Golden Queen Mining Co. Ltd. (the “Company”) plans to develop a gold-silver, open pit, heap leach operation on its Soledad Mountain property, located just outside the town of Mojave in Kern County in southern California.
The Project will use conventional open pit mining methods and the cyanide heap leach and Merrill-Crowe processes to recover gold and silver from crushed, agglomerated ore. The planned, average ore and waste mining rates are 4.71 million tons and 7.03 million tons per year with a stripping ratio of 1.49:1 for a combined mining rate of ore and waste of 11.74 million tons per year. The permitted combined ore and waste mining rate is 14 million tons per year. Gold and silver production is projected to average approximately 75,000oz and 860,000oz respectively per year although this is expected to fluctuate considerably from year to year depending upon the ore head grades. Gold and silver production is projected to be 1,047,625 oz of gold and 11,699,000 oz of silver over a period of 15 years.
Claim staking in April of 2007.
The Soledad Mountain deposit is hosted in a volcanic sequence of rhyolite porphyries, quartz latites and bedded pyroclastics that occur on a large dome-shaped feature, called Soledad Mountain, along the margins of a collapsed caldera. High-grade precious metal mineralization is associated with steeply dipping epithermal fissure veins occupying faults and fracture zones that cross cut the rock units and generally trend in a northwest direction. The veins are contained within siliceous envelopes of lower grade material that forms the bulk of the mineral resource.
Extensive programs of mapping, diamond drilling, reverse-circulation drilling and underground diamond drilling and channel sampling were carried out on the property between 1985 and 1999. Company geologists and engineers managed these programs. The geological database today includes the results of exploration done on the property by Rosario Exploration and Shell/Billiton and the crosscut assay data recorded on linens by a mining syndicate managed by Gold Fields America Development Co. between 1933 and 1942. The database contains 71,325 samples, generated from over 113,593 m (372,649 ft) of drilling and sampling of underground crosscuts.
Ore zones were shaped manually by company geologists to define continuity with a low-grade cutoff grade of 0.274 g/t AuEq (0.008 oz/ton AuEq). Prices for gold and silver of $325.00/oz and $6.00/oz and recoveries for gold and silver of 78.0 % and 60.0 % respectively were used to calculate the gold-equivalent cutoff grade for this purpose.
Mineral Resources Development, Inc. (“MRDI”), San Mateo, California, completed a detailed due diligence review of the procedures used by the company between 1998 and 2000. This work involved statistical analyses, the evaluation of grade capping, the design of appropriate kriging techniques and setting criteria for the classification of resources. MRDI submitted a final report with recommendations in May 2000.
SRK Consulting (U.S.) Inc. (“SRK”) and AMEC E & C Services, Inc. (“AMEC”) (AMEC acquired MRDI in 2000) did an exhaustive review of the database information and this included the MRDI recommendations from 2000 and audited the geological model over a period of five months in late 2005 and early 2006. Linear kriging was used to estimate gold and silver grades for all blocks in the model.
Mineral resources were classified as follows:
Measured – first drill hole or crosscut within 21 m (70 ft) and a second drill hole or crosscut within 30 m (100 ft);
Indicated - first drill hole or crosscut within 43 m (140 ft) and a second drill hole or crosscut within 61 m (200 ft) and
Inferred – everything beyond Measured and Indicated, but with two drill holes or cross-cuts within 91 m (300 ft) and this is more restrictive than the MRDI recommendation.
A Technical Report in the form prescribed under National Instrument 43-101 (“NI 43-101”) was released on March 6, 2006. Peter Clarke of SRK Consulting (U.S.) Inc. (“SRK”), of Lakewood, Colorado, prepared the Technical Report.