Patented Mining Land – Santiago Gold and Silver Mine
19 March 2014
The owners are willing to sell the property for $33,000,000, or do a joint venture from $1,900,000 to $6,000,000. An investment of $7,900,000 may return $79,000,000, or ten times at 43% net-profit share. When the investor has received a net return of $79,000,000, he will receive a 15% net-profit share for the mine life.
This is a Gold and Silver mine just 9 miles outside of Georgetown, in the heart of the Colorado Rockies. This is a combination of both patented land and mining claims. The mine has produced 20,000+ ounces of gold based on incomplete historical records. In the Santiago Ore shoot alone there is an estimated 2016000 ounces of gold and 4,320,000 ounces of silver, with proven: 60,000 tons of reserves. Estimated total reserves are at: 240,000 tons. The mine also produces copper 3.31% and lead 6.06%. The gold averages .84 oz./ton gold; 20.7 oz./ton silver. The mine is currently inactive.
Permits NOI and 110-2; jumbos, haulage, milling equipment are included with the purchase. The total acreage is 160 acres (120 acres plus 40 acres pending filing for CNC members). In lieu of NI43-101, because of extensive records of tunnel-stope maps, shipping, milling and smelters of Santiago properties and seven other adjacent, proven-mine properties along with hundreds of assays, historical records from personal files, Colorado School of Mines, Bureau of Mines, Bureau of Land Management, historical files of Clear Creek County, geological records from a geological engineer, Mosch; beneficiation study of proven reserves; engineering reports from McFadden, and many others, gives Santiago Mining Company a fair head start for completion of an NI43-101 study to be completed in year three, as mentioned in the Executive Summary. Through review of company archives by a qualified geological engineer, it will be clear regarding Company mining concepts for Santiago Mines on Mt. McCLellan.
$1.9 million to begin Mining Secured with a $2,850,000 payback. Investment of $1.9 million, fully protected to be used for the following: Site and above ground development, including early recovery of the estimated 60,000 tons of verifiable, already mined ore and below ground drifting on ore in pursuit of opening Santiago ore bodies. This first phase of construction and development will take on full mining season. At season’s end, the investor will inspect development work and decide on participating in the Joint Venture.
$Investment of $6 million to include participation in a Joint Venture with equity and net profit sharing for the life of the mine (estimated to be 62.5 years). An average 6 month mining season will return the Joint Venture Partner the average of $11.5 million net revenue per year starting at the end of the ramp up period or $345 million in the first half of the estimated years of mine operation. If Option #2 is not exercised, the investment capital of $1,9 million will be secured with prove, processed, already mined reserves and other equities on newly mined ores until the investor receives a return of $2,850,000. This will terminate Option #1, and the investor will have no further involvement in the Santiago Mines.
Brief Property Description
The Santiago Mine is in Colorado’s East Argentine Mining District that straddles the Continental Divide and is known for its high grade gold and silver ores. The Santiago properties are located on three major fracture zones within the high confines of a glacial cirque and the interior of Mount McClellan. (see mt. photo)
The Santiago ore body is on the Southern portion of the Santiago-Commonwealth-Centennial-Rosalie vein, productive for over a mile, and is traceable for 15 miles. The Santiago has been opened for a distance of 1400 feet and a depth of 700 feet on a vein width of 2 feet – 10 feet with an average width of 3.5 – 4 feet.
It has become known as the Mother Lode of the district because of the uniform tenor of ore with gold increasing at depth until the Government closing of the mine via Law 208 during WWII.
Last reported values in 1941 from Leadville, Colorado smelting records were 17.32 oz. gold, 33.5 oz. silver, and 45% lead per ton! There were 11 Santiago original claims, #3, #5, and #6 are very large, paralleling veins showing ore on the surface, never explored.
Conservative, professional, geological engineering estimates of the Santiago ore shoot only are $366,000,000 of recoverable ores. Historical Colorado archives are available for serious investor review.
The Santiago Blue3 is in the second zone showing its face on the sheer eastern flank of Mt. McClellan (see photo). It is the continuation of the Independence vein, the first silver strike in Colorado. In 1906 Independence values reported were 17,000 oz. silver and 259 oz. gold, and this was known by miners as “smuggling” grade. All mining at this time was done by hand. The entire quartz lode ran $600 – $700 per ton at $19/oz. gold and $0.47/oz. silver!
In 1911, the Santiago II Group consisted of 4 known veins. A 160 foot prospect drift was driven on the additional #II vein some 400 feet above the basin floor. The Santiago II Tunnel was driven 1100 feet from the basin floor in an attempt to cut the Santiago II that outcropped as a 3 foot sheeted zone. Only the #3 and #4 veins were cut. The #3 vein was $50 per ton with gold predominant and the #4 vein assayed 5.28 oz./ton gold and 180 oz. silver. Stoping was scheduled in 1913 until the mining era ended for the Santiago II and the Group of the #3 fracture zone. The II dump assayed in 2009 at 40 oz. silver and .574 oz. gold. The Santiago II is the southern continuation of the Wheeling vein, opened for 1000 feet with a 5 foot width, containing 70% smelting grade and 30% shipping grade ore. 1891 reports show assays of gold at .33 oz. and silver at 246 oz. per ton. The Santiago Blue and II Group are estimated from historical documents by owners @ $600,000,000 in recoverable smelting grade ores.
In 1913, massive caving of talus in the Santiago II drift and the stripping of the East Argentine railroad tracks in 1918 for the WWI effort prevented the economical transport of ores from the district. However, the Santiago Mother Lode continued production until 1927 with horse and wagon and some intermittent production through 1941 with final closure during WWII. Smelter receipts available for 1939 – 1941 showing average mill recover grade @ .81 Au.
Diagram of the workings and ore bodies
1.0 Executive Summary
Location and Climate
The Santiago Mine is a historic producer of silver, gold, lead, and copper that was mined from the late 1800s to as recently as 1941. It is located about 60 miles west of Denver and 9 miles by road south of Georgetown, Colorado in the Rocky Mountains. Denver, Georgetown, and surrounding communities offer plentiful access to labor, contractors, and supplies.
The mine is located on the flank of Mt. McClellan, with existing historic portals ranging from 12,000 to 12,600 feet. The climate is that of high alpine, with cold snowy winters (annual snowfall ranging from 100 to 400 inches annually) and cool dry summers. Snowmelt allowing access to the property typically occurs in mid-late April and snow closure typically ranges from October to December. A typical year would allow for six working months at the site unless significant snow plowing was undertaken.
Appendix 02 includes a property map, BLM LR2000 output for unpatented claims, tax records for patented claims, and an ownership table for surrounding claims.
The Santiago Mine is located in the Colorado Mineral Belt and is part of the Montezuma Shear Zone, which runs roughly from Keystone at southwest, to Silverplume and Georgetown to the northeast.
The deposits are characterized as mesothermal veins occupying faults and fissures, striking mostly northeast. The deposits are hosted in the Pre-Cambrian Silverplume Granite and Idaho Springs formation gneiss. Veins formed at moderate depth, pressure, and temperature. The majority of the productive veins strike North 15® to 35® East and dip steeply northwest. Lead-zinc-silver veins consist mainly of galena, sphalerite, pyrite, and quartz, but also contain notable amounts of chalcopyrite, barite, and fluorite. Please refer to the report in Appendix 6 for a complete description of the geology of the district.
Sampling has been carried out at various stages in the early 1980’s and late 2000’s. Samples have been grab samples ranging from single samples to 5-pound bags, to 5-gallon buckets full used for metallurgical testing. Appendix 03 includes a summary of the assays collected, a map showing assay locations, and the individual assay reports.
Grab samples were taken, marked at the location and on the samples, and sent to the lab. The Colorado Assaying Company was used for assaying in the late 1980’s and Hazen Research was used more recently. Fire assay was used for gold and silver and AA for other minerals. Duplicates and check assays have not been performed historically, but duplicate samples have been cut for many samples and are available for testing.
Metallurgical test work of samples of dump material was undertaken in 2012. A full report is available in Appendix 13. Samples ranged from 0.33 to 1.96 opt gold, 4.7 to 62.7 opt silver, 14.4% to 17.4% lead, 0.94% to 3.61% copper, and 2.23% to 2.12% zinc. Recoveries were 88% for gold, 82% for silver, 95% for lead, and 84% for copper. The concentrate was 66% of the original sample weight and no zinc recovery was reported, so additional work is required to optimize the process.
Access is via Interstate 70, Guanella Pass Road from Georgetown (mostly paved), and approximately six miles of single-lane dirt road that is intermittently very rough.
Power is currently planned to be via diesel generator for the first phase of the project (exploration and initial development). Electrical power is available via the Cabin Creek Substation along the Guanella Pass Road. Power poles exist along much of the single lane road that could be used to string power line to the site. A trade-off study will be undertaken to determine the economics and potential for running a power line to the site and obtaining line electrical power.
Water exists below No. 5 in level in the Santiago Mine, which may be able to be used for mining and activities underground as long as it is re-circulated, but could not be used for surface uses (offices, dry, etc.). The Clear Creek watershed is currently over-allocated with respect to water rights. One abandoned right was found in the basin for the Waldorf Pipeline, which at one time served the town of Waldorf, below the Santiago Mine. The status and availability of this right is unknown and water for personnel use for washing will need to be obtained. The most likely pathway for this is via a commercial-exempt well which may be permitted through the State Engineer. Discharge of wash water from dry and office use would most likely be through a leach field on site.
Manpower, contractors, and supplies are readily available in Georgetown, Denver, and surrounding communities.
Ore is currently planned to be shipped raw (no on-site milling or tailings) to a custom mill. Budgeting has included a mill in Virginia City, MT with an associated smelter in Bellevue, WA. Further studies will be conducted into additional milling options.
Two “Notice of Intent” applications have been filed and basically approved with the exception of posting of reclamation bonds. Additional permitting will be needed as the project advances.
1.4 Project Plan
The Santiago vein hosts a known structure that likely holds additional resources. In addition, the Santiago Blue Vein, the Vesper vein, Santiago #8 and #9 veins, and other potential veins lie within or near the property held by the Santiago Mining Company. The plan is to drill 1-2 exploration holes in the first year from surface to confirm depth to bedrock, geotechnical properties, and location of veins. This will help target an exploration drift. This exploration drift will be started in Year 1. The drift is intended to follow the Santiago Blue vein, then turn and intercept the Santiago Mine near the back (south) end near the 4½ or 5 Level. The total length of the drift is approximately 2,600 feet, and it would ultimately serve as a haulage path from producing areas to surface. Two exploration drift options, the proposed portal locations, and estimated vein locations are shown on Figure 1-2
1.5 Potential Economics
Two economic cases were run. The resources used in the economic evaluation were assumed to average 0.94 opt Gold, 20.7 opt Silver, 7.6% Lead and 4.1% Copper (average historical values from the Santiago Mine, using assumed recoveries). Note that any resources referred to here-in are either historical or hypothetical and do not meet the criteria for NI43-101 or any national code at this point in time.
The first case assumed that 75,000 tons of resource was minable (and approximates the 1985 probably resource estimated by Mosch). This case assumed that only the first five levels of the Santiago were mined (this resource lies above a potential water level that may or may not need to be dealt with if mining below the 5th level). The mineable tons were determined by measuring the remaining length of the vein south of existing workings either to the surface or to claim boundaries, then assuming 50% recovery of the assumed vein length. A 4.5-foot mining width was taken with a 3.5-foot assumed vein width. Table 1-2 shows the estimated resource potential above 5th level in the Santiago that was calculated using this evaluation.
The case results in the following economics:
The second case assumed that 200,000 tons of resource was minable (and approximates the probable plus possible 1985 resource estimated by Mosch). Given that (1) vein widths have been reported to average 3-4 feet with widths of up to 10 feet, (2) the Santiago was reported by Mosch to show probable resources well below 5th level, and (3) the significant potential for additional veins, there is likelihood of expanding resources to fulfill a 10+ year mine life, if not more. This case results in the following economics:
First year activities consist of permitting and confirming the resource. Specifically they include:
The assumption behind the economics for both these cases were conservative due to the uncertainty of the resource. The following assumptions were included that added to the conservatism and will need to be addressed as the project moves forward:
A five year budget is presented in Table 1-1. First stope in production is estimated in year three with ramp-up to full production by year 5. Key assumptions in the development of the budget include:
Hauling ore out of the mine
Head Ore Samplings
Down into the mine
5th level rehabilitation, original timber
Another view of the tunnel
5th level rehabilitation, original timber set in permafrost
Another view of the tunnel
Another view of the tunnel
Photos of the site in Spring and Winter
View of the property in spring
View of the property in winter
Assay reports on the Santiago Mine:
Beneficiation Study of the Santiago Mine Stockpile Ore, Santiago Mine, Colorado Hazen Project
In March 2012, the Santiago Mining Company requested that Hazen Research, Inc. conduct a beneficiation study of the Santiago Mine stockpile ore composite. The work consisted of gravity separation and flotation to make a bulk sulfide, gold, and silver concentrate of acceptable grade and recovery.
A combined concentrate from table testing and flotation of the fine fraction assayed 55 g/t Au, 1,500 g/t Ag, 3% Cu, and 22% Pb and recovered 88% of the gold, 82% of the silver, 84% of the copper, and 95% of the lead in 66% of the weight.
A 5 gal bucket of ore, up to 10 in. in diameter, was received on March 3, 2012. A second bucket of ore, up to 10 in. in diameter, was received on March 27, 2012. Sample descriptions are provided in Table 1.
Table 1. Sample Identification
Each sample was stage-crushed to minus 1.7 mm, blended, and a head sample was made. One quarter of each sample was archived, and the remainder (approximately 3/4 split) was composited, blended, and split into 1 kg test charges for the beneficiation work.
The head assay results are shown in Table 2, and a semiquantitative x-ray fluorescence (XRF) analysis of the composite sample is shown in Table 3.
Table 2. Head Assays
na = not analyzed
Table 3. XRF Analysis on Stockpile Ore Composite
Note: Analysis performed at The Mineral Lab, Inc.
A quantitative x-ray diffraction (XRD) analysis was conducted on the composite sample by The Mineral Lab, Inc. (Golden, Colorado). The results are shown in Table 4.
Table 4. XRD Results for Stockpile Ore Composite
Note: Analysis performed at The Mineral Lab, Inc.
According to the XRD results, 17% of the sample consist of galena, 8% chalcopyrite, and less than 5% sphalerite. Pyrite accounts for 26% of the sample.
MICROSCOPIC EXAMINATION OF STOCKPILE ORE COMPOSITE
A polished section of the Stockpile Ore Composite sample (53098-3) was prepared for microscopic examination.
The sample consists of major galena, pyrite, and chalcopyrite, subordinate sphalerite and siliceous gangue, minor tetrahedrite—tennantite, other sulfosalts, probably tellurides, carbonates including possibly cerussite, and traces of covellite.
The galena consists mainly of coarse, liberated euhedral to subhedral cleavage fragments with sizes varying between micron-sized particles up to about 3 mm, averaging 0.5-1 mm. Some of the galena shows alteration, probably to anglesite, along the cleavage planes.
The pyrite occurs mostly as coarse, liberated subhedral crystals or irregular particles with sizes varying between a few microns and up to 3 mm, averaging 0.5-1 mm.
The chalcopyrite occurs abundantly as coarse, liberated particles, sometimes showing alteration to covellite. The size of the chalcopyrite varies between a few microns up to about 1.5 mm, with an average between 400 and 700 pm.
The galena, pyrite, and chalcopyrite occur less frequently, forming intergrowths with each other, the sphalerite, and the gangue.
The sphalerite occurs mostly intergrown with the other sulfides and the gangue. Sometimes the sphalerite shows signs of corrosion around the edges. The particle size of the sphalerite varies between a few microns up to 1 mm, averaging 300-500 pm.
Figures 1-8 are photomicrographs of the sample.
PROCEDURES AND RESULTS
A 3 kg split of the composite sample was stage-crushed to minus 850 gm and screened at 600, 300, 150, and 75 gm. Each size fraction, except the minus 75 gm fraction, was tabled using an eighth-sized Wilfley shaking table. The table products (concentrate and tails) were assayed for gold, silver, copper, lead, zinc, arsenic, and antimony. The results of Test 3540-63 are shown in Table 5.
The minus 75 gm fraction was subjected to bulk sulfide flotation using a sodium isobutyl xanthate (SIBX) (Flomin C-3430) as a collector, and a methyl isobutyl carbinol (MIBC) (Flomin F-500) as a frother. The flotation was done in a 1 L cell at 1,200 rpm and at a pulp density of 31% solids. Three rougher stages were done. The flotation results are shown in Table 6.
Initial fire assay results of the gravity and flotation concentrates were lower than the head assays, therefore, all three head samples and all of the concentrates were re-assayed.
Table 5. Table Test 3540-63
Test No: Project: Objective: Conditions: Sample: Grind:
3540-65 11515 Bulk sulfide flotation using a sodium isobutyl xanthate (C-3430) as a collector and a methyl isobutyl carbinol (F-500) as a frother. 1,200 rpm in a 1 L cell Test 3540-63 Minus 75 pm Weight: 500 g aliquot (taken from 603 g in size fraction) (31% solids) Rougher 1 none
Table 6. Laboratory Flotation Test Report
C. Schultz, D. Anger
Stage Reagent, kg/t of Feed Time, min pH , 3430 F-500 Grind Cond Float Start End Observations and Remarks Condition 1 0.036 2 6.3 Nothing floated Rougher 1 2 Condition 2 2 6.8 Rougher 2 0.021 3 Condition 3 2 6.8 Rougher 3 Total 0.036 0.021 6 5 ,
The flotation rougher concentrate assayed 444 g/t Au, 2,500 g/t Ag, 4.5% Cu, and 30% Ph and recovered almost 99% of the gold, 95% of the silver, 98% of the copper, and 95% of the lead in the minus 75 pm fraction, which amounted to 63% of the weight.
The calculated total concentrate from the concentrates from tabling the various size fractions and flotation of the minus 75 pm fraction is summarized in Table 7.
Table 7. Summary of Gravity and Flotation Calculated Total Concentrate
All water from gravity separation and flotation was collected and analyzed for lead, nickel, chromium, molybdenum, arsenic, and pH to confirm that it meets or lowers the hazardous waste and sewer discharge regulatory limits. The results of the wastewater analysis are shown in Table 8.
All analyses are below the sewer regulatory limit.
Table 8. Results of Wastewater Analysis
The initial results should be confirmed by additional work. Further work should be done to upgrade the bulk sulfide concentrate by reducing the weight of the concentrate. We recommend tabling with one or more cleaning stages, or possibly whole-ore flotation with cleaning. Larger-scale gravity separation and/or flotation work should be done on a more representative sample. A flotation study could also be done to investigate copper—lead—zinc separation of a bulk concentrate to potentially increase the value by separating the element streams.
Christopher P. Schultz Project Engineer CPS/wcf xc: Roland Schmidt, Hazen Research, Inc.
East Argentine Mining District History:
New life came with the discovery of major silver deposits in the Argentine and East Argentine Districts along McClellan Mountain (near the later townsite of Waldorf) in 1864. The size and purity of the veins encouraged the mine developers who previously thought that processing would be too costly. Along with this new excitement came the growth of a new town, Elizabeth Town (sometimes referred to as Elizabeth City), located in the southern end of the Georgetown townsite, near the start of the road networks leading to the silver strikes. As the silver boom gained momentum, the valley came back to life. By 1867, the townspeople in both Georgetown and Elizabeth Town began to consider incorporation.
In the fall of 1867 citizens of the area began meeting to discuss the formation of a town. On January 28, 1868 the Territorial Legislature passed a law incorporating the Town of Georgetown.
THE WALDORF RAILROAD MINING TOWN
The Vidler mill at Waldorf proper. In both photos the road around to the Santiago mine and its power line across the hill are prominent.
Waldorf is unique because, single-handed, it was caused and named by a mining magnate who built his own little railroad-the Argentine Central – to create the town.
One mill and a camp called Argentine (from the Latin word for silver, argentum) were fairly high in Leavenworth Gulch on the way to Argentine Pass. Their location was beside the stagecoach road from Georgetown to Montezuma. But now a large boarding house, several residences, a store and a depot clustered about the Waldorf and Vidler tunnels and their mills. Thus the new camp of Waldorf was born. Everything went well at first for the town and railroad even despite the ban on Sunday tourists. The little railroad made a great impression, and Wilcox was as proud as a racehorse stable owner as he added little Shay engines to his rolling stock. Early in 1907 a British syndicate offered $3,000,000 for his holdings around Waldorf including the railroad. Wilcox refused despite the enormous profit involved” (Bancroft pp. 21-22)
In 1912 it was reported – “The Santiago mine in East Argentine district promises to be one of the heaviest shippers in Clear Creek County this year. An important strike was recently made in sinking a shaft from the fourth level, being a streak of heavy lead ore eight to twelve inches wide, carload lots returning $104 net per ton. The company, it is stated, will construct an aerial tramway next summer. The length to the eight miles, by which the cost of ore delivery can be reduced from $4 to $0.50 per ton” (Mining Science p. 302).
Bancroft, C. (1967). Unique ghost towns and mountain spots. Boulder, Colo: Johnson Pub. Co.
Mining Science (1912). The Mining American, Industrial Reporter Co.