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The Cortez Story - Part Four: Profiles of Sample Junior Players (1)

Precious Metals Special Report

... Part One: Overview
... Part Two: The Fundamentals
... Part Three: Overview of Players, Two Majors
... Part Four: Profiles of Sample Junior Players
... Part Five: Cortez Trend Maps, Pictorial Overview

Part Four: Profiles of Sample Junior Players (1)

This section focuses on junior mining companies that have attracted major mining companies (highlighted in red) as JV partners or lead-manage some of the larger land positions on the Cortez Trend. Arranged in alphabetical order, they are BacTech, Bravo Venture Group, CMQ Resources, Coral Gold, Klondex Mines, Miranda Gold, Nevada Pacific Gold, Victoria Resource Corp, and White Knight Resources. I have also included recommendations for particular companies by such individuals as John Kaiser, Paul Van Eeden, columnist for Kitco, John Doody of the Gold Stock Analyst, and Bob Moriarty, head of 321Gold.com.

Disclaimer. As of the date of publication of this article, I own no shares in any of the companies below and have received no other forms of compensation from them. The choice of companies to profile was based on a quasi-random sampling of the most visible junior players and is not meant to provide an exhaustive analysis or specific investment advice. Lastly, although I mention buy recommendations by newsletter writers and brokerage firms, the stock prices and underlying fundamentals of the recommended companies may have changed dramatically since the date of those recommendations. Certain companies may no longer be suitable. In addition, the sources of these recommendations may have been in error.

BacTech Mining Corp (http://www.bactech.com/s/Home.asp) TSX-V symbol BM.

Size of Cortez land position: 55% interest in 36 sq. mile tract.
1) Tonkin Springs: According to BacTech, in 2003 it acquired a 55% interest in "U.S. Gold's Tonkin Springs gold property [which] encompasses 36 square miles located on the prolific Cortez/Battle Mountain Gold Trend in Nevada. A gold resource of 1,400,000 ounces [measured and indicated] has been defined. In addition, facilities include a 2,000 ton per day mill with a bioleaching circuit and complete mine, mill and tailings infrastructure were included in the US$1.75 million purchase price." According to U.S. Gold, BacTech "is responsible to fund $12 million to recommence gold production from the existing 1.4 million ounce gold resource."

BacTech's property is located immediately south of the Cortez Joint Venture area that hosts the Cortez Hills and ET Blue discoveries. BacTech's CEO, Ross Orr, believes that the Cortez Fault system runs down the spine of the Tonkin Springs property for 12 miles. Rifts can play an important role in gold formation, and the property sits in the middle of the intersection of the Northern Nevada Rift and Battle Mountain-Eureka Trend, as noted in the Klondex magnetic map midway through Part Five. No one has ever drilled down to the Lower Plate strata on this property, but instead all gold mining to date has been relatively shallow. Placer Dome's Cortez Hills discovery to the north ranges from 1,500 feet down to 2,500 feet. In some places the Lower Plate may undulate upwards to within 600 feet of the surface. BacTech will not know until it drills whether it will have to go down 600 feet or 2,000 feet or even further.

Source: BacTech and Mineral Information Maps

Projects outside of the Cortez Trend area:
2) China. BacTech has a right to back into bacterial oxidation projects proposed by a joint venture company.
3) Dizon Project, Philippines. BacTech is involved in a joint venture which is evaluating recovery of metal from the tailings at certain mines that can make use of bacterial oxidation technology.

Active mines or facilities in Cortez: According to CEO Ross Orr in his May 5th Tom O'Brien interview, BacTech originally bought the Tonkin Springs property with the intention of using it for bioleach processing. The Tonkin Springs site is a former gold producer with a mill and tailings infrastructure on site. The mill closed down due to low gold prices in the late 1990's. BacTech originally considered hauling ore concentrate from places as far away as Canada to its Tonkin Springs facility with hopes of eventually processing around 300,000 ounces a year. If the Cortez Trend takes off, BacTech will likely get surprise business from neighbors. The company is now evaluating returning Tonkin Springs to production most likely at a reduced production rate from the original plan. This might start at about 30,000 ounces a year, and perhaps ramp to 40-50,000 ounces a year over eight years. The cash costs of production could possibly range in the low to mid $200's. The bioleaching process can be modularized and scale well, and the required plant and equipment is relatively less expensive than alternative oxidation processes for lower production volumes.

Amount of proven resources in Cortez. 1.4 million ounces measured and indicated at Tonkin Springs property. Out of this 500,000 ounces are "proven and probable" @ $400 an ounce. This constitutes the total reserves in the company.
Exposure to Cortez: 90% with balance of effort to locate new projects for future development in various countries around the world.
Total production.
None. BacTech intends to refurbish the bioleaching plant on its property. The production process is modular and should scale well if increasing business comes from Cortez Trend neighbors.
Total Company revenues: $253,184 for the 12 months ended Sept 2003, but none for the nine months ended Sept 2004.. Please note the annual report and most recent unaudited financial statements for expense data.
Fully diluted shares: 63 million shares.
Working capital: $1.25 million as of Dec 31, 2004.
Outside ownership/largest shareholders. Largest shareholder is Sun Valley Gold, a private equity fund for 21%. Linx Resources, which bought its fund from Rothschild Australia, owns 10%. RAB Capital of London, UK, owns 6.6%. Veneroso Gold Fund owns 3.5%. Prudent Bear owns 3.5% plus $C3 million in BacTech debentures. Management has 7.7%.

Management/Strategy: "Bacterial Technology" (BacTech) was originally founded in Australia to develop bacterial methods to leach gold from certain amenable ores types, typically the "refractory" sort. "Refractory" means ore that resists normal chemical treatment such as cyanide to leach out the gold. Refractory sulfide ores can be decomposed by bacteria that eat away on the sulfur. This cuts out a number of toxic production steps and is much more environmentally-friendly compared to competing full process cyanide leaching and roasting methods.

BacTech has a strategic alliance with Mintek, the national metallurgical association of South Africa. According to Mr. Orr, Bactech and Gold Fields are the two global leaders in bioleaching technology. BacTech has successfully commissioned three gold bioleaching plants. Gold Fields operates four plants using its BIOX technology, to include the largest plant in the world in Ghana, and has many more plants on the drawing boards. The bacterial oxidation process has been commercially available for 15 years. Newmont Mining, incidentally, runs a large bioleaching process in northern Nevada, except that it uses an open air process for heap leach pads, whereas BacTech and Gold Fields bioleach inside tanks.

Bioleaching might leach out 95% of gold in refractory ore compared to 98% in competing pressure oxidation processes, however, it has the financial advantage of requiring much less capital investment for plant and equipment, which can be modularized and can scale well. Therefore, in volumes under several hundred thousand ounces of gold a year, bioleaching is normally more cost effective than alternatives.

BacTech's CEO told me that he is getting calls from major mining companies about structuring a joint venture exploration deal for the Tonkin Springs property. BacTech clearly faces many issues. One involves resolving whether to buy out or continue to joint venture with its 45% partner U.S. Gold Corp. Another issue involves whether or not to accept a joint venture deal from a major gold mining company or else try to find financing elsewhere. A third issue involves whether it wants to focus on gold exploration right now, or put it on the back burner and focus on developing bioleach plants around the world while its Cortez Trend neighbors hopefully prove up their properties and make the broader area better defined and more valuable.

BacTech's 2003 annual report states that its corporate strategy focuses on obtaining ownership of mining operations that use its bacterial processes. In other words, rather than just collect licensing, royalty, or consulting fees to install and run bioleaching plants, the apparent "sweet spot" is to buy equity exposure in mining operations that would otherwise be worthless without BacTech's technology. This could be a great strategy to obtain substantial upside equity exposure at a very low cost. BacTech's current problem is that the company has a significant cash burn rate and relatively little working capital in a very capital intensive business. (Welcome to the junior mining company sector!). However, the company also has ownership of proven and probable ounces that provide some cushion to its stock price as a bargaining chip to do deals and raise more money.

In Feb 2004 Raymond James of Canada gave BacTech a "Strong Buy" but later cut its rating after the stock had a run-up. In its April 2004 review, Veneroso Gold Associates felt BacTech shares were trading at a substantial discount to NPV based on the firm's Tonkin Springs resources alone. In his July 5, 2004 letter to shareholders, CEO Ross Orr reported that mining analyst John Kaiser also felt that BacTech was undervalued.

Bravo Venture Group (http://www.manexresourcegroup.com/ ). TSX.V symbol BVG

Size of Cortez land position: about 20 sq. miles
1) SF Claims (100% working interest) 2.2 sq miles
2) Gable Canyon Claims (100% working interest)1.8 sq. miles
3) South Gold Bar Claims (100% working interest) 2 sq. miles. According to the Oct 21, 2004 Bravo Venture Press Release, "[Placer Dome can elect] to enter into a joint venture agreement on such project to earn a 51 percent interest upon total expenditure of $1.0 million. Placer Dome can also further elect to earn an additional 19 percent by funding exploration through to a bankable feasibility study. If all three projects advance, Placer Dome will be required to spend US$3.0 million to earn an initial 51 percent in each project [to also include Three Bar Prospect and South Lone Mountain]."
4) Three Bar Claims (100% working interest) 3.8 sq. miles. Same deal with Placer Dome as described with South Gold Bar above.
5). Pete Hanson Claims (100% working interest) 4.2 sq. miles
6) South Lone Mountain (100% working interest) 3 sq. miles. Same deal with Placer Dome as described with South Gold Bar above. On Feb 15, 2005 Bravo announced some assay evidence of gold in fragments from a 1989 oil well drilled on this property, indicating a possible "120-foot-thick interval of gold-bearing Roberts Mountains Formation."
7) North Lone Mountain (100% working interest) 2.6 sq. miles
8) Granite Mountain project: (100% working interest) .50 sq. miles

[Source: Bravo Venture Group]

Other projects outside of Cortez:
1) Homestake Project, NW British Columbia
2) Woewodski Island, SE Alaska
Active mines in Cortez: None
Amount of proven reserves in Cortez. None
Exposure to Cortez: Three of the eight Cortez Trend properties are joint-ventured with Placer Dome. Bravo believes it can joint venture out the remaining five without a further expenditure of working capital. The company's working capital will instead go towards developing its British Columbia and Alaska properties to the point that they are ready for joint venture deals as well. Bravo believes that it has hit some good assays on these properties as well, although British Columbia and Alaska involve very different geology.
Total gold reserves in company. None
Total production None
Total Company revenues: Negative
Fully diluted shares: 53 million shares.
Working capital: Around $1.2 million
Outside ownership/largest shareholders. The Bravo Venture Group is managed by Manex Group out of Vancouver, B.C. Manex is also involved with Rio Fortuna, Western Silver (AMEX listing: WTZ), Southern Silver, and Quaterra Resources.
According to a company spokesperson, over the next few months Bravo will continue negotiations to joint venture out the rest of its five Cortez Trend properties. Placer Dome is already a joint venture partner on three properties. Teck Cominco (already a JV partner with White Knight), Newmont, and other companies are still active in the area looking at deals. Once the six week rain cycle ends in mid-March, they hope to get active with Placer Dome on a drilling program.

The Bravo spokesperson said that Bravo's property acquisitions were advised by Trend, a geological consulting company active in Nevada for many years. Bravo was also guided by data developed by Placer Dome which suggests that the formations that created the Pediment and ET Blue deposits extend much further to the south. This is supported by considerable airborne and surface data collection.

CMQ Resources (http://www.cmqresources.com/s/Home.asp) TSX.V symbol CMQ.

Size of Cortez land position: 26.8 sq. miles
1) Montezuma (100% working interest) 12.4 sq. miles. Located NE of Cortez Hills area in Crescent Valley. This is next to Placer Dome/Kennecott's large Dean Ranch tract. According to the Sept 10, 2004 Loewen, Ondaatje, McCutcheon analyst report (Speculative Buy), from Nov 2004 to March 2006 CMQ Resources will drill 10 exploratory holes looking for Carlin, horst-type gold targets.
2) Vasquir (100% working interest) 14.4 sq. miles. Located 15 km NE of Cortez Hills. From Nov 2004 to March 2005 CMQ Resources will drill 10 exploratory holes here as well. Same types of targets as the Montezuma property.

Source: CMQ Resources

Martin Lambert, the President of CMQ Resources, told me that if I use pictures such as the one above from his web site, I need to emphasize that this is simply one of many unproven theories that his company is investigating. I like this cutaway picture because it does a nice job of illustrating for the layman how the valleys are filled with alluvium, how upper and lower plate strata are layered, and how intrusives can originate from deep within the earth. CMQ Resources has drilled down around 1,500 feet and hit something in the middle of Crescent Valley, but it has not drilled enough holes to prove that this thing labeled "Montezuma" is in fact a horst block structure. CMQ Resources considers it a Jurassic-aged [150-205 million years old] intrusive. Also, while attending the January 2005 Vancouver Resource Investment Conference, I did not hear any geologists validate the theory that the Pipeline deposit drifted from somewhere up Crescent Valley. Despite all of this, I still like the illustration.

Incidentally, "Alluvium" is "a general term for clay, silt, sand, gravel or similar unconsolidated detrital material, deposited during comparatively recent geologic time by a stream or other body of running water." An "allochthon" is "a body of rock that has been moved from its place of formation by tectonic processes, such as thrust faulting." An "autochthon" is a body "formed in the place where now found. Applied to a body of rock which has not moved from its original place of formation."
Projects outside Cortez
3) Kuusamo, Finland, (100% working interest) Exploration for Ni, Cu, PGM targets.
Active mines in Cortez: None
Amount of proven reserves in Cortez. None
Exposure to Cortez Trend: Currently the main focus of exploration efforts.
Total gold reserves in company. None
Total production None
Total Company revenues: None
Fully diluted shares: 65.4 million shares. Insider stake 46%. Institutions 19.9% According to Mineweb, Gold Fields acquired 11% (fully diluted) of the company's shares, significantly contributing towards the C$8 million working capital. Sprott Asset Management has 12.5%.
Working capital: C$8 million
Management/Strategy: Martin Lambert, the company's President, told me that you can drive by some people's homes in the Crescent Valley area and see bathing suits hanging out to dry from the enjoyment of hot springs literally in their backyards. (Nevada's answer to California hot tubs?) In addition to desirable hydrothermal characteristics, there are elevated mercury levels in the soil that can be a tell-tale sign. The Montezuma structure seems to have all the right conditions for hosting gold, except, of course, for sitting on top of the Cortez Trend fault system and already producing economic grades of gold in drill results. Mr. Lambert said Gold Fields has invested in his company, and one of its senior geologists is currently studying CMQ's properties. Placer Dome also has a large property nearby called "Dean Ranch." Obviously some staff professionals at two major firms think that there could be something worth exploring in the area.

Loewen, Ondaatje, McCutcheon issued an 18 page report (Speculative Buy) dated 15 June 2004 that gives a good overview of CMQ Resources and the geology of its properties in addition to the already cited two page Sept 10, 2004 update report (Speculative Buy).

Coral Gold (http://www.coralgold.com/) TSX.V symbol CGR.

Size of Cortez land position: Total area (including partner interests) 11,000 acres or 17.6 square miles. Coral Gold's share is about 11.3 sq, miles. The story, in a nutshell, is that all of the properties are within a few miles of the prolific Pipeline Complex run by Placer Dome. They have all shown surface indications of gold here and there, but they have not been systematically explored down to the Lower Plate.
1) Norma-Sass (66% working interest). 1.2 sq. miles. This is a joint venture with Levon Resources Ltd.
2) Robertson (100% interest) covers 4,500 acres or 7 sq. miles. It has had over $20 million in exploration funds invested in it to date. According to the Haywood Securities' 23 June 2004 report, this area "contains 1.8 million ounces of gold in historical resources from four areas." The report mentions a step-out hole that found 30 feet of .229 oz/tonne gold beginning at 675 feet. Conversely, the Coral Gold 2004 Annual Report claims a 583,700 ounce resource for this property.
3) Robertson-Excluded (39% interest, the Cortez Joint Venture with Placer Dome/Kennecott has the other 61%) total area covers 4,526 acres, or 7.2 square miles, Coral's share 2.82 sq. miles. Apparently the contract does not put Placer Dome under any time pressure to perform.
4) Ruf (66% interest) .65 sq. miles. Joint venture with Levon Resources Ltd, which has 34%.

Active mines in Cortez: None
Amount of reserves in Cortez. For its Robertson property, the company reports 583,700 "contained ounces" at a grade of .053 ounce/ton. It does not define the economic mineability of these ounces. Its web site provides more detail in a Jan 29, 2004 Geological Report.
Other projects outside of Cortez: None.
Exposure to Cortez 100%.
Total Company revenues: None.
Fully diluted shares: About 5 million fully diluted. This follows a 10:1 reverse split in July 2004 . Insider stake: 44%
Working capital: $C2 million
Management/Strategy: On 7 Jan 2005 I had the pleasure of speaking with David Wolfin, the CEO. He and his father Lew Wolfin run six public mining companies, three of which operate in the Cortez Trend area. The latter companies are Coral Resources, Levon Resources, and Mill Bay. Levon is partnered with Coral on two properties near the Pipeline Complex, and Mill Bay has some relatively small parcels about 15 km to the NE of Coral Gold adjacent to CMQ Resources and the Klondex Fire Creek property (see the northern map section in Part Five). As mentioned near the beginning of Part Three, John Kaiser listed Levon as a bottom fish candidate in his 3 Jan 2005 report.

Coral Gold has been around since 1983, when the company hired the legendary Dr. Ralph Roberts, who suggested staking claims that tie into Placer Dome's Gold Acres mine The company has been in and out of different joint ventures with companies such as Amax (later folded into Kinross) and the Cortez Joint Venture. The value of the joint ventures got crushed by down swings in gold prices in the 1990's.

Mr. Wolfin pointed out that you can find Lower Plate near the surface at the southernmost boundary of the Robertson property, but they do not know how quickly it drops off moving further north. For the time being their exploration drilling is going down 500 to 1,000 feet. In January the ground is hard from the cold and good for drilling, but during a six week period from February to Mid-March it usually turns rainy and muddy, and drilling slacks off. They hope to have assay results by the end of January for their most recent round of drilling.

There may be some lucrative deep deposits, but then again drilling costs rise sharply with depth, as do the costs of creating mining infrastructure. For many junior companies, they are conserving their cash resources by remaining focused on relatively shallow drilling targets until higher gold prices or news of a big discovery by another junior ignites stock prices to create better terms to raise equity to pay for deeper and more aggressive drilling. The perfect dream of junior companies is to find enough shallow gold deposits to pay for an open pit that takes them down to 500 or 1,000 feet. Then they can launch their underground mines to go after deeper deposits. This is a lot cheaper and financially less dangerous in terms of risking runaway costs and stock dilution for the company than starting at the surface with a tunnel that has to burrow down 1,500 to 2,000 feet before it reaches economic gold deposits.

Klondex Mines Ltd (http://www.klondexmines.com/) TSX.V symbol KDX.

Size of Cortez land position: 16 sq. miles.

1) Fire Creek (100% working interest) About 5,000 acres or 7.8 sq miles, 10 miles NW of the Cortez JV Pipeline Complex. According to the 15 Sept 2004 Cannacord Letter, 600,000 ounces (now considered "historical") were once identified around the old Fire Creek mine. On Oct 18th, company reported, "Klondex drills 25 foot gold intercept at 2.594 ounce per ton ["bonanza" grade"] on 100% owned Fire Creek property." Around this time the stock jumped from $C1.00 to $C2.00. On. Dec 29, 2004 Klondex reported fifty one significant intercepts in 21 out of 28 holes. "The high grade, narrow vein style of mineralization was determined to be similar to that of the Midas (Ken Snyder) Mine, another Nevada gold deposit located on the Northern Nevada Rift." This story gets more exciting when you read the 9 Dec 2004 account by Bob Morarity, head of 321Gold.com, about how Klondex management flew him from the San Francisco Gold Show to look at gold-speckled rock specimens in a Reno, NV warehouse. The company is entering Phase 3 of a drilling program where it intends to drill nine holes for a total of 10,900 feet.
2) Corral Canyon (100% working interest). 3.9 sq. miles. Adjacent to Coral Gold's Robertson property. Grassroots.
3) Hot Springs Point (100% working interest) 2.6 sq. miles. Adjacent to CMQ Resources in Crescent Valley. Grassroots.
4) Woodtick (100% working interest) 1.7 sq. miles. Northwest of Fire Creek. Grassroots.

Aerial view of Klondex's Fire Creek property

Source: Klondex

Other projects outside of Cortez
1) Maggie Creek (67% working interest) in Carlin Trend area
2) Reef (100% working interest) in Fairview District, NV
Active mines in Cortez: None. The Fire Creek Mine open pit mine was closed in 1983 on account of softening gold prices.
Amount of proven reserves in Cortez. None. Regulators will not allow Klondex to count the aforementioned "historical" ounces at Fire Creek, so the official position is that the company has no significant resources right now.
Exposure to Cortez: Klondex is heavily focused on the Fire Creek property in the Cortez Trend.
Total production
Total Company revenues. None
Fully diluted shares: 20 million shares, Somewhere between 25% to 40% insider ownership. The President has 15%. The Canadian mining company Wolfden Resources Inc. (WLF) owns 10%.
Working capital: $C6.7 million (Dec 2004). Company raised $6.25 million in November.2004. No debt.
Management Strategy/Overview: Management hopes that Fire Creek may prove comparable to the Ken Snyder mine (also marked as the "Midas Mine" on maps, see the Klondex map of the Northern Nevada Rift in Part Five), which sits on the intersection between the Carlin Trend and the Northern Nevada Rift. In the case of Fire Creek, it sits on an intersection of the Northern Nevada Rift and an area that is perhaps five km away from the Cortez Fault system. It is definitely within the Battle Mountain-Eureka Mineral belt.

The Ken Snyder mine is an underground mine with about seven million ounces in reserves that produces 200,000 ounces a year and keeps getting bigger. Like many underground mines, it continually proves up additional reserves simultaneously as it mines. As Chris Davie, CEO of Queenstake Resources told James Puplava in his Dec 4, 2004 broadcast, "...The classic example is the Homestake mine which was finally shut down in the last two or three years after 135 years of operation. The maximum reserve that Homestake ever had ahead of it was 2 years."

Klondex geologist Richard Kern recently explained to me the similarities with Ken Snyder. The bonanza assay was found deep, about 1,200 to 1,300 feet down. The veins are multistage quartz calcite. They lie in a similar 16 million year old basalt formation that characterizes the Northern Nevada Rift. The gold formations seem to form long horizontal ribbons running parallel to each other, down dipping towards the west. The shapes of the veins, the widths, and the mineralogy seem similar to Snyder. He is currently checking out the metallurgical properties for similarities as well, which involve the ways in which gold can be mechanically or chemically separated from the ore. The Klondex web site shows rock samples with visible gold specks, which of course were the focal point of the special trip to Reno and write up by 321Gold.com's guru Bob Moriarty.

Mr. Kern pointed out that it may be possible to get carried away with the idea of gold having to be close to the Cortez Fault and near parallel "controlling structures." It is possible that magma could initially move up through a major earth crack such as the Cortez Fault, but then as gold-bearing fluids get close to the surface, they could seep into and solidify in fractures from a different geological event that crisscross over the Cortez Fault system at odd angles.

Newmont Mining and White Knight control "checkerboard" parcels that lie between five to ten kilometers just west of Klondex's Fire Creek Mine in an area called Slaven Canyon. It will be interesting to see how far the Fire Creek's ribbon-like gold deposits extend westwards. White Knight thinks that Slaven Canyon sits on top of the Cortez Fault system area, which might comprise a distinctly separate formation. White Knight will commence drilling deep holes in April.

Miranda Gold (http://www.mirandagold.com/) TSX.V symbol MAD, OTCBB: .MRDDF

Size of Cortez land position: 31.1 square miles (19,905 acres or 963 claims)
1) BPV (100% working interest). 43 claims or 1.4 sq. miles. Miranda states: "3 miles south of ET Blue discovery."
2) Coal Canyon (100% working interest). 64 claims or 2.1 sq. miles. "Outcropping lower plate carbonate rocks (Roberts Mountains and Hanson Creek Formations), Bordering mineralized Grouse Creek fault zone. No deep drilling." "Golden Aria can earn a 60% interest in the Coal Canyon property by spending $1.0 million in exploration expenditures over four years." Ken Cunningham, Miranda's President and CEO, told me that the Coal Canyon property is bounded on the west by the gold-bearing Grouse Creek fault zone.
3) CONO (100% working interest) 73 claims or 2.4 sq miles. "Gravity data suggests horst feature on margin of claim block Recent drilling (Newcrest) hit bedrock (Roberts Mountain Formation?) at 1500 feet."
4) ETTU (100% working interest). 74 lode claims, or .9 sq. miles. "Geophysical data indicates WNW and NW structures intersect on the ETTU claims beneath shallow gravel cover. The WNW structure is a projection from the Gold Bar Mine through a target being drilled on Tone Resource claims onto the ETTU claims. The NW structure projects south from the Afgan deposit and is manifested as a resistivity high. Surrounded by claims recently (May 2004) staked by Newmont."
5). Fuse-JDW (100% working interest). 209 claims total or 6.7 sq. miles. According to Ken Cunningham, this outlying area was selected based on mercury soil gas surveys. Placer Dome announced at the Vancouver B.C. Cordilleran Round Up in Jan 2004 that mercury is one of the best indicators for gold in the Cortez Hills. John Kaiser comments in his analysis of Miranda, "Although the Fuse, JDW and Red Hill cluster appear to be somewhat off the structural trend, and might easily be dismissed as moose pasture staking by juniors seeking closeology benefits, they do represent the fruit of Joe Hebert's geological thinking that involves speculations about structural offsets which if true would make the Cortez Trend not just rival but eclipse the scale of the Carlin Trend goldfield." I provide more information on Miranda's cross-rift thinking in my "West Northwest School" section in Part Five.
6). Red Canyon (100% working interest). 237 claims or 7.5 sq. miles. "Lower plate carbonate rocks including the Devonian Wenban Formation (host to Cortez Hills) crop out on property. Large alteration cell with strong geochemical trace elements as well as gold. Best hole: 95 feet of 0.14 opt (ounces per tonne) gold. Several excellent targets remain untested by drilling." "Newmont can earn a 60% interest in the Red Canyon property by spending $2.5 million in exploration expenditures."
7). Red Hill (100% working interest). 79 claims or 2.6 sq. miles."Outcropping lower plate carbonate rocks." Oct 28, 2004 news release: "[Placer Dome U.S.] PDUS can earn a 60% interest in the property by spending $2.0 million in exploration expenditures over four years.]" Ken Cunningham believes that the extensive alteration at Red Hill warrants additional exploration.
8) Horse Mountain. (100% working interest). 4.5 sq. miles. Miranda announced its acquisition of this property on Nov 23, 2004. "The property is located approximately 11 miles west-northwest of the Cortez Joint Venture's Pipeline Mine and is surrounded by lands being explored by the Cortez Joint Venture. Placer Dome, operator of the Cortez Joint Venture...Historic work by Phelps Dodge has defined a small low-grade gold resource called the Rum Dreams deposit that is hosted by upper plate quartzite and chert. Conventionally this resource has been interpreted by earlier workers to represent possible leakage from a potentially more significant deposit at depth."

Chart source: Miranda Gold

Outside Cortez
1 ) Redlich, Esmeralda County, NV, will likely see an aggressive drilling program this year. Australian joint venture partner Newcrest intersected ten feet of 0.68 oz per ton gold in one hole and five feet of 1.35 oz per ton gold in another hole.
2 ) Bald Peak, Mineral County, NV
3 ) Troy, Nye County, NV. Had some interesting results. Miranda's main geologist believes he found a gold system and got some high grade samples. Miranda plans to arrange a JV partner.
Active mines in Cortez: None
Amount of proven reserves in Cortez. None.
Exposure to Cortez: About about 75% of exploration spending. Miranda added all of its Cortez Trend properties within the last fifteen months.
Total gold reserves in company. None
Total production None, focused almost exclusively on exploration.
Total Company revenues None
Fully diluted shares: After Jan 21, 2004, 36.8 million
Working capital: Dec 13, 2004 private placement raised C$2 million, will close by Jan 21st, to total $C3.7 million in treasury.
Outside ownership/largest shareholders. Management has (with warrants) about 15%. Several newsletter writers might hold around 200,000 shares. Some funds were involved in the recent private placement. Rick Rule of Global Resource Investments has 4%.
According to management, Miranda seeks properties that combine numerous geologic features important to Cortez or Carlin-style deposits. They include:

1) Exposures of Lower Plate Carbonate host rocks (windows). This is typically where the Lower Plate has been thrust towards the surface. Lower Plate rocks have been a better sponge to hold gold compared to upper plate rocks where gold deposits tend to be more spotty. As the hills and mountains overlying uplifts of Lower Plate rock get eroded down, the distance from the surface to the Lower Plate diminishes. Sometimes this brings the distance within the economic range of open pit mining (about 500 to 1,000 feet in depth). According to Ken Cunningham, the major "windows" are near a) the Pipeline Mining Complex b) Miranda's Coal Canyon property c) Miranda's Red Hill area d) BacTech's Tonkin Springs mine area and e) Miranda's Red Canyon area. (As a caveat, the existence of Lower Plate rock does not guarantee the existence of gold deposits, but it can greatly increase the odds. There are a lot of Lower Plate exposures throughout Nevada that do not have significant gold).
2). Hydrothermal alteration. Swirling water helps to sort out gold.
3). Presence of intrusive bodies and intrusive dikes. As an example, the Cortez mine has a gold-rich 38 million year old dike coincident with the age of many Carlin gold formations.
4). Gold bearing structures or conduits. Note that "seepage gold" is a clue to more gold further down, and that without structures for gold-bearing fluids to seep into, there can not be any gold separation and mineralization to begin with. Miranda is a major proponent of the "WNW School" discussed in Part Five.
5) Favorable fold axis. Geologists look for "structural controls" to help predict how gold-bearing fluids might have arranged themselves as they cooled down and settled in.
6) Presence of anomalous geochemical pathfinder elements. As an example, mercury tends to separate out of gold-bearing fluids at about the same temperature and pressure as gold itself.

Analyst Commentary: On the Nov 19, 2004 Report on Business Interview, Paul Van Eeden, managing partner at Cranberry Capital and columnist for Kitco.com, commented: "Miranda is run by two gentlemen who not only know how to work in Nevada, but between the two of them, they have six discoveries under their belt in Nevada. As an exploration team, these guys stack up against the best in Nevada. Joe Hebert, the Vice President of exploration was the [senior] generative exploration manager for the Cortez Trend venture between Placer Dome and Kennecott that made the Cortez Hills discovery. Joe through his own work made another called the ET Blue that Placer Dome has not talked about much but from what I understand is a bona fide discovery. And Joe and Ken Cunningham [President and CEO], are applying their geological concept to generate exploration projects in Nevada. They then joint venture these out to other companies and exploration companies to develop. It is only a matter of time. It is a large holding of mine. I am very happy with it."

Nevada Pacific Gold (http://www.nevadapacificgold.com/). TSX-V symbol NPG.

Size of Cortez land position: 38 square miles.
1) Keystone Property. 11 sq. miles. Site of the historical Keystone mine. Company interpretation, "The Keystone project (as well as Cornerstone) is located within the structural corridor on the Cortez Gold Trend approximately 12 kilometers south of Placer Dome's 10+ million ounce Cortez Hills, Pediment and ET Blue discoveries which many consider to be the most significant in Nevada over the past 15 years." On September 7, 2004, the Company signed a binding letter agreement with Placer Dome, whereby Placer Dome has the right to earn a 60% interest in the Keystone project by spending $5 million on exploration over a five-year period. Nevada Pacific retains 100% right to explore for silver and base metals. Placer Dome will initiate an exploration program in first quarter of 2005.
2 ) Cornerstone (formerly called Pat Canyon, no longer to be confused with White Knight's Pat Canyon property). 2,120 acres or 3.3 sq miles. Company interpretation: "The Pat Canyon property... is located immediately adjacent to the 1.4 million [measured and indicated] ounce Tonkin Spring gold mine. The Dec 17, 2004 press release notes that 25% of the total land package has been systematically worked up, and soil samples have found four areas of mineralization. Some areas have included significant levels of elevated anomalies coincident with gold anomalies.
3) BMX. 24 sq miles of "checkerboard" properties located on or just off northwest corner of the trend, surrounded by Newmont's corresponding checkerboard pieces. Technically BMX may be outside of the Cortez Trend for the same reasons I describe for Newmont's Phoenix deposit in Part Three. BMX lies just off the northwest corner of the northern property map in Part Five. Placer Dome has right to earn in 60% with $4 million. According to Nevada Pacific: "A total of 7,060 feet were drilled in ten reverse circulation drill holes [in Jan 2004]. All ten holes drilled in this initial program encountered significant gold, trace and base-metal mineralization and have confirmed the presence of a major gold and copper system." Company interpretation: "Nevada Pacific believes that the BMX project has potential for both open pit, low-grade gold/copper deposits and underground, high-grade gold targets similar to the nearby mines such as Lone Tree, Marigold, Fortitude, Phoenix, Surprise and Trenton Canyon."

This chart not only depicts Nevada Pacific Gold projects, but also red triangles where 10 million ounce reserves have already been proved up. Source: Nevada Pacific Gold Corp

Projects outside Cortez:
1) Magistral, Sinaloa, Mexico. A producing mine, projected 30,000 ounces at a cash cost of $250 per ounce.
2 ) Limousine Butte, Carlin Trend, NV. Joint ventured in Sept 2004 to Placer Dome Gold.
3) Amador Canyon, Lander County, NV
4 ) Buffalo Canyon, Nye County, NV
5) Clover Valley, NV, north of Limousine Butte
6) South Carlin, NV, on Carlin Trend
7) High Dollar, NV, on Carlin Trend
8) Timber Creek, NV
9) Valmy Antler Project (2,080 acres or 3.2 sq miles). Nevada Pacific controls 100%. Company note: "The Valmy Antler land package abuts the Glamis' Marigold Mine position on the east and north boundaries and covers both NE and N-S mineralized trends extending from known ore bodies. The project lies within Newmont checker boarded private lands and also abuts Newmont's active lode mining claims that have been held since 1986." It is near the northern border of the Cortez Trend.

Active mines in Cortez: None. There was a historical mine, called the Keystone mine on the Keystone property which was active in 1940's and 1960's. "The mine produced 114 tons of ore yielding 19,800 pounds, 17,900 pounds of zinc, 1,400 pounds of copper and 417 ounces of silver."
Amount of proven reserves in Cortez. None. Drilling results may be available by late 2005. Placer Dome sets the schedule for Keystone and BMX, since they are the lead joint venture partner. Under their JV agreement, Placer Dome is required to spend a certain amount a year.
Exposure to Cortez: The Cortez area comprises 38 sq miles out of 75 total square miles in Nevada, or 50% exposure. Nevada Pacific thinks the sites outside of the Cortez Trend in Nevada are equally prospective with those inside the trend. The company believes that the 250 sq miles in Mexico are under-explored, and they are not necessarily comparable to the Nevada properties because they involve different geological formations.
Total gold reserves in company. 465,000 oz proven and probably reserves, included in 616,000 ounces for total reserve and resource ounces at the Magistral property in Mexico. In the Cortez Trend area, everything is still in the exploration phase.
Total production 23,000 ounces at Magistral mine in Mexico in 2003 under Queenstake management, before Nevada Pacific bought the mine from Queenstake in Feb 2004.
Total Company revenues: None. The Magistral mine was declared pre-commercial for 2004 based on the capital expenditures required to improve operations at Magistral. The mine is expected to be declared commercial effective Jan 2005.
Fully diluted shares: 64 million.
Working capital: $5.5 million.
Outside ownership/largest shareholders. Institutions: 15%, Management 5%. Sept 9, 2004 press release stated that Placer Dome acquired 1.3 million shares in private placement for US$1 million
Management/Strategy: According to "Nevada Pacific Hunts for Motherlode" (4-10 June 2004 Northern Miner), "Nevada Pacific's team was previously involved in the growth phase of two mid-tier producers, Bema Gold (BGO-T) and Eldorado Gold (ELD-T). Along with [CEO] Richard Barclay, [Chairman David] Hottmann and senior management of Nevada Pacific have been involved in the discovery of 75 million oz gold, 10 operating mines, and the raising of about $700 [actually $300] million in venture capital."

Canaccord Capital issued a Speculative Buy in its Nov 22, 2004 Daily Letter. On Dec 4, 2004 at the San Francisco Gold Show, John Doody, author of the Gold Stock Analyst, told interviewer James Puplava that he had just added Nevada Pacific to his recommendation list.

In his Puplava interview, John Doody discussed how Nevada Pacific's Mexican property could have some exploration upside (a 400 sq kilometer property with a gold porphyry target) in addition to producing 30,000 ounces a year. John Doody stated, "The exciting exploration to me is that they have eleven properties in Nevada, oddly enough. In three of these properties Placer Dome is spending a total of 13 million dollars over five years exploring to earn a 60% interest. Placer has got some great technical expertise, they know their way around Nevada, they know what they are doing there, and the fact that Placer is willing to bet 13 million bucks on these properties to earn in a 60% interest is very exciting for me, and I am sure if only one out of three hits, it will be a good upside for the stock. Plus, they have eight other good properties that they are exploring on their own, one of which Newmont did ten years ago, drilling and found 600,000 ounces, so they are going to do more drilling to hopefully find better grades..."

Victoria Resource Corp. (http://www.victoriaresource.com/298/Victoria_Resource.htm) TSX-V symbol VIT.

Size of Cortez Trend land position: 209 square km. or 80.7 square miles
1) Mill Canyon (49% working interest) 93 square km, or 35.9 sq. miles. Located 1.4 km to the east of Placer Dome's Cortez Hills discovery. June 30th Victoria announced: "Significant [drilling] results from OC-36 include 10.4 grams per tonne gold over 26 metres [at a depth of 503 to 529 meters]." Restated in the English system, they found .36 ounce per tonne (.3 and above is considered "high grade," and may be required to make certain underground mines economic.) over 85 feet (nice thickness, but how far and how long?) at an average depth of 1,692 feet. (most open pits do not go deeper than 500 to 1,000 feet, so we are probably talking about underground mining to get close to the Lower Plate). Victoria's Feb 8, 2005 news release announced the results of seven more deep holes drilled totaling 4,850 meters, which "outlined a very large 'Carlin Style' alteration' system," however, unfortunately the additional drilling did not find any assay results for any significant lengths comparable to the aforementioned drill hole OC-36.
The "Newmont connection." Victoria also announced Newmont's renegotiated back-end right: "Newmont has a one-time back-in right [to earn a 51% interest in the property], which is exercisable during the period beginning on January 1, 2006, or upon completion of $5 million in expenditures on the property by Victoria, whichever is earlier.."
2) Hilltop-Slaven (49% working interest). 116 sq. km, 44.8 square miles. Newmont has a 51% back-in right, but Victoria has 100% lease on the mineral rights.
Outside of Cortez Trend in northwestern Battle Mountain-Eureka Trend
3) Preble-Pinson (49% working interest). 53 square km or 20.4 square miles. Newmont has a 51% back-in right. This is located east of Winnemucca close to where highway 789 and Interstate 80 intersect.
Active mines in Cortez:
None. Historical mining includes working high grade silver veins on the Mill Canyon property going back to 1863.
Amount of proven reserves in Cortez: None. No resources, no production, no revenues yet.
Other projects outside of Cortez: None. 100% exposure to Cortez.
Fully diluted shares: 47.2 million shares, 33% insider
Working capital: $C3.3 million for last quarter ended 31 Aug 2004
Outside ownership/largest shareholders. 33% owned by Bema Gold.
Management/Strategy: Victoria is a pure exploration company, therefore the strategy is to keep drilling until they "hit." They have two rigs on the property, but have not published their drilling program yet. To finance the drilling, they have everything lined up through Newmont.

Bema Gold began with 28% ownership and increased its stake by buying up all of Victoria's new share issues. Bema retains a right of first refusal, and has stated an intent to hold its shares. As an adventuresome intermediate exploration company, Bema has demonstrated competence and longevity both with its very successful Kupol mine in Russia and it's promising (at $450+ gold) low grade copper and gold project at Cerro Casale in the high Andes of Chile (Bema owns 24%, and along with Arizona Star is joint-ventured with Placer Dome on this deal).

Analyst coverage: On 3 Aug 2004 Raymond James issued a "Strong Buy 1"-rated research report on Victoria Resources, which noted "Victoria's excellent drill results from the Mill Canyon property are quickly solidifying the company's initial geological theory that the property represents a faulted-off portion of the gold trend hosting the Cortez Hills and Pediment deposits to the west (page 1)...Four distinct zones were identified over a minimum width of 185 metres and a minimum length of 125 metres (page 12)...we assume at 15% probability of finding another Cortez Hills deposit and use a value of 5.25 million ounces (proven and probable reserves at Cortez Hills) multiplied by a market "in the ground" value of $US50 per proven and probable ounce [yields an expected value of C$41.4 million] (page 21)..."

The "X-Report" published 23 June 2004 by Haywood Securities of Canada, highlights Victoria Resources as one of the companies that it thinks will most likely benefit from the Cortez Trend development. The others include, in the order they are listed, White Knight Resources (TSX-V, WKR), Coral Gold Corp. (TSX-V, CLH), Miranda Gold Corp. (TSX-V, MAD), J-Pacific Gold (TSX-V, JPN), Levon Resources (TSX-V, LVNH), NDT Ventures (TSX-V, NDE), and Nevada Pacific Gold (TSX-V, NPG). This seems to be based on a theory that the real "action" will take place running north to south through the Cortez Hills Hubs.

End of Part Four: Profiles of Sample Junior Players, Page 1

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