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TECHNICAL REPORT
(as at February 26, 2014)

 

PRESENTATION
Corporate

 

FINANCIAL REPORTS

 

 

 

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Oracle Mining operates in mining-friendly
jurisdictions with good potential for mineral
discoveries/extraction and available
infrastructure.

 

 

 

 

 

 

 

Oracle Ridge Copper Project

 

Background:
Reviving a Former Producer

 

Oracle Mining's 100%-owned Oracle Ridge Copper Project is located near Tucson, Arizona, USA and operated as a copper-silver-gold mine from 1991 to 1996. The mine was closed due to production problems. Historical references indicate that the main problems were that the crushing and grinding circuits were inadequate for the tonnage of ore the mine was attempting to process, and the low copper price. The historical mill facility has been removed and as the Project advances, evaluation of a new plant will be necessary.

 

Previous mining operations have left an intact, developed underground mine with an estimated +11 miles (17 kilometres) of underground workings. Mineral processing was historically carried out using the flotation method after the ore had been crushed and ground. As an underground operation, the historical Oracle Ridge mine generated a small environmental footprint in comparison with typical open pit copper mines. A significant portion of the property has not been drill-tested.

 

Since our acquisition in 2010, the Corporation has made significant steps in advancing the Oracle Ridge Project, including announcing on March 18, 2013 an initial NI 43-101 Mineral Resource estimate and filing a technical report entitled “Review of the Oracle Ridge Project” dated April 1, 2013, with an effective date of March 18, 2013. The report was written by Glenn R. Clark, P.Eng., of Glenn R. Clark & Associates Limited and Tracy Barnes P.E., of Barnes Engineering Services Inc. (the “Technical Report”). A copy of the Technical Report is available for downloading on this website at http://www.oracleminingcorp.com/_resources/pdfs/04-01-13_Technical_Report_Oracle_Ridge.pdf and on the Corporation’s profile on SEDAR (www.sedar.com).

 

 

 

Major Accomplishments:

 

  • Aquifer Protection Permit - received March 2013
     
  • Drill program to the end of 2012 of 91 surface and underground holes drilled totalling 54,753 feet
     
  • NSR Royalty Agreement between Oracle Mining, Oracle Ridge Mining LLC and MF2 Investment Company 1 LP (“MF2”) - November 2012
     
  • Offtake Agreement with MF2 provides that MF2 will purchase 100% of the future annual copper concentrate production from the Oracle Ridge Project - November 2012
     
  • Class II Air Quality Operating Permit - received July 2012
     
  • Memorandum of Understanding with Pima County - July 2012
     

 

 

 

Mineral Resource Estimate

 

The Mineral Resource estimate has been prepared by, or under the supervision of, Tracy Barnes, P.E. Mr. Barnes is an independent "qualified person", within the meaning of NI 43-101 and has reviewed and approved the scientific and technical information included in this webpage relating to the Mineral Resource estimate, including the discussion on QA/QC procedures described below.

 

The estimated Indicated Mineral Resources at various cut-off grades for comparison purposes, with 1.0% copper used as the base case cut-off grade is summarized in Table 1. Indicated Mineral Resources at the 1.0% copper base case cut-off grade are estimated to be 9.9 million short tons at 1.64% copper. All tonnages in this Report are in imperial (short) tons.

 

Table 1: Oracle Ridge Project Indicated Mineral Resource Estimate (Diluted)



Cut-off
%Cu
Tons
Millions
Grade
Contained
Cu
Contained
Ag
Contained
Au
%Cu
Ag oz/t
Au oz/t
%Cu
Equivalent
Millions
(lb)
Millions
(oz)
Thousands
(oz)

0.75
13.5
1.43
0.38
0.004
1.74
386
5.1
59
1.00
9.9
1.64
0.43
0.005
1.98
323
4.2
48
1.25
7.0
1.85
0.47
0.005
2.23
258
3.3
37
1.50
4.7
2.08
0.52
0.006
2.49
197
2.5
27
1.75
3.1
2.33
0.57
0.006
2.77
143
1.8
18
2.00
2.0
2.59
0.63
0.006
3.06
102
1.2
12

 

  • The effective date of the Mineral Resource estimate is March 18, 2013.
     
  • Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
     
  • There is no certainty that all or any part of the Mineral Resources will be converted into Mineral Reserves.
     
  • The base case cut-off grade of 1.0% copper has been estimated to ensure reasonable prospects of economic extraction assuming extraction by an underground mining scenario, projected copper price of $2.80 per pound and estimated total site operating costs of $45 per ton.
     
  • A selective mining unit of 25 x 25 x 5 feet has been used as a dilution allowance for potential extraction methods.
     
  • Mineral Resource tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add due to rounding.
     
  • Silver and gold grade estimates were based on a less comprehensive data set than the copper grade estimates. Where copper grade estimates exist without accompanying silver or gold grade estimates, the silver or gold grade estimates were assumed to be zero.
     
  • Copper equivalency has been estimated using metal pricing of $2.80 per pound of copper, $28 per ounce of silver and $1,487 per ounce of gold. Metal prices were averaged over the 3 year period of 2010 through 2012. No metallurgical recovery has been assumed and is estimated on a contained metal basis. The formula used is as follows: CuEQ = Cu% + (Ag oz/t x tons at cut-off x $28 / $2.80 x 2000 x tons at cut-off) x 100 + (Au oz/t x tons at cut-off x $1,487/ $2.80 x 2000 x tons at cut-off) x 100.
     

Table 2 summarizes the estimated Inferred Mineral Resources at various cut-off grades for comparison purposes, with 1.0% copper used as the base case cut-off grade. Inferred Mineral Resources at the 1.0% copper base case cut-off are estimated to be 6.9 million tons at 1.58% copper.

 

Table 2: Oracle Ridge Project Inferred Mineral Resource Estimate (Diluted)


Cut-off
%Cu
Tons
Millions
Grade
Contained
Cu
Millions
(lb)
Contained
Ag
Millions
(oz)
Contained
Au
Thousands
(oz)
%Cu
Ag oz/t
Au oz/t
%Cu
Equivalent

0.75
10.7
1.33
0.35
0.003
1.58
283
3.7
32
1.00
6.9
1.58
0.41
0.003
1.87
217
2.8
22
1.25
4.4
1.85
0.47
0.003
2.17
161
2.0
15
1.50
2.7
2.14
0.53
0.003
2.50
116
1.4
9
1.75
1.7
2.45
0.60
0.004
2.85
84
1.0
6
2.00
1.2
2.73
0.68
0.004
3.18
63
0.8
5

 

  • The effective date of the Mineral Resource estimate is March 18, 2013.
     
  • Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.
     
  • There is no certainty that all or any part of the Mineral Resources will be converted into Mineral Reserves.
     
  • The base case cut-off grade of 1.0% copper has been estimated to ensure reasonable prospects of economic extraction assuming extraction by an underground mining scenario, projected copper price of $2.80 per pound and total estimated site operating costs of $45 per ton.
     
  • A selective mining unit of 25 x 25 x 5 feet has been used as a dilution allowance for potential extraction methods.
     
  • Mineral Resource tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add due to rounding.
     
  • Silver and gold grade estimates were based on a less comprehensive data set than the copper grade estimates. Where copper grade estimates exist without accompanying silver or gold grade estimates, the silver or gold grade estimates were assumed to be zero.
     
  • Inferred Mineral Resources have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. It cannot be assumed that all or any part of the Inferred Mineral Resources will ever be upgraded to a higher category.
     
  • Copper equivalency has been estimated using metal pricing of $2.80 per pound of copper, $28 per ounce of silver and $1,487 per ounce of gold. Metal prices were averaged over the 3 year period of 2010 through 2012. No metallurgical recovery has been assumed and is estimated on a contained metal basis. The formula used is as follows: CuEQ = Cu% + (Ag oz/t x tons at cut-off x $28/ $2.80 x 2000 x tons
     

The Mineral Resource model was developed using a total of 588 drill holes, including 83 holes (62 from surface and 21 from underground) drilled on behalf of ORM during the 2011 and 2012 drilling campaigns and 505 historical drill holes.

 

The Mineral Resource estimate has been generated from drill hole sample assay results and the interpretation of a geologic model that relates to the spatial distribution of copper in the deposit. Grade estimates are made using ordinary kriging constrained within individually identified geological beds using sample data composited to 5-foot intervals into model blocks measuring 25 feet by 25 feet along strike and down dip and 5 feet perpendicular to the structure. A comprehensive geological model that encompasses all known mineralization was constructed. Within the framework of the comprehensive model, individual skarn beds and the presence of intrusive sills were estimated incorporating LVA (locally varying anisotropy) kriging techniques. Mineralization within each of the individually identified skarn beds was estimated independently using only the assay data identified as being within that skarn bed. The resulting tons and grade represent an estimate of what would be expected to be extracted at the time of mining (i.e. fully diluted). Statistical checks were made to ensure that the level of dilution incorporated into the model was consistent with what would be expected with mining selectivity of 25 x 25 x 5 feet. That is the expected level of selectivity within the underground stopes would be 5 feet on the hanging wall and 5 feet on the footwall. It is assumed that any additional dilution will be unnecessary when evaluating minable stopes. Resources have been classified using estimation variance and are reported according to the CIM definition standards for Mineral Resources and Mineral Reserves.

 

 

 

Quality Assurance/Quality Control

 

Since acquiring the Project in 2010, the Corporation has maintained a rigorous QA/QC protocol on all aspects of sampling and analytical procedure. Drill core is checked, logged, marked for sampling and sawn in half. The sample size varies depending on the geology and the mineralization. In general, the samples are predominantly about 5 feet long. One-half of each drill core is maintained for future reference and one-half of each drill core is sent for analysis. Half-core samples are shipped to Skyline Assayer and Laboratories ("Skyline"), in Tucson, Arizona, or SGS Minerals Services Geochemistry in Vancouver (“SGS”), both ISO/IEC 17025 accredited laboratories. Each lab is contracted to complete all sample preparation and assaying and is independent of Oracle Mining. Samples are analyzed employing acid digestion and AA for analyses of copper, as well as fire assaying for silver and gold. For QA/QC purposes, Skyline and SGS run a series of standard and blank samples and provide the results of these assays to us. The Corporation periodically submits the pulps of the samples assayed by our primary labs to ALS Chemex Labs Ltd. in Reno, Nevada for check analysis.

 

For information on the QA/QC procedures employed during historical drilling and the data verification of the historical drilling database, please refer to the Technical Report.

 

***

 

Mr. Kevin Francis, SME RM, Vice President Technical Services for Oracle Mining has reviewed and approved the scientific and technical information, other than the Mineral Resource estimate and underlying QA/QC discussion, included in this webpage.