Executive Summary – Geology

1.1 Introduction

The Independence project is located in Lander County, Nevada, adjacent to Newmont Gold’s Phoenix Project and approximately 14 miles south of Battle Mountain, Nevada. The Independence property consists of 14 unpatented load mining claims covering approximately 238 acres of BLM administered public lands situated in Sections 28, 29, 32, and 33, Township 31 North, Range 43 East. Cibolan Gold has also purchased 470 acres of private fee surface land exclusive of mineral rights situated in Section 17, Township 30 North, Range 43 East, MDBM, Lander County, Nevada in the Battle Mountain Mining District.

1.2 Geology, Mineralization and Alteration

1.2.1 Geology

The Independence project lies in the Battle Mountain Mining District located on the west side of Pumpernickel Ridge in north central Nevada. The regional geology of north central Nevada is defined by episodic tensional deformation, rifting, sedimentation and erosion, followed by wide spread thrusting resulting from compressional deformation. Episodic tensional events followed by compressional events include the Robert Mountains Allochtonon emplaced during the Antler orogeny. The Antler sequence hosts the Golconda Allocthon which was emplaced during the Sonoma orogeny and contains the Havallah Sequence of Mississippian to Permian age rocks, including the Pumpernickel Formation, host for near surface mineralization at the Independence property. Rocks of the Roberts Mountain Allocthon, hosted the adjacent Fortitude deposit and are the principle host for the Phoenix deposit and the Independence Deep Skarn Target. These rocks are structurally overlain by the Mississippian, Pennsylvanian, and Permian Havallah sequence of the Golconda allochthon.

The Havallah sequence, which constitutes the upper plate of the Golconda thrust, is a Mississippian, Pennsylvanian, and Permian allochthon consisting of an assemblage of chert, argillite, shale, siltstone, sandstone, conglomerate, limestone, and metavolcanic rocks exposed over much of the western part of the Battle Mountain District. The base of the Havallah sequence is the regionally extensive Golconda thrust, which places the Havallah sequence structurally over the Antler sequence. This structural relationship (the Havallah sequence over the Antler sequence along the Golconda thrust) represents the principal tectonostratigraphic control on the distribution of ore deposits in the Battle Mountain mining district (Doebrich and Theodore, 1996).

Two major rock units are exposed at the Independence project, the Paleozoic age Pumpernickel Formation (Havallah Formation) and Tertiary (Eocene) age intrusive rocks of the Independence Stock. Minor dikes in part appear to be contemporaneous with, and in part younger than the Independence Stock. The oldest rocks exposed on the surface of the Property are silic-clastic sediments of the upper Pennsylvanian – Permian age Pumpernickel Formation, consisting of interbedded chert, siltstone, and argillite, these units generally strike N5oE with a general dip of 50o to 60o degree westerly. Locally on the surface and within the old underground Independence Mine these sediments are deformed by folding and faulting.

Three distinct deposit types are present at the Independence property, (1) a shallow near surface epithermal system, (2) a deeper high grade, gold rich skarn hosted system and (3) a possible intrusive hosted stock work, gold-copper porphyry system.

1.2.2 Mineralization

Shallow (Chert hosted mineralization)

The shallow near surface mineralization at Independence is best characterized as a high level epithermal system formed as a leakage halo above the deep Independence gold skarn, both related to emplacement of Eocene age granodiorite porphyry’s. The Independence deep gold skarn target is a high grade, gold rich skarn system developed in the carbonate rich portions of the Battle Mountain, Antler Peak and Edna Mountain formations of Roberts Antler Sequence in the lower portion of the Roberts Mountain Allocthon. The Independence Stock, situated at the northern end of the Independence Property hosts stockwork style gold-silver mineralization and disseminated porphyry style gold-copper mineralization.

The main structural feature on the Property is the Wilson Independence fault zone, a series of subparallel N5oW striking sub-vertical westerly dipping faults and shear zones. The main zone of gold and silver mineralization and essentially all of the defined near surface resources lie along these north striking structural zones in and near the thick bedded to semi massive chert units where the competency contrast of the massive cherts and intercalated thin bedded shale and chert zones occurring above and below, resulted in refraction of the westerly to sub-vertical Independence faults to steeply east dipping open fractures within the semi-massive cherts with substantial attendant fracturing, developing open spaces, porosity and permeability available for fluid flow. The predominant metal-bearing minerals in the shallow mineralization are oxidation products of the original sulfide minerals and include goethite, hematite, cerargerite, argentiferous plumbojarosite, scorodite, very fine grained native gold and rare native silver and precious metal bearing colloidal clays developed during oxidation of the sulfide mineralization. Oxidation in the shallow “Chert Hosted” deposits is pervasive and ubiquitous to depths of 400 feet below the surface. A mixed sulfide – oxide zone extends for roughly 100 feet below this, and may extend to more than 1000 feet along certain structures and fractures which permit the circulation of oxygen laden meteoric waters.

Skarn Hosted Mineralization

Skarn hosted precious metal mineralization consists of discrete grains of gold ranging from 2 to 20 and rarely up to 220 microns deposited on micro-fractures and crystal faces of all prior mineral species developed in brittle skarnified units of the Battle Mountain, Edna Mountain and Antler Peak formations in the Roberts Mountain Allocthon. Here early development of skarn minerals resulted in masses of hard brittle rocks which suffered wide spread brittle fracturing with subsequent tectonic stress. A very late stage high temperature gold only mineralizing event deposited microscopic grains of free gold on these micro fractures and on crystal faces and resulted in wide spread potassic alteration consisting of fine grained potassic feldspar (Larson, 2005). Gold mineralization appears to be independent of earlier mineral species including sulfides. Thin and polished sections do not indicate any encapsulating minerals which would represent potential metallurgical or recovery issues.

Intrusive hosted Stock-work and Porphyry gold – copper Mineralization

Stock-work and possible porphyry style mineralization occurs in the Eocene age Independence Stock at the north end of the Independence property. On the Independence Property, quartz stockwork mineralization occurs at the surface and in drill intercepts. In the Sunshine pit contiguous with the north boundary of the property, porphyry style gold copper mineralization was mined from the Independence stock.

1.2.3 Alteration

Chert Hosted Deposits

Alteration in the chert sequences within the shallow chert hosted mineralization at the Independence is dominated by intense recrystallization of the thick bedded to semi massive cherts to nearly structurless, amorphous masses of chalcedonic silica cut by hairline to 1 centimeter finely crystalline quartz veinlets. Silica is often remobilized into open spaces as either crystalline quartz ranging from drussy quartz to rare crystals to 3 inches on the C axis and as younger iron rich, flinty, chalcedonic silica. Euhedral quartz is early and appears to predate precious metal mineralization whereas the chalcedonic silica often fills and floods spaces around the earlier quartz crystals, and grades imperceptibly into gossanous iron oxides and semi-massive to massive scorodite.

In proximity to mineralization, clastic sediments and intrusive dikes have been argillicaly altered to white to ocherous masses of clays. Locally some intrusive dikes exhibit phyllic alteration with the development of sericite.

Skarn Hosted Mineralization

Precious metal mineralization in skarnified sediments of the Roberts Mountain Allocthon is associated with intense potassic alteration consisting of widely developed zones of fine grained cream to tan colored potassic feldspars visible in both hand specimen, thin and polished sections.

Stock-work and Porphyry Mineralization

Alteration in the stock work and porphyry style mineralization typically consists of potassic to phyllic alteration selvages surrounding precious metal bearing quartz veinlets. Potassic alteration consisting of development of secondary biotite is associated with porphyry gold – copper mineralization in the Independence stock in the Sunshine pit.

1.3 Exploration and Mining History

Activity in the Copper Canyon (Battle Mountain) District began in 1866 with the discovery and mining of high-grade silver veins. Gold was discovered in the area in 1912. High grade copper ores from the Glory Hole mine were produced starting in the 1920s.

Mining in the district was sporadic throughout the early part of the twentieth century until Duval Corporation, then a subsidiary of Royal Dutch Shell Minerals, commenced open pit mining of copper in 1966. Duval Corporation changed its name to Battle Mountain Gold Corporation in 1981when discovery of large bulk minable gold ores at the Fortitude deposit (2.4M oz Au) shifted primary production in the district from copper to gold.

The Independence Mine produced intermittently from 1938 through 1987. Production came from several miles of underground workings developed along a 1,500 ft. strike length of the Independence fault zone (Carrington, 1997). Reported historic production by the various operators totaled 750,200 ounces silver and 11,029 ounces gold.

Early prospecting in the Independence area occurred during the late 1800’s. The property apparently then lay idle until local rancher Dudley Wilson is reported to have discovered the surface outcrops of the present day ore zone in 1937 and begun sinking a shallow shaft on the mineral showing. Past producers include Wilson (1938 – 1943), local miner Bonner Cole (1945?), Agricola Minerals (1973), APCO Oil Corporation (1974 – 1975), Silver King Mines Inc. (1976 – 1981), United Mining (1981 – 1985), Harrison Mining (1985 – 1987).

Exploration drilling on the property was first conducted by Union Pacific Minerals Division of the Union Pacific Railroad with two NQ diameter core holes (1973). Subsequent drilling campaigns were completed by APCO Oil Corporation (1974 – 1975), United Mining Corp. (1981 – 1985), Noranda Exploration (1984 – 1987), Battle Mountain Gold Corp. (1988?), Lansdowne Minerals Inc. (1993 – 1994), Teck Corporation (1995 – 1996), Great Basin Gold Corporation (1997), andCibolan Gold Corporation (2007 – 2011).

In 2004 Gold Range LLC, a private Nevada Limited Liability Company acquired an option to lease the Independence Property from Independence Gold and Silver Mines Company and subsequently acquired the leasehold interest. Later in 2004, Gold Range negotiated an agreement with General Gold Corporation which resulted in Gold Range assigning its interests to General Gold. General Gold was subsequently acquired by Cibolan Gold Corporation.

1.4 Drilling and Sampling Table 1.1 below shows the drilling to date by company and type of drilling for the property.

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The sampling and quality control procedures used during the different campaigns were highly variable depending on the operator, type of drilling and industry standard practices at the time the drilling was carried out. The results from the drilling by Union Pacific, APCO, and United Mining were not of sufficient quality to use for resource calculations under current standards and guidelines; however they were used to help determine where mineralization occurs. The rest of the drilling met or exceeded industry standard practices at the time the drilling was carried out.

Cibolan Gold is currently conducting exploration drilling on the project, as part of an ongoing program begun in the second half of 2007, consisting of Reverse Circulation (RC) and HQ core drilling on the property. The first phase of this program was completed in 2008 and consisted of 84 RC drill holes with a total footage of 28,000 feet. The second phase started in the fall of 2009 and was completed in the winter of 2010. The latest phase of this drilling was completed in April of 2011 and consisted of three HQ core holes with a total footage of 1,074 feet. These holes were drilled as twins to previously drilled RC holes. The core was geotechnically logged and cut in half for assaying. Results are pending as of the date of this report. The core will be available for future metallurgical test work. The second phase program consisted of 44 RC holes drilling a total of 12,895 feet. As of the effective date of this report, Cibolan Gold had completed 41,969 feet of RC drilling in 131 drill holes. This drilling has outlined a zone of near surface gold and silver mineralization with a strike length of more than 3,000 feet, a down dip extent of more than 400 feet, and ranging from 30 to more than 100 feet thick. The mineralized zone is open to the north and down dip. Cibolan Gold believes this surface mineralization is rooted in the gold skarn below the Golconda Thrust approximately 3,000 feet below the surface.

1.5 Metallurgical Testing

Available metallurgical data is limited to cyanide-soluble gold and silver analyses of 2,301 drill samples, bottle roll test work on one surface sample and one sample collected from the underground workings run at 10 mesh, ½ inch, 1.0 inch, and 2.0 inches, and two column tests performed on the surface sample at sizes of 80% passing 2 inch and 80 % passing 4 inch. The column leach tests for the underground sample are in progress and results are pending. These data suggest that the Independence mineralization is highly amenable to the extraction of gold and silver by cyanidation.

Past ore production from the relatively shallow underground workings was processed either by directly shipping the ore to a smelter or treated in a conventional counter-current decantation (CCD) circuit cyanide mill with gold and silver recovered through a Merrill-Crowe circuit.

1.6 Mineral Resource Estimation

Mineral Resources at the Independence are currently developed in two distinct zones and deposit types, the Independence Shallow and the Independence Deep. The Independence Shallow consists of chert hosted epithermal mineralization in the Golconda Allocthon, while the Independence Deep consists of gold mineralization in late stage fracturing in skarnified sediments of the Roberts Mountains Allocthon.

1.6.1 Independence Shallow Resources

The Independence shallow deposit lies entirely within the Pumpernickel Formation of the Golconda Allocthon. Cibolan Gold has identified four units within the Pumpernickel, designated the C-1, C-2, C-3 and Slts. These consist of variably altered interbedded thin to thick bedded cherts, cherty argillaceous sediments, and argillite.

Gold resources at Independence were modeled and estimated by evaluating the drill data statistically, developing three-dimensional lithologic solids to help interpret mineral domains on cross sections spaced at irregular intervals (average spacing of 100 feet within the main portion of mineralization), creating three-dimensional solids of the mineral domain interpretations, analyzing the modeled mineralization statistically to establish estimation parameters, and estimating gold and silver grades by inverse-distance methods into a block model with 20 feet(width) x 20 feet (length) x 20 feet (height) blocks that were previously coded to the correct mineral domains using the three-dimensional solids. The three-dimensional mineral domain solids were defined to control the resource estimation.

The main portion of the shallow mineralized body is roughly 3,800 ft. long plunging -3o at an azimuth of 5o. Silver occurs along with gold but has a larger cross-sectional extent that envelops much of the gold mineralization and the grade distribution is different enough from that of gold that an independent silver model was warranted.

Two block models were created, one for gold and one for silver. These were later combined for reporting and for future economic studies. Fields stored in the block model include percent topography, percent of each domain, grade for each domain, block- and zone-diluted grades, resource classification, tons per block, distance to the nearest composite, number of composites and holes used in each estimate, and rock type. All of the shallow mineralization lies within the oxide zone. A three-dimensional solid of the underground workings, not including the production stopes due to lack of survey information, was created and the volume and grade of this solid was subtracted from the estimated resource.

Geostatistics were completed on the 20-foot down hole composites. The gold and silver grades were estimated by two different methods, once by inverse distance and once using the nearest neighbor method. Resource reporting uses the inverse distance grades while model checking makes use of the nearest-neighbor results. Composites from each domain were only used to estimate into blocks from the same domain.

The estimated Measured, Indicated, Measured and Indicated, and Inferred resources based on gold equivalent cutoffs at Independence are given in Table 1.2. The resource has been tabulated based on a calculated gold equivalent grade to fairly represent the shallow deposit in situ metal content from the two overlapping metal distributions. The silver to gold ratio used is 35:1 or the equivalent of an $1100 gold price and $31.00 silver price. No metallurgical recoveries were used to modify the ratio. There is no guarantee that any or all of the resources will be converted to reserves, but based on historic work and prior economic studies of similar deposits, a good portion of the shallow resource should be converted to reserves.

1.6.2 Independence Skarn Hosted Resources

Skarn hosted gold mineralization occurs in three distinct geologic units below the Golconda Thrust in the Roberts Mountains Allocthon and is related to the emplacement of Eocene age granodorite stocks. Mineralization is best developed in the carbonate rich sediments of the Antler Sequence including the Battle Conglomerate, the Antler Peak Limestone and the Edna Mountain Limestone formations. Gold occurs as fine grains of native gold deposited on crystal faces and fracture surfaces. Silver is almost entirely lacking from the deep skarn deposit.

Gold mineralization in the deep skarn has been encountered in drill holes over an area more than 1,400 feet wide and 3,400 feet long which occurs as sub horizontal blankets that have been locally modified by post mineral faulting. The majority of the skarn target is roughly 2,800 to 2,900 feet beneath the surface, except along the eastern margin of the property where faulting displaces the receptive horizon to roughly 2,600 feet beneath the surface. The mineralized zones range from five to twenty feet thick with typically shallow dips, rarely up to 30 degrees westerly and south westerly.

The relatively good geologic continuity of the deep skarn deposit in conjunction with the limited number of drill holes allows for only an inferred resource classification. No cutoff grade has been applied to the deep skarn deposit as a three-dimensional solid was created to capture and constrain the mineralization. During the development of the solid, a grade cutoff of 0.100 Au opt was generally used. Geostatistics were completed on the ten foot composites, which honored the solid. The gold grade was estimated by inverse distance method. The inferred resource is shown in Table 1.2.

This report includes only estimates for mineral resource. No mineral reserves are prepared or reported in this Technical Report.

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1.7 Interpretations and Conclusions

The authors, through their reviews, site visits, and compilations completed for this report, concludes that the Independence project is a property of merit, and that the Independence deposit has the potential to become an economic gold and silver development. The authors believe that the data provided by Cibolan Gold are accurate and can be used to determine a reasonable representation both economically and geologically of the Independence project.

This report presents the first NI 43-101 compliant estimate of the gold and silver resources at Independence. Due to the small land package for the project, there is limited, though real potential, to expand the shallow resource. Continued exploration of the deep skarn deposit will continue to expand and upgrade this deposit.

6 HISTORY OF EXPLORATION AND PRODUCTION

6.1 Early District History

Activity in the Copper Canyon (Battle Mountain) District began in 1866 with the discovery and mining of high grade silver veins. Gold was discovered in the area in 1912. High-grade copper ores from the Glory Hole mine were produced starting in the 1920s.

Mining in the district was sporadic throughout the early part of the twentieth century until Duval Corporation, then a subsidiary of Royal Dutch Shell Minerals, commenced open pit mining of copper in 1966. Duval Corporation changed its name to Battle Mountain Gold Corporation in 1981, and was divested from Shell Oil as an independent public company, when the large bulk minable gold ores at the Fortitude deposit were discovered. This discovery shifted primary production in the district from copper to gold. Current operations in the district are centered at Newmont’s Phoenix Project. This is an open pit, milling operation recovering gold, silver and copper ores from shallow sulfide mineralization. The Independence Mine is situated less than one mile west-southwest of the Phoenix Deposit and the old Fortitude Deposit.

6.2 History – Independence Mine

The Independence Mine produced intermittently from 1938 through 1987. Production came from several miles of underground workings developed along a 1,500 ft. strike length of the Independence fault zone (Carrington, 1997). Reported historic underground mine production, by the various operators, totaled 750,200 ounces silver and 11,029 ounces gold Table 6.1.

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Early prospecting in the Independence area occurred during the late 1800’s. The property apparently then lay idle until local rancher Dudley Wilson is reported to have discovered the surface outcrops of the present day ore zone in 1937 and began sinking a shallow shaft on the mineral occurrence. From 1938 to 1943 Wilson and a partner continued developing the inclined shaft and lateral workings from the shaft producing 1,386 tons of high-grade ore with an average recovered value of 0.072 ounces of gold per ton (opt Au) and 23.6 ounces of silver per ton (opt Ag). This ore was direct shipped to custom mills or smelters in the region.

After a period of inactivity during and shortly after WW II, local miner Bonner Cole acquired a lease on the property from Wilson. During this period Cole recorded production of 2,796 tons with an average grade of 1.000 opt Au and 39.4 opt Ag. Bonner Cole in personal communications with Mr. Carrington reported actual production during this period of 5,000 tons at a similar grade. Cole shipped all of his ore to smelters in Salt Lake City, Utah, and was forced to cease operations when the smelter stopped receiving custom ores.

The property then lay idle from 1958 until 1973, when Union Pacific Railroad’s minerals division, Agricola Minerals, acquired a lease on the property. Agricola conducted limited exploration and drilling, erected a 50 ton per day cyanide mill, which had been moved from a mill site at Manhattan, Nevada. Agricola produced 2,711 tons with an average grade of 0.100 opt Au and 15.5 opt Ag.

In late 1973 and early 1974 APCO Oil Corporation took over the Agricola Lease, rebuilt and expanded the mill to roughly 100 tons per day. APCO also drove 1,200 feet of 12% spiral decline and more than 4,000 feet of new haulage levels for rubber tired access. APCO conducted surface and underground mapping, sampling and drilling programs developing and expanding reserves, encountering high grade mineralization assaying as high as 3.00 ounces of gold and 19,000 ounce of silver per ton in the ore body that became known as the APCO Stope. From 1974 through 1976 APCO produced 35,517 tons with an average grade of 0.110 opt Au and 11.0 opt Ag. During 1975, the peak year of production, APCO produced up to one ton of dore’ bullion per month. 1975 production is reported to be 12,000 tons with an average grade of 0.198 opt Au and 22.75 opt Ag.

In late 1975 APCO Oil became the subject of a hostile takeover for its oil and related assets. APCO’s minerals interests were acquired by Silver King Mines Inc. in 1976. Silver King operated the mine until late 1981 producing 7,984 tons with an average grade of 0.070 opt Au and 4.8 opt Ag. Silver King conducted no exploration or new development work.

In 1981 United Mining acquired Silver King’s interest in the Property, and purchased the Old Glory, DC80, 81, 82 and DC83 claims which became part of the property under the terms of United Mining Agreement. United operated the property from 1981 through 1985 in much the same manner as Silver King, conducting little or no exploration and minimal development work. United produced 3,918 tons at an average grade of 0.22 opt Au and 19.5 opt Ag. United Mining completed 23 open hole “air track” type drill holes using 10 foot sample intervals. In 1985, Earl Harrison, at the time United Mining’s, Mine Manager, acquired United’s interests as Harrison Mining. Harrison operated the property until late 1987 producing 10,747 tons of ore with an average grade of 0.16 opt Au and 5.4 opt Ag.

Noranda entered into an exploration lease agreement with Independence Gold – Silver Mines Company in 1984 to explore the deep skarn gold mineralization on the Independence Property. Between 1984 and 1987, Noranda conducted surface mapping and soil sampling followed by 7 deep drill holes on the property to depths ranging from 2,900 to 3,200 feet, with all holes intersecting mineralization.

Subsequently Battle Mountain Gold acquired a leasehold interest in the property and conducted limited reverse circulation (RC) drilling using a 10 foot sample interval for most of the holes. All holes encountered mineralization but did not encounter consistent values comparable to the Fortitude Deposit that Battle Mountain Gold was mining at the time. Battle Mountain subsequently terminated its interest.

In 1993, Vancouver based, Lansdowne Minerals acquired an option to lease the property from Independence Gold – Silver Mines. Lansdowne conducted limited exploration on the property in 1994, which included 5 RC drill holes all of which encountered mineralization. Later in 1994 Independence Gold – Silver Mines terminated Lansdowne’s option for failure to fulfill its payment obligations.

In 1995 Teck Corporation acquired a leasehold interest to the property. Teck quickly conducted a widespread program of RC drilling completing 14 drill holes, all of which encountered mineralization. In mid-1996 Teck assigned its interest to Robert G. Carrington terminating Teck’s interest.

Carrington subsequently assigned his interest in the property to Great Basin Gold Corporation. Great Basin conducted detailed surface mapping, soil sampling, and extensive trenching. Great Basin subsequently completed two deep drill holes to test the gold skarn that Noranda had identified. In the face of falling metal prices Great Basin re-assigned its leasehold interest to Carrington in early 1998. Unable to attract further attention Carrington terminated his interest in late 1998 returning the property to Independence Gold – Silver Mines Company.

In 2004 Gold Range Company LLC, a private Nevada Limited Liability Company acquired an option to lease the Independence Property and consummated the lease in 2005. A short while later, on April 29, 2005, Gold Range negotiated an agreement with General Gold Corporation which resulted in Gold Range assigning its interests to General Gold. General Gold was subsequently acquired by Cibolan Gold Corporation.

6.3 Exploration and Development History

Table 6.2 below shows the drilling to date by company and type of drilling for the property.

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GMC conducted an assessment of the tailings and screened reject in 2006 which consisted of 36 shallow RC drill holes to characterize the Tailings and coarse rejects. In 2007 – 2008 GMC completed 28,000 feet of RC drilling in 84 holes. This drilling has outlined a zone of near surface gold and silver mineralization with a strike length of more than 3,000 feet and approximately 400 feet wide. The mineralized zone is open to the north and down dip. GMC believes this surface mineralization is rooted in the gold skarn approximately 3,000 feet below the surface and below the shallower Golconda Thrust. The 2009 – 2010 drilling program completed 12,895 feet of drilling and consisted of 44 RC holes. This program was primarily an infill drilling program which confirmed the location, orientation, and continuity of mineralization. In 2011, GMC drilled three HQ core holes with a total footage of 1,074 feet. These three holes twined existing GMC RC drill holes. The core from these holes was logged for both geological and geotechnical characteristics.

6.4 Historic Resource and Reserve Estimates

There are no previous NI 43-101 compliant mineral resource estimates for the Property. Various workers have estimated the resource potential for both the near surface and deep skarn gold potential of the property over the years.

In a 1987 interoffice memorandum, Noranda Exploration estimated the deep gold skarn target potentially contained more than 2 million ounces of gold.

In November 1993, Lansdowne Minerals estimated resource potential from 2.56 to 7.65 million tons grading 0.08 opt Au and containing from 205,000 to 612,000 ounces of gold and 8.5 to 25.4 million ounces of silver for the near surface resource.

R. Carrington in 1997 estimated non-compliant inferred resources for both the near surface targets and the deep target. Carrington estimated the surface oxide resources to contain an inferred resource with 235,000 ounces of gold and 2.5 million ounces of silver in 6.9 million tons with an average grade of 0.034 opt Au and 0.36 opt Ag. Mr. Carrington estimated an inferred resource containing 1.97 million ounces of gold with no silver contained in 10.1 million tons in the deep Skarn target with an average grade of 0.195 opt Au using a cutoff of .09 opt. All Mr. Carrington’s estimates were based on 64 widely spaced reverse circulation drill holes and 9 core holes drilled by various operators. These resource estimates by Mr. Carrington are not CIM compliant and were estimated prior to the publication of NI 43-101 reporting procedures. They are described here for completeness but should not be relied upon.

7 GEOLOGY SETTING

7.1 Regional Geology

The regional geology of north central Nevada is defined by episodic tensional deformation rifting, sedimentation and erosion, followed by wide spread thrusting resulting from compressional deformation. Episodic tensional events followed by compressional events are:

Robert Mountains Allochtonon emplaced during the Antler orogeny, erosion and sedimentation followed depositing the overlap sequence (Antler Sequence of Roberts, 1964) in angular unconformity. The Antler sequence hosts the Golconda Allocthon which was emplaced during the Sonoma orogeny and contains the Havallah Sequence of Mississippian to Permian age rocks, including the Pumpernickel Formation, host for near surface mineralization at Independence.

The Roberts Mountains allochthon contains Late Cambrian Harmony Formation, Ordovician Valmy Formation, and Devonian Scott Canyon Formation and was emplaced during the Antler orogeny. This allochthon is overlain in angular unconformity by the overlap assemblage (Antler sequence of Roberts, 1964) containing the Middle Pennsylvanian Battle Formation, Pennsylvanian and Permian Antler Peak Limestone, and Permian Edna Mountain Formation. Rocks of the Roberts Mountain Allocthon, host the adjacent 2.2 million ounce Fortitude deposit and are the principle host for the contiguous 12.5 million ounce Phoenix deposit and the Independence Deep Skarn Target. These rocks are structurally overlain by the Mississippian, Pennsylvanian, and Permian Havallah sequence of the Golconda allochthon, the base of which is the regionally extensive Late Permian to Early Triassic Golconda thrust, which was active during the Sonoma orogeny (Doebrich and Theodore, 1996).

The Late Cambrian Harmony Formation crops out over a large area in the eastern part of the Battle Mountain Mining District and structurally overlies the Ordovician Valmy Formation and Devonian Scott Canyon Formation along the Dewitt thrust. The Dewitt thrust is considered a major imbricate thrust or splay of the Roberts Mountains thrust known locally as the Dewitt allochthon. The Harmony Formation consists of locally calcareous, feldspathic to micaceous sandstone and lesser amounts of calcareous shale and limestone (Doebrich and Theodore, 1996).

Calcareous units of the Harmony Formation were converted to biotite hornfels in the Copper Canyon, Copper Basin and Independence areas near intrusions. Locally the more calcareous units were converted to garnet-pyroxene skarn. In the Copper Basin area, the Harmony Formation was host to supergene-enriched porphyry copper mineralization at the Contention, Carissa, Copper Queen, Sweet Marie, and Widow deposits, and to gold-silver skarn and distal disseminated silver-gold deposits at the Labrador, Surprise, Northern Lights, and Empire deposits. The Harmony Formation also was host for half of the one billion tons of mineralized rock at the Buckingham molybdenum deposit. At the East Deposit in the Copper Canyon area and just south of the Independence, rocks of the Harmony Formation were hosts for porphyry copper mineralization associated with potassic alteration assemblages along the east side of the granodiorite of Copper Canyon (Doebrich and Theodore, 1996). Early and Middle Ordovician rocks of the Valmy Formation underlie a large area in the northern part of the mining district and are found as small fault-bounded slivers structurally intercalated with Late Devonian Scott Canyon Formation in the Galena Canyon area. The Valmy Formation, particularly quartzarenite units, are hosts to distal disseminated silver-gold ore bodies at the Top Zone deposit at the Marigold Mine and at the Valmy-Trout Creek and Trenton Canyon gold deposits of Santa Fe Pacific Gold’s, now Newmont’s Trenton Canyon project (Doebrich and Theodore, 1996).

Devonian Scott Canyon Formation is exposed in the southeast part of the district. North and south of Galena Canyon it is structurally overlain by the Late Cambrian Harmony Formation along the Dewitt thrust. The Scott Canyon Formation is host for distal disseminated silver-gold ore at the Iron Canyon Mine, where mineralization is closely associated with an Oligocene granodiorite porphyry dike (Doebrich and Theodore, 1996).

Rocks of the Roberts Mountains allochthon were transported eastward, on the Roberts Mountains thrust, during the late Devonian to Early Mississippian Antler orogeny. The Roberts Mountains thrust is not exposed at the surface in the Battle Mountain district. Deep drilling indicates that it probably underlies the district at depths greater than 1,300 m. A Paleozoic structural fabric, primarily consisting of fold axes, was imparted on rocks of the Roberts Mountains allochthon during the Antler orogeny and generally strikes N 10º W to N 20º E (Doebrich and Theodore, 1996).

The Pennsylvanian and Permian Antler sequence, the overlap assemblage, is exposed at several localities in the district and constitutes the only Paleozoic autochthonous rocks in the district. The sequence consists of the Middle Pennsylvanian Battle Formation, Pennsylvanian and Permian Antler Peak Limestone, and Permian Edna Mountain Formation. Thicknesses of formations are extremely variable throughout the district, and individual formations may be absent from local stratigraphic sections. Rocks of the Antler sequence, the most favorable host for hydrothermal mineral deposits in the Battle Mountain mining district, lie unconformably on rocks of the Roberts Mountains allochthon. The Middle Pennsylvanian Battle Formation is at the base of the Antler sequence and locally lies unconformably on the Late Cambrian Harmony Formation and Ordovician Valmy Formation. The Battle Formation was deposited in a high energy environment and generally consists of deeply canneled, immature thick-bedded conglomerate and sandstone, along with lesser amounts of siltstone, shale, and limestone. Siliciclastic units are variably calcareous, and clastic components were derived from rocks of the Roberts Mountains allochthon during erosion of the Antler highland. The Battle Formation is the primary host for mineralization in the Independence Skarn mineralization and was the primary host for porphyry copper ore in the East Deposit, for gold-silver skarn ore in the Tomboy- Minnie deposits, for gold-silver replacement ore in the Upper Fortitude deposit, and for the gold-silver skarn ore currently being mined from the Midas pit. In the Copper Basin area, the Battle Formation hosted gold-silver skarn ore at the Labrador and Surprise deposits and hosted distal disseminated silver-gold ore at the Lone Tree deposit and at the East Hill and Red Rock deposits at the Marigold Mine (Doebrich and Theodore, 1996).

The Pennsylvanian and Permian Antler Peak Limestone is the middle formation of the Antler sequence. It consists mostly of medium- to thick-bedded fossiliferous limestone, locally containing quartz sand, with lesser amounts of shale and pebbly conglomerate. The Antler Peak Limestone also hosts part of the mineralization in the Independence Skarn, and was the primary host for gold-silver skarn ore in the Lower Fortitude ore zone, which yielded most of the ore (1.9 million ounces Au) from the 2.2 million ounce Fortitude Mine, and the primary host for gold-silver skarn ore in the Phoenix deposit, a southern extension of the Fortitude deposit (Doebrich and Theodore, 1996).

The Permian Edna Mountain Formation is the uppermost unit of the Antler sequence and is usually found directly below the trace of the Golconda thrust. Its lower contact with the Antler Peak Limestone is depositional and unconformable. The formation consists of calcareous siltstone, sandstone, pebble conglomerate, and limestone. Conglomerate and sandstone are texturally more mature than those in the Battle Formation. Near its base, the Edna Mountain Formation contains a regionally extensive unit of debris flow conglomerates with intercalated siltstone, which is the primary host for distal disseminated silver-gold ore at the 8 South, 8 North, and 5 North deposits at the Marigold Mine. Siltstone and sandstone of the Edna Mountain hosts distal disseminated silver-gold ore at the Lone Tree deposit. The Edna Mountain Formation hosts minor amounts of mineralization in the Independence Skarn, and likewise hosted minor amounts of gold-silver skarn ore in the Lower Fortitude ore body and also hosts gold-silver skarn mineralization in the Phoenix deposit (Doebrich and Theodore, 1996).

The Havallah sequence, which constitutes the upper plate of the Golconda thrust, is a Mississippian, Pennsylvanian, and Permian allochthon consisting of an assemblage of chert, argillite, shale, siltstone, sandstone, conglomerate, limestone, and metavolcanic rocks exposed over a large area throughout the western part of the Battle Mountain District. The base of the Havallah sequence is the regionally extensive Golconda thrust, which places the Havallah sequence structurally over the Antler sequence. This structural relationship (the Havallah sequence over the Antler sequence along the Golconda thrust) represents the most important tectonostratigraphic control on the distribution of ore deposits in the Battle Mountain mining district (Doebrich and Theodore, 1996) (Figure 7.1).

7.1.1 Mesozoic and Cenozoic Tectonics and Magmatism

Mesozoic structural and magmatic events in the Battle Mountain mining district are characterized by the development of a northwest-striking structural fabric, including faults, broad open folds and emplacement of Late Cretaceous granodioritic to monzogranitic stocks. Low-fluorine porphyry molybdenum systems developed with the Late Cretaceous stocks in the mining district (Doebrich and Theodore, 1996), porphyry copper deposits developed in the copper zone surrounding the central molybdenum zone related to these Late Cretaceous intrusive events.

Tectonics and magmatism during the Cenozoic in the Battle Mountain mining district changed from one of largely compression to one of extension. The composition of the plutons generally became more intermediate and the plutons were emplaced at higher levels, forming a number of copper, molybdenum – copper and copper – gold porphyry systems with distal related deposits of silver – gold and mixed base and precious metals.

Cenozoic structural and magmatic events in the Battle Mountain district include development of northstriking normal fault zones, emplacement of late Eocene to early Oligocene granodioritic stocks and dikes throughout the region, and eruption of volcanic and volcaniclastic rock, ranging in age from early Oligocene to Pliocene. Periodic change in extension directions during the Cenozoic resulted in several generations of normal fault sets with variable orientations (Doebrich and Theodore, 1996).

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7.1.2 Structure

Northwest-striking Mesozoic age structural zones are manifested by granodiorite porphyry dikes and larger elongate intrusive bodies, aeromagnetic lineaments, and regional alignment of mineralized areas related to the emplacement of the Cenozoic intrusive bodies. They form subtle features that trend N 30° to 40° W and are generally not as obvious as the younger north-striking fault zones. Related northwest striking structures are an important ore control in the Wilson Independence Mine, localizing solutions and controlling some of the highest grade gold and silver mineralization known in the historic mine workings.

North-striking (roughly N 20° W to N 20° E) normal faults in the Battle Mountain mining district are abundant. They generally predate late Eocene to early Oligocene dikes and stocks emplaced within them. Renewed movement is clearly indicated in a number of areas including the Independence Stock where such north striking structures are mineralized and cut the intrusive.

7.1.3 Tertiary-Intrusive and Volcanic Rocks and Mineral Deposits

All dated Tertiary intrusive rocks in the Battle Mountain mining district are late Eocene to early Oligocene in age (41 to 31 Ma) and mostly monzogranitic to granodioritic in composition. Although Tertiary intrusive rocks are scattered throughout the mining district as small stocks and dikes, the main exposed Tertiary intrusive centers are at the Independence Mine and in the Copper Canyon, Copper Basin, Elder Creek and Buffalo Valley gold mine areas. Associated with each of these intrusive centers are porphyry-style (Cu-Au and/or Mo-Cu) alteration assemblages, mineralized zones, and related base and precious metal deposits (Doebrich and Theodore, 1996).

The Copper Basin area has produced considerable amounts of copper, gold, and silver from supergene-enriched porphyry copper, skarn, replacement, and distal disseminated deposits, all of which are hosted in calcareous rocks of the Late Cambrian Harmony Formation and/or Middle Pennsylvanian Battle Formation. The proximity of the Late Cretaceous Buckingham stockwork molybdenum system, the early Oligocene Paiute Canyon Mo-Cu porphyry system, and other Tertiary dikes and stocks in the area makes it difficult to establish with certainty a direct relationship between deposits and mineral systems from which they were derived. Gold skarn ore at the Surprise Mine and distal disseminated silver-gold ore associated with silica-pyrite alteration at the Empire Mine may be related genetically to the Late Cretaceous Buckingham stockwork molybdenum system. (Doebrich and Theodore, 1996).

The Early Oligocene Caetano Tuff is a rhyolitic ash-flow tuff exposed as a ridge-capping and cliff-forming unit in the southwest and extreme eastern parts of the district (Doebrich and Theodore, 1996). Oligocene olivine-augite basaltic andesite occurs as thin flows in the northwest part of the mining district (Doebrich and Theodore, 1996).

7.2 Local and District Geology

Precious and base metal deposits in the Copper Canyon area are genetically and spatially related to a mid-Tertiary granodiorite intrusive centrally located within Copper Canyon and a smaller related stock, referred to as the Wilson Independence Stock which lies adjacent and immediately to the west (Theodore 1975). Doebrich (1995) considers them to be identical, chemically, texturally and temporally, and describes both as the Copper Canyon Stock. These Tertiary stocks intruded Paleozoic sediments which have undergone recurrent tectonism.

The Golconda Thrust emplaced Pennsylvanian Havallah Formation, locally termed the Pumpernickel Formation, over the Antler Sequence. Subsequent extension has resulted in a number of north-south, northwest, and northeast oriented mineral controlling structures. The dominant host rocks are fine to coarse clastics and carbonate units belonging to the Antler Sequence, also referred to as the Onlap Assemblage (Roberts, 1965).

The most important gold and silver occurrences in the immediate area of the Independence Mine is the operating Phoenix Deposit and the now depleted Upper and Lower Fortitude deposits. The Upper and lower Fortitude deposits, discovered in 1981 and mined until 1993 contained combined production of 2.2 million ounces of gold and 9.7 million ounces of silver more than 90% of which was contained in the Antler sequence.

Two major rock units are exposed at Independence, the Paleozoic age Pumpernickel Formation (Havallah Formation) and Tertiary (Eocene) age intrusive rocks of the Independence Stock. Minor dikes in part appear to be contemporaneous with, and in part younger than the Independence Stock. The oldest rocks exposed on the surface of the Property are sili-clastic sediments of the upper Pennsylvanian – Permian age Pumpernickel Formation, consisting of interbedded chert, siltstone, and argillite, these units generally strike N5oE with a general dip of 50o to 60o degree towards the west. Locally on the surface and within the Independence Mine these sediments are deformed by folding and faulting.

The Pumpernickel Formation has been subdivided into four general units on the Independence Property by GMC consultants. These units designated the C-1, C-2, C-3 and Slts in the Cibolan Gold 2007 – 2008 drill logs consist of variably altered interbedded thin to thick bedded chert and argillite.

The upper-most and likely the youngest in this sequence is thick sequence composed of thin to medium-bedded black chert (identified as C-3) with numerous thin discontinuous argillite beds. The total thickness of this unit is unknown but is known to exceed 600 feet in the main decline in the mine. Near the portal of the main Independence decline, the C-3 chert is highly deformed and exhibits intense folding, deformation and dislocation by faulting.

Structurally and presumably stratigraphically beneath the C-3 chert is a sequence of siltstone and poorly bedded argillite with minor chert (mapped as Slts). This unit is depositionally discontinuous on the south end of the property, but is relatively continuous north of the Independence decline. It is typically weakly altered and poorly mineralized and varies from 160 to 180 feet thick. It appears to form an aquaclude or ‘cap rock’ above the underlying mineralized C-1 chert. Bonanza grade gold and silver mineralization is frequently found constrained to the upmost portion of the underlying C-1 chert and lowest portions of the overlying Slts unit as evidenced by production from the Gold Pillars, APCO, 1+40, and Nigger Heaven stopes where historic, individual samples yielded results to 19,800 ounces of silver per ton and 63 ounces of gold per ton (Carrington, R. per. Communication, 2009) and Cibolan Gold drill hole, GM52 where the interval from 90 – 95 yielded an uncut average grade of 0.291opt Au and 200.5 opt Ag at this contact.

The C-1 chert hosts the majority of the near surface gold-silver mineralization. The unit varies between 180 and 220 feet in thickness. The most prominent geologic feature of this unit is three prominent, semi-massive to massive recrystallized chert beds, historically known in the underground mine workings as the Upper, Lower, and Basal blocky chert units. These 10 to 75 foot beds are separated by 5 to 20 foot sections of thin bedded chert and intercalated shale. The C- 1 “blocky” chert is strongly altered and bleached due to intense effects of hydrothermal alteration. Intense surface oxidation within this brittle and fractured unit generally extends to 400 feet, giving the unit a ubiquitous tan color throughout the existing mine and in most of the Cibolan Gold drill holes.

The lowest and presumably oldest of sedimentary sequence in the mine area is a thinly-bedded sequence of chert and argillite beds, mapped as C-2. Most of the C-2 unit south of the Independence shaft is poorly mineralized thin bedded black chert interbedded with fine-grained tan to gray argillite. North of the Independence Shaft, this unit exhibits widespread propylitic alteration (chlorite-epidote-pyrite). The thickness of this unit is unknown, but is likely greater than 500 feet. In the mine workings, this unit locally exhibits intense compressional deformation in the form of folding and possible local thrusting. Where observed, deformation is strongest immediately below the C-1 chert member and decreases down sequence.

Petrographic work conducted by U.C. Berkley in 1987 indicated numerous previously unidentified thrust sheets near the Independence Mine based on the identification of radiolarian in the cherts of the Havallah Formation.

The second major rock type at Independence are intrusive rocks of the Independence Stock (38 Ma). These range compositionally from granodiorite to monzonite and occur as a small stock with a large west to northwest-dipping sill-like body. Drill holes by Battle Mountain Gold and Great Basin Gold contain intercepts with up to 680 feet of altered intrusive rocks before encountering the Pumpernickel Formation. The apex of this sill-like mass occurs in the northern portion of the claim block. Numerous smaller dikes and sill-like masses of similar composition are common throughout the property. Also common, and often in spatial association with mineralization, are diatreme breccias locally termed “pebble or breccia dikes”. These are narrow, generally elongate, diatreme breccias of often well heavily milled, rounded chert fragments in an intrusive matrix typically found in dike like masses.

Contact metamorphism is developed well away from the intrusive contact. The upper C-2 and lower C-3 chert beds have been completely recrystallized into a dense white to tan “quartzitetextured” unit. This alteration feature is extremely resistant to weathering and forms the prominent Pumpernickel ridge to the east and unnamed ridges north of the property. Siltstone and argillite of the “Slts” unit has been metamorphosed to a green to brown biotite hornfels. This metamorphic halo can be traced in the above units for up to 1,000 feet from the intrusive contact.

The blocky C-1 chert exhibits the most intense recystalization and alteration effect of all rock types. This is possibility due to the capping feature of the overlying Slts, siltstone and argillite, in combination with numerous sub-parallel striking fractures and faults of the Wilson-Independence Shear Zone. Hydrothermal mineralizing fluids migrating through brecciated and fractured semi massive blocky cherts were ponded below the Slts unit which formed an effective aquaclude in higher concentrations of mineralization locally forming bonanza grade chutes. Figures 7.3 and 7.4 show the local surface geology and a typical geologic section respectively for the project area.

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7.3 Property Structure

The main structural feature on the Property is the Wilson Independence fault zone, a series of subparallel faults and shear zones striking approximately N5oW and dipping steeply to the west. Offsets on individual members vary from several hundred feet of normal (west side down) offset to no apparent offset and rarely reverse offset. The combined width of fracturing in the Independence fault system is at least 400 feet. This structural zone can be traced for more than 10,000 feet south from the Sunshine open-pit gold mine just north of the Independence property to the south property line where the fault zone strikes under gravels of Copper Canyon and Newmont’s Phoenix Mine dumps.

The most productive gold-silver zone at the Independence Mine occurs at the structural intersection of this major shear zone with the sub-parallel striking blocky C-1 chert horizon. The semi-parallel strike of the intersection between structure and receptive stratigraphy results in a large mineralized envelope which rakes southerly at approximately 3o – 4o to the south. The combination of structural and stratigraphic control results in a prospective mineralized envelope which can be traced over the entire length of the property, a distance of more than 10,000 feet. Within this mineralized envelope, additional structural control related to east-west to northwest faults and the ponding of mineralizing fluids beneath the impermeable Slts unit locally resulted in the formation of bonanza grade chutes of mineralization.

The north – south structural zone of the Independence has undergone episodic recurrent movement. Movement in part predates the Eocene intrusion of the Independence stock as evidenced by the strong north – south orientation of many intrusive dikes and diatreme “pebble” dikes and in part postdates emplacement of the bulk of the Independence stock as evidenced by the related north – south trending mineralized fractures in parts of the stock. Late stage volatile fractions appear to have locally moved explosively along certain members of the Independence fault zone as evidenced by the diatreme breccias (pebble dikes). Mineralization encountered in drilling thus far in the stock is generally lower grade than that in the sedimentary units. It should be noted that this may be due to the greater amount of drilling in the sedimentary package to date than in the intrusive rocks.

Locally cross cutting structures resulting in increased porosity and permeability in the receptive chert horizon have further localized bonanza grade mineralization in the cherts. Historic sampling by APCO at the Independence contained values up to 63 ounces of gold per ton and 19,800 ounces of silver per ton from such structural intersections at the C-1 – Slts contact.

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