Basin Gulch Mine
The Basin Gulch Mine is a large, open-ended, gold and silver system in Montana located in central Montana west of the historic mining towns of Philipsburg and Anaconda. It is important to note that Basin Gulch is not affected by the recent proposed political changes affecting the North Fork Flathead Area. This is an area with numerous historic mines, including the legendary mines at the historic town of Butte.
Recently, several conditions have changed to make Basin Gulch an exciting exploration target. Gold prices have increased. Attitudes toward mining have improved in central Montana. Discovery and development of very large and very profitable underground mines, primarily in Nevada, have made formerly disdained underground mines very attractive to mining companies. Dutch recognized that Basin Gulch has major mining potential under current Montana law and had the historic exploration information reviewed by an independent consulting geologist. The geological consultant completed an updated report in January 2010. The report showed a significant increase in the volume of mineralization, using data not previously reported in an area that was historically drilled on fifty and hundred-foot spacings. A copy of the report is available at www.SEC.gov or on the Company website, www.dutchgold.com.
The consulting geologist did not complete mineralization estimates for the other areas where less densely spaced drilling occurred. These areas also encountered strong mineralization but the drilling was not on close enough centers to use for volume estimation of mineralized material. It is important to understand that none of the historic drilling or trenching was designed to look for higher grade selectively mineable or underground mineable resources, although several strong exploration targets were identified. Dutch believes resources discovered in these exploration targets would be minable under Montana mining law. The potential size of the exploration targets is theoretically several million ounces.
The mine was discovered by Rauno Perttu and been partly explored by 323 reverse circulation and core drill holes, totaling approximately 90,000 feet. Approximately 17,000 feet of trenches have also been completed. Most of the holes were shallow and largely pattern-drilled for an open-pit deposit. The system contains multiple areas of mineralization, and an open-ended continuous area of mineralization in excess of two million ounces of mostly low-grade disseminated gold and silver, with local shallow higher-grade breccias and inferred veins. The mineralization extends locally outward for several thousand feet from a gold and silver bearing nested volcanic diatreme complex that measures approximately 2,600 feet by 3,300 feet on the surface, and appears to be related to other mineralized occurences in the local area. Approximately $3.6 million was spent on this exploration, which was focused on identifying a large open-pit minable reserve.
The most exciting target on the property is the gold and silver mineralized nested diatreme complex (overlapping volcanic breccia pipes). This diatreme complex has not been drilled to depth, and may contain high-grade gold and silver mineralization in a deeper “boiling zone”. The diatreme complex is characterized by overall low-grade gold and silver mineralization and local high-grade mineralization. Nearby shallow much smaller diatreme zones appear to be adjacent outliers to the main diatreme complex. These outliers are associated with an inferred controlling fault zone that may also be an important control for the main diatreme and for some of the inferred veins. Two of these smaller diatremes appear to contain near-surface “boiling zones”, and contain high-grade gold and silver mineralization.
It is important to note that extensive historic placer mining during the early 1900’s actually placer mined that upper surface of the diatreme complex, not recognizing its true nature, and recovered economic coarse gold. The more recent exploration of the property encountered areas with significant coarse gold, which the Company believes will present a potentially significant “upside” to the project economics, but will also present challenges to mineralization grade evaluations.