ‘Previously Disputed Ground’.
5 underground drill stations completed. 59 holes drilled totaling of 25,959 feet.
Discovery of three new high grade gold and silver veins in the hanging wall of the mine and completion of a 43-101 resource estimation on new veins. Confirmation of historical resource of gold and silver in areas of past producing mine and in some cases improvement of grade (multi ounce per ton).
‘Previously Disputed Ground’ opened and can now be drill tested.
RX received all necessary permits and exemptions by the State of Montana and the U.S. Department of Labor for the Drumlummon mine to continue exploration and surface/underground development. (See Appendix #2) 8
Drumlummon Mine Property Map
The veins on the property are accessed by the mine’s existing underground workings.
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Historical Facts & 2008 Progress in Context
There is excellent potential for additional high grade gold and silver discoveries at the Drumlummon mine (historic resources plus new resource is greater than 600,000 ounces of gold equivalent at a grade of 0.5 ounces of gold equivalent).
Company’s target is 3 million ounces of gold in ore grading greater than 0.3 ounces per ton gold equivalent. Virgin veins have the potential to grade multi ounces of gold per ton in the ‘Previously Disputed Ground’.
When the Drumlummon mine was previously in production, gold prices were near historical lows of approximately $20 per ounce. Miners focused on extremely high grade mineralization, generally above 1 ounce per ton. Miners always drove drifts on ore.
Any ore believed to fall below a 1 ounce per ton cutoff grade or that contained high silver content was left behind.
Drilling has discovered three new veins of high grade gold and silver in the hanging wall of the mine showing past production simply followed the high grade sections of known veins from the 200 level down to the 1600 level. Drilling to date has confirmed historical resource in Block ‘D’ and returned some very high grades of up to 2.53 ounces per ton gold and 101.24 ounces per ton silver.
The ‘previously disputed ground’, now owned by RX, was fought over for many years indicating that grades and tonnage in this area were of particular interest but it was never mined. RX is now able to access and drill the ‘previously disputed ground’ along historic and newly discovered veins. 10
Underground Workings – Longitudinal Section
RX’s exploration targets can be split into five distinct areas: Drumlummon Workings • Xmas Vein • Previously Disputed Ground • 9 Hour Workings • Charly Vein RX’s first phase of drilling was focused on the ‘D’ Block of the Drumlummon Workings
South Surface
9 Hour Workings
North
Drumlummon Workings
Surface Setup
400 Level 1000 Level 700 Level Previously Disputed Ground Xmas Vein Shaft No.2
1600 Level
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Highlighted ‘D’ Block Drill Results
59 holes (25,959 feet) were drilled targeting 3 veins in the ‘D’ Block. Drilling was successful and this small area added 95,240 inferred ounces of gold equivalent to the historic resource.
Drill Hole
DDH 08-8 DDH 08-9 incl.
incl.
DDH 08-10 incl.
incl.
DDH 08-13 DDH 08-27 DDH 08-28
From (ft)
69 74 84 74 90 90 36 12 DDH 08-29
To (ft) Length (ft)
4 19 9 6 74 6 26 10 6 2 8 4 8 4 10
Gold (oz/t)
0.2
1.1
0.7
2.5
0.3
0.2
0.7
0.3
0.5
0.7
1.5
0.3
0.3
0.3
0.1
Silver (oz/t)
35.4
70.2
32.9
11.1
53.1
15.2
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Charly Veins (‘D’ Block 400 E veins, A,B,C)
A Vein C Vein B Vein 13
Mineral Resource Estimates
59 drill holes have been completed in order to develop a preliminary 43-101 compliant resource estimate. Inferred mineral resources were calculated over the newly discovered Charly veins, which indicate very strong continuity.
The new resource estimate is 43 the 700 foot level.
101 compliant and focuses on ‘D’ Block, an area between Shafts No. 1 and No. 2 that begins above the 400 level and continues below A cutoff mining width of 5 feet was used, along with a minimum grade of 0.1 ounce per ton.
Despite the continuity, calculations are considered inferred and infill drilling is required to bump these resources to reserve status.
400E Vein
A B C
Total Tonnage
67,284 39,740 48,494
Grade Au Grade Ag Ounces Ounces (oz/t) (oz/t) Au Ag
0.39
12.2
26,192 820,166 0.53
0.48
7.3
16.6
21,097 23,414 291,053 804,341
Total Ounces Au Equivalent 36,698 24,825 33,717 95,240
Several highly prospective targets remain with excellent high grade and high tonnage potential: Xmas Vein Previously Disputed Ground Nine Hour Workings 14
Historic Resource Vs. New Resource:
Goldsil Mining completed a resource calculation in 1985 of 515,000 ounces of gold equivalent. Although the historic resource is not 43-101 compliant, drilling may bring this historic resource to 43-101 standards while continuing to add incremental ounces.
BLOCK HISTORICAL RESOURCES LOCATION TONS GRADE
Au Ag Au
OUNCES
Ag
TOTAL OLD OUNCES Au Equivalent* NEW RESOURCES (43-101 COMPLIANT) LOCATION TONS GRADE
Au Ag Au
OUNCES
Ag
TOTAL NEW OUNCES Au Equivalent* TOTAL OUNCES Au Equivalent* Block A
Last Hope Claim 6,300 0.4
4.0
2,520 25,200
2,843 2,843 Block B
Drumlummon Workings to Last Hope 26,000 0.4
4.0
10,400 104,000
11,732 11,732 Block C
Drumlummon Workings above 400 level 20,000 0.2
2.0
3,600 40,000
4,112 4,112 Block D
Drumlummon Workings below 400 level a) Virgin Ore b) Caved Material 160,000 100,000 0.4
0.2
4.0
2.0
64,000 20,000 640,000 200,000
72,198 22,562
400E-A Vein 400E-B Vein 400E-C Vein 67,284 39,740 48,494 0.39
0.53
0.48
12.2
7.3
16.6
26,192 21,097 23,414
36,698 24,825 33,717 36,698 97,023 56,279 Block E
Virgin Ground #2 Shaft 90,000 0.4
3.0
36,000 270,000
39,459 39,459 Block F
Top Half - St. Louis 173,000 0.6
5.0
103,800 865,000
114,880 114,880 Block F
Bottom Half - St. Louis 112,000 0.4
3.0
44,800 336,000
49,104 49,104 Block G
Top Half - Apex Ground 140,000 0.6
4.0
84,000 560,000
91,173 91,173 Block G
Bottom Half - Apex Ground 130,000 0.4
3.0
52,000 390,000
56,996 56,996 Block H
9 Hour Workings 30,000 0.4
2.5
12,000 75,000
12,961 12,961 Misc.
TOTAL
North Star Vein Castletown Vein 60,000 60,000 0.4
0.2
3.0
2.0
24,000 9,000 180,000 120,000
26,306 10,537
1,107,300 466,120 3,805,200
514,862
155,518 70,703
26,306 10,537 95,240 610,102
Source: P. Towndrow (Mining and Metallurgical Consultant and Project Manager for Goldsil’s Marysville Project 7/80 to 7/84) 15
43-101 Interpretation & Conclusions
Testing of areas on the 800 level down dip from the Xmas vein (where Wade mined before his mill burned down) is recommended and potential for grade and tonnage in this area is considered excellent. RX can now drill this area.
Testing of the ‘Previously Disputed Area’ between shaft #2 and the 9 hour workings beneath the 400 level to beneath the 1600 level has the best potential to develop precious metal resources. RX can now drill the ‘Previously Disputed Ground’. As this area is considered prime ground, drilling success could more than double the anticipated tonnage and gold equivalent ounces.
Past recommendations (Ropes, 1935) encouraged testing at the north end of the 400 level (currently known as the ‘A’ & ‘B’ blocks being drilled from surface) as this area was never tested due to divided ownership.
Blocks ‘A’ and ‘B’ were drilled after the completion of the NI 43-101 document and are therefore not included in the resource calculation. Tonnage potential in this area is high.
Other underdeveloped sections beneath and south of the 9 hour workings are considered optimal areas to develop grade and width of precious metal mineralization.
The Company believes that ramp development at the north end to the 600 foot level combined with drilling from station 7 maximizes resource development. The ramp is expected to produce a minimum 200 tons per day grading 0.5 ounces per ton from the Charly vein once completed 16
Ramp Development & Budget
Water Treatment Plant New Portal On Surface Drive 1,900 Foot Decline Services & Electricity Water Discharge Line
June July Aug Sept Oct Nov Dec Jan Feb Mar
Cost
$300,000 $600,000 $2,000,000 $120,000 $120,000
$3,140,000 TOTAL
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Management Team
John O’Donnell
is the Chairman of the Board and has been instrumental in the overall transformation of the Company. He has practiced law in the City of Toronto since 1973 where he is engaged primarily in the field of corporate and securities law. He is and has been counsel to several publicly traded companies, including many mineral exploration companies. John is currently a director of Gold Reef International, Inc., a company which he founded and now has extensive exploration activities in Nevada, including a joint venture with Newmont. John has a BA in Economics and a Bachelor of Laws from the University of Windsor.
Murray Nye
is the Chief Executive Officer, Chief Financial Officer and a Director of the Company. Mr. Nye is a director and principal of Venbanc, Inc., an investment and merchant bank located in Winnipeg, Canada that he founded with a partner in 1994. He also serves as Chief Executive Officer and Director of ATSI Communications Inc. and is a Director of Clifton Mining and XPEL Technologies Corp.
Mike Gunsinger
employed for 40 years by Patrick Harrison and Co., underground mining contractor, the clients of which include major mining companies such as Inco and Noranda and the US Military. Upon retirement, Mr. Gunsinger established his own underground contracting company and has been involved in several projects in Utah and Montana for Kennecott, Clifton Mining, and Hanover Gold.
is the Director of Underground Operation for RX Exploration.
He was
Timothy Beesley
has been actively involved in mineral exploration in Canada, Australia and South America for over 30 years.
He founded his own consulting company, T.J. Beesley Geological Services Inc., in 1986.
mining companies and consortiums in the exploration for and evaluation of several mineral properties around the world.
Since that time he has acted on behalf of senior and junior Mr. Beesley has an M.S. in geology from the University of Colorado.
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500-220 Bay Street Toronto, Ontario Canada M5J 2W4 T: (416) 367-1930 Ext 222 F: (416) 365-1813 19
Appendix #1: Drumlummon Historic Resource Calculation
The Drumlummon mine has a historic resource :
Gold Silver
Tonnage (tonnes)
841,000 841,000
Grade (g/t)
17.14
171.43
Gold Equivalent* Grade (oz/t) 0.50
5.00
Contained Ounces 463,000 4,635,000 514,862
*Equivalent based on commodity prices of November, 2008.
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Appendix #2: Production Permitting
RX has received all permits and exemptions required for production: Approval of exploration license including water discharge permit by the Montana Department of Environmental Quality Approval of small miner exemption which permits the company to mine so long as surface operations do not exceed five acres Approval of the alternative mine rescue capabilities by the U.S. Mine Safety and Health Administration Approval of the ventilation, escape and evacuation plan by the U.S. Mine Safety and Health Administration 21