Shareholders Update
For the Year Ending - December 31, 2012
The following is a brief overview of the current status of Western Sierra Mining for the year ending December 31, 2012. This summary of the period should be viewed in conjunction with the previous reports filed with the Pink Sheets, press releases, SEC filings and previous shareholder updates file during the year 2012.
During the fourth quarter of 2012 we have continued to expand our relationship with current and potential Joint Venture Partners, initiated development of the Azurite mine and expanded our exploration programs.
The Azurite Mine
During the second and third quarters of 2012, we completed the acquisition of the Azurite hardrock gold, silver and copper mine and the private property on which it exists.
The Azurite project is located approximately 14 miles south of Prescott, Arizona and within the Senator Mining District.
The Azurite Mine, also known as Lower Davis Dunkirk, is comprised of 86 patented acres contained in 6 original patented claims. The Mine consists of 6000 feet of underground workings, together with numerous surface excavations, dumps, and road infrastructure. An old mill site with water is present and useable for future milling.
The Company completed the initial phases of re-opening the mine and upgrading the access roads and driving new roads that now expose additional areas of the main vein structures. With the completion of the new roads we have done some additional sampling both at the planned surface exploration spots as well as some minimal underground sample sites. That data from the lab should be available during the first week in January. We have received a permit for a small hard rock production plant from ADEQ and completed some initial restoration work on the main cabin and crew quarters.
Western has entered into a production agreement with the Azurite Development Corporation for the mining of the property.
Gold Basin
We have continued to work closely with Pine Creek mining to re-open the Gold Basin placer mine. We have recently completed additional fencing and earth control barriers at the request of the U.S. Forest Service. We are looking at a variety of possibilities to Joint Venture the project with Pine Creek as an operating partner or as the mine operator for an outside or private developer.
Outside and Independent Evaluations for Others
Under a private contract, Western completed a preliminary evaluation of the Castle Springs property. We have been notified that the client, a foreign developer has elected not to pursue the project. The main reason given was their concerns relative to the possible lengthy permitting process now in place on Federal lands. The results of that fairly extensive exploration work was positive and with the new and additional data we derived from that work we are proceeding to continue look for either a financial partner or for a direct sale of the property.
We completed an evaluation for an independent client on a large private property located in Skull Valley, Arizona. The results of the initial work were positive and the client is now considering to expand the test criteria. A decision is expected during the first quarter of 2013 with Western again to provide the equipment and expertise and potentially a mining contract for the property should the client decide to go forward.
Western is evaluating several other properties around Oatman Arizona and Salt Lake City, Utah. This work is being done on a “fee for service” basis but our objective is to eventually have the development/production contract for these and others mines currently being evaluated
Gold Star/Gold Crown/GDSM
GDSM has elected to work with Western on the development of the Azurite mine and for the moment postpone its work at the Gold Star property. This decision was made as a result of a review of the current status of the two properties in terms of development, the permitting issues, issues of timing to production and the opportunity to work with additional investment partners without any further dilution to their current corporate structure.
Western has recently completed some very preliminary testing of the North-North section of the Gold Crown property. Results showed placer gold in all samples however the sample size was such as not to be able to predict grade, just to provide an indication of the presence of Au or not . Additional work is planed to expand the testing area as time and finances permit.
VHGI Holdings
In previous reports, Western disclosed its sale of the Sun Gold and Oro Cash mines to VHGI. While Western did receive the initial payments for the property, a major consideration for the sale prices was Western would receive the development contract for the mine. There is a minimum payment due Western from VHGI regardless of whether they use Western as the prime contractor or not. VHGI has spent considerable funds expanding the claim block and other necessary developments prior to entering into a production mode. VHGI, after a company re-organization, has elected to concentrate on its need to develop its coal properties making VHGI default in their agreement with Western. Western has offered several alternatives to VHGI but as yet no viable solution response has come from VHGI.
Current Exploration
During this period, we have been looking to expand certain claim sites and have been doing the necessary work to evaluate the cost/rewards attributable to that effort. We will reserve disclosing those specific properties until we have filed the necessary paper work, signed a purchase agreement or decided against going forward.
We are now concentrating on the acquisition of additional private properties to add to our reserve inventory as opposed to properties under Federal lease. The policies of the current administration are designed to remove small scale mining from federal lands. The cost of filing and maintaining a lease on federal land continues to increase to where the small miner or small mining company will not have the financial resource to maintain even its current holdings. In addition, having to pay the government the now required royalty will make most existing mining operations marginal. Work on State lands still provides an economic solution for both the miner and the State but the mineral resource will be possibly impaired.
In our last report, we referred to our continuing exploration. Part of that work provided information to make an intelligent decision on Azurite. Our current exploration work has brought us several new potential projects that the Company hopes to develop during 2013.
We have continued our first look at the Silver Cord underground mine completing basic power and lighting installations. Work there has been limited during the period primarily due to our commitment to other projects and more recently the weather.
Ongoing and New Projects
Western continues to work with individuals and corporations that have expressed an interest in purchasing mines currently in the inventory of the Company. Several proposals have been rejected for a variety of reasons. We are also negotiating with a number of potential J.V. partners in an effort to initiate a project that would lead to a long term production program.
We also continue to work with potential corporate and private investors who are looking to becoming involved with the mining industry and needing an independent evaluation of the proposed transaction or the property itself.
We get many inquiries for our services in the outside and independent property evaluation of our business. However, revenues are extremely small since most of the projects being presented either have little merit; problems with ownership documentation or because of environmental and permitting issues make the project uneconomical.
GEAR International.
In the third quarter of 2011, certain shareholders of Western entered into a stock purchase agreement that if completed would have provided GEAR a controlling interest in Western. GEAR failed to fund the transaction. Late in the first quarter of 2012, a new agreement was reached with certain shareholders that would again provide GEAR a controlling interest in the Company. After many promises and assurances, GEAR again defaulted on that agreement as well.
Those shareholders involved are now looking closely at the circumstances surrounding the promises and stipulations made during both the first and second contract negotiations by both GEAR and certain associated parties and evaluating their legal options.
Reporting Status
Our financial and corporate reporting will continue to be filed at Pink Sheets.com as will any significant press releases for the present time.
As always, should you require any additional information or have any questions, you may contact the office between the hours of 7:00 AM to 7:00 PM, MST Monday through Friday. We are currently spending a large amount of time in the field but will do our best to return your calls.
Because of the large volume of calls, callers without caller ID are no longer answered.
WESTERN SIERRA MINING
