American Bonanza Gold Mining Corp - Bonanza
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COPPERSTONE PROJECT

                   

IMPORTANT INFORMATION

In October 2000 Mine Development Associates (MDA), an independent mining engineering firm based in Reno, Nevada, was engaged to review the project and produced the "Geologic Report for the Copperstone Gold Property".  This report in its entirety is available for review on the SEDAR website ( www.sedar.com ).  The MDA report reviews and contains a Preliminary Assessment completed by MRDI/Golder Associates (then entitled "Copperstone Gold Project - Scoping Study") in February 1999.  It is MDA's opinion that the presently defined gold resource in the C and D zones could be overstated.  MDA does not have an opinion of the resources of the A and B zones because they were not reviewed by MDA nor are the focus of the current work programs.  MDA believes a substantial and defensible estimate of Measured and Indicated resources requires both detailed geology and infill drilling, both of which are currently underway.  In MDA's opinion these programs should be successful.  At that point, in MDA's opinion, there should be the ability to better define location, grade, and distribution of gold.  The Company is currently engaged in drilling programs to acquire the data to estimate a resource with greater confidence. When the drilling programs are complete, it is the company's plan to sponsor an updated Report.

MRDI Canada, (then a division of H.A. Simons Ltd.), now a subsidiary of AMEC plc, (“MRDI”) was retained by the Company during 1999 to assist in a scoping level evaluation of an underground mine at Copperstone, as has been previously announced.  Exploration drilling on the project outlined four zones of mineralization defined as the A, B, C and D zones with gold mineralization occurring principally within the Copperstone Fault. 

As has been previously announced, the total resource estimate for the C and D zones using capped grades is comprised of an Indicated resource containing 892,000 tons grading 0.32 opt Au (285,700 ounces of gold) and an Inferred resource containing 1.19 million tons grading 0.35 opt Au (423,000 ounces of gold).  Although these resouces were estimated prior to the implementation of NI-43101, the company believes that these resources are comprable to NI-43101 Indicated and Inferred resources (see below).

As has been previously announced, the Preliminary Assessment evaluated the underground mine development of only the C and D zones, and estimated a total resource for the C and D zones of 2.1 million tons at an average uncut grade of 0.58 Au opt, containing over 1.2 million ounces of gold.   The uncapped resource was estimated by MRDI for comparison purposes only, providing an estimate of the affects of capping the gold grades.  MRDI did not separate Inferred and Indicated resources in this uncapped estimation.

Within the above mentioned Indicated Resource and Inferred Resource, MRDI estimated a combined resource for the material that they considered available to mining - that is to say, the material that can be accessed from one decline tunnel starting at the north end of the extisting open pit.  This decline has been completed to access the high grade D-Zone.

This estimate utilizes diluted grades and recoverability parameters to estimate the portion of the resources that MRDI included in the conceptual mine design plan.  MRDI estimated that portion of the resources to be 827,400 tons at a cut and capped grade of 0.56 opt Au (459,500 ounces Au). While MRDI used descriptive language to accurately provide a definition of the resource estimates completed by MRDI that were adequate at the time the preliminary assessment was completed, these terms are no longer permissible under NI-43101.  To avoid misinterpretation by the reader, the company here states that resources estimated by MRDI are not mineral reserves, are based on conceptual mine modeling, and despite the very high grades present at Copperstone have not yet been shown to be economically viable through preparation of a NI-43101 report and other studies that will be necessary.

To study this conceptual mine design plan, economic mining cut-off grades were based on a gold price of $300 per ounce, a milling recovery of 90% and estimates of operating costs were determined for each zone and varied from about 0.25 to 0.30 opt Au.  A planned daily processing rate of 500 tons per day was used.  The resources available for mining are based on the material within a geologic grade envelope of 0.10 opt Au and greater, and having overall diluted grades greater than the estimated cut-off grades.  Each zone has been factored for 95% mining recovery and 10% mining dilution at a grade of 0.08 opt Au.  Material excluded from the mining plan includes that with diluted grades less than 0.25 opt Au, totaling about 474,000 tons at a grade of 0.183 opt Au, and that in the hangingwall zones which is based on limited drill hole data and totals about 105,000 tons at a grade of 0.998 opt Au.

The MRDI report was completed prior to NI43-101 and was prepared by MRDI Canada, an independent mining engineering consulting firm.  The report was prepared to industry standards and is relevant and reliable today, as it was in 1999.   MRDI did not independently verify the sample data.  The MRDI resource estimate is based on a geological model provided by the Company and an inverse distance weighting to the power 3 block model (IDW3).  Gold grades were capped at 2.5 opt Au in the C zone and 4.7 opt Au in the D zone.  A 0.00 opt Au block cut-off grade was used for the total resource estimate.  The tonnage factor applied was 10.7 cu.ft/ton.  The assay database supplied to MRDI contains 30,391 assays from 586 exploration and ore outline drill holes completed during the period 1980 to 1998.  A subset of this database containing 71 drill holes with 253 associated assays has been used in this preliminary assessment to develop the geological and resource model of the C and D zones in the Northwest High Grade Zone.  According to MRDI, “The Copperstone Gold Project Geological Resource…has been classified into Measured, Indicated and Inferred Resources based upon the level of confidence according to the proposed TSE guidelines using the drilling grid spacing and continuity of mineralization as determined through the geological and geostatistical review of the data.”  Management is of the opinion that these classifications are materially in compliance with NI-43101.  These mineral resources are not mineral reserves and do not yet have demonstrated economic viability – demonstrating such economic viability is a priority for the company.

The MRDI report is a "preliminary assessment" and  is preliminary in nature;  it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary assessment will be realized.

The Copperstone Project is the site of previous, recent, modern, open pit gold mining.  For that reason, all environmental permitting, legal, title, taxation , socio-political, and marketing issues at the site have been successfully overcome in the recent past.  The site has recently been permitted for a much larger operation that any potential underground high grade mine that will be constructed in the near future.  Title is held through a renewable 10 year lease with the owner and is in good standing.  No legal issues that appear to compromise the potential of the property are known.  The pertinant taxation system is favorable to mining.  Arizona has hosted a very large modern mining industry.  The local socio-political climate appears favorable to development of a gold mine.  The locality is remote, rural, and pro-jobs.  Gold, the product of a contemplated mine, is a very liquid product that can be marketed very easily and directly.

The company has not done the work necessary to verify the classification of the resources currently present at Copperstone.  The company is not treating these resources as NI-43101 defined resources.  The company is currently engaged in drilling programs and studies with the objective of estimating NI-43101 resources.  The historical estimates are not mineral reserves and do not have demonstrated economic viability and should not be relied upon.

As has been previously announced, the qualified person for the MDA report is Steve Ristorcelli, Registered Professional Geologist, Certified Professional Geologist, employed by Mine Development Associates, an independent Consulting Engineering Firm, whose address is 210 South Rock Blvd, Reno, Nevada 89502.

The qualified person for the MRDI report is not specifically stated due to the report pre-dating the implementation of NI-43101.  The site visit to Copperstone was conducted, and the report was jointly authored by Tim Maunula, an employee of MRDI late in 1998.

The qualified person for the various news releases that may at times update this website is Gregory French, CPG#10708, a Qualified Person as defined in Canadian National Instrument 43-101.  Mr. French is an independent Consulting Geologist based in Reno, Nevada.