CONRAD SILVER PROJECT

Mineralogy

Conrad Lode

The greater part of the delineated mineral resource at Conrad is contained within the Conrad Lode, which is the dominant feature of the Conrad system. This main lode has now been drilled over a strike length of 2.2km and to a maximum depth of 500m below surface. Importantly, the mineralisation in the Conrad Lode is open in both directions along strike (but especially to the southeast) and at depth. Most of the metal value in the lode is contained within a narrow, high grade core zone, generally between 0.5 and 1m wide, that ranges from dominantly massive sulphide, with minor quartz, to dominantly quartz, with subordinate sulphides. At the northwestern end of the Conrad Mine area the ore minerals in the lode are principally sphalerite and galena, with some chalcopyrite, cassiterite and stannite. Silver is present mainly as tetrahedrite, pyrargyrite and acanthite. Gangue minerals are mainly pyrite, pyrrhotite, arsenopyrite and quartz. At the southeastern end of the Conrad Mine area the lode tends to be somewhat different, with subordinate galena and minor sphalerite and more abundant chalcopyrite, stannite and cassiterite, in a mainly quartz-pyrite gangue.

In most places where it has been intersected in drilling the high grade core of the Conrad Lode is contained within a lower grade envelope that is expressed as a zone of disseminated sulphides and narrow (1 to 20mm) sulphide veinlets within altered granite. The mineralised envelope can be developed over widths ranging from 1m to as much as 5m and its presence means that dilution of the high grade core zone at the mining stage would be by mineralised rather than barren material.

King Conrad Lode

This lode occurs only at the northwestern end of the Conrad Mine area and seems to represent a split off the main lode (Figure 4). Mineralogically it is fairly similar to the nearby Conrad Lode, although it tends to be narrower and can be of very high grade. For example, drill hole CMDD50 intersected the King Conrad Lode from 84 to 85.17m for a 0.5m true width intercept that assayed 1,715g/t Ag, 3.9% Cu, 16.1% Pb, 5.0% Zn, 3.4% Sn and 79g/t In.

A mineralised envelope is present at the King Conrad Lode but it also tends to be narrower than in the Conrad Lode case, except near the confluence of the King Conrad and Conrad Lodes. Although only about 15% of the mineral resource so far delineated at Conrad is contained within the King Conrad Lode it is quite an important component as it is near surface and should be readily accessible through a refurbished King Conrad shaft. The King Conrad Lode is still open to the northwest, although it seems to have narrowed down to probable sub-economic widths. Down dip it appears to merge with the Conrad Lode at about 300m depth.

Greisen Zone

This body of mineralisation occurs between the Conrad and King Conrad Lodes at the northwestern end of the Conrad Mine area over true widths ranging from about 20m to 40m. The mineralisation within the Greisen Zone is generally of lower grade (around 100g/t silver equivalent) compared with the narrow lodes and is similar in style to that in the envelope zones that surround the two main lodes. Sulphides occur as disseminations and small veinlets, ranging from weakly to strongly developed and locally within the Greisen Zone there are wider high grade veins whose affinities are uncertain.

Mineralogically the Greisen Zone differs significantly from the high grade lodes. The ore minerals are galena, sphalerite and cassiterite, with the silver occurring at least in large part as native silver, while the gangue minerals are pyrite and pyrrhotite, all contained in a siliceous and micaceous (i.e. greisenous) host rock. There is virtually no copper and arsenopyrite is very subordinate.

Only about 8% of the interim resource estimate is contained within the Greisen Zone but it is an important part of the total because the near surface part of the body, which crops out a little to the northwest of the King Conrad shaft, maybe amenable to low cost open pit mining. Moreover, a pit to extract the upper part of the Greisen Zone would also allow some of the high grade parts of the nearby Conrad and King Conrad Lodes to be extracted in this way. This could significantly improve mining economics for Conrad as a whole.