Other Properties
Lincoln Mining - Elgin Mining Option AgreementOn March 31, 2011, Elgin Mining and Lincoln Mining entered into an option agreement which granted Elgin the exclusive right and option to acquire up to a 60% undivided interest in each of Lincoln's Oro Cruz and La Bufa properties by funding expenditures totalling $10,000,000 over a maximum four year period.
Under the agreement, Elgin committed to fund an initial aggregate amount of $4,000,000 in exploration expenditures on the properties ($3,000,000 on Oro Cruz and $1,000,000 on La Bufa) over a period of up to two years from the date of the agreement prior to earning any interest in the properties (Initial Exploration Commitment). On the date that the Initial Exploration Commitment has been satisfied (Option Acquisition Date), Elgin will have acquired the exclusive right and option to earn up to a 60% interest in each property on the basis of a 20% interest earned in a property for each $1,000,000 in additional expenditures funded on the property over a two year period following the Option Acquisition Date. The parties have agreed to negotiate and enter into a formal option and joint venture agreement, based on the terms of the agreement, following the Option Acquisition Date. Lincoln will continue to be the operator of the properties until such time as Elgin has earned a greater than 50% interest in a property, at which time Elgin will be entitled to be the operator of such Property.
ORO CRUZ
Lincoln acquired a 100% interest in the 20 lode claims that cover the Oro Cruz gold prospect located in Imperial County, California in February 2010. Since then, Lincoln has staked an additional 131 claims for a total of 151 lode claims covering approximately 3,000 acres.
Oro Cruz is a pre-development stage gold project located in the Tumco mining district in the Cargo Muchacho Mountains, Imperial County, CA. First discovered by the Spaniards as early as 1780-81, the Cargo Muchacho-Tumco district is believed to have produced the first gold mine in California. The property is approximately 14 miles southeast of the operating Mesquite gold mine (New Gold Inc.) and is adjacent to the American Girl gold mine (past producer).
Historic mining was conducted during 1890-1916 and again in 1932-1941; production exceeded 150,000 ozs gold. In the mid-1990s, the property was drilled and developed by MK Gold Company. MK Gold produced 61,000 ozs gold during a 12 month period in 1995 and 1996, from both open-pit and underground mining. Mining ceased in 1996 due to low gold prices. Prior to cessation, MK Gold was conducting a significant pit wall push back to reach in-place "ore." Gold mineralization remains exposed in the open-pit and in underground workings and numerous targets remain untested.
Lincoln believes that the idle Oro Cruz mine has near-term potential to be reopened and expanded into a producing gold mine. A National Instrument 43-101 ("NI 43-101") technical report (filed on September 21, 2010) compiled by Tetra Tech, Inc. reported an inferred gold resource of 341,800 ozs. with an average grade of 0.070 opt in 4,835,000 tonnes (refer to Lincoln's news release dated September 21, 2010 available at www.sedar.com).
LA BUFA
The La Bufa property is a mid-stage, gold-silver exploration project within the Sierra Madre Occidental in southwestern Chihuahua State, Mexico. The property consists of four concessions (5,700 acres) covering a large part of the Guadalupe y Calvo mining district completely surrounding AuRico's Guadalupe y Calvo project. The principal targets are gold-silver epithermal quartz-breccia veins and stockworks. Reported historic production in the district is 2 million ozs gold and 28 million ozs silver.
On February 10, 2009, Lincoln filed an amended and restated NI 43-101 technical report, which confirmed significant gold-silver mineralization at La Bufa and recommended continued exploration. A total of 17 core holes (5,478 m) have been drilled in the southern portion of the La Bufa property. Encouraging drill hole intercepts ranged up to 2.5 m in width and graded from 4.12 gpt to 10.7 gpt gold and 281 gpt to 516 gpt silver.
A geophysics program was conducted in early 2010, followed by rock chip sampling in areas highlighted by this program. Three large target areas were identified by coincident geophysical and geochemical anomalies.
A drill program totalling 4,500 -- 5,000 metres commenced on the northwest part of the property in mid-July 2011 to test a total of five large, distinct targets, including those noted above. Twenty-eight holes are planned with an average length of 525 feet or 160 meters. The five large targets have been identified from Aurico Gold Inc.'s Guadalupe y Calvo property boundary in the south and across the La Bufa property to the northern boundary, a distance of over 5 kilometers. The drill holes will test for extensions of the main mineralized structures that run in a northwest-southeast direction.
Auracle Resources investment
Elgin Mining holds a 35.3% interest in Auracle Resources as a result of two transactions. On November 23, 2010 a private sale and transfer of common shares in the capital stock of Auracle was completed between certain of its shareholders and Elgin, pursuant to which Elgin acquired 1,800,000 shares at a price of $0.02 per share. On November 25, 2010, Auracle also closed a non-brokered private placement of 10,315,000 units in the capital stock of the Company, at a price of $0.20 per Unit, each Unit consisting of one Share and one share purchase warrant entitling the holder to acquire one additional share of Auracle at a price of $0.30 per share until November 25, 2011. Elgin acquired 10,000,000 units of this placement.
MEXICAN HAT PROJECT
The Mexican Hat project is located 72 miles ESE of Tucson Arizona and was acquired by Auracle in May, 2009 under a 100% option agreement. Work performed on the Mexican Hat to date includes a total of 203 drill holes, several miles of access roads, and numerous trenches. Exploration activities to date have been focused on an area roughly 3000 feet NE-SW by 1000 feet NW-SE. The project is located in the vicinity of a distinctive, mineralized hill protruding up into a flat, desert terrain and can be seen from miles away.
The property was extensively explored in the late 1980s by Placer Dome U.S. During the period of 1989-1990, 137 drill holes were completed for a total of 62,120 feet, in conjunction with 2,100 channel samples from trenches and outcrop (Placer Dome US). Based on this work, an internal report prepared by Placer Dome stated "The total near surface geologic reserves for the property is estimated at 300,000 ounces of gold." The gold grade averages slightly better than 1 g/t. These are not currently 43-101 compliant resources. Metallurgical testing by Placer Dome resulted in an average gold recovery of 92% by conventional leaching methods. Low gold prices during the early 1990s impeded the project's advancement but a program in the mid-1990s further improved confidence in the database. For the past 10 years the mineral rights were held by placer miners seeking alluvial gold production.
Not included in the resource estimate was drilling on shallow dipping faults and other targets tested during the program. VLF-EM ground geophysics have historically worked well in delineating these types of structures. For example, drilling on the Victoria Fault consisted of 14 drill holes, all of which encountered gold mineralization. The most significant intercept was 60 feet @ 0.280 oz/ton gold from a drill hole located some 1500 feet from the core Mexican Hat exploration area and resource calculation.
Company consultants have identified a target in excess of 50 million tons of gold mineralization within the drilled area based on 3-D block modelling. To prove up this potential, the company is planning an in-fill drill program to further bolster the existing database and deliver an updated NI 43-101 compliant resource. Permitting is underway to allow this work to be completed. In addition, the company plans to clean and sample all access roads drill test other identified targets on the property. Lastly, there is the potential for blind targets to be discovered in the flat lands surrounding Mexican Hat.