NI 43-101 Technical Report Preliminary Economic Assessment...

NI 43-101 Technical Report Preliminary Economic Assessment The Revenue Mine Sneffels, Colorado Effective Date: April 18, 2014 Report Date: July 23, 2014

Report Prepared for

Fortune Minerals Limited

148 Fullarton Street, Suite 1600 London, Ontario N6A 5P3 Canada

.

Report Prepared by

SRK Consulting (U.S.), Inc. 7175 West Jefferson Avenue, Suite 3000 Lakewood, CO 80235 SRK Project Number 457700.030

Signed by Qualified Persons: Dorinda Bair, BSc Geology, CPG, Principal Consultant (Geology) James M. Beck, Bsc Mining Engineering, PE, SRK Associate Consultant (Environmental) Mark K Jorgensen, BSc Chemical Engineering, SRK Associate Consultant (Metallurgy) Joanna Poeck, BEng Mining, Senior Consultant (Mining Engineer) Reviewed by: Bret Swanson, BEng Mining, Principal Consultant (Mining Engineer)

SRK Consulting (U.S.), Inc. Preliminary Economic Assessment – The Revenue Mine Page ii

DB/MLM FortuneMinerals_Revenue_PEA_457700.030_014_SH July 23, 2014

Table of Contents Table of Contents .............................................................................................................. ii

1 Summary ....................................................................................................................... 1

1.1 Property Description............................................................................................................................ 1

1.2 Ownership ........................................................................................................................................... 1

1.3 Geology and Mineralization ................................................................................................................ 2

1.4 Status of Exploration, Development and Operations .......................................................................... 2

1.5 Mineral Resource Estimate ................................................................................................................. 3

1.6 Preliminary Economic Assessment Results ....................................................................................... 4

1.6.1 Underground Mining ................................................................................................................ 4

1.6.2 Processing and Metallurgy ...................................................................................................... 5

1.6.3 Geotechnical and Tailings ....................................................................................................... 6

1.6.4 Infrastructure ........................................................................................................................... 6

1.6.5 Environmental and Permitting ................................................................................................. 6

1.6.6 Capital Costs ........................................................................................................................... 7

1.6.7 Operating Costs ...................................................................................................................... 7

1.6.8 Indicative Economic Results ................................................................................................... 8

1.7 Conclusions ......................................................................................................................................... 8

2 Introduction .................................................................................................................. 9

2.1 Terms of Reference and Purpose of the Report ................................................................................. 9

2.2 Qualifications of Consultants (SRK) .................................................................................................... 9

2.3 Details of Inspection .......................................................................................................................... 10

2.4 Sources of Information ...................................................................................................................... 11

2.5 Effective Date .................................................................................................................................... 11

2.6 Units of Measure ............................................................................................................................... 11

3 Reliance on Other Experts ........................................................................................ 12

4 Property Description, Location and Access ............................................................ 13

4.1 Property Location .............................................................................................................................. 13

4.2 Mineral Titles ..................................................................................................................................... 14

4.2.1 Nature and Extent of Issuer’s Interest ................................................................................... 17

4.3 Royalties, Agreements and Encumbrances ...................................................................................... 17

4.4 Environmental Liabilities and Permitting ........................................................................................... 18

4.4.1 Environmental Liabilities........................................................................................................ 18

4.4.2 Required Permits and Status ................................................................................................ 18

4.5 Other Significant Factors and Risks .................................................................................................. 19

5 Accessibility, Climate, Local Resources, Infrastructure and Physiography ........ 20

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5.1 Topography, Elevation and Vegetation ............................................................................................. 20

5.2 Accessibility and Transportation to the Property .............................................................................. 21

5.3 Climate and Length of Operating Season ......................................................................................... 21

5.4 Sufficiency of Surface Rights ............................................................................................................ 22

5.5 Infrastructure Availability and Sources.............................................................................................. 22

5.5.1 Power .................................................................................................................................... 22

5.5.2 Water ..................................................................................................................................... 22

5.5.3 Mining Personnel ................................................................................................................... 23

5.5.4 Tailings Storage Areas .......................................................................................................... 23

5.5.5 Waste Disposal Areas ........................................................................................................... 23

5.5.6 Processing Plant Site ............................................................................................................ 23

6 History ......................................................................................................................... 24

6.1 Historical Production ......................................................................................................................... 29

6.2 Historical Resource Estimate ............................................................................................................ 29

7 Geological Setting and Mineralization ..................................................................... 31

7.1 Regional Geologic Setting ................................................................................................................ 31

7.1.1 Revenue Area Geologic Setting ............................................................................................ 31

7.2 Local Geology ................................................................................................................................... 32

7.2.1 Stratigraphy ........................................................................................................................... 34

7.2.2 Dikes ...................................................................................................................................... 36

7.2.3 Structure ................................................................................................................................ 37

7.2.4 Mineralization ........................................................................................................................ 39

7.2.5 Alteration ............................................................................................................................... 39

7.2.6 Mineralogy of the Mineralization in the Virginius, Terrible and Yellow Rose Veins .............. 40

7.2.7 Project Vein Systems ............................................................................................................ 41

7.2.8 Other Important Veins within the Project Area ...................................................................... 44

8 Deposit Type .............................................................................................................. 46

8.1 Mineral Deposit ................................................................................................................................. 46

9 Exploration ................................................................................................................. 47

9.1 Star Mine Operations Exploration Activity......................................................................................... 47

9.2 Survey work ...................................................................................................................................... 47

9.3 Previous Exploration and Channel Sampling ................................................................................... 47

9.4 Ranchers F9 Test Stope ................................................................................................................... 48

9.5 Star Exploration and Channel Sampling ........................................................................................... 48

9.6 Star Atlas Tailings and Virginius Mine Dump Sampling .................................................................... 48

9.7 Significant Results and Interpretation ............................................................................................... 49

10 Drilling ......................................................................................................................... 50

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10.1 Type and Extent ................................................................................................................................ 50

10.2 Procedures ........................................................................................................................................ 54

10.3 Interpretation and Relevant Results .................................................................................................. 55

10.3.1 Interpretation ......................................................................................................................... 55

11 Sample Preparation, Analysis and Security ............................................................ 56

11.1 Historic Sample Security ................................................................................................................... 56

11.2 Historic Sampling .............................................................................................................................. 56

11.3 Historic Analytical .............................................................................................................................. 56

11.4 Star Security Measures ..................................................................................................................... 57

11.5 Drill Core Processing ........................................................................................................................ 57

11.6 Geotechnical Data ............................................................................................................................. 57

11.7 Core Recovery .................................................................................................................................. 57

11.8 Detailed Core Logging ...................................................................................................................... 57

11.9 Sampling Methodology ..................................................................................................................... 57

11.10 Core and Sample Storage ................................................................................................................ 58

11.11 Sample Analyses .............................................................................................................................. 58

11.12 Quality Assurance/Quality Control (QA/QC) ..................................................................................... 59

11.12.1 Reference Materials .......................................................................................................... 59

11.12.2 Blanks ............................................................................................................................... 61

11.12.3 Duplicates ......................................................................................................................... 61

11.13 Opinion on Adequacy ........................................................................................................................ 62

12 Data Verification ......................................................................................................... 63

12.1 Procedures ........................................................................................................................................ 63

12.2 Limitations ......................................................................................................................................... 63

12.3 Opinion on Data Adequacy ............................................................................................................... 63

13 Mineral Processing and Metallurgical Testing ........................................................ 64

13.1 Testing and Procedures .................................................................................................................... 64

13.1.1 Sample Representativeness ................................................................................................. 64

13.2 Relevant Results ............................................................................................................................... 64

13.3 Recovery Estimate Assumptions ...................................................................................................... 65

13.4 Significant Factors ............................................................................................................................. 66

14 Mineral Resource Estimate ....................................................................................... 67

14.1 Topography ....................................................................................................................................... 67

14.2 Coordinate System ............................................................................................................................ 67

14.3 Drillhole Database and Channel Sample Database ......................................................................... 67

14.3.1 Yellow Rose .......................................................................................................................... 67

14.3.2 Virginius and Terrible ............................................................................................................ 68

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14.4 Geologic Model ................................................................................................................................. 69

14.5 Sample Database .............................................................................................................................. 71

14.6 Assay Capping and Compositing ...................................................................................................... 73

14.7 Compositing ...................................................................................................................................... 73

14.8 Density .............................................................................................................................................. 74

14.9 Variogram Analysis and Modeling .................................................................................................... 75

14.10 Block Model Construction ................................................................................................................. 75

14.11 Estimation Methodology .................................................................................................................... 76

14.12 Model Validation ................................................................................................................................ 78

14.12.1 Visual Inspection ............................................................................................................... 78

14.12.2 Block-Composite Statistical Comparison .......................................................................... 79

14.12.3 Comparison of Interpolation Methods ............................................................................... 80

14.12.4 Swath Plots ....................................................................................................................... 80

14.13 Resource Classification .................................................................................................................... 85

14.13.1 Yellow Rose Classification ................................................................................................ 85

14.13.2 Virginius and Terrible Classification .................................................................................. 86

14.14 Mineral Resource Statement ............................................................................................................ 86

14.15 Mineral Resource Sensitivity ............................................................................................................. 87

14.16 Relevant Factors ............................................................................................................................... 88

15 Mineral Reserve Estimate .......................................................................................... 89

16 Mining Methods .......................................................................................................... 90

16.1 Cut-off Grade Calculations ................................................................................................................ 91

16.2 Geotechnical Parameters ................................................................................................................. 94

16.3 Mine Design .................................................................................................................................... 100

16.4 Mine Plan Resource ........................................................................................................................ 103

16.5 Production Schedule ....................................................................................................................... 104

16.6 Mining Operations ........................................................................................................................... 107

16.7 Mine Services .................................................................................................................................. 108

17 Recovery Methods ................................................................................................... 115

17.1 Processing Methods........................................................................................................................ 115

17.2 Flowsheet ........................................................................................................................................ 115

17.3 Plant Design and Equipment Characteristics ................................................................................. 116

17.3.1 Plant Expansion to 400 Tons per Hour ............................................................................... 117

17.4 Consumable Requirements ............................................................................................................ 117

18 Project Infrastructure............................................................................................... 118

18.1 Accessibility ..................................................................................................................................... 118

18.2 Power ............................................................................................................................................. 118

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18.3 Water ............................................................................................................................................. 118

18.4 Mining Personnel ............................................................................................................................ 119

18.5 Tailings & Waste Disposal Areas .................................................................................................... 119

18.6 Processing Plant Site ...................................................................................................................... 121

19 Market Studies and Contracts ................................................................................ 122

20 Environmental Studies, Permitting and Social or Community Impact ................ 123

20.1 Required Permits and Status .......................................................................................................... 123

20.2 Environmental Study Results .......................................................................................................... 129

20.3 Environmental Issues ...................................................................................................................... 129

20.4 Operating and Post Closure Requirements and Plans ................................................................... 130

20.5 Post-Performance or Reclamation Bonds ...................................................................................... 130

20.6 Social and Community .................................................................................................................... 130

20.7 Mine Closure ................................................................................................................................... 131

20.8 Reclamation Measures during Operations and Project Closure ..................................................... 132

20.9 Closure Monitoring .......................................................................................................................... 132

20.10 Reclamation and Closure Cost Estimate ........................................................................................ 133

21 Capital and Operating Costs ................................................................................... 134

21.1 Introduction ..................................................................................................................................... 134

21.2 Costs Assumptions and Qualifications............................................................................................ 134

21.2.1 Tax ....................................................................................................................................... 134

21.2.2 Work Schedule .................................................................................................................... 135

21.3 Capital Costs ................................................................................................................................... 135

21.3.1 Mining Capital ...................................................................................................................... 136

21.3.2 Process Facility Capital ....................................................................................................... 137

21.3.3 Environmental Capital ......................................................................................................... 137

21.4 Operating Costs .............................................................................................................................. 137

21.4.1 Surface Costs ...................................................................................................................... 138

21.4.2 Underground Mining Costs.................................................................................................. 140

21.4.3 Processing Costs ................................................................................................................ 140

21.4.4 Concurrent Environmental Rehabilitation ............................................................................ 142

21.4.5 G&A ..................................................................................................................................... 142

22 Economic Analysis .................................................................................................. 144

22.1 Introduction ..................................................................................................................................... 144

22.2 External Factors .............................................................................................................................. 144

22.2.1 Market for Products ............................................................................................................. 144

22.2.2 External Costs ..................................................................................................................... 145

22.3 Main Assumptions ........................................................................................................................... 145

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22.4 Taxes, Depreciation and Royalties ................................................................................................. 147

22.5 Results ............................................................................................................................................ 148

22.6 Sensitivities ..................................................................................................................................... 151

23 Adjacent Properties ................................................................................................. 154

24 Other Relevant Data and Information ..................................................................... 155

25 Interpretation and Conclusions .............................................................................. 156

25.1 Exploration ...................................................................................................................................... 156

25.2 Mineral Resource Estimate ............................................................................................................. 156

25.3 Mining ............................................................................................................................................. 156

25.4 Metallurgy and Processing .............................................................................................................. 157

25.5 Environmental ................................................................................................................................. 157

26 Recommendations ................................................................................................... 158

26.1 Exploration and Geology ................................................................................................................. 158

26.2 Mineral Resource Estimate ............................................................................................................. 158

26.3 Mineral Reserve Estimate and Mining ............................................................................................ 158

26.4 Metallurgy ........................................................................................................................................ 159

26.5 Environmental ................................................................................................................................. 159

26.6 Costs ............................................................................................................................................. 159

27 References ................................................................................................................ 161

28 Glossary .................................................................................................................... 164

28.1 Mineral Resources .......................................................................................................................... 164

28.2 Mineral Reserves ............................................................................................................................ 164

28.3 Definition of Terms .......................................................................................................................... 165

28.4 Abbreviations .................................................................................................................................. 167

List of Tables Table 1.5.1: Mineral Resource for the Yellow Rose at a Cut-off of US$150/t as of April 18, 2014 .................... 4

Table 1.5.2: Mineral Resource at the Virginius at a Cut-off of US150/t as of April 18, 2014 ............................. 4

Table 1.6.1.1: Mine Plan Resources Classification * .......................................................................................... 5

Table 1.6.1.2: Annual Mining Schedule .............................................................................................................. 5

Table 1.6.6.1: Capital Cost Summary ................................................................................................................. 7

Table 1.6.7.1: Operating Cost Summary ............................................................................................................ 7

Table 1.6.8.1: Revenue Mine LoM Annual Production and Revenues .............................................................. 8

Table 2.3.1: Site Visit Participants .................................................................................................................... 10

Table 4.2.1: Mining Claims Owned by Silver Star and Revenue Virginius ....................................................... 15

Table 5.1.1: Vegetation Found on the Revenue Mine Property ....................................................................... 20

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Table 6.1: Ownership and Exploration History of the Virginius Vein and the Revenue Tunnel ....................... 27

Table 6.1.1: Historical Production from the Revenue Virginius as reported by Tremlett in 1976 modified by R. Perry (2013) ......................................................................................................................................... 29

Table 6.2.1: Sunshine 1998 Historical Reserve Estimate for the Revenue Mine ............................................. 30

Table 6.2.2: Historical Mineral Resources for the Virginius Vein at a Cut-off Grade of 3 oz/t Ag .................... 30

Table 6.2.3: Historical Mineral Resources for the Yellow Rose Vein at a Cut-off Grade of 3 oz/t Ag .............. 30

Table 7.2.1.1: Stratigraphic Column for Rocks Exposed in the Revenue Mine Area ....................................... 34

Table 7.2.4.1: Age Dates of Mineralization from the Northwestern San Juan Mountains ................................ 39

Table 7.2.6.1: Minerals Identified in the Virginius, Yellow Rose and Terrible Veins ........................................ 40

Table 9.3.1: Exploration Work Completed between 1966 and 2001 ................................................................ 47

Table 9.5.1: Star Exploration Work ................................................................................................................... 48

Table 10.1.1: Total Core Drilling on the Revenue Virginius ............................................................................. 52

Table 11.11.1: Elements and Upper and Lower Detection Limits for ALS code ME-ICP61 (Limits are in ppm unless otherwise noted) ....................................................................................................................... 58

Table 11.12.1.1: Reference Materials for Standard Silver ............................................................................... 60

Table 11.12.1.2: Reference Materials for Standard Gold ................................................................................. 60

Table 11.12.1.3: Reference Materials for Standard Copper ............................................................................. 60

Table 11.12.1.4: Reference Materials for Standard Lead ................................................................................ 60

Table 11.12.1.5: Reference Materials for Standard Zinc .................................................................................. 60

Table 14.3.1.1: Drilling Statistics for Yellow Rose ............................................................................................ 68

Table 14.3.1.2: Channel Sample Statistics for Yellow Rose ............................................................................ 68

Table 14.3.2.1: Drilling Statistics for Virginius and Terrible .............................................................................. 68

Table 14.3.2.2: Channel Sample Breakdown for Virginius ............................................................................... 69

Table 14.4.1: Yellow Rose Veins and Modeling Code ..................................................................................... 69

Table 14.4.2: The Virginius Veins and Modeling Code .................................................................................... 70

Table 14.5.1: Summary Statistics for Chip Channel Samples at Yellow Rose ................................................ 72

Table 14.5.2: Summary Statistics for Drill Core Samples at Yellow Rose ....................................................... 72

Table 14.5.3: Summary Statistics for All Samples at Yellow Rose .................................................................. 72

Table 14.5.4: Summary Statistics for Chip Channel Samples on the Virginius and Terrible ........................... 72

Table 14.5.5: Summary Statistics for Drillhole Samples on the Virginius and Terrible .................................... 73

Table 14.5.6: Summary Statistics for All Samples on the Virginius and Terrible ............................................. 73

Table 14.6.1: Assay Capping by Deposit ......................................................................................................... 73

Table 14.7.1: Summary Statistics for Capped and Uncapped 3 ft Composites on the Yellow Rose ............... 74

Table 14.7.2: Summary Statistics for Capped and Uncapped Statistics 2 ft Composites on the Virginius ...... 74

Table 14.10.1: Block Model Origin and Extent: Yellow Rose ........................................................................... 76

Table 14.10.2: Block Model Origin and Extent: Virginius ................................................................................. 76

Table 14.11.1: Summary of Search Ranges and Sample Selection Criteria Yellow Rose .............................. 77

Table 14.11.2: Yellow Rose Search Orientations by Vein ................................................................................ 77

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Table 14.11.3: Summary of Search Ranges and Sample Selection Criteria Virginius .................................... 77

Table 14.11.4: Virginius Search Orientations by Vein ...................................................................................... 77

Table 14.12.2.1: General Statistics for Blocks and Composites for the Yellow Rose and the Virginius .......... 79

Table 14.12.3.1: Comparison of IDW and NN Tonnage and Grade at a 0 oz/t Silver Cut-off – All Estimation Passes at Yellow Rose ........................................................................................................................ 80

Table 14.12.3.2: Comparison of IDW and NN Tonnage and Grade at a 0 oz/t Silver Cut-off – All Estimation Passes at Virginius .............................................................................................................................. 80

Table 14.14.1: Mineral Resource for the Yellow Rose at a Cut-off of US$150/t as of April 18, 2014 .............. 86

Table 14.14.2: Mineral Resource at the Virginius at a Cut-off of US$150/t as of April 18, 2014 ..................... 87

Table 14.15.1: Yellow Rose Mineral Resource Sensitivity as of April 18, 2014 ............................................... 87

Table 14.15.2: Virginius Mineral Resource Sensitivity as of April 18, 2014 ..................................................... 88

Table 16.1.1: NSR Calculation Inputs .............................................................................................................. 92

Table 16.1.2: Concentrate Payability ................................................................................................................ 92

Table 16.1.3: Concentrate TC/RC* ................................................................................................................... 92

Table 16.1.4: Cut-off Grade Calculation ........................................................................................................... 94

Table 16.2.1: Summary of Estimated Average Rock Properties ...................................................................... 97

Table 16.4.1: Mine Plan Resources Classification * ....................................................................................... 103

Table 16.5.1: Productivity Rates ..................................................................................................................... 104

Table 16.5.2: Annual Mining Schedule ........................................................................................................... 104

Table 16.5.3: Production Schedule Totals by Area and Development Type .................................................. 105

Table 16.7.1: Mine Fans ................................................................................................................................. 109

Table 16.7.2: Fortune Compressors ............................................................................................................... 110

Table 16.7.3: Underground Electrical Power Estimate ................................................................................... 111

Table 16.7.4: Current Mine Equipment ........................................................................................................... 113

Table 16.7.5: Anticipated LOM Mine Equipment Purchases .......................................................................... 114

Table 18.4.1: Underground Mine Personnel** ................................................................................................ 119

Table 20.8.1: Surface Disturbance Permit Area ............................................................................................. 132

Table 21.3.1: Project Capital Cost Summary ................................................................................................. 136

Table 21.3.1.1: Mine Development Capital .................................................................................................... 136

Table 21.3.1.2: Mine Equipment Capital ........................................................................................................ 136

Table 21.3.2.1: Process Facility Capital ......................................................................................................... 137

Table 21.3.3.1: Environmental Capital ........................................................................................................... 137

Table 21.4.1: Operating Cost Summary ......................................................................................................... 138

Table 21.4.1.1: Surface Consumables Assumptions ..................................................................................... 138

Table 21.4.1.2: Surface Costs Labor .............................................................................................................. 139

Table 21.4.1.3: Surface Costs Consumables ................................................................................................. 139

Table 21.4.2.1: Revenue Mine Underground Mining Cost Summary ............................................................. 140

Table 21.4.2.2: Revenue Mine Underground Mining Cost Assumptions ....................................................... 140

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Table 21.4.3.1: Revenue Mine Plant Consumables Summary....................................................................... 141

Table 21.4.3.2: Revenue Mine Plant Consumption Rates Summary ............................................................. 141

Table 21.4.3.3: Revenue Mine Plant Cost Summary ..................................................................................... 142

Table 21.4.5.1: Revenue Mine G&A Assumptions ......................................................................................... 143

Table 21.4.5.2: Revenue Mine G&A Costs..................................................................................................... 143

Table 22.2.1.1: Revenue Mine Price Assumptions ........................................................................................ 144

Table 22.2.1.2: Revenue Mine Net Smelter Return Terms ............................................................................ 145

Table 22.2.2.1: Product Logistics Cost ........................................................................................................... 145

Table 22.3.1: Revenue Mine Production Assumptions* ................................................................................. 146

Table 22.3.2: Revenue Mine Mill Production Assumptions ............................................................................ 147

Table 22.5.1: Project Indicative Economic Results (Dry Basis) ..................................................................... 149

Table 22.5.2: Project LoM Annual Production and Revenues........................................................................ 150

Table 22.5.3: Project Cash Costs ................................................................................................................... 150

Table 22.6.1: NPV Sensitivity (US$ Millions) ................................................................................................. 152

Table 26.1.1: Summary of Costs for Recommended Work ............................................................................ 160

Table 28.3.1: Definition of Terms ................................................................................................................... 165

Table 28.4.1: Abbreviations ............................................................................................................................ 167

List of Figures Figure 4.1.1: Project Area Map ......................................................................................................................... 13

Figure 4.2.1: Fortune and Star Claim Ownership ............................................................................................. 14

Figure 5.2.1: Location Map of the Revenue Mine, Ouray County, Colorado ................................................... 21

Figure 7.1.1.1: Western San Juan Caldera Complex after Steven and Lipman (1976) ................................... 32

Figure 7.2.1: Generalized Geologic Map of the Silverton, Ouray, Telluride Area after Varnes (1963) ............ 33

Figure 7.2.3.1: Important Structural Feature and Principal Veins in the Revenue Mine Area ......................... 38

Figure 7.2.7.1: Revenue Tunnel and the Yellow Rose, Terrible and Virginius Veins ...................................... 41

Figure 10.1.1: Plan Map showing Drill and Channel Sample at Yellow Rose .................................................. 53

Figure 10.1.2: Plan Map showing Drill and Channel Sample at Virginius and Terrible .................................... 54

Figure 14.4.1: Yellow Rose Wireframes ........................................................................................................... 70

Figure 14.4.2: Revenue Virginius and Terrible Wireframes Showing Stoped Areas in Dark Green ................ 71

Figure 14.9.1: Yellow Rose Omni-directional Variogram for Ag using 3 ft Composite Data ............................ 75

Figure 14.12.1.1: Typical Cross Section Showing Block and Composite Grades for Yellow Rose Looking NW78

Figure 14.12.1.2: Typical Cross Section Showing Block and Composite Grades for the Virginius Looking NW79

Figure 14.12.4.1: Yellow Rose Drift Analysis along Azimuth 308° Direction by Metal ..................................... 81

Figure 14.12.4.2: Yellow Rose Drift Analysis by Elevation by Metal ................................................................ 82

Figure 14.12.4.3: Virginius Swath Plots in Azimuth 322° Direction by Metal ................................................... 83

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Figure 14.12.4.4: Virginius Drift Analysis by Elevation by Metal ...................................................................... 84

Figure 16.1: General Layout of Mine and Mill .................................................................................................. 91

Figure 16.1.1: Revenue Virginius Grade/Ton Curve ........................................................................................ 93

Figure 16.1.2: Yellow Rose Grade/Ton Curve ................................................................................................. 93

Figure 16.2.1: Longitudinal Section through the Virginius Vein showing the Stratigraphy and Historic Mining95

Figure 16.2.2: Plan View Section through the Revenue Level showing the Vein Locations and Historic Mining96

Figure 16.2.3: Ground Support Chart ............................................................................................................... 99

Figure 16.3.1: Rotated View approximating Long Section through Block Model ........................................... 100

Figure 16.3.2: Rotated View approximating Long Section of Stope Optimizer Shapes ................................. 101

Figure 16.3.3: General Layout ........................................................................................................................ 101

Figure 16.3.4: Schematic of Raises in Stoping Areas .................................................................................... 102

Figure 16.3.5: Rotated Long Section View of the Completed PEA Mine Design ........................................... 103

Figure 16.5.1: Mine Production Schedule Colored by Year (rotated long section view) ................................ 106

Figure 16.6.1: Example Development Layout ................................................................................................ 108

Figure 18.5.1: Tailings and Waste Disposal Area Location ............................................................................ 120

Figure 22.5.1: Project After-Tax Metrics ......................................................................................................... 148

Figure 22.6.1: Cumulative NPV Curves .......................................................................................................... 151

Figure 22.6.2: Sensitivity to Discount Rate ..................................................................................................... 152

Figure 22.6.3: Project Sensitivity .................................................................................................................... 153

Appendices Appendix A: Certificates of Qualified Persons

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1 Summary This report was prepared as a NI 43-101 Technical Report, Preliminary Economic Assessment

(Technical Report or PEA) for Fortune Minerals Limited (Fortune or the Company), by SRK

Consulting (U.S.), Inc. (SRK) on the Revenue Mine (Revenue Mine or the Project). The purpose

of this Technical Report is to update the resource estimate for the polymetallic Yellow Rose Vein

(Yellow Rose) and the Virginius Vein (Virginius) with analytical data from new drilling and channel

sampling completed by Star Mine Operations LLC (Star) and to complete PEA level mine design,

production schedule, and economic evaluations. The PEA is preliminary in nature that 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 PEA will be realized. This Technical Report is intended for public

disclosure provided any use of this report by any third party is at that party’s sole risk.

Fortune and Star have informed SRK that they have started mine production and mill

commissioning and that infrastructure is in place for the Revenue Mine to be put back into

production. SRK has not reviewed the infrastructure or mining aspects of the Project. SRK has

reviewed historical test work that was performed for Ranchers in 1984 and results from test work

completed in 2012 by Star. Review of this test work was considered indicative of recoveries using

a flow sheet and equipment suitable for silver flotation. The historical recoveries and 2012 test

work are the basis for recoveries used to report the resources estimate.

1.1 Property Description The Project is located in southwestern Colorado about 5.5 miles southwest of the town of Ouray.

The Revenue Portal, the site of the current surface activity, is located at longitude 107.750° W,

latitude 37.974° N (mine grid coordinates of 100,630 ft E, 99,100 ft N). The majority of the

historical underground work occurred approximately 1.2 miles to the southwest centered at

approximately 107.773° W., latitude 37.967° N (mine grid coordinates of 97,790 ft E, 95,070 ft N).

All of the mining claims are located in Township 43 North, Range 8 West, New Mexico Prime

Meridian (NMPM), Ouray and San Miguel Counties, Colorado, and are held in the name of either

Revenue-Virginius Mines Corporation (RV) or Silver Star Resources, LLC (Star Resources).

Figure 4.1.1 presents the location of the Project.

1.2 Ownership The Project is 12% controlled by Fortune through its wholly owned subsidiary Fortune Revenue

Silver Mines, Inc. (Fortune Revenue). The remaining 88% is controlled by Star, a Colorado limited

liability private company. Star is controlled by Rory James Williams, James W. Williams, Jr., and

John A. Bettridge. Williams, Williams and Bettridge are the majority owners of RV and Star

controlling 98.75%, with the remaining held by other owners at 1.25%. Fortune Revenue has

operating authority for the mine, mill and surface operations. Fortune Revenue can complete the

purchase of a 100% interest in the Project by paying an additional US$14 million to Star and the

other owners by July 31, 2014, subject to a promissory note to pay US$34.5 to US$36.8 million in

deferred quarterly installments over 3.5 to 5.75 years, respectively and by assuming additional



deferred payments to the previous owners of US$4.5 million and a 2% net smelter return royalty

capped at US$9 million.

1.3 Geology and Mineralization At the Yellow Rose and Virginius, silver, gold, copper, lead and zinc mineralization is found in

quartz veins hosted primarily in San Juan volcanic rocks. Veins range from several inches up to

6 ft in thickness, and have been mined and drilled over a vertical extent of approximately 3,000 ft.

The Virginius vein has been mapped at surface over a distance of approximate 4,000 ft and the

Yellow Rose has been traced for up 16,000 ft extending off the Star property. Mineralization

found in the Virginius and Yellow Rose is interpreted as epithermal (formed at shallow depths and

low to medium temperatures). Some workers are of the opinion that it may also be interpreted as

deep epithermal or shallow mesothermal. Mineralization in the veins south of Stony Mountain,

including the Virginius, is interpreted as shallow emplacement and includes galena, sphalerite,

pyrite, tetrahedrite arsenopyrite, marcasite and minor covellite. Gangue minerals include quartz,

barite, sericite, calcite, rhodocrosite, ankerite, siderite and other carbonate minerals. Some

authors have reported adularia, and other more obscure silicates, carbonates, and sulfates.

Alteration minerals include sericite, beidellite and other clays as well as iron and magnesium

oxides (Moore, 2004).

Trujillo (2012, personal communication) described the tetrahedrite at the Project as freibergite

and stated that some native silver had been identified. “High grade” mineralization was described

as massive, occurring in nodules and bands in association with calcite. Galena was described as

coarse-grained with euhedral crystals up to 3.5 inches long. Quartz occurs as rhythmically

banded veins characteristic of low sulfidation epithermal vein development.

1.4 Status of Exploration, Development and Operations The Virginius is a past silver producer in the Sneffels Mining District. Silver was reportedly

discovered at the site in 1876 with underground production beginning in 1880 and continuing

through 1906 when the mine flooded. Milling continued until 1912 when the mill was destroyed in

a fire. There is no recorded production after 1912 and the limited production reported cannot be

verified.

Since 1912, exploration work has been completed by contractors to the family of A.E. Reynolds

(the Family) and by leasing agreements between the Family and Camp Bird, Inc. (Federal

Resources) from 1960 through 1970, Ranchers Exploration and Development Corp. (Ranchers)

from 1980 to 1984 and Sunshine Mining and Refining Company (Sunshine) from 1994 to 2001.

Star acquired the Project in 2011. Since then Star has completed 68 surface drillholes, 33

underground drillholes, 201 channel samples and collected 818 samples from surface dumps and

tailings. Most of the drilling and channel sampling was focused on the Yellow Rose Veins with

additional drillholes investigating the Virginius, Terrible and Wheel of Fortune veins. Star has also

completed exploration and development drifting in the Yellow Rose Vein. In addition, Star has

collected two bulk samples for completion of metallurgical test work in support of construction of a

300 t/d mill. In May, 2014 Fortune Revenue obtained a 12% interest in the Project and became

responsible for operating direction and authority.



1.5 Mineral Resource Estimate The Mineral Resource statement, presented in Tables 1.5.1 and 1.5.2, represents the mineral

resource evaluation prepared for the Revenue Project in accordance with the Canadian

Securities Administrators’ National Instrument 43-101 (NI 43-101).

A four pass inverse distanced squared (ID2) grade estimation methodology was used to estimate

grades for both Yellow Rose and Virginius veins. Variography was utilized to determined proper

search ellipsoid orientation and search distances.

Mineral resources are not mineral reserves and do not have demonstrated economic viability.

There is no certainty that all or any part of this mineral resource will be converted into mineral

reserve.

The Project’s mineral resources are not materially affected by any known environmental,

permitting, legal, title, taxation, socio-economic, political or other relevant issues. The estimates

of Mineral Resources and Mineral Reserves may be materially affected if mining, metallurgical, or

infrastructure factors change from those currently anticipated.

The resource estimation for both the Yellow Rose and the Virginius are reported at a minimum

total recovered block metal value using a mining and milling cost provided by Star of US$150/t.

Total recovered block metal is based on the following prices and recoveries provided by Star:

Ag price of US$20/oz and recovery of 95%;

Au price of US$1,250/oz and recovery of 90%;

Cu price of US$3.15/lb and recovery of 80%;

Pb price of US$1/lb and recovery of 90%; and

Zn price of US$1/lb and recovery of 85%.

Copper was not estimated at Yellow Rose due to lack of validation of the copper database. The

data were hand entered from historical assay certificates and there were too many data entry

errors for inclusion in the resource estimation at this time. With additional data review and data

entry corrections, there is potential to add this data to the resource estimate. Table 1.5.1 presents

the Yellow Rose resource statement and Table 1.5.2 presents the Virginius Resource statement.



Table 1.5.1: Mineral Resource for the Yellow Rose at a Cut-off of US$150/t as of April 18, 2014

Category TonsAg

(oz/t)Au

(oz/t)Pb(%)

Zn(%)

Contained Metal Ag

(Moz )Au

(oz) Pb

(Mlb)Zn

(Mlb)Measured 215,300 10.08 0.034 1.71 1.69 2.17 6,400 7.37 7.28Indicated 100,700 10.92 0.036 1.96 1.74 1.10 4,000 3.95 3.50Measured & Indicated 316,100 10.35 0.035 1.79 1.71 3.27 10,490 11.31 10.78Inferred 38,100 11.01 0.025 1.69 0.92 0.49 700 1.28 0.701

Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the Mineral Resources estimated will be converted into Mineral Reserves.

Mineral Resource tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add due to rounding.

Cut-off is based on a minimum total recovered metal value using a mining and milling cost provided by Star of US$150/t.

Recovered block metal value = (Ag oz/t * Ag recovery * US$/oz Ag) + (Au oz/t * Au recovery * US$/oz Au) + (2000 * Pb % / 100 * Pb recovery * US$/lb Pb) + (2000 * Zn % / 100 * Zn recovery * US$/lb Zn).

The following metals prices and recoveries were used: Ag price of US$20/oz and recovery of 95%; Au price of US$1,250/oz and recovery of 90%; Pb price of US$1/lb and recovery of 90%; Zn price of US$1/lb and recovery of 85%.

Table 1.5.2: Mineral Resource at the Virginius at a Cut-off of US150/t as of April 18, 2014

Category Tons Ag

(oz/t) Au

(oz/t)Pb(%)

Cu(%)

Zn(%)

Contained Metal Ag

(Moz )Au

(oz )Pb

(Mlb) Cu

(Mlb) Zn

(Mlb)Indicated 485,600 26.95 0.044 4.30 0.25 1.37 13.1 21,000 41.80 2.4 13.3Inferred 646,100 14.93 0.038 3.04 0.13 0.99 9.65 24,500 39.25 1.6 12.8



Cut-off is based on a minimum total recovered metal value using a mining and milling cost provided by Star of US$150/t.

Recovered block metal value = (Ag oz/t * Ag recovery * US$/oz Ag) + (Au oz/t * Au recovery * US$/oz Au) + (2000 * Cu % / 100 * Cu recovery * US$/lb Cu) + (2000 * Pb % / 100 * Pb recovery * US$/lb Pb) + (2000 * Zn % / 100 * Zn recovery * US$/lb Zn).

The following metals prices and recoveries were used: Ag price of US$20/oz and recovery of 95%; Au price of US$1,250/oz and recovery of 90%; Cu price of US$3.15/lb and recovery of 80%; Pb price of US$1/lb and recovery of 90%; Zn price of US$1/lb and recovery of 85%.

1.6 Preliminary Economic Assessment Results

1.6.1 Underground Mining

The available geotechnical information and historic mining information indicates that shrinkage

stoping is a suitable method for the deposit. The mine is currently in startup production and

development with underground mine personnel working two 10 hr shifts/day targeting a

production rate of 400 t/d.

Mining occurs in two vein systems, the Yellow Rose and the Revenue Virginius. Mine design

using Vulcan software was completed based on an estimated NSR cut-off grade of US$130/t.

Stope optimization was used to determine mine plan resource areas based on cut-off grade and a

minimum mining width of 3 ft.



Table 1.6.1.1 summarizes the mine plan resources in each area. These numbers include a 90%

mining recovery to the designed stope wireframes in addition to the 15% unplanned waste

dilution within stopes. Additional development of 5% to 10% was applied based on development

type to account for detail currently not in the design. Zero grade was used for the waste dilution.

Table 1.6.1.1: Mine Plan Resources Classification *

Description Tons (kt) Ag (oz/t) Au (oz/t) Pb (%) Zn (%)

Revenue Virginius

Measured Indicated 369.8 19.68 0.03 2.91 0.83 Measured + Indicated 369.8 19.68 0.03 2.91 0.83 Inferred 310.9 12.43 0.02 1.98 0.69

Yellow Rose

Measured 141.6 8.38 0.02 1.28 1.31 Indicated 45.2 11.29 0.01 2.21 1.63 Measured + Indicated 186.86 9.08 0.02 1.51 1.39 Inferred 20.7 5.19 0.01 1.05 0.73

*Includes Measured, Indicated, and Inferred reported using a marginal cut-off grade of US$50/t.

The PEA is preliminary in nature and is based on technical and economic assumptions which will

be further evaluated in more advanced studies. The PEA is based on a resource model that

contains Measured, Indicated and Inferred mineral resources. Inferred mineral resources 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 PEA

will be realized.

The design was then scheduled using iGantt software to generate a life of mine production

schedule which is summarized in Table 1.6.1.2.

Table 1.6.1.2: Annual Mining Schedule

Year Mineralized Tons (kt) Ag (oz/t) Au (oz/t) Pb (%) Zn (%) Waste Tons (kt) 2014 24.2 8.13 0.02 1.60 0.94 35.8 2015 122.8 13.66 0.02 2.04 1.00 99.5 2016 141.4 13.61 0.03 2.44 0.87 89.7 2017 140.3 11.23 0.03 1.84 0.95 73.9 2018 142.4 9.79 0.03 1.67 0.88 21.4 2019 141.8 14.26 0.02 2.25 0.81 10.2 2020 140.7 23.04 0.02 3.01 1.00 0.2 2021 34.7 27.83 0.03 3.92 0.58 0 Total 888.3 14.63 0.02 2.26 0.90 330.7

1.6.2 Processing and Metallurgy

Preliminary test work on bulk samples taken from the mine indicate that base and precious

metals may be recovered using standard crushing, grinding, gravity and flotation methods.

Historically, mineralized material was treated using what today would be considered a

conventional flotation process. Based on these preliminary results and historical information, Star

directed CH2M HILL Engineers, Inc. (CH2M HILL) to provide a detailed engineering design for a

300 t/d plant.

CH2M HILL designed a conventional flotation plant to process Virginius and Yellow Rose

mineralized material that includes two-stage crushing, ball mill grinding, reagent storage, flotation,



flotation concentrate filtration for product shipment and a tailings filtration circuit for dry tailings

disposal. At the time of this writing, the plant has been constructed and is being prepared for

operation. Commissioning of the mill has commenced; however, steady state operation has yet to

be achieved. Once steady state operation is achieved mill recovery and grade parameters will be

verified.

1.6.3 Geotechnical and Tailings

No geotechnical studies have been conducted to collect data on rock mass characterization.

Ground conditions used as the basis for assessing mine design parameters are based on

observations made during a site visit to the underground workings.

The vein varies in thickness, proximate location to the dikes, and undulates along both strike and

dip. Rock mass quality was observed to vary from Very Good, Class I rock (RMR> 80) to Fair,

Class III rock (40 < RMR < 60).

In the absence of rock mass characterization data, SRK has not conducted a detailed review of

optimal mining methods. The PEA relies on historic mining methods used in the historic ground

conditions and it is assumed that all stopes will be mined using shrinkage stope method.

SRK has made a preliminary assessment using empirical design methods for sizing pillars and

stopes at the mine. The stope design parameters have been assumed rock mass properties.

Although pillar dimensions will be a function of the mined vein thickness in various ground

conditions the following average stope design parameters have been used

Rib pillars are about 6 ft wide;

Surface crown pillar is about 7.5 ft wide;

Sill pillars are about 12.5 ft wide; and

Maximum stope length is 125 ft long with 125 ft between levels.

The PEA design assumes only spot bolting will be required in weaker rock areas. This has been

incorporated into the design by including 4 ft long split sets on a 4-ft spacing over 5% of the new

workings. It is assumed that 10% of the historic workings that are rehabbed will require this

average level of ground support.

A TSF will be constructed near the Revenue Tunnel portal. The current permit allows for total

tailings storage of 482 kt between the Revenue pile and the Atlas pile. The Company has stated

that with a permit modification the capacity could be increased to about 4 Mt.

1.6.4 Infrastructure

The Project infrastructure is largely in existence at the mine. The mine is located approximately

5.5 miles southwest of Ouray, Colorado, and accessible year round via dirt roads. Power and

water are available on site and in case of loss of permanent power a diesel powered backup

generator is being installed. A local workforce exists in surround towns to support the mine.

1.6.5 Environmental and Permitting

At this date, it appears that all necessary environmental studies and permitting activities are

either completed or well-defined and progressing satisfactorily to facilitate Project startup. The



Company has indicated an awareness of potential future permitting requirements associated with

various tailing disposal capacity enhancement options. Likewise, other programs are in place to

ensure ongoing monitoring requirements are carried out and necessary environmental

management actions integrated (as required) into existing permits.

No significant outstanding environmental studies or permitting issues have been identified;

however, authorization of production-scale operations remains contingent on Fortune

satisfactorily addressing various “conditions” attached to the Colorado Division of Reclamation,

Mining and Safety (DRMS) 112-D Reclamation Permit. In general, these conditions pertain to a

demonstration (and DRMS “acceptance” of the results) that the produced mill tailing will be

rendered virtually “inert” after flotation processing and dewatering/filtration. While pilot-scale

milling and tailing analyses are ongoing at the time of this review, it is anticipated that such will be

the case, and the proposed dry stack tailing disposal method will move forward (allowing scale-up

to production status). An additional condition potentially influencing the actual production start-up

date is associated with Fortune’s satisfactory characterization of baseline groundwater

characteristics in the proposed tailing storage area(s); it is anticipated that recent data, along with

the use of historic data, will achieve this objective and allow production-scale start-up to occur in

a timely manner.

1.6.6 Capital Costs

Table 1.6.6.1 summarizes the capital costs.

Table 1.6.6.1: Capital Cost Summary

Area LoM Capital (US$000s) Mine Development 20,656Mine Equipment 1,679Plant Expansion 912Environmental 2,897Total $26,144

1.6.7 Operating Costs

Table 1.6.7.1 summarizes the operating costs.

Table 1.6.7.1: Operating Cost Summary

Description LoM (US$000s) LoM (US$/t-Mineralized Material) Surface 25,813 21.18 Underground Mining* 57,272 46.98 Process 25,407 20.84 Environmental 5,128 4.21 G&A 30,479 25.00 Total Operating $144,099 $118.21

*A portion of the mine development has been capitalized.



1.6.8 Indicative Economic Results

Results indicate that the Project has a potential after tax present value of approximately

US$58.8 million, based on a 6% discount rate. Table 1.6.8.1 shows annual production and

revenue forecasts for the life of the project.

Table 1.6.8.1: Revenue Mine LoM Annual Production and Revenues

Year RoM/

Plant Feed (kt)

Lead Conc.

(t)

ZincConc.

(t)

GravityConc.

(lb)

Free Cash Flow

(US$ 000s)

DiscountedCash Flow(US$000s)

2014 24.19 668 292 1.93 (9,488) (9,488)2015 122.82 4318 1585 11.20 1,424 1,3442016 141.39 5943 1583 15.31 11,642 10,3612017 140.30 4448 1712 15.00 6,537 5,4882018 142.40 4111 1608 15.90 8,967 7,1022019 141.78 5515 1475 11.34 17,188 12,8442020 140.69 7297 1810 11.26 30,462 21,4742021 34.72 2349 259 4.17 13,614 9,0542022 0.00 0 0 0.00 1,064 668

Total 888.28 34,648 10,324 86.11 $81,410 $58,848

1.7 Conclusions SRK considers that the project is amenable to underground mining methods. It is the goal of the

PEA to present an option for mine development of the Project that best fits Fortune’s corporate

strategy of maximizing the mine life which Fortune states allows them to capitalize on anticipated

future exploration upside and silver price increases. This approach does not necessarily

maximize the NPV of the project presented herein.

The metallurgical flow sheet for the PEA includes lead concentrate, zinc concentrate, and gravity

concentrate. The mill is designed to operate at 300 t/d but modifications underway should allow

the mill throughput to ramp-up to 400 t/d by 2015. The average annual throughput is

approximately 140,000 t/y based on operating at 400 t/d for 350 days per year.

Highlights of the PEA include:

Underground mine life of eight years, which includes a ramp up and ramp down;

Combined mine plan resources of 888.3 kt from two separate mining areas;

Mine plan resource average yearly contained silver of 1.86 Moz silver;

Mill annual average production (recovered) of 1.7 Moz of equivalent silver (AgEq);

Average cash operating cost (including by-products) of US$11.16/oz AgEq;

Capital in the first year (2014) is US$6.4 million; and

After-tax IRR of 73.2% and NPV (6%) of US$58.8 million. This mine has already been

significantly developed and the cashflow model is not reflective of sunk costs except for

the impact on depreciation.



2 Introduction SRK was retained by Fortune to update the resource estimate for the Yellow Rose Vein, the

Virginius Vein and the Terrible Vein with analytical data from new drilling and channel sampling

completed by Star and to complete PEA level mine design, production schedule, and economic

evaluations. Additional claims had been staked around the Virginius to cover the entire deposit

area. The Yellow Rose and Virginius Project are located in Sneffels, Colorado, Ouray County,

approximately 8 miles southwest of the town of Ouray, Colorado.

The PEA was developed subsequent to completion of the resource work.

2.1 Terms of Reference and Purpose of the Report This report was prepared as a PEA for Fortune by SRK on the Revenue Mine.

The quality of information, conclusions, and estimates contained herein is consistent with the

level of effort involved in SRK’s services, based on: i) information available at the time of

preparation, ii) data supplied by outside sources, and iii) the assumptions, conditions, and

qualifications set forth in this report. This report is intended for use by Fortune subject to the

terms and conditions of its contract with SRK and relevant securities legislation. The contract

permits Fortune to file this report as a Technical Report with Canadian securities regulatory

authorities pursuant to NI 43-101, Standards of Disclosure for Mineral Projects. Except for the

purposes legislated under provincial securities law, any other uses of this report by any third party

is at that party’s sole risk. The responsibility for this disclosure remains with Fortune. The user of

this document should ensure that this is the most recent Technical Report for the property as it is

not valid if a new Technical Report has been issued.

This report provides mineral resource estimates, and a classification of resources prepared in

accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards on

Mineral Resources and Reserves: Definitions and Guidelines, November 27, 2010. The PEA is

preliminary in nature that 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 PEA will be

realized. This report follows the format of Canadian National Instrument Form 43-101F1.

This report includes technical information, which required subsequent calculations to derive

subtotals, totals and weighted averages. Such calculations inherently involve a degree of

rounding and consequently introduce a margin of error. Where these occur, SRK does not

consider them to be material.

2.2 Qualifications of Consultants (SRK) The Consultants preparing this technical report are specialists in the fields of geology,

exploration, mineral resource and mineral reserve estimation and classification, underground

mining, geotechnical, environmental, permitting, metallurgical testing, mineral processing,

processing design, capital and operating cost estimation, and mineral economics.



None of the Consultants or any associates employed in the preparation of this report has any

beneficial interest in Fortune or Star. The Consultants are not insiders, associates, or affiliates of

Fortune or Star. The results of this Technical Report are not dependent upon any prior

agreements concerning the conclusions to be reached, nor are there any undisclosed

understandings concerning any future business between Fortune or Star and the Consultants.

The Consultants are being paid a fee for their work in accordance with normal professional

consulting practice.

The following individuals, by virtue of their education, experience and professional association,

are considered Qualified Persons (QP) as defined in the NI 43-101 standard, for this report, and

are members in good standing of appropriate professional institutions. The QP’s are responsible

for specific sections of this Technical Report as follows:

Joanna Poeck, MMSA, SRK Senior Consultant is the QP responsible for Mining Methods,

Project Infrastructure, Market Studies and Economic Analysis Sections 1.6.1, 1.6.3, 1.6.4,

1.6.6 through 1.6.8, 1.7, 2, 3, 5.5, 15, 16, 18, 19, 21 through 24, 25.3, 26.3, 26.6, 27 and

28.

Dorinda Bair, CPG, SRK Principal Consultant is the QP responsible for Geology and

Resources Sections 1.1 to 1.5, 4.1 through 4.3, 4.5, 5.1 through 5.4, 6 through 12, 25.1,

25.2, 26.1 and 26.2;

Mark Jorgensen, MMSA, SRK Associate Metallurgist is the QP responsible for

Metallurgy, Processing and Recovery Sections 1.6.2, 13, 17, 25.4 and 26.4; and

James M. Beck, P.E., SRK Associate Consultant, is the QP responsible for

Environmental Sections 1.6.5, 4.4, 20, 25.5 and 26.5 of this Technical Report.

2.3 Details of Inspection Site visit attendees are shown in Table 2.3.1.

Table 2.3.1: Site Visit Participants

Personnel Company Expertise Date(s) of Visit Details of Inspection

Dorinda Bair SRK Consulting Geology and Resources

April 3, 2013

Reviewed drilling and sampling data, sample storage, underground drillhole locations and viewed the Virginius Vein underground.

Mark Jorgensen SRK Consulting Metallurgy April 10, 2013; May 6-8, 2014

Reviewed the mill infrastructure, water supply, mineralization in samples

James Beck SRK Consulting Environmental June 19, 2014

Reviewed surface facilities and infrastructure related to permitting of tailing disposal areas, water management, and wetlands.

Jeff Osborn SRK Consulting Infrastructure May 15, 2014 Surface and underground tours; focus on mining methods.

John Tinucci SRK Consulting Geotechnical May 15, 2014 Surface and underground tours; focus on geotechnical.



2.4 Sources of Information The sources of information include data and reports supplied by Fortune and Star personnel as

well as documents cited throughout the report and referenced in Section 27.

2.5 Effective Date The effective date of this report is April 18, 2014.

2.6 Units of Measure The U.S. System for weights and units has been used throughout this report. Tons are reported in

short tons of 2,000 pounds (lb). All currency is in U.S. dollars (US$) unless otherwise stated.



3 Reliance on Other Experts The Consultant’s opinion contained herein is based on information provided to the Consultants by

Fortune and Star. The Consultants used their experience to determine if the information from

previous reports was suitable for inclusion in this technical report and adjusted information that

required amending. This report includes technical information, which required subsequent

calculations to derive subtotals, totals and weighted averages. Such calculations inherently

involve a degree of rounding and consequently introduce a margin of error. Where these occur,

the Consultants do not consider them to be material.

SRK has relied on Fortune regarding the ownership, legal status of the mineral titles, surface

agreements and/or encumbrances. These items have not been independently reviewed by SRK

and SRK did not seek an independent legal opinion of these items.

This report includes technical information which required subsequent calculations to derive

subtotals, totals and weighted averages. Such calculations inherently involve a degree of

rounding and consequently introduce a margin of error. Where these occur, the Consultants do

not consider them to be material.



4 Property Description, Location and Access

4.1 Property Location The Project is located in southwestern Colorado about 5.5 miles southwest of the town of Ouray.

The Revenue Portal, the site of the current surface activity, is located at longitude 107.750° W,

latitude 37.974° N (mine grid coordinates of 100,630 ft E, 99,100 ft N). The majority of the

historical underground work occurred approximately 1.2 miles to the southwest centered at

approximately 107.773° W., latitude 37.967° N (mine grid coordinates of 97,790 ft E, 95,070 ft N).

All of the mining claims are located in Township 43 North, Range 8 West, New Mexico Prime

Meridian (NMPM), Ouray and San Miguel Counties, Colorado, and are held in the name of

Revenue-Virginius Mines Corporation (RV) or Silver Star Resources, LLC (Star Resources).

Figure 4.1.1 presents the location of the Project. Fortune has a 12% interest in the Revenue Mine

and has operating authority for the mine, mill and surface operations.

Source: Modified from www.googlemaps.com (June 2012)

Figure 4.1.1: Project Area Map



4.2 Mineral Titles Steven Lappin, Consulting Landman and Surveyor, was contracted to compile the claim

ownership in the vicinity of Fortune and Star’s property holdings. The property consists of both

patented and unpatented mining claims. There are 109 patented mining claims covering 736.88

net acres and 37 unpatented mining claims covering 342.98 net acres. Figure 4.2.1 shows the

Star claim holdings overlain on the topographic map of the area. Table 4.2.1 is a detailed listing of

the claims and includes the ownership interest in each claim. Fortune and Star have an operating

agreement with RV.

Source: Star Resources, 2014

Figure 4.2.1: Fortune and Star Claim Ownership



Table 4.2.1: Mining Claims Owned by Silver Star and Revenue Virginius

Revenue Virginius Mines Corporation PATENTED MINING CLAIMS T43N-R8W

Claim Name Mineral

Survey # Patent

Date Patent

Serial # Gross Acres

Section County Interest

(%) Net

Acres Anglo Saxon 5723 10/29/1896 27539 3.89 21 Ouray 100.00 3.89 Atlas Ext. 5684 6/4/1895 25685 3.89 20 Ouray 100.00 3.89 Banner 2079 6/3/1887 12114 5.11 20 Ouray 100.00 5.11 Bismark 2410 11/19/1889 15359 10.33 16, 21 Ouray 100.00 10.33 Black 12290 5/28/1906 43625 6.40 20, 29 Ouray 100.00 6.40 Black Hawk 5723 10/29/1896 27539 8.93 21 Ouray 100.00 8.93 Blackstone 5019 4/20/1891 17668 10.29 21 Ouray 100.00 10.29 Blaine 5772 A 6/18/1894 24478 9.41 21 Ouray 100.00 9.41 Blank 17500 10/20/1906 44556 7.03 21 Ouray 100.00 7.03 Blank M.S. 14495 4/17/1902 35357 5.00 22 Ouray 100.00 5.00 Blazer 16494 11/6/1905 41106 5.77 21, 22 Ouray 100.00 5.77 Blazer M.S. 14499 4/17/1902 35358 0.86 23 Ouray 100.00 0.86 Block 12163 2/1/1899 30502 10.33 29 San Miguel 100.00 10.33 Boojum 16089 6/8/1907 44192 7.76 28, 33 Ouray 100.00 7.76 Caribou 163 1/14/1879 3032 9.10 22 Ouray 100.00 9.10 Chip 12163 2/1/1899 30502 5.62 29 San Miguel 100.00 5.62 Clara Belle 6537 4/23/1892 20807 8.27 21, 28 Ouray 100.00 8.27 Col. Porter 5772A 6/18/1894 24478 4.29 21 Ouray 100.00 4.29 Cumberland 2077 2/25/1887 11594 10.33 20 Ouray 100.00 10.33 Eclipse M.S 7816B 12/4/1893 23690 2.25 16, 21 Ouray 100.00 2.25 Egypt Placer 16053 7/21/1904 39362 17.84 21 Ouray 100.00 17.84 Eliza Pinkstone 12799 2/6/1900 32135 2.61 21 Ouray 100.00 2.61 Engle 8505 7/5/1894 24552 10.31 29 San Miguel 100.00 10.31 Grand Trunk 339 3/17/1884 8927 7.88 21 Ouray 100.00 7.88 Grant 7284 A 12/4/1893 23689 7.41 21 Ouray 100.00 7.41 Hard Cash 5394 A 7/3/1896 27239 7.69 21 Ouray 100.00 7.69 Highland Lassie 162 1/14/1879 3030 10.22 21, 22 Ouray 100.00 10.22 Hill Top 13424 A 6/2/1904 38905 1.97 20 Ouray 100.00 1.97 Hill Top Millsite 13424 B 6/2/1904 38905 3.77 20 Ouray 100.00 3.77 Last Chance Millsite 11499 11/16/1898 30063 0.00 13, 14 Ouray Easement only 0.00 Lincoln 7284 A 12/4/1893 23689 7.36 21 Ouray 100.00 7.36 Lincoln M.S. 7284 B 12/4/1893 23689 4.22 16, 21 Ouray 100.00 4.22 Little Chief 840 6/15/1883 7783 8.35 21, 22 Ouray 100.00 8.35 Lizard * 2655 4/8/1890 15976 10.19 29 San Miguel* 100.00 10.19 Mark Twain 344 A 7/30/1881 4870 6.83 21, 22 Ouray 100.00 6.83 Mark Twain Millsite 344 B 7/30/1881 4870 5.00 21, 22 Ouray 100.00 5.00 Mikado 6537 4/23/1892 20807 10.20 21, 28 Ouray 100.00 10.20 Moltke 2411 6/19/1889 15052 10.30 16, 21 Ouray 100.00 10.30 Monarch 990 5/31/1883 7766 10.02 20 Ouray 100.00 10.02 Monetizer 346 7/30/1881 4872 10.33 21, 22 Ouray 100.00 10.33 Monongahela 523 5/12/1884 9218 10.03 20 Ouray 81.25 8.15 Mountain Top 13425 8/2/1901 34291 9.38 29 San Miguel 100.00 9.38 Muldoon 14798 7/1/1903 36783 9.08 22 Ouray 100.00 9.08 Myrtle 5723 10/29/1896 27539 5.26 21 Ouray 100.00 5.26 Nada * 2655 4/8/1890 15976 10.19 29 San Miguel* 100.00 10.19 Nashville 2078 2/25/1887 11595 10.18 20 Ouray 100.00 10.18 Ottawa 5772 A 6/18/1894 24478 7.29 21 Ouray 100.00 7.29 Potosi 168 1/14/1879 3037 8.93 15, 21, 22 Ouray 100.00 8.93 Protector 16494 11/6/1905 41106 5.04 21 Ouray 100.00 5.04 Queenie 1824 8/9/1887 12378 9.90 21, 28 Ouray 100.00 9.90 Revenue 5723 10/29/1896 27539 8.60 21 Ouray 100.00 8.60 Revenue Millsite 16714 5/16/1905 41995 0.05 21 Ouray 100.00 0.05 Sarah Bernhardt 6537 4/23/1892 20807 9.94 21, 28 Ouray 100.00 9.94 Seven Thirty 166 1/14/1879 3035 6.50 21 Ouray 100.00 6.50 Sidney (east 200 ft only) 982 10/4/1883 8250 1.38 20, 21 Ouray 100.00 1.38 Silver Queen 345 7/30/1881 4873 8.22 21 Ouray 100.00 8.22 SiWash Millsite 16965 4/3/1905 41996 0.40 21 Ouray 100.00 0.40 Slide 14182 1/16/1902 34898 10.33 14 Ouray 100.00 10.33 Snark 16089 6/8/1907 44192 5.46 28, 33 Ouray 100.00 5.46 Stonewall Jackson 5772 A 6/18/1894 24478 10.16 21 Ouray 100.00 10.16 Stonewall Jackson Millsite 5772 B 6/18/1894 24478 5.00 * 21 Ouray 100.00 5.00 Summit 13207 4/20/1901 33766 6.77 16, 21 Ouray 100.00 6.77 Terrible 1592 12/9/1886 11299 7.37 20 Ouray 100.00 7.37 Tip Top 13425 8/2/1901 34291 10.33 29 San Miguel 100.00 10.33 Torpedo (SE 500 ft only) 1755 4/8/1887 11813 3.44 16, 21 Ouray 100.00 3.44 Two Step 17500 10/20/1906 44556 5.05 21 Ouray 100.00 5.05 Valley View 1823 5/7/1894 24291 10.33 21 Ouray 100.00 10.33 Victor 6537 4/23/1892 20807 9.86 21, 28 Ouray 100.00 9.86 Virginius Lode 229 5/12/1880 3956 10.33 20, 29 Ouray 100.00 10.33 Volta 5772 A 6/18/1894 24478 6.25 21, 22 Ouray 100.00 6.25 Walrus 16089 6/8/1907 44192 1.11 28, 33 Ouray 100.00 1.11 Wheel of Fortune 343 A 7/30/1881 4871 9.68 21, 22 Ouray 100.00 9.68 Wheel of Fortune Millsite 343 B 7/30/1881 4871 4.10 21, 22 Ouray 100.00 4.10 Ymir 16494 11/6/1905 41106 1.42 21 Ouray 100.00 1.42



Revenue Virginius Mines Corporation UNPATENTED MINING CLAIMS T43N-R8W

Claim Name BLM CMC Serial No.

Location Date

Gross Acres

Section Ouray 100.00 Net

Acres T.M.C. NO. 1 281857 9/2/2011 20.42 20 Ouray 100.00 10.67 T.M.C. NO. 2 281858 9/2/2011 20.42 20 Ouray 100.00 9.14 T.M.C. NO. 3 281859 9/2/2011 20.42 20 Ouray 100.00 5.06 T.M.C. NO. 4 281860 9/2/2011 20.42 20, 21 Ouray 100.00 13.74 T.M.C. NO. 5 281861 9/2/2011 20.42 20, 21 Ouray 100.00 12.95

Star Resources LLC PATENTED MINING CLAIMS T43N-R8W

Claim Name Mineral

Survey # Patent

Date Patent

Serial # Gross Acres

Section County Interest Net

Acres Blythe Lode 18529 7/8/1909 71065 6.71 19, 20 Ouray 77.92 5.23 Mountain Queen Lode 7757 10/17/1893 23466 7.95 19 Ouray 77.92 6.19 Clipper #2 Lode 7769A 10/17/1893 23467 6.71 18-20 Ouray 77.92 5.23 Fargo Lode 18529 7/8/1909 71065 5.41 19, 20 Ouray 77.92 4.22 Gray Eagle Lode 5663 8/10/1891 18413 10.19 19, 20 Ouray 77.92 7.94 Hendricks Lode 7769A 10/17/1893 23467 6.15 19, 20 Ouray 77.92 4.79 Little Annie Lode 2688 11/19/1890 16810 3.49 17, 20 Ouray 77.92 2.72 Monongahela Lode 523 5/12/1884 9218 10.03 20 Ouray 15.78 1.58 Nuada Lode 18529 7/8/1909 71065 2.41 19, 20 Ouray 77.92 1.88 Old Trail Lode 7769A 10/17/1893 23467 5.10 17, 20 Ouray 77.92 3.97 Rene Lode 18529 7/8/1909 71065 5.81 19, 20 Ouray 77.92 4.53 Shamrock Lode 1145 6/4/1889 14995 10.11 18, 19 Ouray 77.92 7.88 Silver Dollar Lode 13715 2/18/1904 38033 10.19 20 Ouray 77.92 7.94 Terrible #2 Lode 7096 8/3/1892 21721 9.12 19, 20 Ouray 77.92 7.11 Zig Zag Lode 7769A 10/17/1893 23467 10.33 20 Ouray 77.92 8.05 Zig Zag Millsite 7769B 10/17/1893 23467 5.00 17, 20 Ouray 77.92 3.90 Tornado Lode 1680 10/23/1886 11092 10.13 19, 20 Ouray 77.92 7.89 Thomas J. Regan Lode 19958 1/8/1921 13484 6.74 19, 20 Ouray 77.92 5.25 Tip Top 9062 7/8/1895 25817 7.96 19, 20, 29 Ouray 100.00 7.96 White Pine 9123 8/19/1896 25890 10.33 19. 20, 29 Ouray 100.00 10.33 Chief Deposit 167 1/14/1879 10.07 22, 27 Ouray 100.00 10.07 Valkyrie 14305 6/20/1904 8.01 20, 29 Ouray 90.00 7.21 Millionaire 472 10/31/1882 10.09 26, 27 Ouray 80.00 8.07 US Depository 474 7/18/1889 10.28 27 Ouray 80.00 8.22 Hidden Treasure 548A 2/28/1883 7249 10.20 27, 34 Ouray 49.58 5.06 Hidden Treasure MS 548B 2/28/1883 7249 2.47 27 Ouray 49.58 1.22 Good Luck 7147 3/281896 26676 10.28 27, 34 Ouray 49.58 5.10 Good Luck Ext. 7147 3/28/1896 26676 4.11 34 Ouray 49.58 2.04 Pocahontas 165 1/14/1879 10.09 27 Ouray 54.12 5.46 Vincent 20316 3/4/1927 996952 14.53 34 Ouray 80.00 11.62 Evelyn 19964 7/27/1920 763934 12.88 27, 34 Ouray 80.00 10.30 Edward B 20316 3/4/1927 996952 7.44 27, 34 Ouray 80.00 5.95 John R 20316 3/4/1927 996952 14.63 34 Ouray 80.00 11.70 Saracen NW 300' 15474 4/9/1904 2.06 26. 27 Ouray 80.00 1.65 Ground Hog 16675 7/21/1906 10.31 27, 28 Ouray 49.58 5.11 Ptarmigan 12749 4/20/1901 1.36 27 Ouray 49.58 0.67

Star Resources LLC UNPATENTED MINING CLAIMS T43N-R8W

Claim Name BLM CMC Serial No.

Location Date

Gross Acres

Section County Interest Net

Acres RV 1 282292 10/4/2011 20.66 21, 22 Ouray 100.00 4.31 RV 2 282293 10/4/2011 20.66 21, 22 Ouray 100.00 8.56 RV 4 284135 7/13/2012 20.66 21, 22 Ouray 100.00 4.69 RV 5 282295 10/5/2011 20.66 21 Ouray 100.00 2.89 RV 6 282296 10/5/2011 20.66 21, 22 Ouray 100.00 12.46 RV 7 282297 10/5/2011 20.66 21 Ouray 100.00 5.07 RV 8 284136 7/14/2012 20.66 21 Ouray 100.00 2.56 RV 9 284137 7/13/2012 20.66 21 Ouray 100.00 3.02 RV 10 284138 7/17/2012 20.66 19,20 Ouray 100.00 8.80 RV 11 284139 7/17/2012 20.66 20 Ouray 100.00 1.88 RV 12 284140 7/17/2012 20.66 20 Ouray 100.00 8.82 RV13 284141 7/17/2012 20.66 20 Ouray 100.00 6.56 RV 14 284142 7/17/2012 20.66 20 Ouray 100.00 8.36 RV 15 284143 7/17/2012 20.66 20,29 Ouray 100.00 13.24 RV 16 284144 7/18/2012 20.66 20,29 Ouray 100.00 17.23 RV 17 284145 7/18/2012 20.66 20,29 Ouray 100.00 8.52 RV 18 284146 7/21/2012 20.66 21,28 Ouray 100.00 1.37 RV 19 284147 7/22/2012 11.02 28 Ouray 100.00 1.18 RV 20 284148 8/1/2012 20.66 22,27 Ouray 100.00 9.87 RV 21 284149 7/30/2012 20.66 22,27 Ouray 100.00 15.10 RV 22 284150 7/29/2012 20.15 22,27 Ouray 100.00 13.80 RV 23 284151 7/29/2012 20.15 27 Ouray 100.00 16.41 RV 24 284152 7/30/2012 20.58 27 Ouray 100.00 17.37 RV 25 284153 7/30/2012 20.58 27 Ouray 100.00 9.05 RV 26 284154 7/30/2012 20.66 26,27 Ouray 100.00 7.58 RV 27 284155 7/30/2012 20.66 26,27 Ouray 100.00 7.14 RV 28 284156 8/2/2012 20.66 29 Ouray 100.00 12.72



RV 29 284157 8/2/2012 20.66 29 Ouray 100.00 12.87 RV 30 284158 8/2/2012 20.66 29 Ouray 100.00 13.02 RV 31 284159 8/2/2012 20.66 29 Ouray 100.00 20.66 RV 33 285304 7/2/2013 20.66 17,20 Ouray 100.00 3.60 RV 34 285305 7/2/2013 20.66 17,20 Ouray 100.00 12.71 TOTAL Net Acres PATENTED CLAIMS 736.88 TOTAL Net Acres UNPATENTED CLAIMS 342.98

* Nada-Lizard - 7.71 acres in Ouray Co. are covered by Mining Lease from Ouray Co. to Silver Star Res, LLC Source: Star Mine Operations, 2014

4.2.1 Nature and Extent of Issuer’s Interest

The mining claims, the Revenue Tunnel, all mining equipment, surface equipment and buildings,

milling equipment and operations located on these claims are owned or controlled by Fortune,

Star Resource, Star or RV. Fortune is the operator of the Project.

Patented claims grant both fee simple ownership of the surface of the land and all underlying

minerals. Unpatented mining claims grant ownership to the underlying minerals and permit use of

the surface for activities and infrastructure required to exploit the underlying minerals.

Owners of patented mining claims are required to pay annual county property taxes to hold the

land and beyond payment of taxes, ownership is in perpetuity. Unpatented mining claims grant

provisional ownership of the underlying minerals and to maintain this ownership annual fees of

US$140 per claim are due the U.S. Bureau of Land Management (BLM) by September 1 of each

year. Fortune records an affidavit of payment of the BLM claim fee with the Clerk and Recorders

office of Ouray County. This is not a legal requirement, but the fee for recording is US$6 for the

first page, US$5 for each additional page and US$0.25 for each claim name paid to Ouray

County.

The claims covering the Yellow Rose vein zone are accessible on surface from County Road 26

(the Yankee Boy Basin Road). Surface access to the claims covering the Virginius and Terrible

veins is along County Road 26 (the Governor Basin Road).

The Revenue Tunnel is a historical access that passes out of the Fortune, Star Resources, Star

and RV controlled claims and under U.S. Forest Service (USFS). The USFS manages surface

activities and not mineral rights. As a historic access, without active mining other than maintaining

an open travel-way, and no surface impact, it is unlikely that the USFS would have requirements

for the use of the Revenue Tunnel. However, the areas of the Revenue Tunnel that are

unprotected by mining claims could be vulnerable to over-staking by a third party, which could

potentially impact access to the Virginius and Terrible veins.

SRK cannot advise on mining law and does not know the legal ramifications of this situation. SRK

recommends that Fortune obtain a legal opinion regarding access through the Revenue Tunnel

under USFS land.

4.3 Royalties, Agreements and Encumbrances The Project is 12% controlled by Fortune through its wholly owned subsidiary Fortune Revenue.

The remaining 88% is controlled by Star, a Colorado limited liability private company. Star is

controlled by Rory James Williams, James W. Williams, Jr., and John A. Bettridge. Williams,

Williams and Bettridge are the majority owners of RV and Star controlling 98.75%, with the



remaining held by other owners at 1.25%. Fortune Revenue has operating authority for the mine,

mill and surface operations.

On May 8, 2014, Fortune completed the first phase of the planned purchase of a 100% interest in

the Revenue Mine in southwestern Colorado through its wholly owned subsidiary Fortune

Revenue. The first phase was completed on May 8, 2014 when Fortune Revenue obtained a 12%

participating interest in the Mine by paying US$2 million and by issuing 32 million shares in

Fortune’s capital stock. Fortune Revenue can purchase a 100% interest in the mine by paying an

additional US$14 million by July 31, 2014 and by issuing a promissory note to pay between

US$34.5 million and US$36.5 million in deferred quarterly installments over 3.5 to 5.75 years as

determined by revenue targets commencing in August 2015. Fortune Revenue will also assume

obligations to make two deferred payments totaling US$4.5 million and pay a 2% net smelter

return royalty, which is capped at US$9 million to the former owners of the Revenue Silver Mine.

Star executed a mining lease dated June 26, 2012 covering 7.51 net acres in Nada and Lizard

claims from Ouray County for a term of 40 years and for so long as production continues. The

Lease provides for annual payment of US$75 and additional payment if production is obtained.

Star obtained a Winter Road Maintenance Agreement from Ouray County dated November 15,

2013 to June 30, 2014, allowing Star to remove snow from CR26 and CR361 for access to the

mine. This will require renewal by Fortune for the winter of 2014/2015.

4.4 Environmental Liabilities and Permitting SRK has not independently identified or been otherwise made aware of any existing significant or

potentially significant environmental liabilities associated with the subject property or Project. SRK

has conducted a limited review of existing permits and status, as further discussed in Section 20

of this Technical Report.

4.4.1 Environmental Liabilities

Fortune indicates that there are no identified environmental liabilities associated with the subject

property and/or the Project.

4.4.2 Required Permits and Status

All surface disturbances are indicated to be located on patented mining claims, which shortens

the list of required permits for the site. The Project has obtained the following permits, which

comprise the primary permits necessary to allow the mining operations to proceed (when

compliant with all other applicable laws and regulations):

State of Colorado - Division of Reclamation, Mining and Safety 112D Permit;

State of Colorado- Water Quality Control Division Wastewater Discharge Permit; and

State of Colorado- Water Quality Control Division Mine Stormwater Discharge Permit.

There is a US$277,078 bond in place with the Colorado DRMS for reclamation at the end of the

mine life. A recent (pending) Technical Revision to the DRMS 112-D Permit contains a proposed

increase in the reclamation bond amount which would result in a new total bond amount of

US$330,000, if approved as submitted/calculated. The site operator has also conducted wetlands

delineation work and obtained coverage under USACE Nationwide Permit No. 44 relative to



planned filling of a portion of the existing Revenue Pond to accommodate expansion of the

planned Revenue Waste Pile as a dry stack tailing repository area. No other permits are required

from Ouray County as the Project (as an underground mining operation) holds a “use-by-right”

classification as defined under Section 22 of the Ouray County Land Use Code. This was

confirmed in a letter from the Ouray County Land Use Department dated March 27, 2012.

4.5 Other Significant Factors and Risks The current Revenue tailings storage facility (TSF) is within a defined avalanche run-out zone,

thus introducing seasonal operating constraints and a need for an additional TSF (the proposed

Atlas TSF) to accommodate winter tailing storage placement. Regardless, Fortune indicates that

appropriate avalanche deflection features to protect personnel and activities and the TSF itself

from potential avalanche damage will be constructed/utilized at the Revenue facility.

The Company has stated that berms are constructed out of snow in the winter to protect the

buildings adjacent to the TSF. The current permit allows for total tailings storage of 482,431 t

between the main disposal area (Revenue Waste Pile) and the proposed Atlas Waste Pile. Star

has stated that the capacity could be increased to about 4 Mt with a permit modification.

Incremental tailing storage capacity options are being examined, inclusive of potential expansion

of the Atlas Waste Pile and/or implementation of paste backfill disposal underground. Limited

quantities of waste rock are to be co-disposed with tailing in each of these facilities.

The current “permitted area” associated with the Company’s operations comprises a total of

34.19 ac, virtually all of which encompasses historic mine development areas. Inasmuch as

additional areas of historic disturbance are present in the immediate surrounds, any future effort

by Fortune Revenue to expand the permit area to include other previously disturbed areas in the

Project area would require permit modification through the Division of Reclamation, Mining and

Safety (DMRS) “Amendment” process. However, to the extent such areas are not further

disturbed in the course of Fortune Revenue’s operations or otherwise re-disturbed by Fortune

Revenue, such historic surface disturbance would be considered by DRMS to be “pre-law” (i.e.,

such disturbance occurred prior to the 1976 implementation of the Colorado Mined Land

Reclamation Act) and therefore not subject to inclusion in the Fortune Revenue reclamation

obligation.

Fortune is currently addressing certain “conditions” attached to the DRMS 112-D Permit which

could potentially influence the ultimate production start-up date, namely: (1) characterization, and

“acceptance” by DRMS of produced tailing characteristics relative to moisture content, residual

metal content, and sulfide content; and (2) characterization of baseline groundwater quality.

Neither of these is viewed by SRK as posing a “significant” Project risk; however, corresponding

schedule and/or cost impacts, if any, should be taken into consideration, particularly if mill

throughput is to be increased from 300 to 400 t/d.



5 Accessibility, Climate, Local Resources, Infrastructure and Physiography

5.1 Topography, Elevation and Vegetation The Project is located in southwestern Colorado near the town of Ouray, in Ouray County. Ouray

is approximately 335 highway miles or approximately 5.5 hours by road southwest of Denver via

Interstate 70 and US Highways 50 and 550.

The San Juan Mountains in general and the Revenue area in particular are rugged young

volcanic mountains with steep topography. Glacial valleys form the broadest areas of relatively

flat ground but are typically surrounded by steep walls. Within the Project area, elevations range

from about 10,000 ft to nearly 13,500 ft.

The portal site is developed on a large flat area of historic mine waste at the portal of the

Revenue Tunnel where the surface buildings and infrastructure are located. This area will also

accommodate the tailings from the 300 t/d flotation mill. Work is underway to expand the mill to

400 t/d. The mill is underground in the Revenue portal area. In addition, this area will also be

used for waste rock from underground mining operations. SRK has not reviewed the capacity of

the TSF or waste rock storage for the Project.

Vegetation on the property is typical of Sub-alpine areas of the southern Rocky Mountains. North

facing slopes are typically covered by evergreen trees while south facing slopes are drier and

have plants requiring less moisture. A detailed listing of plants present on the Project is shown in

Table 5.1.1.

Table 5.1.1: Vegetation Found on the Revenue Mine Property

Species Species Achillea lanulosa (= A. millefoliia) Helenium autumnale Agrostis exarata Juncus arcticus ssp. Ater (= J. balticus) Bistorta bistortoides Lonicera involucrata Bromus ciliatess Phleum pratense Bromus inermis Picea engelmannii Calamagrostis canadensis Poa pratensis Caltha leptosepala Polemonium pulcherrimum Cardamine cordifolia Potentilla pulcherrima Carex aquatilis Ribes lucustre Carex lanuginosa Rumex densiflorus Carex microptera Salix geyeriana Carex utriculata Salix monticola Cirsium tracyi Salix planifolia Dactylis glomerata Salix brachycarpa Deschampsia cespitosa Senecio atratus Elytrigia repens Senecio ermophilus Epilobium ciliatum Senecio trangularis Erodium cicutarium Taraxacum officinale Fragaria virginiana Thalictrum fendleri Geranium richardsonii Urtica gracilis Geum macrophyllum Source: Star, 2013



5.2 Accessibility and Transportation to the Property To access the property from Ouray follow County Road (CR) 361 southwest up Canyon Creek

past the Camp Bird Mine. The portal of the Revenue Tunnel is 6.7 miles from the beginning of CR

361 on the south side of Sneffels Creek. Current surface activity is at the Revenue Portal located

at longitude -107.750° W, latitude37.974° N (Figure 5.2.1). In the local mine grid coordinates the

portal is at 100,630 ft E, 99,100 ft N. The bulk of the historical underground work was centered

approximately 1.3 miles to the southwest at approximately 107.773°W., latitude 37.967°N or

approximately 97,790 ft E, 95,070 ft N in the local mine grid.

During the summer months the property is accessible by high clearance two-wheel drive vehicles.

During the winter four-wheel drive vehicles are required since the road is snow covered.

Source: Star, 2013

Figure 5.2.1: Location Map of the Revenue Mine, Ouray County, Colorado

5.3 Climate and Length of Operating Season There are no officially published weather/climate records for the Revenue Portal site. The nearest

information is for Ouray located at an elevation of approximately 7,800 ft, which is about 2,860 ft

lower than the Revenue portal at 10,660 ft. The Köppen Climate Classification subtype for Ouray

is "Dfb" - “Warm Summer Continental Climate”. The average temperature for the year in Ouray is

44.3°F. The warmest month, on average, is July with an average temperature of 64.7°F. The



coolest month, on average, is January with an average temperature of 25.8°F. The highest

recorded temperature in Ouray is 96.0°F in June and the lowest recorded temperature

was -22.0°F in January.

Average annual precipitation for Ouray is 23.1 inches. March is the wettest month with 2.3 inches

of precipitation falling as snow while June is the driest with 1.1 inches of precipitation. Average

annual snowfall is 140.2 inches.

The portal area and mine surface infrastructure are located at an elevation of 10,660 ft on the

south side of Sneffels Creek in a steep-walled valley between approximately 1,000 ft below

timberline. The area near the portal is classified as Sub-alpine but the higher elevation of the

property, are in the Alpine climate zone. The Project area experiences broad temperature swings

both within and between seasons. During winter months temperatures hover near freezing on

warmer days to well below zero on cold days and nights. During summer, temperatures vary from

the 50’s°F to modestly below freezing on cooler nights to the upper 70’s and low 80’s°F on very

warm days. Anecdotal information suggests that the average temperature at the portal is typically

10°F cooler and winter snowfall perhaps double that falling in Ouray.

The Project is accessible year-around although heavy winter snow in the area requires plowing

from about November through May. The road beyond the Revenue portal is not maintained in the

winter and even in summer it is a four wheel drive road. During winter, snowfall can accumulate

to depths of 5 to 10 ft and avalanches can be a hazard. The Project has avalanche controls in

place during the winter months. During the summer months thunderstorms are frequent and can

be severe with lightning and heavy rainfall that can cause flash flooding in the streams.

5.4 Sufficiency of Surface Rights Since the area is located on patented mining claims owned and controlled by Star and RV,

certain permitting activities are simplified. The mineral deposits are located at variable distances

to the southeast of the portal and accessed from the Revenue tunnel.

5.5 Infrastructure Availability and Sources There is a commercial airport in Grand Junction. Montrose has a smaller airport and both are

served by regularly scheduled commercial air service and can accommodate small regional jets.

5.5.1 Power

The company has access to 12,470 volt, three-phase commercial electric power supplied by San

Miguel Power Company.

5.5.2 Water

The Company has water rights associated with the purchase of the mining claims. Currently,

water used at the Project comes from the Revenue Mine. The outflow from the underground is a

minimum of 200 g/m, which will be sufficient to supply the processing plant. The Company also

has conditional water rights to take up to 3.34 cubic feet per second (cfs) from Sneffels Creek.



5.5.3 Mining Personnel

The workforce in the area includes workers trained in industrial applications and includes oil field,

mining and forest workers. Industrial parts and equipment are also easily available. Grand

Junction is 60 miles north of Montrose and is the major industrial center for the western Colorado

and eastern Utah. Grand Junction has been and remains a center for mining and industrial

activity and is the most important source for such supplies between Denver, Colorado and Salt

Lake City, Utah.

5.5.4 Tailings Storage Areas

Two discrete TSFs will be constructed, one near the Revenue Tunnel portal and a second facility

atop the area currently occupied by the former Atlas mill tailings. The current permit allows for

total tailings storage of approximately 400 to 500 kt between the Revenue pile and the Atlas pile.

The Company has stated that with a permit modification the capacity could be increased to

approximately 4 Mt. Additional information on the TSF is provided in section 18.5 of this report.

5.5.5 Waste Disposal Areas

The Company envisions using a shrinkage stope mining method. A minimal amount of waste rock

is transported out of the mine as part of an agreement with the county for road bed material.

Waste rock will be produced from development headings that are not driven on the vein. Waste

rock will be co-disposed with tailing at either/both the Revenue and Atlas TSF dry stack features.

In addition, the Company indicates that some portion of this material could be used for road

material and is discussing this with the City of Ouray and a company in Montrose, Colorado.

Additional information on waste rock storage is provided in Section 18.6 of this report.

5.5.6 Processing Plant Site

A 300 t/d crushing, grinding and flotation facility has been constructed at the Project site.

Operations are currently assessing the capacity of the different mill components and have plans

to increase throughput to 400 t/d. The major components in crushing, grinding and flotation

appear to have sufficient capacity for such a change. The crushing, grinding and flotation facilities

are located in an underground cavern that has been excavated adjacent to the Yellow Rose exit

portal of the mine. Tailing filtration facilities are located in a made to purpose building immediately

outside of the excavated mill cavern.

Water supply for the plant will be provided by mine drainage. The water is of sufficient quality as

to be used for processing.



6 History The following text and Table 6.1 summarizes the history of the Project and, unless otherwise

noted, is taken substantially from an internal Star report by Steve Zahony (2013) and from an

internal memorandum written by Sunshine on the property dated January 12, 2001.

The history of the Revenue Mine property is well documented by past reports, most notably by

the Sunshine Mining and Refining Company (Sunshine) Information Memorandum dated January

12, 2001. Table 6.1 is a summary outline of the property’s mining history and lists key individuals

involved at various times. The property has had two owners since 1886. A.E. Reynolds was the

principal owner of the Caroline Mining Co. and its successor companies and his heirs remained

the owners of the property until its purchase by Star in 2011 (Zahony, 2013).

After the outcrop discovery of the Virginius Vein in 1876 and its near-surface development, the

property was purchased in 1880 and developed by the Caroline Mining Company under the

direction of A. E. Reynolds. The earliest work occurred at high elevations in Governor Basin and

mostly from the 3rd Level portal. The 3rd Level became the primary access to the vein and

development of the mine progressed downward through a 1,100 ft internal shaft from the 3rd Level

to the 14th Level (Zahony, 2013).

When logistics and costs became too challenging to continue mining from the 3rd Level and

Virginius Shaft, the Revenue Tunnel was driven between 1888 and 1893 to access the Virginius

vein at depth. The Revenue Tunnel Company spent nearly five years driving the Revenue

Tunnel. The Tunnel intersected several veins en route to the Virginius vein and these became

targets for varying levels of exploration and production. Among these was the Cumberland-Atlas

vein system which was mined during this period. When miners reached the Virginius structure in

the Revenue Tunnel, they encountered a strong eastern or footwall structure of the vein, and later

a western or main structure. They drifted on the main structure to the southeast for over 5,000 ft,

to beyond where the Virginius vein intersected the Montana Vein system (Zahony, 2013).

Caroline Mines operated the mine for its most productive period from 1880 to 1901. Several set-

backs resulted in limited production beyond 1901. In 1906, a fire in the upper workings caused

electrical damage and failure resulting in flooding on levels below the Revenue Level. The

following year the Revenue mill burned. Work beyond the mill fire was limited to small scale

mining and exploration (Zahony, 2013).

After A. E. Reynolds’ death in 1921, the property was managed by his daughter and son in-law.

Work during this period included modest development work over the next several years including

the construction of a small 10 t/d ball mill and limited stoping (Zahony, 2013).

In 1923 the northwest extension drift on the Terrible vein was channel sampled along its length

on approximately 6 ft centers. The average sample width was thought to be 2 ft. No economic

mineralization was located at that time but the results showed silver values of <1 oz/t and variable

gold values ranging from 0.01 to 0.76 oz/t and averaging in the range of 0.05 to 0.06 oz/t Au. No

distinct shoots of higher grade vein material were identified. These grades have not been

confirmed through modern sampling. Other work included channel sampling a raise and

associated levels near the end of the northwest-trending drift above the Revenue Level. Channel



sampling of the raise and various levels did not identify economic mineralization at the time but

were similar to those in the lower drift (Zahony, 2013).

In 1938, the family of A.E. Reynolds contracted geologist George Garrey to direct development of

the Project. Garrey assumed management of the family’s mining assets including the Revenue

Mine. He wrote two summary reports on the Revenue Mine property’s veins and their exploration

potential, one on October 5, 1947 (Garrey, 1947) and a second on October 5, 1949 (Garrey,

1949). These reports formed the basis for the modern exploration of the Revenue property by

Camp Bird Colorado, Inc. (Federal Resources), Ranchers Exploration and Development Corp.

(Ranchers), and Sunshine (Zahony, 2013).

According to Garrey (1947), pre-1922 production from the Cumberland was US$153,590, with an

additional US$16,862 having been mined by lessees from 1922 to 1926. Of the 12,000 t mined

before 1922, 4,200 t were hand-cobbed and shipped, averaging 0.136 oz/t Au, 28.5 oz/t Ag, and

25.5% Pb. These grades have not been confirmed by modern sampling.

Between 1948 and 1953, there was work on the Wheel of Fortune vein. The Wheel of Fortune

vein was intersected by several long drifts that followed veins crossing the Revenue Tunnel to the

southeast. Intersections between the Yellow Rose, Anglo-Saxon, Cumberland, and Virginius

veins failed to find economic mineralization within the Wheel of Fortune structure at the Revenue

Tunnel level and the Wheel of Fortune as not historically mined in these areas (Zahony, 2013).

Limited production from Wheel of Fortune vein was low but reportedly “high grade”, most of it

coming from a single mineralized shoot that was mined on three levels over a vertical extent of

400 ft immediately above the main adit level. This principal level consists of a drift along the

Wheel of Fortune vein with a portal on the southwest slope of Sneffels Creek’s valley at an

elevation of 10,680 ft. The drift is 1,730 ft long, following the vein in a southwesterly direction

extending through its intersection with the Yellow Rose Vein and beyond for another 450 ft from

that intersection. The single mineralized shoot on the Wheel of Fortune claim was discovered

cropping out at the surface and was worked down following the northeasterly rake of the shoot to

just above the long main drift level that was driven below the stope. Production from the shoot

was high in silver but the shoot narrowed with depth. The long drift encountered no economic

mineralization though several shallow experimental stopes were attempted. Towards the

northeast from the portal, in the opposite direction from the drift and across Sneffels Creek, the

trace of the Wheel of Fortune vein is followed by the Potosi patented claim. Beyond the Potosi

claim the Wheel of Fortune structure appears to continue further to the northeast with the rising

surface slope to the Bimetallic Mine, whose portal is at an elevation of 11,475 ft. Production at

this mine was high grade silver-gold mineralized material but the Bimetallic Mine is outside the

present Project boundaries. Federal Resources leased the property in 1960 and in their five-year

lease period drove over 3,440 ft of headings, mostly to the north of the Virginius Shaft No.1 on

both the Revenue Tunnel and the 210 Levels. This also included work in the Cumberland vein

workings and the Belcoe Raise. Camp Bird work included channel sampling, experimental mining

and test milling at the Camp Bird milling facility. Records are not available detailing how much

Camp Bird spent in their work.

The most complete and usable exploration and development information on the Revenue Mine

property was generated by Ranchers between 1980 and 1984 when Ranchers spent

US$8.5 million in exploration and was committed to take the property to production. However,



Ranchers’ hard-rock mining assets were purchased by Hecla Mining in mid-1984 and Hecla shut

down the Revenue Project. Sunshine leased the Revenue Mine property in 1994 and between

that date and the termination of its lease in 2001, spent an additional US$1.2 million in its study of

the Virginius and Yellow Rose veins and in exploratory surface drilling of other veins. Sunshine

built on earlier Ranchers’ work to construct a modern digital database of all previous channel

sampling and drilling and created a 3D digital model of the underground workings. They also

expended considerable effort toward estimating and frequently updating “reserves” on the

property (Zahony, 2013). Star was only able to recover paper copies of Sunshine’s channel

sample and drillhole database and has since recreated a digital database from the paper copies.

Star acquired the Project in 2011 from RV through a combination of a stock purchase of the

Revenue Virginius Mines Corporation dated September 21, 2011, and closed June 25, 2012. Star

has expanded the Project with further land acquisitions. Star conducted exploration including

drilling and channel sampling in both the Virginius and the Yellow Rose between 2012 and 2013.

This work supports the resource estimates reported in this Technical Report and are discussed in

Sections 9 and 10, exploration and drilling, respectively.

On May 8, 2014, Fortune Revenue obtained a 12% interest in the Project and operating authority

for the mine, mill and surface operations.

A complete summary of the history can be seen in Table 6.1.



Table 6.1: Ownership and Exploration History of the Virginius Vein and the Revenue Tunnel

Date Ownership Company Activity Persons Involved Core Holes

1876-1880

Family of A.E Reynolds

Individuals Virginius Vein discovered at 12,700 ft, accessed via upper two levels.

WB Feland, Alvord & Chase

1880 Caroline Mining Co Virginius claims purchased by AE Reynolds. AE Reynolds

1880-1906 Caroline Mining Co and Glacier Mining Co

3rd Level driven at 12,420 ft elevation and Virginius UG Shaft sunk from 3rd level to 14th Level. Vein stoped 14th Level to 3rd level.

AE Reynolds

1888-1893 Revenue Tunnel Co

Drive the 8 ft x9 ft Revenue Tunnel for 7,500 ft. AE Reynolds

1894-1906 Revenue Tunnel Co and Caroline Mining Co

Production from above the Revenue Tunnel Level and below the Tunnel Level down to the 350 Level. New stamp mill at the portal in 1895.

AE Reynolds ,HW Reed manager 1880-1901, EH Platt

1906 Revenue Tunnel Co

Fire in upper workings caused electrical failure and subsequent flooding of all levels below the Revenue Level.

AE Reynolds ,H Krumb, PG Caetani, EH Platt, AG Suydam

1907-1922 Lessee Revenue mill burns 1912, H Krumb takes 228 channel samples of Virginius vein on the Tunnel Level.

1916-1918 Revenue Tunnel Co

Drifting on 14th level of Virginius vein exposes +650 ft of milling mineralized material but no mill available.

1921 AE Reynolds dies. Daughter Ann R Morse and husband Bradish Morse take control.

Morse and Morse

1922-1923 Sneffels Leasing Co

Stoping on Cumberland vein under Atlas Extension patented claim on Revenue Level.

JW Clamp, TH Woods

1932 Lessee Build 10 t/d ball mill and gravity table. WB Rogers

1934-1938 Revenue Development Co

Rehab work, develop Belcoe Raise up 200 ft on Cumberland vein from Revenue Level, milled some Cumberland dump at 0.04 oz/t Au, 4.6 oz/t Ag, 5% Pb.

JW Belcoe, GA Franz

1943-1945 King Lease Drift 150 ft on +200 level of Cumberland vein, sink Cutler winze 100 ft, repair Revenue Tunnel.

LK Requa, RG Lee, RS Dunn

1946-1948 Virginius Mines Co

Rehab Virginius Vein drift and Revenue Tunnel. Recondition Shaft No 1 to -350 level, 210 level extended SE 146', Cutler winze on Cumberland deepened to 146'.

DC McNaughton, WSJ

1948-1953 Revenue Mines Atlas drift extended 1,428 ft from Revenue Tunnel, two fatalities in Atlas drift, work on Wheel of Fortune vein.

MC Dann

1960-1970 Camp Bird (Federal Resources)

Drove NW and test mined the Mononghalela section of the Revenue vein on the Revenue Level and drove 116 ft NW on the -210 level. Most underground work completed in 1966.

CP Tremlet, JDS DDH-1 to DDH-6, DDH-M-1 to DDEH-m-6



Date Ownership Company Activity Persons Involved Core Holes

1966 Revenue Virginius Mines Co

Progress report by C Melbye to JH Tippit - RV Mining Co.

C Melbye, JH Tippit

1947-1976 Revenue Virginius Mines Co

Project summary and projected operation report by CP Tremlet.

1980-1984 Ranchers Exploration and Development Corp

Rehab Revenue Tunnel, rehab Shaft No. 1 to 700 level, drift south along vein on 550 level, UG drilling from 550 level on Virginius vein and on Yellow rose vein, experimental stoping up from 210 level to the Revenue Level.

RA Larson, Project Mgr, JR Trujillo, Geologist, DJ Fitch, RE Lyons

RV-1 to RV-85, FF-1 to FF-152, YR-1 to YR-36, Y-1 to Y-24, T-1, TT-1 to TT-43, TF-1 to TF-9, BG-1 to BG-2, M-1 to M-2, HC-1 to HC-5

1984-1985 Hecla Mining Co Hecla purchased mining assets of Ranchers, reviewed the RV project and elected to drop it.

1994-2001 Sunshine Mining and Refining Co

Explored project, drilled underground, enhanced the digital database including the 3D digital model, calculated a reserve.

Alan Young, VP, JR Trujillo, Geologist

MK-1, MK-2, SQ-1, SQ-2, T-2, T-3, YR37 to YR-46, WF-1 to WF-3

2011

Star

Star Mine Operations LLC

Property is purchased by Star Mining Operations from Virginius Mines Corporation owned by the heirs of A.E. Reynolds.

2012-May 8, 2014 Star Mine Operations LLC

Star buys project, drills on Virginius and Yellow Rose veins, builds 300 t/d underground mill, and develops veins for production.

Rory Williams YR-47 to YR-66, Y-25 to Y-50, WOF-1 to WOF-7, TR-1 to TR-16, MT-1 to MT-10

May 8, 2014 to Present Fortune Revenue

Fortune Revenue Silver Mines Inc.

Fortune Revenue obtains a 12% interest in the Project and operating authority for the mine, mill and surface operations. Fortune plans to expand mill to 400 t/d.

Source: Zahony, 2013; Modified by SRK, 2014.



6.1 Historical Production Research into the historical production records by Perry (2013) indicates that the records are

incomplete. The majority of the production from the mine occurred between its discovery in 1876 and

the flooding and fires that occurred in 1906 and 1912. Specific production records for the period

1876 to 1895 are not available. A. E. Reynolds’ heirs believe that many of these early records had

been stored at the mill and were destroyed in the 1912 fire. However, this was a very productive

period in the mine’s history and involved all or most of the production from the surface to the

14 Level of the mine. The longitudinal sections of the Revenue vein show the major extent of this

productive period. The vein tended to be wider high in the mine and thus would represent more tons

mined from a similar area of stoping as viewed on a long section.

In 1976, Tremlett compiled production records from 1895 to 1906. His records begin roughly when

the Revenue Tunnel would have reached the Virginius vein and probably represent production

between the Revenue Tunnel and the 14 Level and from the Revenue Tunnel level down to the 550

Level. Table 6.1.1 is modified from Tremlett (1976). It is a summary of production for the 12-year

period between 1895 and 1906 and documents approximately 10.1 Moz of silver production. It is

estimated that approximately 204,000 t were milled. Between 1901 and 1906, the average grade of

the product sold was 14.89 oz/t Ag, 0.083 oz/t Au and 4.38 % Pb. The 10.1 Moz of silver reported by

Tremlett (1976) does not include pre-1895 production or the more modest production from 1907

through about 1920. Sunshine (2001) speculated that at least 15 Moz of silver was produced over

the life of the Project, but this has not been confirmed.

Table 6.1.1: Historical Production from the Revenue Virginius as reported by Tremlett in 1976 modified by R. Perry (2013)

Year Tons

Mined Tons

Milled

Tons ShippedCrude +

Concentrate

TotalConcentrates

Sold

Ag oz Sold

Au oz Sold

Pb lb Sold

1895 to 1900 1895 5,556 751,823 2,419 3,176,000 1896 9.346 1,167,657 2,613 4,914,400 1897 11,992 1,685,916 3,181 6,565,600 1898 11,452 1,676,371 4,952 6,799,200 1899 10,663 1,477,502 5,399 5,659,600 1900 8,254 1,174,668 6,466 4,984,800 Totals 1895-1900 203,778 57,263 7,933,937 25,030 32,099,6001901 to 1906 1901 62,008 60,095 1,313 4,933 889,378 5,846 3,871,303 1902 44,347

Incomplete records 1903 33,382 1904 8,506 8,344 162 1,175 111,788 774 956,721 1905 33,665 32,539 1,126 4,364 533,295 2,318 3,824,784 1906 42,336 39,693 2,643 4,352 647,903 3,160 4,170,616 Totals 1901 to 1906 162,236 141,271 5,244 14,824 2,182,344 12,098 12,823,424Totals 1895 to 1906 203,778 10,116,271 37,128 44,923,024Source: Tremlett (1976) modified by Perry (2013)

6.2 Historical Resource Estimate Sunshine utilized an electronic database and 3D computer model of the mine to estimate, and

frequently revise, the tonnage and grade of mineralization that had been defined from drilling and

channel sampling of the lower workings of the mine.



Sunshine optioned the Project from RV in 1994 and completed surface mapping and 15 surface

drillholes between 1994 and 1996. In 1998, Sunshine completed a feasibility study and published a

historical reserve estimate of 6.2 Moz of silver for the Mine in its annual reports. This estimate does

not comply with international reporting standards or guidelines. Table 6.2.1 presents the reserve

reported by Sunshine in December 1998 (Sunshine Mining & Refining Company, 2000;

www.infomine.com, accessed December 2011; www.intierra.com accessed June, 2012).

Table 6.2.1: Sunshine 1998 Historical Reserve Estimate for the Revenue Mine

Category Tons Ag Grade (oz/t) Au Grade (oz/t) Pb-Zn-Cu Concentrate (%) Unclassified 260,000 23.89 0.060 5.89 Note: No cut-off was provided. Source: Modified from www.infomine.com (June, 2012)

Sunshine carried the Project on its books until 2001 when they ended their option agreement.

Sunshine’s final 2001 estimate of proven and probable reserves in the Virginius Vein are 174,500 t

27.3 oz/t Ag, 0.072 oz/t Au, 4.59% Pb, 1.71% Zn and 0.35% Cu, at an average diluted mining width

of 2.1 ft. Proven and probable reserves for the Yellow Rose were 84,540 t grading 0.045 oz/t Au,

17.0 oz/t Ag, 2.33% Pb, 1.87% Zn, and 0.14% Cu. This was with a 3.8 ft diluted mining width.

In 2012, SRK reviewed the Sunshine data and conducted a historical resource estimate that was not

for public reporting. SRK’s resource estimate is listed in the Table 6.2.2 for the Virginius Vein System

and was only classified as inferred based on the confidence in the data at that time.

Table 6.2.2: Historical Mineral Resources for the Virginius Vein at a Cut-off Grade of 3 oz/t Ag

Resource Category

Tons (000s)

Ag Grade (oz/t)

Au Grade (oz/t)

Cu Grade

(%)

Pb Grade

(%)

Zn Grade

(%)

Contained Metal Ag

(M oz) Au

(oz) Cu

(M lb) Pb

(M lb) Zn

(M lb) Inferred 213 32.83 0.08 0.19 5.30 0.80 6.98 17,000 0.809 22.6 3.4

Note that the resource was clipped by the claim block. The vein is now covered by claims. Source: SRK, 2012

Yellow Rose was also estimated at that time but as an internal estimate. Below is the resource

estimate for the Yellow Rose (Table 6.2.3):

Table 6.2.3: Historical Mineral Resources for the Yellow Rose Vein at a Cut-off Grade of 3 oz/t Ag

Resource Category

Tons (000s)

Ag Grade (oz/t)

Au Grade (oz/t)

Pb Grade (%)

Zn Grade (%)

Contained Metal Ag

(M oz) Au

(oz) Pb

(M lb) Zn

(M lb) Inferred 213 26.23 0.03 3.16 2.10 5.6 6,400 13.5 8.9

Source: SRK, 2012



7 Geological Setting and Mineralization

7.1 Regional Geologic Setting The San Juan Mountains are the erosional remnants of a large Tertiary volcanic field covering

roughly 9,500 square miles in southwestern Colorado. The volcanic field was formed between 35+

and 22.5 Ma ago and contains fifteen defined and two buried calderas (Steven and Lipman, 1976).

The older pre-caldera volcanic rocks, thought to have formed 35 to 30 Ma ago, consisted of

intermediate, predominantly andesitic, flows and flow breccias. About 30 Ma ago the eruptive

character became more explosive depositing rocks of intermediate to more felsic composition. The

character of the volcanism changed again at about 28 Ma to a bi-modal suite of basaltic and rhyolitic

rocks with the largest volume of felsic rocks consisting of the Sapinero Mesa Tuff which was erupted

from the San Juan and Uncompahgre calderas.

7.1.1 Revenue Area Geologic Setting

Most relevant to the Project are the nearby San Juan-Uncompahgre, Silverton and Lake City

Calderas shown in Figure 7.1.1.1. These lie to the east of the Project. The San Juan-Uncompahgre

Caldera is a large northeast-aligned volcanic depression consisting of the earlier Uncompahgre and

San Juan Calderas which in turn host the younger Lake City Caldera in its northeast portion and the

Silverton Caldera at its southwestern segment. Steven and Lipman (1976) are of the opinion that the

Silverton/San Juan/Lake City/Uncompahgre Caldera system is unique in the San Juan Mountains in

that it displays the best developed radial/concentric fracture system of any of the calderas in the San

Juan Mountains. Steven and Lipman (1976) speculate that this complex and strong faulting are likely

the control for the vein systems in the San Juan Mountains.



Source: Perry, 2013

Figure 7.1.1.1: Western San Juan Caldera Complex after Steven and Lipman (1976)

7.2 Local Geology The dominant rock formation in the Revenue area is the 35 to 30 Ma andesitic San Juan Formation.

This is a thick package of mostly water-lain volcaniclastic rocks with minor lava flows. These rocks

are in turn overlain by younger (30 to 28 Ma) ash flows of the Ute Ridge and Blue Mesa Tuffs.

Volcanism in the Revenue area is interpreted to have begun approximately 28.4 and 26.37 Ma ago

related to eruptions in the Uncompahgre and San Juan Calderas. This resulted in the deposition of

the Dillon Mesa and Sapinero Mesa Tuffs. Subsequent doming and collapse resulted in the

development of the Silverton Caldera and in deposition of the Crystal Lake Tuff approximately

26.7 Ma.

Based on stratigraphic relationships, Burbank and Luedke (1966) believe that the Stoney

Mountain/Sneffels intrusive complex was forming contemporaneously with collapse of the Silverton

caldera although K-Ar age dating by Lipman and others (1976) yields ages for these intrusives of



about 32 Ma, indicating they had been active for some time prior to development of the Silverton

Caldera.

The veins of the Sneffels district seem to occupy structures that were genetically related to the San

Juan and Silverton Calderas and are radial and concentric structures extending for several miles

northwest of the actual caldera margin. These structures were apparently influenced by the

contemporaneous emplacement of the Stony Mountain Stock as evidenced by their propensity to

merge with the radial pattern of faulting surrounding the Stoney Mountain Stock (Figure 7.2.1,

modified from Varnes, 1963).

Source: Perry, 2013

Figure 7.2.1: Generalized Geologic Map of the Silverton, Ouray, Telluride Area after Varnes (1963)



7.2.1 Stratigraphy

There are several formations exposed within the Project area but not all are exposed in the

underground workings of the mine. Table 7.2.1.1 is a summary of the rock units which, within the

area of the mine, span a vertical thickness of nearly 3,500 ft.

Table 7.2.1.1: Stratigraphic Column for Rocks Exposed in the Revenue Mine Area

Series Formation Description

Oligocene

Gilpin Peak Tuff (Tgp)

(4 mbrs.) 28.4 Ma

Tpg-5 (Dillon Mesa tuff), 80’ Predominantly quartz-latitic, welded ash-flow tuffs Tpg-4, 32’

Tpg-3, (Blue Mesa Tuff) 325’ Tpg-1 (Ute Ridge Tuff), 490’

Burns Formation Dark, massive flows, flow breccias, and tuffs of predominantly rhyodacitic composition 0-230 ft thick

Eureka Member, Sapinero Mesa Tuff

Medium to dark, rhyodacitic to quartz-latite, welded ash-flow tuff with abundant lithic inclusions, 0-200 ft thick

Picayune Formation Dark, porphyritic and amygdular flows, breccias and tuffs of andesitic to rhyodacitic composition 50-100 ft thick

San Juan Formation 35-30 Ma

Primarily andesite to rhyodacite mudflow breccias with sparse interbedded andesite flows, 2000-2600 ft thick

Eocene Telluride Conglomerate Reddish-gray to red-brown conglomerate with interbedded sandstone, siltstone and shale, 0-520 ft thick

Source: Burbank and Luedke, 1966 and Lipman, et al., 1973

Although extensively exposed at surface in the area, the Burns Formation is not recognized within

the workings of the Revenue Mine. It is believed that the unit pinches out short of its intersection with

the workings. Below is a discussion of each of the formations oldest to youngest found in the

Revenue Mine.

Telluride Conglomerate

The Eocene Telluride Conglomerate is located in the Project area and while not actually exposed in

the Revenue mine it has been identified in drilling completed by Ranchers approximately 100 ft

below the bottom of the No 1 Shaft (700 Level) at about 800 ft below the Revenue Level.

The Telluride Conglomerate lies unconformably on an erosional platform consisting of rocks from

Precambrian to Cretaceous in age. It is an arkosic conglomerate with rounded to sub-angular clasts

of Precambrian quartz and lesser amounts of granitic, sedimentary and volcanic fragments ranging

in size from pebbles to boulders more than 3 ft in diameter. The larger clasts lie in a matrix of

ferruginous calcite-cemented fine-grained quartz, feldspars and mica. The Telluride Conglomerate is

exposed in red to grey cliffs below the Project facilities in the Sneffels Creek Valley. The unit pinches

and swells and contains discontinuous lenses of sandstone and siltstone. The Telluride

Conglomerate hosted significant base-metal replacement bodies in the nearby Idarado and Camp

Bird mines where veins intersected lenses of porous and reactive host carbonate. Because of this,

the Telluride Conglomerate is considered an economically important rock unit in the district. The

limited drilling completed by Ranchers that intersected the Telluride Conglomerate did not identify

any mineralization.



San Juan Formation

The San Juan Formation is the most extensively exposed rock unit in the vicinity of the Revenue

Mine. Within the mine workings it is exposed over more than 2,000 vertical feet from the 8th Level

down to the lowermost -700 Level of the mine. It is the host for the majority of the mineralization.

The unit is grey to maroon and is made up of heterogeneous, intermediate composition volcanic

fragments. Clasts range in composition from andesite to quartz latite and some clasts are porphyritic

within a very fine grained groundmass. Like many of the volcanic units in the western San Juan

Mountains, it is composed of mud flows, pyroclastic breccias, and water-lain tuffs. The unit was likely

deposited upon partially dissected flanks of active volcanoes (Lipman et al., 1973). Lipman et al.

(1973) dated material from a flow breccia at 32.1 Ma

Mapping in the district by Burbank and Luedke (1964, 1966) and Luedke and Burbank (1962) shows

the unit to be 2,000 to 2,600 ft thick, similar to its thickness in the mine. Depending on the particular

facies, the unit is fairly resistant and tends to form steep slopes and cliffs.

Picayune Formation

Near the mine, the Picayune Formation occurs as a 50 to 100 ft thick lava flow resting

unconformably on the San Juan Formation. It is a generally a dark amygdaloidal porphyritic andesite

to rhyodacite with 2 to 3 millimeter (mm) gray to white subhedral oligoclase laths. Burbank and

Luedke (1966) interpret the unit to be the lowermost member of the Silverton Volcanic Group but

Lipman et al. (1973) interpret the unit to be a “down faulted vent-facies accumulation forming the

cores of early central volcanoes that were the source of the mudflow breccias in the San Juan

Formation”. However, Coxe (1985) disputes that interpretation noting that near the Revenue Mine

the Picayune Formation occurs as a relatively thin and continuous flow overlying more than 2,000 ft

of San Juan tuff and deems it to be geologically improbable as an adequate source unit. Coxe (1985)

also notes that the unit is altered and most of the original dark minerals are no longer identifiable and

exist as some mix of chlorite, quartz and iron-titanium oxides.

Eureka Tuff

The Eureka Tuff is a medium to dark colored rhyodacitic to quartz latitic welded ash flow tuff with

abundant lithic fragments derived from similar composition lava (Burbank and Luedke, 1966). In the

Revenue Mine area the unit is discontinuous, lying unconformably on the irregular surface of the

Picayune Formation, which had been thinned by erosion. Where present, the Eureka Formation can

be up to 200 ft thick.

Lipman and others (1973) reinterpreted the unit as part of the Sapinero Mesa Tuff. However, since

the Eureka tuff occurs nearly 1,000 ft stratigraphically below the Sapinero Mesa Tuff in the Revenue

Mine area, Coxe (1985) is of the opinion that the Eureka Tuff represents more locally derived

material from one of the earlier intermediate composition eruptions from the nearby San Juan

caldera and is not part of the Sapinero Mesa Tuff.

Burns Formation

The Burns Formation is best developed as an intra-caldera volcanic unit with complex facies that

include lava flows, mud flows, breccias and tuffs. The unit is thought to have been deposited from

several local sources in a topographically complex environment. The eruptive facies of the unit in

particular extends beyond the rim of the Silverton caldera and at least as far north as the Camp Bird



Mine. The Burns Formation crops out in the area, but is interpreted to pinch out short of where it

would be expected to intersect the Revenue mine workings.

Similar to the underlying Eureka Tuff, the Burns Formation is an unconformable 0 to 230 ft-thick

discontinuous unit deposited onto actively developing topography (Burbank and Luedke, 1969). It

consists of medium to thick bedded rhyodacite and includes massive flows, flow breccias and tuffs

(Burbank and Luedke, 1966). Based on its stratigraphic position well below the Sapinero Mesa Tuff

in the area west of the San Juan caldera, Lipman et al. (1973) dispute the interpretation that this unit

is part of the Sapinero Mesa Tuff and instead place it as part of the early andesitic volcanic rock

package derived from the San Juan volcanic field.

Gilpin Peak Tuff

The Gilpin Peak Tuff represents a collection of separate units and these are the highest units

exposed in the Revenue Mine area. The Gilpin Peak Tuff actually consists of several mapped units

with four of these units outcropping in the high peaks near the Project. The lowermost unit of the

group, the Ute Ridge Tuff, is exposed in the upper three levels of the mine. The base of the Gilpin

Peak group occurs at about 12,400 ft elevation and all of the remaining units occur above this

topographic level (Coxe, 1985).

Lipman et al. (1973) state that the Ute Ridge Tuff correlates with unit one of the Gilpin Peak Tuff and

this is the unit exposed in the upper Revenue mine workings. It is dated at 28.4 Ma and was likely

erupted from the inferred Lost Lake Caldera. The rocks consist of red-brown densely welded quartz

latite with abundant plagioclase, sanidine, biotite and augite phenocrysts. Within the Revenue mine

area the unit is up to 490 ft thick (Coxe, 1985).

Unit three of the Gilpin Peak Tuff likely correlates with the Blue Mesa Tuff which researchers also

believe was erupted from the inferred Lost Creek Caldera. This unit is only found above 12,800 ft

elevation in the Project area (Coxe, 1985) where it is about 325 ft thick. The rock is a pale red-brown

densely welded tuff that Lipman et al. (1976) characterize as silica and phenocryst poor rhyolite.

Units four and five of the Gilpin Peak Tuff are found only at the highest points on the peaks in the

Project area. Unit 4 is a locally deposited quartz latitic tuff that is only about 30 ft thick. Unit 5 is

somewhat thicker in the Project area where Burbank and Luedke (1964, 1966) mapped a thickness

of 80 ft or more. The unit apparently correlates to the Dillon Mesa Tuff and Burbank and Luedke

(1964, 1966) interpreted it as two cooling units: a lower one consisting of grey-lavender pumice- and

lithic-rich tuff and an upper cooling unit of red-brown densely welded pumice and crystal-rich tuff with

a vitrophyric base.

7.2.2 Dikes

Northwest trending andesite dikes are common within the Project area and the Virginius vein adjoins

a dike along most of its mined extent.

Regionally, dikes are abundant and cross-cut all of the volcanic units. The dikes range in thickness

from 2 to 20 ft, are mostly northwest trending and typically dip at 65⁰ or steeper. These dikes vary

from dense aphanitic to porphyritic andesites containing up to 20% phenocrysts (Coxe, 1985).

Burbank (1941) notes that: “Some veins that follow dike walls are mineralized for horizontal stretches

of 25,000 ft or more, though not retaining commercial grade throughout.”



Particularly along the Virginius vein, a dike known as the Virginius Dike, is typically present,

sometimes as the host rock and other times as the hanging or footwall to the vein. This dike likely

plays some role in the mineralizing process, even if only to mark a structurally weak pathway for later

solutions to follow. The Virginius Dike is an aphanitic to slightly porphyritic andesite that averages

about 8 ft in thickness. It is easily recognized because it forms a blocky pattern along the mine’s ribs

where it is exposed (Coxe, 1985). The dike’s aphanitic groundmass is chloritized with some small

(0.2 mm) plagioclase microlites. Coxe (1985) says that up to 10% of the rock consists of 1 to 2 mm

andesine feldspar phenocrysts but otherwise hydrothermal alteration has destroyed the primary

mineralogy.

7.2.3 Structure

Pre-Tertiary structural events are evident in the deeply eroded Uncompahgre Gorge south of Ouray.

Precambrian through Cretaceous rocks are exposed and display several episodes of intense

deformation. Overlying these rocks are moderately folded and faulted Paleozoic to Mesozoic units.

During the Laramide orogeny this package of rocks was domed and earlier faulting was reactivated.

A later period of movement along these faults can be seen where they offset the overlying San Juan

Formation as the earliest structural event that may be directly relevant to the structural and

mineralization history of the Revenue Mine area (Luedke and Burbank, 1962; Burbank and Luedke,

1964).

Virtually all of the structural developments relevant to mineralization are related to the several major

caldera events in the region, particularly the Silverton, San Juan and Uncompahgre Calderas that

are to the east of the Project and to the caldera-concurrent emplacement of the Stony Mountain

Stock (Figure 7.2.1).

These calderas cover an area approximately 15 x 30 miles in extent (Figure 7.2.3.1) and include four

nested calderas within a larger collapse feature. The initial doming and subsequent collapse of these

calderas formed a very complex pattern of concentric and radial fractures that control most of the

veins and dikes in the region, and although somewhat obscured by deposition and erosion, still are

recognizable in the topography today. The Stony Mountain Stock which lies some five to six miles

northwest of the rim of the Silverton Caldera, seems to be structurally connected to the Silverton

caldera by a very prominent fault-vein-dike swarm called the Sneffels Axis (Figure 7.2.3.1). Near the

caldera rim the concentric and radial faults seem to have been developing at the same time as they

truncate and/or offset each other.



Source: Modified from Lipman et al, 1976

Figure 7.2.3.1: Important Structural Feature and Principal Veins in the Revenue Mine Area

According to Burbank (1941), dikes fill many of the radial structures near the Stony Mountain Stock,

but further to the southeast along the Sneffels Axis the proportion of dike-filled structures significantly

decreases. The central portion of the Sneffels Axis reaches roughly six miles in width. Across the

axis the structures change from southwest dipping on the southwest side to steeply northeast

dipping on the northeast side. Burbank (1941) cites this as evidence that these normal faults formed

largely in response to a down, rather than up, warping of the crust along the axis. Total vertical

sagging across the axis is estimated to be 200 to 500 ft and Burbank (1941) states that the axis

developed late, at least post Picayune Formation deposition, since the thickness of the Picayune

Formation stays constant across the axis rather than thickening due to ponding in the middle if it had



been deposited into an existing depression. The Virginius, Yellow Rose and Terrible Veins are all

part of the Sneffels Axis group of structures and are situated in the central portion of the axis.

7.2.4 Mineralization

Mineralization in the District is found primarily in sub-vertical fissure veins and is classified as a

telescoped epithermal quartz vein type deposit. The veins are characterized by somewhat

constrained vertical extents (generally less than 1,000 ft) and a vertical zoning that favors precious

metals in the upper levels grading into more base-metal rich mineralization with depth. There is also

replacement mineralization within the calcareous Telluride Conglomerate with up to 80% massive

sulfide. Replacement mineralization has not been identified in the Revenue Mine.

Lipman et al. (1976) made a comprehensive effort to age date material from numerous mines in the

western San Juan Mountains. They identified mineralization dating from as early as 29.6 Ma

southeast of the Uncompahgre Caldera to as young as 10.2 Ma for mineralization at Camp Bird Mine

in the District. The more significant deposits tend to date in a narrower range of 22.5 to 16 Ma

Table 7.2.4.1 summarizes some of the important dates in the district.

Table 7.2.4.1: Age Dates of Mineralization from the Northwestern San Juan Mountains

Area or Deposit Age Date Comment

SE of Uncompahgre Caldera 29.6 Ma Disseminated mineralization in the core of a strato-volcano

Capitol City District veins, 9 mi west of Lake City

Around 26.7 Likely coeval with development of Silverton/Uncompahgre Calderas

Chimney type deposits in the Red Mountain District

22.5 Ma Contemporaneous with Lake City Caldera

Replacement mineralization in the Argentine Vein

*17.0 Ma and 13.1 Ma * This is the more reliable of the two dates and is derived from K-feldspar

Shenandoah-Dives Vein from southeast of Silverton

16-17 Ma Roughly equivalent to age of veins northwest of the Silverton caldera

Sunnyside Vein north of Silverton in the Eureka Graben

Between 13.0 and 16.6 Ma Age date from Casadevall and Ohmoto, 1977

Camp Bird Vein 10.5 Ma and 10.2 Ma The young age is just one of several ways this vein is distinct from most in the area

Source: Lipman et al. (1976); Casadevall and Ohmoto (1977).

7.2.5 Alteration

Much of the volcanic pile throughout the western San Juan Mountains was subjected to mild to

strong propylitic alteration resulting in pervasive chlorite and calcite alteration with more intensely

altered areas also displaying epidote and pyrite. Coxe (1985) states that the type of wall rock along

the Virginius vein determined the nature of the alteration.

The Virginius andesite dike displays only minor alteration consisting of chlorite or calcite replacement

of the mafic minerals and plagioclase. The adjacent San Juan Formation shows stronger propylitic

alteration. Microscopically, the primary minerals have been replaced with sericite, chlorite, hematite

and other oxides. Higher in the section the Gilpin Peak ash flow layers display similar alteration to

the San Juan Formation (Coxe, 1985).

Mineralizing fluids further altered the rocks adjacent to the veins but typically over shorter distances

of about 2 ft in the San Juan Formation and 7 ft in the overlying Gilpin Peak units (Coxe, 1985). Coxe



(1985) observed that more distal vein-related alteration was dominated by chlorite while sericite was

dominant nearer the vein and tends to impart a bleached look to the rocks. Concentrations of pyrite,

siderite and quartz increase to within 2 to 9 inches of the vein where Coxe (1985) states that quartz

and sericite replace all of the siderite and calcite. Although there are extensive mineralogical

changes in the altered zone adjacent to the veins, primary breccia textures almost completely

survive the alteration process (Coxe, 1985).

7.2.6 Mineralogy of the Mineralization in the Virginius, Terrible and Yellow Rose Veins

Coxe (1985) as well as several other observers at the mine note that the principal mineralogy of the

Virginius, Terrible and Yellow Rose Veins is remarkably consistent both along strike and over the

exposed vertical extent of the systems. Table 7.2.6.1 lists the minerals in order of abundance and is

taken primarily from Coxe’s (1985) mineralogical study unless otherwise noted.

Table 7.2.6.1: Minerals Identified in the Virginius, Yellow Rose and Terrible Veins

Sulfide minerals in order of abundance Comment VeinGalena All Sphalerite All Chalcopyrite All Pyrite All Tetrahedrite All Arsenopyrite Virginius Marcasite Virginius Covellite Trace Mineral Only Virginius Stephenite/Polybasite Trace Mineral Only Virginius Native Silver Trace Mineral Only All Proustite* *Trace Mineral Reported by Bastin, 1923 Virginius Gangue Minerals In Order Of Abundance Quartz All Adularia (?) All Calcite All Chlorite All Rhodocrosite Virginius Ferroan-Rhodonite All Epidote All Magnetite Trace All Barite All Source: Modified from Coxe (1985)

Although the principal sulfide minerals are consistently present over the mined extent of the vein,

Coxe (1985) reported that manganese and iron minerals such as magnetite, ferroan-rhodonite and

calcian-ferroan-rhodochrosite are observed in the deeper parts of the mine and barite seems to be

present only high in the vein system.

Coxe (1985) studied 46 polished sections of Virginius vein material to develop a paragenesis of the

mineralization. In summary he identified three main stages of mineralization including:

The first and predominant stage of vein filling brought deposition of nearly all of the following

minerals:

o Galena predominates with lesser sphalerite,



o Tetrahedrite is the predominant silver mineral and tends to occur intergrown with

galena and sphalerite, and

o Pyrite, chalcopyrite and marcasite appear to have been deposited in preexisting

galena, sphalerite and tetrahedrite.

The second stage brought mostly ferroan-rhodonite, calcian-ferroan-rhodochrosite, quartz

and magnetite with disseminated pyrite which crosscut and replaced earlier vein material;

and

The third stage consisted of open-space filling by gangue minerals, mostly calcite.

Coxe (1985) studied fluid inclusions from minerals collected mostly from the Revenue Level and

below. His conclusion was that the average temperature of the mineralizing fluid in Stage 1

mineralization was between 225°C and 230°C. This indicates that this deposition occurred roughly

3,300 ft below the surface and that the low salinity (2% to 3% NaCl equivalent) fluids did not boil at

this level.

There has been no paragenetic sequence developed for either the Terrible or the Yellow Rose.

7.2.7 Project Vein Systems

The following discussion of the important veins within the Project area is taken in part from a Star

Mine Operations internal report written by Stephen Zahony (Zahony, 2013B). Figure 7.2.7.1 shows

the relationship between the Yellow Rose, Virginius and Terrible veins as well as additional veins

that are exploration targets for the Company along the trace of the Revenue Tunnel.

Source: Star, 2014

Figure 7.2.7.1: Revenue Tunnel and the Yellow Rose, Terrible and Virginius Veins



Virginius Vein System

The most historically productive vein system at the Project is the Virginius and its northern extension,

which is sometimes referred to as the Monongahela Vein. Reference to the Virginius Vein in this

report will include the Monongahela. Between 1875 and 1906 this vein system is estimated to have

produced over 14 Moz of silver with “significant lead and gold credits”. A longitudinal section of the

Virginius Vein’s workings by R.S. Trujillo and J.R. Trujillo (1977) shows that the main mineralized

shoot has the shape of a sail, narrow at the top but lengthening to as much as 3,000 ft strike length

at the Revenue Tunnel Level. Historical mining below the Tunnel Level to a depth of 350 ft confirmed

that this mineralized shoot continued below the Revenue Level (Zahony, 2013B).

Rather than being a single continuous vein, the vein occurs as an intermittently

stacked/anastomosing system of one to three sub parallel veins separated by up to 100 ft. Frequent

reference is made to the “hangingwall”, “footwall” and “main” vein and all have been productive in

different parts of the mine. Sunshine Mining subdivided the Virginius into six sub-veins as listed

below:

FW for the footwall vein;

HW for the hanging wall vein:

o V1 for the vein within the Virginius dike,

o V2 for the vein on the footwall of the Virginius dike,

o V3 for the vein on the hanging wall of the Virginius dike, and

o UK and QM for two minor veins between the footwall vein and the dike.

Given these several parallel vein strands, questions remain if in all cases development followed the

main vein or one of the several splits during mining.

The Virginius Vein in the north-northwest heading from the Revenue Tunnel is consistently a distinct,

8 inch to 1 ft thick, galena bearing vein, with perhaps 2 ft of altered and weakly mineralized rock on

either side. Wall rock beyond that total width is weakly altered and makes for relatively stable walls

for mining purposes.

The vein is continuous over long strike and dip distances and historic stoping occurs extensively

within a zone 3,600 ft along strike and 2,500 vertical ft. The vein is typically 1 ft or less in width

although it can be as thick at 3 ft. The largest intercept on the vein was approximately 7 ft.

The vein strikes from N45°W (near the 3 Level portal) to N25°W in the northwest part of the mine

(Coxe, 1985). In the upper workings the vein is nearly vertical or even steeply northeast dipping in

places. An inflection occurs at approximately the 6 level where the vein establishes a southwest dip

that persists to the lowest workings, varying from 45⁰ to 75⁰ but typically dipping 65⁰ to 75⁰

southwest.

Coxe (1985) says that historical mapping indicates the vein occurs in outcrop as high as 13,300 ft

and mining occurred as high as the 12,600 ft level. However, in describing his own effort to trace the

vein at the surface he says the highest outcrops he found that he felt he could confidently associate

with the Virginius vein were at 12,800 ft. He states that a combination of talus and snow cover and

the general characteristics of the Gilpin Peak Formation as a host make it difficult to follow the vein

at surface.



In the mine, the vein tends to follow the Virginius andesite dike and can occur as the hanging wall,

footwall or interior to the dike although close proximity is almost always the case. The dike is strongly

altered with much of the original mineralogy and texture destroyed or replaced. It does not appear

that the vein is genetically related to the dike but may rather simply follow the same zone of

weakness that the dike exploited.

The vein tends to be narrow but continuous and typically consists of quartz with variable amounts of

galena, tetrahedrite, sphalerite and chalcopyrite. The mineralogy of the vein is remarkably constant

over the very large vertical and horizontal span, although the silver grade is variable (Benham,

1980). Tetrahedrite is the principal silver mineral in the mine and can reach concentrations of 15%

silver by weight.

Terrible Vein System

The Terrible Vein has an overall N60°W strike with a steep southwesterly dip. Historical production

came from workings with portals on three levels spaced at about 100 vertical feet with adits along the

south slopes of Governor Basin ranging in elevation from 12,050 to 12,270 ft. A 4th and 5th Level

were reached by means of internal shafts but stoping only occurred above the 4th Level or above

11,950 ft elevation. The Terrible vein system is intersected by the Revenue Tunnel and followed by a

drift to the northwest of the tunnel for 1,202 ft and to the southeast for 850 ft. The intersection of the

Terrible Vein with the Virginius vein system was identified as an exploration target by Ranchers who

drilled one core hole from the surface. Sunshine drilled two holes in this region in 1995, and Star

drilled an additional 30 surface core holes into this target. The results from this data are widely

spaced but some of the data contributes to the Virginius resource estimate but not the classification.

A longitudinal section constructed by J.R. Trujillo in 1998 but revised in 2013 shows the old workings

and modern drillhole pierce points. There are exploration targets below the stoped areas in the

Terrible Vein. This is the most prospective part of the Terrible vein system that needs to be drilled

from the surface, if topography allows. Several reports state that some high grade gold was found in

the Sidney claim segment of the system. This has not been confirmed by modern sampling.

Yellow Rose Vein

Development of the Revenue Tunnel provided deep access to several veins in the District including

the Yellow Rose Vein. The Yellow Rose is a northwest trending vein sub-parallel to the Virginius

located more than 5,000 ft to the northeast. The Yellow Rose was mined to a minor extent in the

early years following development of the Revenue Tunnel and it has been explored by Ranchers,

Sunshine and Star over a length of approximately 3,800 ft and a down dip extension of

approximately 550 ft. The vein zone has been mapped over 16,000 ft at surface. The historical

stoping is not in the resource area. Like the Virginius, the Yellow Rose Vein dips steeply to the

southwest and consists of several anastomosing veins within a broader structural zone. The

mineralogy of the Yellow Rose is similar to the Virginius (Table 7.2.6.1) but in general it is a wider

vein averaging approximately 3 ft. The widest vein intercept sampled on this vein is approximately

10 ft with the smallest intercept at 0.1 ft. The Yellow Rose is considered to be a lower grade target

than Virginius. Unlike the Virginius, the Yellow Rose does not follow a dike.

The Yellow Rose Vein has been drilled from the surface and from underground with 125 drillholes.

Drill intersections and underground channel sampling results now constitute the data base on which

the estimated resources are based. Star has recently completed stope development work, which has

also been sampled. These samples are included in the resource database.



7.2.8 Other Important Veins within the Project Area

The following veins are controlled by the Company, but have not been systematically explored at this

time.

Cumberland Vein System

The Cumberland-Atlas vein system is a major vein system that is sub-parallel to the Virginius and

located about midway between the Virginius and the Revenue Portal, east of Yellow Rose. The old

Atlas crosscut tunnel, with a portal elevation of 11,225 ft, was the daylight point for production by old-

timers on the Atlas claim. Mined material was transported downhill to the north by means of an aerial

tram and treated at the Atlas mill. After 1893, when the Atlas Vein was exposed along the Revenue

Tunnel, smaller scale exploration and mining were conducted on the northern extension of the Atlas

Vein, along the Cumberland Vein. Available historical sample maps and reports mention several

attempts to explore and work the vein system but a systematic report of the history of the Tunnel

Level mining has not been found. The Cumberland Vein strikes N48-55°W, similar to the Virginius

but in contrast with the Virginius vein, dips steeply to the NE.

Wheel of Fortune Vein System

The Wheel of Fortune Vein has a strike direction approximately perpendicular to the general

northwest-trending veins of the Sneffels District. Its northeasterly strike trend and northwesterly dip is

covered by as many as ten full patented claims that follow the vein’s surface trace from northeast of

Sneffels Creek to the Smuggler-Union vein system on the San Miguel County side of the drainage

divide, a distance of over two miles. Despite its long extent there has been little production from the

vein.

Though the structure is strong and persistent, at the Revenue Tunnel Level it appears that this may

be too deep to host economic material of significant width. The Wheel of Fortune structure could

contain mineralized shoots at higher elevations along its strike length, and it represents an important

target. A surface mapping and sampling program, following the surface trace of the vein, is

warranted, to explore for anomalous segments, which could be subsequently drilled.

Torpedo Vein System

The Torpedo Mine is located north of and just across the valley from the Revenue Mine portal. The

mine explores a consistent northwest trending quartz fluorite vein that dips at 60⁰ to 80o to the SW.

From the mine portal to the first major two-compartment raise is a distance of approximately 680 ft,

which includes the initial 80 ft of crosscut to reach the vein near the portal. Except for a few points

along the 600 ft of exposed vein, there has been no significant stoping of the vein. The drift is

timbered at several places for support. Locally, there is abundant clay in the wall rock and sticky clay

seams are common within and marginal to the vein. Beyond the caved raise at 680 ft, the main drift

continues for another 450 ft to a second caved raise where waist-deep water backed up. No stopes

exist along the 450 ft of exposed vein between the two caved raises.

The Torpedo Vein consists dominantly of banded epithermal quartz but is unusual for its abundant

green to white fluorite and low sulfide content. Base metal sulfides were not observed in the vein and

pyrite makes up a small percentage (1% to 3%) of the vein material. The vein ranges from 1 to +10 ft

wide, averaging approximately 3 to 4 ft in width, and contains about 10% to 20% late-phase fluorite.

Vein walls are moderately clay altered pyrite-bearing San Juan Formation but locally the walls



consist of aphanitic mafic dike material that is also pyritic and clay altered. These vein-parallel dikes

are not obvious on the surface but are persistent underground.

A limited number of samples collected across the Torpedo Vein during Star’s assessment of the

underground workings, one returned a result of 0.455 oz/t Au over a width of 4.4 ft. SRK has not

reviewed or confirmed these results. This was the back-most sample taken in the main drift, across a

short crosscut exposing the main vein. For the length of the vein exposed in the accessible

underground workings, the vein is dominantly quartz and fluorite with some carbonate. Sulfide

minerals are virtually absent. The Torpedo vein is currently and exploration target for the Company.



8 Deposit Type

8.1 Mineral Deposit The Revenue Mine vein deposits and the several associated veins within the mine are classified as

volcanic-hosted epithermal base and precious metal vein type deposits. These deposits are

sometimes referred to as intermediate sulfidation epithermal deposits typically characterized as high

in silver and gold with or without base metals, associated with andesite volcanism and structurally

controlled. The mineralogy found at the Project is consistent with this type of mineralization and

includes galena, sphalerite, tetrahedrite, chalcopyrite, pyrite, arsenopyrite, marcasite as well as

ferroan rhodonite, calcian-ferroan rhodocrosite, quartz and chlorite. At Virginius, chalcedonic quartz

and cockscomb textures have been observed and late euhedral calcite is found in places. Fluid

inclusion studies suggest that boiling did not occur in the system. However, the presence of breccia

in places indicates that at least some boiling occurred (Sunshine, 2001; Coxe, 1985).

SRK is of the opinion that the Company is applying an appropriate deposit model to the Project for

use in exploration.



9 Exploration The Company has just recently acquired the Project. All exploration and drilling activity supporting

the resource estimate were completed by Star.

9.1 Star Mine Operations Exploration Activity Since 2011, Star’s principal exploration effort has been a combination of surface and underground

core drilling in the Virginius, Terrible, Wheel of Fortune and Yellow Rose veins and exploration and

development drifting in the Yellow Rose Vein. Star has also collected exploration samples from

outcropping veins, systematically sampled mine dumps and collected channel samples in the Yellow

Rose from underground. Star’s drilling is discussed in Section 10.

9.2 Survey work In 2013 Star contracted PhotoSat to acquire Pleiades Satellite 50 centimeters (cm) (20 inches) high

resolution imagery covering almost 40 square miles including and surrounding the Project area.

Based on this imagery, PhotoSat produced topographic data with elevation contours down to 2.5 ft

and delivered the imagery and contours in the projects local coordinate system to facilitate

integration with the existing digital data and ease of use by Revenue Mine staff.

Star contracted Merritt LS LLC (Merritt) in Grand Junction to conduct surface and underground

surveying. Merritt has checked and confirmed historical underground work as well as developed the

surface control used for the satellite imagery acquisition and for surveying Star’s surface drilling.

Merritt also surveyed underground drillhole collars and verified any pre-Star drill collars that could be

located on surface and in the underground. The Project now has sub-meter accuracy control for its

major surface and underground infrastructure.

9.3 Previous Exploration and Channel Sampling Prior to Star the available exploration records started with Camp Bird’s in 1966 and continued with

Rancher’s and then Sunshine’s work on the Project. Table 9.3.1 shows exploration work completed

during the period of 1966 to 2001 in the Project area. The number of drillholes reflects all drillholes

drilled at the Project and includes targets outside the Yellow Rose, Virginius and Terrible veins. Not

all of the drillholes were used during resource estimation.

Table 9.3.1: Exploration Work Completed between 1966 and 2001

Historical Sampling 1966 to 2001 # of Completed Work Surface Exploration Samples 9 Surface Samples of Dumps and Tailings 0 Underground Channel Samples 1286 Surface Core Holes 161 Underground Core Holes 309 Source: Star, 2013

The channel sampling programs typically focused on particular sections of various veins. Samples

were collected on 6 to 10 ft centers along the vein with samples taken across the vein width and

typically in the range of 0.5 to 2 ft. Samples were collected using a hammer and chisel and were a



continuous, chip channel sample. The samples were collected to be as continuous a possible using

the available equipment.

Camp Bird, Ranchers and Sunshine were successful underground mining companies and the work

completed by these companies was industry standard for the time period when the work was

completed.

9.4 Ranchers F9 Test Stope Ranchers first drilled, then stoped and systematically channel sampled a section of the Virginius

footwall vein identified as the F9 Test Stope. This stope was developed between the 210 Level and

the Revenue Level. However, it is thought that only the swell was pulled from the stope and no test

milling was completed. In the area around and including the F9 Test Stope, Ranchers reported good

correlation between drillholes and channel samples. No recent work by Star has been completed to

confirm this correlation.

9.5 Star Exploration and Channel Sampling Star’s exploration efforts began in 2012 and continued through 2013 and included surface and

underground sampling as well as surface and underground drilling. Star has completed the

exploration work shown in Table 9.5.1.

Table 9.5.1: Star Exploration Work

Star Sampling 2012 to 2013 Star 2012 Star 2013 Surface Samples of Dumps and Tailings 0 818 Underground Channel Samples 0 201 Surface Core Holes 39 33 Underground Core Holes 33 0 Source: Star, 2013

Star used the same channel sampling techniques as Ranchers. The channel sampling programs

were completed on 6 to 10 ft centers along the vein with samples taken across the vein width.

Samples were collected using a hammer and chisel and were a continuous, chip channel sample.

The samples were collected to be as continuous a possible using the available equipment.

9.6 Star Atlas Tailings and Virginius Mine Dump Sampling Star has investigated the possibility of processing material from the Atlas Tailings and Virginius mine

dump. As part of this, Star sampled the Atlas historic tailings, which are located northwest of the

Revenue Portal. Star collected 269 samples on a nominal grid of 35 ft x 35 ft. The Virginius mine

dump located at the 3-Level in Governor Basin was sampled on a 5 ft x 25 ft grid by digging 1 ft deep

pits. There were 542 samples collected from this site. Preliminary results indicated that there is the

possibility of processing the Atlas tails and Virginius dump material. This material would be easy to

recover and move to the Star mill. Additional evaluation is required for both targets.



9.7 Significant Results and Interpretation SRK is of the opinion that the work completed to date is industry practice and appropriate for the

Project at this stage. SRK recommends that any additional channel sampling be conducted using

careful documentation and supervision with current industry standard QA/QC sampling.



10 Drilling Between 2012 and 2013, Star drilled 101 surface and underground drill holes on the RV property.

This drilling was a combination of infill, offset and exploration drilling. The logistics of additional

drilling from the surface are challenging due to topography and the geometry of the veins. Easily

available locations to collar strategic holes underground are limited. As old workings are reopened

and new workings are developed, additional underground drill stations can be used to drill the veins

at depth.

10.1 Type and Extent Prior to 1966, the Revenue Mine was explored and developed by conventional underground drifting

and shaft sinking. Given the continuity along strike and dip of the mineralization, this technique was

cost effective for the earlier operators. There are no records of these early operators having

completed any drilling on the Project.

The first modern exploration and development drilling occurred in 1966 when Federal Resources,

explored the Project as a way to expand operations at the Camp Bird Mine. The Camp Bird Mine is a

gold mine while the Project is a past silver producer. Camp Bird reopened some of the workings on

the Virginius vein below the Revenue Tunnel level and drilled seven core holes from the 350 Level

totaling 1,140 ft of AQ core with a diameter of 1.062 inches. In 1968, Federal Resources expanded

their efforts to include surface exploration and drilled six NX sized core holes (2.155 inch diameter)

on the Monongahela claim to explore the northern extension of the Virginius Vein. This surface

drilling totaled 5,255 ft.

In 1980, Ranchers acquired control of the property. Ranchers’ work included both surface and

underground drilling, targeting the Virginius, Terrible and Yellow Rose Veins and other veins in the

claim block, including the Banner-Governor and Highland Chief. Ranchers drilled a total of 84,729 ft

of core including 12,967 ft from the surface and 71,762 ft from underground.

In 1994, Sunshine took control of the Project and mapped most of the accessible workings off the

Revenue Level. Sunshine drilled 6,567 ft of NX core to explore several surface targets including the

Yellow Rose, Wheel of Fortune, Mikado, Silver Queen and Terrible veins.

Star purchased the Project in 2011 and initiated a drilling program in 2012. Star’s target in 2012 was

the Yellow Rose vein. The Company drilled NQ core with a diameter of 1.875 inches completing

9,681 ft of drilling underground and 9,456 ft of drilling at the surface. Star also drilled 8,540 ft of NQ

core on the surface of the Monongahela claim to explore the northern extension of the Virginius vein.

Star completed 2,516 ft of underground core drilling to explore the Wheel of Fortune vein at the end

of 2012.

In 2013 Star drilled 20 NQ core holes from the surface in Governor Basin to explore the Terrible and

Virginius veins completing 11,868 ft.

In total, the combined drilling on the Project since Federal Resources’ early efforts totals 139,752 ft

of core including 85,099 ft from underground and 54,653 ft from the surface. All of the historical core

was retained in a warehouse on site at the Revenue Tunnel portal. This warehouse was broken into

and vandalized. Pieces of core were stolen from core boxes and approximately 30% of the core was

dumped. The core from drilling prior to Star’s ownership of the property that was not vandalized is



stored in Star’s core facility in Ouray, Colorado. All of the core from Star’s 2012 and 2013 drilling is

also stored at this core facility. Table 10.1.1 summarizes the drilling at the Project. Figures 10.1.1

and 10.1.2 show the drillholes at the Yellow Rose and Virginius and Terrible, respectively. Not all drill

data is within the resource area.



Table 10.1.1: Total Core Drilling on the Revenue Virginius

Hole Nos. Date Company Location Core Number of

Surface Holes Number of

Underground Holes Surface

(ft) UG (ft)

DDH-1 to DDH-7 1966 Federal Resources 350 Level AQ 7 1,140 DDH-M-1 to DH-M-6 1968 Federal Resources Monongahela surface NX 5 5,255 Federal Resources Total 7 5 5,255 1,140 BG-1 to BG-2 1981 Ranchers Banner-Governor surface NX 2 786 M-1 to M-2 1981 Ranchers Monongahela surface (Virginius Vein) NX 2 1,690 T-1 1981 Ranchers Terrible Vein surface NX 1 896 HC-1 1981 Ranchers Highland Chief surface NX 1 405 Y-1 to Y-24 1984 Ranchers Yellow Rose Rev. L. AQ & AW 24 7,557 YR-1 to YR-7 1981 Ranchers Yellow Rose surface NX 7 2,221 YR-8 to YR-17 1982 Ranchers Yellow Rose surface NX 10 1,695 YR-18 to YR-28 1983 Ranchers Yellow Rose surface NX 11 2,912 YR-29 to YR 36 1984 Ranchers Yellow Rose surface NX 8 2,362 RV-1 to RV-6 1981 Ranchers Revenue Level AX 6 2,953 RV-7 to RV-40 1981 Ranchers Revenue Level AQ 34 4,883 RV-50 to RV-53 1983 Ranchers Revenue Level AQ 4 553 RV-63 to RV-79 1983 Ranchers Revenue Level AQ 17 3,009 RV-80 to RV-85 1984 Ranchers Revenue Level AQ 6 1,246 TT-1 to TT-18 1983 Ranchers 210 Level AQ 18 3,371 TT-19 to TT 43 1984 Ranchers 210 Level AQ 25 5,655 TF-1 to TF-9 1982 Ranchers 350 level AQ 9 1,927 FF-1 to FF-100 1983 Ranchers 550 Level AQ 100 29,544 FF-101 to FF-152 1984 Ranchers 550 Level AQ 52 11,065 Ranchers Total 66 271 12,967 71,762 YR-37 toYR-43 1994 Sunshine Yellow Rose surface NX 7 2,820 YR-44 toYR-46 1995 Sunshine Yellow Rose surface NX 3 1,177 WF-2 to WF-3 1995 Sunshine Wheel of Fortune surface NX 2 455 MK-1 to MK-2 1995 Sunshine Mikado Vein surface NX 2 660 SQ-1 to SQ-2 1995 Sunshine Silver Queen surface NX 2 572 T-2 to T-3 1995 Sunshine Terrible Vein surface NX 2 883 Sunshine Total 18 6,567 0 Y-25 to Y-50 2012 Star Yellow Rose NQ 33 9,681 YR-47 to YR-66 (-75) 2012 Star Yellow Rose surface NQ 31 9,456 WOF-1 to WOF-7 2012 Star Wheel of Fortune NQ 7 2,516 MT-1 to MT-13 2012 Star Monongahela surface (Virginius Vein) NQ 13 8,540 MT-14, MT-16, MT-17 2013 Star Monongahela surface (Virginius Vein) NQ 2 2,772 TR-1 to TR-17 2013 Star Terrible Vein surface NQ 17 9,096 Star Total 70 33 29,864 12,197 Total by Drilling Type (Surface or Underground) Total 161 309 54,653 85,099 Total Drilling Total 470 139,752

Source: Zahony, 2013; Perry, 2013



Source: SRK, 2014

Figure 10.1.1: Plan Map showing Drill and Channel Sample at Yellow Rose



Note: Stoped out areas are not shown. Source: SRK, 2014

Figure 10.1.2: Plan Map showing Drill and Channel Sample at Virginius and Terrible

Figure 10.1.2 does not show the stoped areas located in the southeast half of the Virginius or the

stoped areas in the Terrible.

SRK does not know the drilling contractors used prior to Star’s involvement with the Project. Drilling

completed by Star during 2012 and 2013 was contracted to Core One Drilling Co. based in Delta,

Colorado. Core One operated two shifts of two men per drill.

10.2 Procedures All Star drillhole collars were surveyed by Merritt. Any historical drillhole collars that could be

positively identified have been surveyed. Holes that predate 2012 that cannot be located may vary

from a few feet to 30 ft above or below the surface. These older holes were registered to the

topography for modeling and resource estimation and showed acceptable correlation with Star data.

SRK recommends a more focused effort to identify historical holes and check their collar elevations

and survey locations.



Downhole surveys were completed by the drilling company using a REFLEX EZ SHOT tool provided

by Core One. This is a magnetic downhole survey instrument. There are trace amounts of magnetite

in the mineralization at a microscopic level. According to Star, the amount of magnetite present has

not affected the use of Brunton compasses or other magnetic instruments underground and there

have been no observed issues with using magnetic downhole survey instruments. The drillholes

were surveyed at varying intervals along the hole and at the bottom of the hole.

Drill core was placed into waxed cardboard boxes directly from the core tube at the drill site. A

wooden run-block was marked with the hole depth in feet and was placed in the core box upon

completion of each drill run. The core was drilled with 10 ft tools for surface drilling and 5 ft for

underground drilling. Core recovery was generally very good and 100% core recovery is common.

The core boxes were covered with a cardboard lid and then transported to the core logging facilities

in Ouray. Core was typically delivered at the end of each shift, depending on productivity and

weather conditions. Core was transported from the drill rig to the Revenue Portal by the drilling

contractor.

After drilling, underground drillhole collars drilled by Star were surveyed by site personnel and later

checked by Merritt. Merritt set the surface control points for the Project, surveyed all surface

drillholes drilled by Star and locatable surface drillholes from previous operators. Merritt also

surveyed accessible underground workings and drillholes that could be located on the Revenue

tunnel level.

10.3 Interpretation and Relevant Results Drilling is conducted to intercept the veins as perpendicular as possible. However, given the terrain

and drilling access very few intercepts are of true thickness. Additional drilling at the central area of

the Virginius will have to be completed from underground to intercept the vein perpendicular to the

vein dip.

10.3.1 Interpretation

Drillhole collar coordinates from drilling programs prior to Star may vary from a few feet to 30 ft

above or below the surface. SRK does not know how much northing and easting offset may be

present. These older holes were registered to the topography for modeling and resource estimation

and showed acceptable correlation with Star data. SRK recommends a more focused effort to

identify historical holes and check their collar elevations and survey locations.

SRK is of the opinion that the Company meets industry best practice in conducting its drilling and

logging programs. SRK is of the opinion that the results of both the historic and recent drill programs

are reliable, and suitable for use in resource estimation.



11 Sample Preparation, Analysis and Security

11.1 Historic Sample Security Sample security, preparation and analysis by previous operators pre-dated public reporting under

CIM guidelines. The work conducted by previous operators was done using industry practice of the

time period. Core was stored at the warehouse at the Revenue Tunnel portal and until Sunshine

ended involvement with the Project in 2001, was controlled and secure. As discussed in Section

10.1, the core warehouse at the Revenue Portal was broken into between 2001 and 2011 and

approximately 30% of the historic core was lost through vandalism. During historic operations, core

and channel samples would have been moved from the drill site or collection site to the portal area

and then shipped to the appropriate laboratory.

11.2 Historic Sampling Core drilled by Federal Resources and Sunshine was split in half lengthwise with one half retained

and one half shipped to the assay laboratory for analysis. The other half of the core was retained at

the warehouse. SRK does not know precisely how the core was split; however, during this time

period it was likely a manual splitter.

11.3 Historic Analytical Federal Resources had access to the Camp Bird Mine laboratory located at the Camp Bird Mine.

Analytical work for any drilling completed between 1960 and 1970 would likely have been analyzed

in that laboratory. SRK cannot confirm this. The Camp Bird laboratory conducted Fire Assay (FA) for

precious metals and had the capability of analyzing copper, lead and zinc. SRK does not know the

detection limits for these analyses at this laboratory.

Between 1980 and 1984, Ranchers used the following analytical laboratories:

Mountain States Research and Development (Mountain States) in Vail Arizona;

Root & Norton in Silverton, Colorado;

Union Assay Office, Inc. (Union Assay) in Salt Lake City, Utah; and

Skyline Labs, Inc. (Skyline) in Wheat Ridge, Colorado.

These laboratories analyzed precious metals by FA. Root & Norton report that FA was a one assay

ton charge. None of the other labs distinguish whether FA was by 1 or 2 assay ton. Copper, lead and

zinc were likely by Atomic Absorption Spectroscopy (AAS). The lower detection limits for FA at

Skyline and Root & Norton were 0.005 oz/t for gold and 0.01 oz/t for silver. Skyline reported a lower

detection limit of 0.005% for copper and lead and 0.002% for zinc. Mountain States reported gold

grades down to 0.001 oz/t and silver down to 0.05 oz/t but SRK is unsure if these are the lower

detection limits. Neither Root & Norton nor Mountain States indicated what the lower detection limit

for copper, lead and zinc were on their assay certificates.

Sunshine explored the Project between 1994 and 2001 and used Skyline for analytical work at the

Project.



11.4 Star Security Measures The core was transported to the Star facility in Ouray by either the contractor or Star personnel. The

core was then stored in a locked secure facility until it was logged and sampled. After sampling,

samples were shipped via FedEx or UPS to ALS Global (ALS) in Reno, Nevada. All facilities

supervision, technical program supervision, and core logging were carried out by employees of Star.

11.5 Drill Core Processing The core logging and storage facility is a large warehouse located in Ouray. The core is stored on

pallets and on racks. To log the core, each box in a drillhole was laid out in sequence on elevated

racks in the core logging area of the warehouse. The core was examined for condition, missing core,

and depth tag errors. Boxes were labeled for photographing with black felt tip pens including the hole

number, depth, and box number. The core was then washed and photographed.

11.6 Geotechnical Data Significant faults and zones of incompetent core are marked and entered in the log. Star did not

collected Rock Quality Designation (RQD) or other geotechnical data during its drilling programs.

11.7 Core Recovery Core recovery was recorded for each core run, which was every 5 ft for underground or 10 ft for

surface holes. Rubble, re-drill, or slough recovered at the top of a core lift that was not in place is not

counted as recovered core and was discarded. The core recovery data collected by the geologist

was recorded in the drill log. Recovery is greater than 95% and up to 100%.

11.8 Detailed Core Logging Geologic data was entered on a paper core logging form as the field geologists log the drill core. The

log sheet that includes drillhole location, bearing, inclination and start and finish date. Other

information includes core recovery, description of the core and sample from, to and length

information. Within the logging section, a comprehensive description of lithology, structure, alteration,

mineralization and veining was made by the field geologists.

11.9 Sampling Methodology Star geologists sampled vein intercepts and alteration associated with the vein. Star did not sample

barren wall rock. The geologist marked sample intervals on the core where a vein or mineralization

was visible. The minimum sample interval was defined by the width of the vein. All samples were

recorded on the drill log. Sample data was subsequently entered into a sample spreadsheet. Sample

numbers were assigned sequentially from sample tag books provided by Star. Each sample has a

unique sample number. A wooden block with the sample number was put into the core box at the top

of each sample to provide a permanent record of the sample. The samples were sawed in half

lengthwise with one half sent to the lab and the other half kept in the core box representing the

interval. All samples were cut using a diamond saw. A printed sample tag was placed in the sample

bag with each sample by core cutting personnel. All sampling was performed by Star personnel

under the supervision of the chief geologist.



All samples were packaged and shipped from Ouray via FedEx and UPS to ALS in Reno, Nevada,

generally within five days of sample collection. ALS has ISO 17025:2005 accreditation for individual

analytical methods and ISO 9001:2008 accreditation for quality management. Individual samples are

packed in rice bags sealed with duct tape. Samples were organized sequentially, in each rice bag

with no more than ten samples per bag. Rice bags were labeled with the shipment number, bag

number and total number of rice bags in the shipment. Each bag also had the sample number range

included in the bag on a sheet of paper. A laboratory sample submittal form was filled out and

emailed to the lab. Shipment information was recorded in a sample tracking spread sheet.

11.10 Core and Sample Storage After logging and sampling, the core boxes are stored at Star’s field office in Ouray in the warehouse

or in locked steel cargo containers. After analysis, all sample pulps and rejects were shipped from

ALS in Reno back to Ouray where they are stored in a locked weatherproof building.

11.11 Sample Analyses When samples were received by ALS in Reno, they were opened, sorted and dried prior to

preparation. All samples were crushed to >70% passing 6 mm. The coarse-crushed material was

then fine-crushed to 70% passing 2 mm and a Boyd Rotary Splitter was used to split a 1,000 gram

(g) sample. The 1,000 g split was pulverized to 85% passing 75 micrometer (μm) (0.075 mm).

The samples were then analyzed by FA with a gravimetric finish for both gold and silver. This is ALS

method ME-GRA22, which is analysis using a 50 g charge. The analytical range is 5 to 10,000 ppm

for silver and 0.05 to 1,000 ppm for gold. Silver was also analyzed using Ag-GRA21, which is a 30 g

charge, FA analysis with gravimetric finish if there was insufficient sample to run using a 50 g

charge. The upper limit for this analytical method is 100 ppm. Star also had a subsample analyzed

using a 33 element geochemistry package that includes silver, copper, lead and zinc. This is ALS

code ME-ICP61 and analysis is by Inductively Coupled Plasma-Atomic Emission Spectroscopy (ICP-

AES) and four acid digestion. Table 11.11.1 lists the elements and detection limits for ALS method

ME-ICP61. Over limit analytical results for silver, copper, lead and zinc using the geochemistry

package were re-analyzed using ALS method OG62 for individual elements.

Table 11.11.1: Elements and Upper and Lower Detection Limits for ALS code ME-ICP61 (Limits are in ppm unless otherwise noted)

Element ppm Element ppm Element ppmAg 0.5-100 Fe 0.01-50% S 0.01-10% Al 0.01-50% Ga 10-10,000 Sb 5-10,000 As 5-10,000 K 0.01-10% Sc 1-10,000 Ba 10-10,000 La 10-10,000 Sr 1-10,000 Be 0.5-1,000 Mg 0.01-50% Th 20-10,000 Bi 2-10,000 Mn 5-100,000 Ti 0.01-10% Ca 0.01-50% Mo 1-10,000 Tl 10,10,000 Cd 0.5-1,000 Na 0.01-10% U 10-10,000 Co 1-10,000 Ni 1-10,000 V 1-10,000 Cr 1-10,000 P 10-10,000 W 10-10,000 Cu 1-10,000 Pb 2-10,000 Zn 2-10,000 Source: ALS Geochemistry, 2013

ALS shipped the pulps and rejects back to Star, which are stored at the Company’s warehouse in

Ouray.



11.12 Quality Assurance/Quality Control (QA/QC) Historical QA/QC was not systematic and was run to verify certain samples. It is uncertain if some of

the duplicate samples were FA screen analysis in which case they would not be appropriate for a

duplicate comparison. A comparison of this historical data showed poor correlation, which could be

the result of an inappropriate comparison.

The Star QA/QC program includes Reference Materials (RMs), blanks and duplicate silver analysis.

Star was advised that it is an acceptable industry practice to monitor the ALS internal preparation

and pulp duplicates as part of the QA/QC program. Any failures in the ALS duplicate data must be

reviewed to determine why the failure occurred and rerun if necessary.

Star does not insert core duplicates. Core duplicates are used to test the variability of a deposit and

can be used to determine adequacy of sample size during preparation. Because of the previous

mining and work conducted at the Project, Star is of the opinion that the sample size for preparation

is well understood. Preparation duplicates from ALS support this. Star could test this by submitting a

subset of the retained core to verify the variability and sample submission size.

11.12.1 Reference Materials

In 2012, Star used RMs from Minerals Exploration & Environmental Geochemistry (MEG), Reno,

Nevada). The standards were certified using ICP analysis and did not provide consistent results for

FA analysis. In addition, Standard A averaged 7.68 ppm Ag, which is approximately 0.245 oz/t Ag

and below the cut-off grade at both Yellow Rose and Virginius. Because of this, it was recommended

that Standard A be discontinued for the 2013 drilling program. Standard B averaged 292.7 ppm or

approximately 8.53 oz/t Ag. This is an appropriate analytical range for the deposits but was not

appropriate for FA since RM certification was completed using ICP and FA is the method used for

resource estimation. A more useful standard would be certified for the analytical methods used

during analysis. Standards certified for FA were added to the QA/QC program.

There were five submissions for Standard A and four submissions for Standard B during 2012.

Standard A had five analytical results for all analyses except silver FA, which only had four results.

This may be due to a lack of material. Both standards performed within the expected range for ICP

analysis of silver. However, for silver FA, all but one of Standard A analyses failed. All of the silver

FA analyses for Standard B, which is the higher grade standard, performed low and well below the

expected value for the standard.

Standard A was not certified for gold and gold was not tracked for this standard. Standard B had one

high failure for gold with the rest of the analyses performing low and well below the expected value.

For lead, zinc and copper, Standard B performed within the expected range. Standard A had one

failure that was high, zinc was very low with marginal failures and copper was in the performance

range but was also low. It was recommended that RMs be selected that are more representative of

the mineralization at the Project.

For the 2013 drilling program, Star purchased additional RMs from MEG, Reno, Nevada. These were

Standards A, B and C. There were 11 total standard submissions with four each for Standards B and

C and three for Standard A. Standard A is not certified for gold. Tables 11.12.1.1 to 11.12.1.5

present the RM performance by metal.



General industry practice is to use the following method for determining RM failures:

If one analysis is outside of ±2 standard deviations it is a warning;

Two or more consecutive analyses outside of ±2 standard deviations is a failure; and

If an analysis is outside ±3 standard deviations it is a failure.

The ±3 standard deviation threshold should not be more than 10% of the expected value.

Table 11.12.1.1: Reference Materials for Standard Silver

Reference Material

Number Samples

Expected (oz/t) Observed (oz/t) % of Expected

Number Failures

% Failure RateMean Std Dev Mean Std Dev

Standard A 3 0.224 0.013 0.233 0.058 96 1 30Standard B 4 8.715 0.590 8.025 0.096 92 0 0Standard C 4 78.28 4.90 78.09 0.89 99 0 0Total 11 1 9

Table 11.12.1.2: Reference Materials for Standard Gold

Reference Material

Number Samples

Expected (oz/t) Observed (oz/t) % of Expected

Number Failures


Standard A 3 NA NA NA NA NA NA NAStandard B 4 0.031 0.0012 0.032 0.003 103 1 25Standard C 4 0.046 0.0029 0.059 0.018 128 1 25Total 8 2 25

Table 11.12.1.3: Reference Materials for Standard Copper

Reference Material

Number Samples

Expected (%) Observed (%) % of Expected

Number Failures



Table 11.12.1.4: Reference Materials for Standard Lead

Reference Material

Number Samples


Number Failures



Table 11.12.1.5: Reference Materials for Standard Zinc

Reference Material

Number Samples


Number Failures



This is a limited dataset and more measurements would be required for a representative

interpretation. The failures that occurred were in the low grade silver RM and in the gold RMs. The



silver failure is below the lower cut-off grade for the deposit and is not material to resource

estimation. SRK notes that use of a RM closer to the lower cut-off grade would be more appropriate

and is recommended. The gold standards are both in the range of the average grade for gold and

this RM should be monitored carefully. It may be that the RM is not appropriate for the deposit or

was not properly certified. If the RM continues to have failures, Star should obtain a different RM for

gold in this range. The limited data show that the laboratory is providing accurate analysis and the

with the exception of gold, the RMs are performing within acceptable limits. ALS internal standards

for gold were acceptable and there were no other control sample failures for gold in the grade range

of interest. Because of these factors, SRK recommends continuing to monitor the gold standard and

is accepting the results for gold for resource estimation. All failures must be investigated to

determine why the failure occurred. This may include reanalysis of the sample.

SRK recommends continuing to monitor the RMs particularly for gold and if necessary replace the

gold RM.

11.12.2 Blanks

Star used a pulp blank from MEG during both 2012 and 2013. There were no failures in the blank

submissions. SRK recommends using a preparation blank to monitor preparation for cross

contamination and discontinuing the use of a pulp blank. A pulp blank does not check for cross

contamination during sample preparation which is where the majority of cross contamination issues

occur.

11.12.3 Duplicates

Star does not insert duplicates but relies on the pulp and preparation duplicates automatically

generated by ALS during analysis. This is an acceptable industry practice. Preparation duplicates

are expected to show reproducibility within ±20% while analytical duplicates are expected to show

reproducibility within ±10%.

During 2012, there were 33 pulp duplicates and three preparation duplicates. The majority of the

duplicates were below the cut-off grade of the deposit and failures within this range are not

considered material to resource estimation. Four samples were above approximately 2 oz/t Ag and

ranged up to approximately 4 oz/t Ag. There were no failures in this population. However, these four

duplicates were higher than the original sample.

During the 2013 drilling program, there were no preparation duplicate results outside the acceptable

range for silver; there was one duplicate result outside the acceptable range for gold. There were

four pulp duplicate results outside the acceptable range for silver and six for gold. These failures

were all very near the detection limit for analysis and below the grade range of interest. Because of

this, the failures were not considered material to the resource estimation.

Star duplicates every silver analysis by requesting the laboratory run silver by both FA and ICP. This

paired analysis shows reproducibility within ±10% with ICP performing slightly higher overall. SRK

uses the FA data for resource estimation.

SRK recommends adding check assays to the QA/QC. Check assays are a second analysis of the

original pulp sample run by a second laboratory. These samples must be submitted with RMs and

are analyzed using the same method at the secondary laboratory as used at the primary laboratory.



Star has not submitted core duplicates that would be a test of the variability of the deposit. Typically

at an operating mine, there is enough information to understand the variability of the deposit. The

Revenue Mine has been operated in the past. Core duplicates can assist in adjusting the sample

submission size and crushing and pulverizing requirements for a given deposit. Previously, SRK has

recommended that Star submit core duplicates to assess the variability of the deposit and sample

submission size. The preparation duplicates demonstrate acceptable reproducibility and SRK notes

that there has been no indication that the submitted sample is not representative of the

mineralization. SRK is of the opinion that core duplicate submissions are not necessary.

SRK is of the opinion that the QA/QC supports the use of the data for resource estimation.

11.13 Opinion on Adequacy SRK is of the opinion that the sample security, preparation and analytical procedures are appropriate

for the deposit type and are of industry best practice.



12 Data Verification

12.1 Procedures SRK reviewed 10% of the database of both historical and new data against assay certificates and

found less than 2% error in the database. Identified errors were corrected in the database.

Star provided additional copper data for the Yellow Rose area from recently located historical data.

However, the first pass validation identified greater than 10% error in data entry for the copper

analytical data. This data was returned to Star for corrections. This data has been omitted from the

current Yellow Rose resource estimate pending a recheck of this additional copper data.

12.2 Limitations Star has corrected the questions from previous resource estimations. These include obtaining a

more accurate topography, having drillholes professionally surveyed, maintaining an industry

acceptable QA/QC program, checking and updating the historical database, establishing better

control on underground workings and conducting infill drilling at the Yellow Rose. Downhole survey

data was reviewed by Star and corrected in the database. There are no significant limitations to the

data.

12.3 Opinion on Data Adequacy SRK is of the opinion that the available data is adequate for resource estimation.



13 Mineral Processing and Metallurgical Testing

13.1 Testing and Procedures In 1984, Ranchers sampled and tested several different bulk samples from the Virginius and the

Yellow Rose Veins. Test work used a flotation process very similar to the flow sheet that was utilized

at the Camp Bird Mill. The samples were crushed and ground then floated in a rougher-cleaner

circuit. The bulk concentrate produced from the test work contained copper, lead, zinc, silver and

gold. The test work was performed by Hazen Research Inc. located in Golden, Colorado and was

reported in “Metallurgical Studies, Revenue-Virginius 210 Level and Yellow Rose Ores, September

26, 1984” (Hazen, 1984).

In 2012, two bulk samples were collected: one from the Yellow Rose and one from the Virginius. The

test work procedure again utilized crushing, grinding and flotation to produce a bulk concentrate. The

material was ground to 150 mesh (106 microns) and 200 mesh (74 microns) and tested to see if

increased recovery could be realized with a finer grind. The test work was performed by Resource

Development Inc. (RDI) located in Wheat Ridge, Colorado and reported in “Silverstar Progress

Report, October 18, 2012” (RDI, 2012).

In 2012, test samples were also sent to Knelson Concentrators located in Langley, British Columbia

to determine if sufficient recovery could be achieved using modern gravity separation methods and

reported in “Gravity Test Work Report, Silver Star Resources, Revenue-Virginius, September 17,

2012” (Knelson, 2012).

Filtration test work for the tailings was performed by Pocock Industrial, Inc. (Pocock) located in Salt

Lake City, Utah from samples processed during the test work completed in 2012 and results are

contained in the report “Results of Direct Pressure Filtration Tests on Silver Star Tailings”, dated

August 27, 2012 by Pocock (Pocock, 2012).

13.1.1 Sample Representativeness

Samples taken in 1983 and 2012 were bulk samples taken from a particular section of the vein

complex. The samples represent only that portion of the vein and are not representative of the entire

deposit or vein structure. However, the samples are indicative of the appropriateness of process to

be used and recoveries that may be expected. It is recommended that a series of samples be taken

from drill core along the length of the vein systems and be tested for metal recovery.

13.2 Relevant Results Bulk samples processed in 1983 and 2012 yielded good silver recoveries using a conventional

configuration for a crushing, grinding and flotation circuit.

Standard Bond ball mill grind tests varied as to the location of the sample. A work index of 18.4 hp/t

(15 kWh/t) was selected for mill sizing, which is conservative for the different materials tested.

Test work recovery increased several percent with a coarser grind of 150 mesh versus a grind of

200 mesh.

Locked cycle flotation tests improved gold recovery by 12% but had no discernible effect on silver

recovery.



Attempts to use gravity to concentrate and recover gold yielded a low grade gold concentrate, which

did not warrant further investigation. The use of gravity concentration as a supplemental process to

increase gold recovery is recommended since native gold was identified in some of the samples.

Conventional filter design was found to be appropriate for the tailings material.

13.3 Recovery Estimate Assumptions Tables 13.3.1 and 13.3.2 summarize the recoveries achieved in the test work associated with this

report.

Table 13.3.1: Ag and Au Recovery Summary

Report Virginius Yellow Rose

Ag Rec. Au Rec. Ag Rec. Au Rec. (%) (%) (%) (%)

Hazen, 1984, Metallurgical Studies, Test 1 89.6 96.6 Hazen, 1984, Metallurgical Studies, Test 4 96.4 91.9 RDI, 2012, Progress Report 97.0 81.0 86.9 79.9 RDI, 2013, Locked Cycle Test 96.1 92.9 Recovery Used for this Report 95 90 95 90

Table 13.3.2: Pb, Zn and Cu Recovery Summary

Report Virginius Yellow Rose

Pb Rec. Zn Rec. Cu Rec. Pb Rec. Zn Rec. Cu Rec.(%) (%) (%) (%) (%) (%)

Hazen, 1984, Metallurgical Studies, Test 1 95.7 89.1 87.6 Hazen, 1984, Metallurgical Studies, Test 4 96.2 63.0 87.2RDI, 2012, Progress Report 97.4 57.3 89.6 96.3 RDI, 2013, Locked Cycle Test 94.5 93.4 94.8 Recovery Used for this Report 90 85 80 90 85 80

Table 13.3.1 shows that silver recovery varies from 86.9% to 97.0% based on the test work data

available for the two deposits. Virginius silver recovery is estimated at 95% based on recent test

work by RDI. The Yellow Rose sample obtained in 2012 was of a much lower grade (2.5 oz/t Ag

compared to an average grade of approximately 10 oz/t Ag average for the measured resource),

which should result in a lower recovery. Hence, silver recovery for Yellow Rose is estimated at 95%

based on historical test work performed by Ranchers. Additional testing on composite samples from

drill core is recommended to confirm silver recovery.

Table 13.3.1 shows that gold recovery varies from 81.0% to 96.6% for the two vein systems. Gold

recovery for Yellow Rose is estimated at 90% based on historical test work performed by Ranchers.

Gold recovery for the Virginius material is also estimated at 90% based on historical test work and a

perceived 12% improvement in gold recovery using locked cycle flotation tests from recent test work.

Additional testing on composite samples from drill core is recommended to confirm gold recovery.

Table 13.3.2 shows the lead, zinc and copper recoveries for the test work previously discussed.

Lead recovery varied from 94.5% to 97.4%. A value of 90% lead recovery was estimated for this

report.



Copper recovery varied from 87.2% to 94.8%. A value of 80% copper recovery was estimated for

this report.

Zinc recovery varied from 57.3% to 93.4%. The variation in zinc recoveries in the RDI test work is the

result of the laboratory focusing on silver recovery and not zinc recovery. A value of 85% zinc

recovery was estimated for this report.

13.4 Significant Factors Bulk concentrates generated from test work in 1983 and 2012 contained lead, zinc, copper and

antimony.

Early test work in 1984 attempted to produce a zinc concentrate for sale and succeeded in one

series of tests to produce one that graded 59% zinc. Test work in 2012 failed to produce a zinc

concentrate that graded higher than 25% zinc. Sale of zinc concentrates usually requires a zinc

concentrate value higher than 60% in order to achieve an undiscounted payout rate.

The 2012 test work produced a lead/silver concentrate from the Yellow Rose sample where zinc

values ranged from 10% to 24%. Smelter penalties may be assessed for zinc concentrations higher

than 5%. The 2012 Virginius sample produced a bulk concentrate that ranged from 1.5% to 5% zinc,

which would probably not incur a penalty.

The variation of zinc in the deposit and subsequent variation of zinc in the concentrate will determine

if any penalty might be associated with the product. As stated previously, the plant is capable of

producing a lead/zinc/silver concentrate or producing a separate lead/silver concentrate and a zinc

concentrate.

The bulk concentrates from 2012 contained 0.8% to 1.2% antimony. Smelter penalties for antimony

may be assessed depending on the smelter and are generally assessed at US$2.50/t of concentrate

for each 0.1% above 0.25%. No antimony penalty is being assessed against the Revenue Mine

concentrates pursuant to the Teck contract.



14 Mineral Resource Estimate Dorinda Bair is the Qualified Person (QP) responsible for the resource estimation methodology and

the resource statement.

Prior to 2012, resource and reserve estimates at the Project were conducted using polygonal

methods and later computer-based methods. Studies completed by Sunshine made use of the

Techbase software package (TECHBASE®). In 2012 and 2013, SRK conducted resource

estimations using Vulcan software (Maptek Vulcan™).

14.1 Topography In 2013, Star acquired a topographic survey with 2.5 ft contours from satellite data. This survey

covers the entire Project area, extending into Yankee Boy and Imogene Basins. The topography files

were clipped to the area over each deposit.

Drillhole collars from Star’s 2012 and 2013 drilling programs were within ±2 to 5 ft of the topography

surface. However, some historic drillholes were up to ±30 ft from the topographic surface. All surface

drillholes were registered to the topography for modeling and estimation purposes. Once the historic

drillholes were registered to the topography, the intercepts reconciled with nearby drilling and could

be correlated within the vein. SRK recommends that Star resurvey the collars of the historic drillholes

that can be located.

14.2 Coordinate System The Project is in a local coordinate grid system in feet. All claims are located in both the local

coordinate grid system and Colorado State Plane South, NAD 27 ft (State Plane).

14.3 Drillhole Database and Channel Sample Database The bulk of drilling and channel sampling was completed prior to 1996 on the Virginius vein. At

Yellow Rose Vein, approximately 50% of the drilling is from 2012 or later and all but three of the

channel samples were collected by Star. Core recoveries observed in the Star drilling programs is

+95%.

14.3.1 Yellow Rose

The drillhole database for the Yellow Rose contains both historic and modern data. There are 68

drillholes and 10 channel samples in the resource database collected prior to 1996. Of the historic

drillholes, 46 were drilled from surface and 22 were drilled from underground. The 1996 data

includes 10 channel samples; four collected at surface and six from underground. The core size

during this period was NX with a diameter of 2.98 inches and AQ and AW both with diameters of

1.89 inches.

In 2012, Star conducted an exploration drilling program adding 56 drillholes to the database. Six of

these were drilled from underground into the Wheel of Fortune area, four were drilled into the Silver

Queen target area (two from underground and two from surface), and the remaining 46 drillholes

were drilled into the Yellow Rose. Of these 46 drillholes, 20 were drilled from surface and 26 were

drilled from underground.



During 2013, Star added nine surface drillholes and 151 channel samples to the Yellow Rose area.

The surface drillholes were drilled as infill in widely spaced drilling. Of the 151 channel samples

collected during 2013, 114 were collected from the main Yellow Rose vein structure. These were

collected from existing drifts and a stope development area. The other 37 samples were collected

from adjacent structures and splays off the main Yellow Rose vein.

Because of proximity to the Yellow Rose vein, drillholes targeting the Silver Queen and Wheel of

Fortune drillholes have been included in the block model for the Yellow Rose. All 2012 and 2013

drilling was completed using NQ tools. Table 14.3.1.1 presents the drilling breakdown and

Table 14.3.1.2 presents the channel sampling breakdown.

Table 14.3.1.1: Drilling Statistics for Yellow Rose

Location Year No. of

Drillholes No. of

Samples

Average Length

(ft)

Min. Length

(ft)

Max. Length

(ft)

Total Feet Sampled

Total Feet

Drilled

Yellow Rose

Pre-1996 68 465 2.1 0.1 9.8 570.40 20,206 2012 46 319 2.3 0.6 8.7 996.45 18,591 2013 9 53 2.3 0.4 6.0 122.00 3,771

Wheel of Fortune

2012 6 55 2.9 1 6.0 163.4 2,426

Silver Queen

2012 4 34 3.2 1 8.7 107.3 815

Total 133 926 2.56 0.1 9.8 1,959.55 45,809 Source: SRK, 2014

Table 14.3.1.2: Channel Sample Statistics for Yellow Rose


Samples Average

Length (ft) Min. Length

(ft) Max. Length

(ft) Total Feet

Sampled

Yellow Rose Pre-1996 10 2.45 1.0 5 24.50 2013 151 1.17 0.1 7 175.93

Total 161 1.81 0.1 7 200.43 Source: SRK 2014

14.3.2 Virginius and Terrible

Like the Yellow Rose, the Virginius and Terrible is a combination historic and modern data as well as

channel and drillhole data. The core size prior to 1996 was AQ. Star drilling drilled the Virginius with

NQ tools (Tables 14.3.2.1 and 14.3.2.2).

Table 14.3.2.1: Drilling Statistics for Virginius and Terrible

Location Year No of

Drillholes No. of

Samples

Average Length

(ft)

Min. Length

(ft)

Max. Length

(ft)

Total Feet Sampled

Total Feet

Drilled Virginius and Terrible

Pre-1996 232 627 1.25 0.1 6.2 786.25 60,830.2 2012 14 164 2.26 0.7 7.1 370.10 9,118.0 2013 20 194 1.90 0.8 5 368.50 11,554.0

Total 266 985 1.80 0.1 6.2 1,524.85 81,502.2 Source: SRK, 2014



Table 14.3.2.2: Channel Sample Breakdown for Virginius


Samples Average

Length (ft)

Min. Length

(ft)

Max. Length

(ft)

Total Feet Sampled

Virginius Pre-1996 1,437 1.40 0.09 13.1 1,793.54 2013 13 1.95 0.20 4.0 25.40

Total 1,450 1.4 0.09 13.1 1,818.94 Source: SRK 2014

14.4 Geologic Model Both the Yellow Rose and Virginius veins were modeled using Aranz’ Leapfrog Geo™. Previously

the model had been constructed by wireframing in Maptek Vulcan® and these wireframes were used

as a starting point for modeling in Leapfrog Geo™.

Before 2013, Star had anticipated a 6-ft mining width based on the work by Sunshine. It is also noted

that Sunshine used a numerical code (-999 or -998) to identify vein that was not sampled. These

data have been used as reference for vein location in the current modeling, but priority has been

given to sampled vein intervals.

Star has since changed the minimum mining width to 3 ft based on a shrinkage stoping mining

method. At the client’s request, SRK constructed the current vein models based on a minimum 3 ft

vein width.

SRK notes that there is evidence that dikes and/or faults disrupt and offset the Virginius and the

Yellow Rose vein structures near the Wheel of Fortune and near the intersection between the

Virginius and the Terrible Vein causing difficulty in interpretation. SRK did not model faulting or dikes

and recommends that mapped faults and dikes be added to the geological model in these areas. The

resource classification in these areas is inferred.

The block models were coded as either intact or mined, with mined areas representing known

workings and stopes. Only intact blocks were reported as part of the resource.

Yellow Rose was modeled as ten individual veins. These included the Yellow Rose main vein, splays

off the main vein, structures parallel to the main vein and those north and east of the intersection

with the Wheel of Fortune vein. Table 14.4.1 lists the veins and their modeling codes for Yellow Rose

and the wireframes are shown if Figure 14.4.1. The Yellow Rose main vein wireframe measures

approximate 3,800 ft along strike and 550 ft down dip.

Table 14.4.1: Yellow Rose Veins and Modeling Code

Vein Code Yellow Rose Main Vein se1 Footwall Splay off of Main Yellow Rose se3 Footwall Splay off of Main Yellow Rose se4 Hangingwall Vein parallel to Yellow Rose mid Hangingwall Vein parallel to Yellow Rose north of Wheel of Fortune intersection mid1 Silver Queen Area fw Silver Queen Area fwse Silver Queen Area fwse1 Silver Queen Area fwse2 Silver Queen Area fwse3 Source: SRK, 2014



Source: SRK, 2014

Figure 14.4.1: Yellow Rose Wireframes

The Virginius was modeled as five individual veins. The Terrible vein was included in the Virginius

block model since it intersects the northern end of this vein structure. The veins modeled for the

Virginius and Terrible are listed with their codes in Table 14.4.2 and shown in Figure 14.4.2. The

Virginius veins have been modeled for approximately 6,100 ft along strike and 1,100 ft down dip. The

Terrible has been modeled for approximately 2,900 ft along strike and 1,100 ft down dip. The

Virginius veins and the Terrible vein have been mined historically. SRK does not have information on

the location of the stopes in the Terrible vein, but the stoping was east of the current drilling.

Table 14.4.2: The Virginius Veins and Modeling Code

Vein Code Main Vein Main Main Splay splay Main Splay 2 splay2 Hangingwall Vein hw Footwall Vein fw Terrible Vein terrible Source: SRK, 2014



Source: SRK, 2014

Figure 14.4.2: Revenue Virginius and Terrible Wireframes Showing Stoped Areas in Dark Green

14.5 Sample Database In the sample database, half the lowest detection limit identified in the database was used to denote

sampled intervals that were below the detection limit. Unsampled intervals within the veins were set

to a value of 0. The following is a list of the values used for samples below the detection limit for both

the Yellow Rose and the Virginius.

Ag = 0.005 oz/t;

Au = 0.0005 oz/t;

Cu = 0.0025 %;

Pb = 0.0025 %; and



Zn = 0.0025 %.

Summary statistics for Yellow Rose chip channel and core samples within the wireframes are listed

in Tables 14.5.1 and 14.5.2, respectively. Table 14.5.3 presents the combined summary statistics for

the database. Summary statistics for the Virginius for channel, core and combined within the

wireframes are listed in Tables 14.5.4, 14.5.5, and 14.5.6, respectively.

Table 14.5.1: Summary Statistics for Chip Channel Samples at Yellow Rose

Chip Channel Number of

Samples Mean Max Min

Standard Deviation

Coefficient of Variation (CV)

Ag (oz/t) 153 3.90 74 0.005 8.43 2.16 Au (oz/t) 153 0.029 0.27 0.002 0.036 1.24 Pb (%) 153 0.55 7.22 0.003 1.17 2.13 Zn (%) 153 0.89 9.5 0.012 1.35 1.53 Source: SRK, 2014

Table 14.5.2: Summary Statistics for Drill Core Samples at Yellow Rose

Drill Core Number of


Standard Deviation


Ag (oz/t) 782 3.55 138.4 0 12.99 3.66 Au (oz/t) 782 0.027 6.21 0 0.255 9.33 Pb (%) 782 0.76 33 0 6.59 3.37 Zn (%) 782 0.68 23.5 0 1.84 2.71 Source: SRK, 2014

Table 14.5.3: Summary Statistics for All Samples at Yellow Rose

All Number of


Standard Deviation


Ag (oz/t) 935 3.61 138.4 0 12.36 3.43 Au (oz/t) 935 0.028 6.21 0 0.233 8.45 Pb (%) 935 0.73 33 0 2.40 3.30 Zn (%) 935 0.71 23.5 0 1.77 2.49 Source: SRK, 2014

Table 14.5.4: Summary Statistics for Chip Channel Samples on the Virginius and Terrible

Chip Channel

Number of Samples

Mean Max Min Standard Deviation


Ag (oz/t) 1,333 36.49 1085 0 77.13 2.11 Au (oz/t) 1,333 0.083 24.52 0 0.737 8.83 Cu (%) 1,333 0.33 8 0 0.73 2.20 Pb (%) 1,333 5.79 67.4 0 8.51 1.47 Zn (%) 1,333 1.74 29 0 2.65 1.53 Source: SRK, 2014



Table 14.5.5: Summary Statistics for Drillhole Samples on the Virginius and Terrible

Chip Channel

Number of Samples



Ag (oz/t) 957 7.53 821.16 0 35.15 4.54 Au (oz/t) 957 0.037 7.28 0 0.277 7.43 Cu (%) 957 0.12 18 0 0.70 5.84 Pb (%) 957 1.35 58 0 4.26 3.15 Zn (%) 957 0.56 27 0 1.69 3.04 Source: SRK, 2014

Table 14.5.6: Summary Statistics for All Samples on the Virginius and Terrible

Chip Channel

Number of Samples



Ag (oz/t) 2,737 21.26 1085 0 60.35 2.84 Au (oz/t) 2,737 0.059 24.52 0 0.546 9.23 Cu (%) 2,737 0.22 18 0 0.724 3.27 Pb (%) 2,737 3.45 67.4 0 6.98 2.02 Zn (%) 2,737 1.12 29 0 2.28 2.04 Source: SRK, 2014

14.6 Assay Capping and Compositing The raw assay data for all metals was assessed by sample type for the presence of high-grade

outlier values that could impact grade estimation. Capping was reviewed for both the Yellow Rose

and the Virginius independently. After review of log probability plots, it was decided to cap all metals

in both deposits. Table 14.6.1 lists capping for each deposit.

Table 14.6.1: Assay Capping by Deposit

Metal Yellow Rose VirginiusAu (oz/t) 0.300 0.445 Ag (oz/t) 109 318 Cu (%) NA* 3.75 Pb (%) 12.6 37 Zn (%) 10 10 *Cu was not estimated for Yellow Rose. Source: SRK Consulting, 2014

Capping gold at Yellow Rose removes seven samples ranging from 0.305 to 6.213 oz/t. It was

shown that these samples were having a strong effect on the overall estimation that was not

necessarily representative of the gold in the deposit. Capping these samples removes the area

northeast of the Wheel of Fortune intercept, which has the greatest variation in gold grades. This

area exhibits nugget affect, has very few samples and requires more exploration prior to use in

resource estimation.

14.7 Compositing Approximately 80% of the samples on the Yellow Rose are 3 ft or less with 60% exactly 2 ft. SRK

composited the samples at 3 ft lengths to standardize the length for resource estimation for Yellow

Rose. The composites were broken against the vein solids generated by SRK.



On the Virginius, approximately 85% of the samples are 2 ft or less and 60% are approximately 1 ft.

On the Virginius, SRK composited the samples at 2 ft lengths and the composites were broken

against the vein solids. Tables 14.7.1 and 14.7.2 present the statistics for capped and uncapped

composites for the Yellow Rose and the Virginius, respectively.

Table 14.7.1: Summary Statistics for Capped and Uncapped 3 ft Composites on the Yellow Rose

Statistic Au

(oz/t) Au Cap

(oz/t) Ag

(oz/t) Ag Cap

(oz/t) Pb

(oz/t) Pb Cap

(oz/t) Zn

(oz/t) Zn Cap

(oz/t) Samples 870 870 870 870 870 870 870 870 Minimum 0 0 0 0 0 0 0 0 Maximum 2.709 0.270 110.54 89.09 17.61 11.33 20 10 Mean 0.018 0.014 2.69 2.65 0.52 0.49 0.60 0.57 Standard Deviation 0.100 0.025 7.71 7.32 1.46 1.27 1.39 0.13 CV 5.52 1.75 2.86 2.76 2.82 2.60 2.32 1.99 Source: SRK, 2014

Table 14.7.2: Summary Statistics for Capped and Uncapped Statistics 2 ft Composites on the Virginius

Statistic Au

(oz/t) Au Cap

(oz/t) Ag

(oz/t) Ag Cap

(oz/t) Cu(%)

Cu Cap(%)

Pb (%)

Pb Cap (%)

Zn(%)

Zn Cap(%)

Samples 3852 3852 3852 3852 3852 3852 3852 3852 3852 3852 Minimum 0 0 0 0 0 0 0 0 0 0 Maximum 9.42 0.445 1085 318 18 3.75 67.4 37 29 10 Mean 0.034 0.023 14.45 13.51 0.15 0.14 2.37 2.34 0.78 0.75 Standard Deviation 0.247 0.054 48.59 39.27 0.59 0.42 5.76 5.50 1.91 1.71 CV 7.27 2.31 3.36 2.91 3.89 3.05 2.43 2.35 2.44 2.26 Source: SRK, 2014

14.8 Density Prior to 2013, a tonnage factor of 12 ft3/t had been used based on documentation by Mayor (1971)

for the Idarado Mine. On SRK’s recommendation, Star conducted density measurements on material

from both the Yellow Rose and the Virginius to determine the tonnage factors for the two vein

systems. The measurements were completed at the core shed by volume displacement method on

waxed core.

A total of 27 measurements were made on Yellow Rose core samples; 17 in waste and 10 in

mineralization. The average for all samples is 10.91 ft3/t. Mineralization averaged 10.70 ft3/t and

waste averaged 11.04 ft3/t. SRK used 10.70 ft3/t and 11.04 ft3/t for mineralization and waste,

respectively.

A total of six measurements were made on core from the Virginius from the 2013 drilling program.

Since there were so few samples, SRK averaged these six samples and used 10.28 ft3/t for both

mineralization and waste.

SRK notes that the number of density measurements is small at Virginius. SRK recommends

collecting more measurements throughout the Virginius collecting a representative population from

both mineralization and waste material. SRK also recommends taking more measurements from the



Yellow Rose. In addition, SRK recommends verifying the density measurements through a

commercial laboratory such as ALS for both vein systems.

14.9 Variogram Analysis and Modeling SRK conducted variogram analysis for the Yellow Rose using the 3 ft, capped composite dataset.

SRK was unable to produce meaningful and interpretable directional variograms. SRK was able to

produce an omni-directional variogram that was used to determine estimation searches and resource

classification and is presented in Figure 14.9.1. Because of the small number of veins and limited

amount of samples in some veins, SRK did not attempt variography on individual veins.

Figure 14.9.1: Yellow Rose Omni-directional Variogram for Ag using 3 ft Composite Data

New drilling in the Virginius was completed using a limited number of drillholes at the northeast end

of the system. The majority of this drilling was focused primarily on the Terrible vein. This area is

isolated from the rest of the sampling and should be modeled separately. Unfortunately, the small

dataset does not lend itself to variogram analysis. Variography conducted in 2012 on the Virginius

failed to produce useable variograms.

14.10 Block Model Construction A sub-celled block model was constructed in Vulcan for the Yellow Rose. The block model was

rotated 128⁰ around the z-axis to better align the block edges with the orientation of the

mineralization. Sub-celling was limited to within the Yellow Rose Veins. The model limits and extents

are provided in Table 14.10.1.



Table 14.10.1: Block Model Origin and Extent: Yellow Rose

Axis Origin (ft) Extent (ft) Parent Block Size (ft) Subcell Size (ft) X 99,500 4,650 150 3 Y 98,500 1,500 150 3 Z 10,250 2,100 150 3 Source: SRK, 2014

A sub-celled block model was also constructed in Vulcan for the Virginius. The block model was

rotated 142⁰ around the z-axis to better align the block edges with the orientation of the

mineralization. Sub-celling was limited to within the Yellow Rose Veins. The model limits and extents

are provided in Table 14.10.2.

Table 14.10.2: Block Model Origin and Extent: Virginius

Axis Origin (ft) Extent (ft) Parent Block Size (ft) Subcell Size (ft) X 91,820 6,750 150 3 Y 97,516 2,550 150 3 Z 9,400 4,200 150 3 Source: SRK, 2014

Both block models contain the following variables with exception that Cu is not included in the Yellow

Rose block model:

Ag, Au, Cu, Pb, Zn estimated by IDW with a spatial limitation on the outliers;

Agnn, Aunn, Cunn, Pbnn, Znnn estimated by nearest neighbor approach;

Number of composites used per block;

Number of drillholes used per block;

Density;

Variable for veins;

Class;

Value of metals based on recovery; and

A mined out variable; and topography.

The bock model was sub-blocked at and within the veins, at topography and at stopes in the

Virginius and workings at the Yellow Rose.

14.11 Estimation Methodology At Yellow Rose, the resource was estimated in four passes using ID2. Each vein was estimated

separately using the search distances, minimum and maximum composites, and samples per

drillhole listed in Table 14.11.1. Search orientations are listed in Table 14.11.2. The estimation was

performed for each wireframe separately using only composites within each specific wireframe. The

search distance for the major and semi-major distance was based on the omni-directional variogram

and channel sampling and drillhole spacing. The first pass was at 50 ft to capture the more closely

spaced channel samples. The second pass is 125 ft which is approximately 80% of the sill. The

fourth pass at 375 ft is 100% of the sill. The minor search distance was set to 50 ft to accommodate

local changes in dip of the wireframe.



Table 14.11.1: Summary of Search Ranges and Sample Selection Criteria Yellow Rose

Search Pass Number

Search Distance (ft) Min Comps

Max Comps

Max per DDH

Sample Type(s) Used Down dip Strike Width

1 50 50 50 3 10 1 Channel & DDH 2 125 125 50 3 10 1 Channel & DDH 3 250 250 50 3 10 1 Channel & DDH 4 375 375 50 3 10 1 Drillholes Source: SRK, 2013

Table 14.11.2: Yellow Rose Search Orientations by Vein

Vein Bearing in degrees Dip in degreesFw 295 70 fwse1 295 72 fwse2 295 73 fwse3 295 73 fwse 295 67 se1 308 65 se3 308 65 se4 308 65 mid1 315 65 mid 315 65 Source: SRK, 2013

The Virginius was also estimated in four passes using ID2. Each vein was estimated separately

using the searches distances, minimum and maximum composites, and samples per drillhole listed

in Table 14.11.3. Search orientations are listed in Table 14.11.4. Search distances were based on

channel sample and drillhole spacing.

Table 14.11.3: Summary of Search Ranges and Sample Selection Criteria Virginius

Search Pass Number

Search Distance (ft) Min Comps

Max Comps

Max per DDH

Sample Type(s) Used Down dip Strike Width

1 50 50 50 3 10 1 Channel & DDH 2 100 100 50 3 10 1 Channel & DDH 3 200 200 50 3 10 1 Channel & DDH 4 300 300 50 3 10 1 Drillholes Source: SRK, 2013

Table 14.11.4: Virginius Search Orientations by Vein

Vein Bearing in degrees Dip in degreesfw 325 65 hw 325 65 main 325 65 splay 325 65 splay2 325 65 terrible 305 80 Source: SRK, 2014

A nearest neighbor (NN) estimation run was also run for comparison to the estimated grades. The

results are discussed in Section 14.12.3.



14.12 Model Validation Various measures have been implemented to validate the resultant resource block model. These

measures include the following:

Comparison of drillhole composites with resource block grade estimates from all zones

visually both in plan and section;

Statistical comparisons between block and composite data using histogram and cumulative

distribution analysis;

Generation of a comparative NN model; and

Constructing swath plots along strike and elevation.

14.12.1 Visual Inspection

Visual comparisons between the block grades and the underlying composite grades in plan and

section show close agreement and indicates that the estimation was good. Example cross sections

for Yellow Rose are provided in Figures 14.12.1.1 for Yellow Rose. Example cross sections for the

Virginius showing block and composite silver grades are presented in Figures 14.12.1.2.

Figure 14.12.1.1: Typical Cross Section Showing Block and Composite Grades for Yellow Rose Looking NW



Figure 14.12.1.2: Typical Cross Section Showing Block and Composite Grades for the Virginius Looking NW

14.12.2 Block-Composite Statistical Comparison

SRK also conducted statistical comparisons between the IDW block contained within the vein solids

for both the Yellow Rose and the Virginius with the underlying composite grades for each block

model. For both block models, average block model grades are lower than composite grades

indicating that the estimate is not overestimating grades globally. Table 14.12.2.1 shows the general

statistics of blocks and composites in both the Yellow Rose and the Virginius for silver.

Table 14.12.2.1: General Statistics for Blocks and Composites for the Yellow Rose and the Virginius

Mine Type Mean Ag

(oz/t) Max Ag

(oz/t) Min Ag

(oz/t) StandardDeviation

CV

Yellow Rose Block 1.78 88.85 0.00 4.01 2.05 Composite 2.65 89.09 0.00 7.32 2.76

Virginius Block 8.45 315.5 0.00 18.44 2.07 Composite 13.51 318.0 0.00 39.27 2.91



14.12.3 Comparison of Interpolation Methods

For comparative purposes, grades were estimated using NN interpolation methods. The results of

the NN model are compared to the IDW model at a 0 oz/t silver cut-off grade for the Project in Tables

14.12.3.1 and 14.12.3.2 for the Yellow Rose and the Virginius, respectively. SRK conducted this

comparison for all estimation passes in the Yellow Rose and the Virginius. The tables show the

overall average.

Table 14.12.3.1: Comparison of IDW and NN Tonnage and Grade at a 0 oz/t Silver Cut-off – All Estimation Passes at Yellow Rose

Note: Comparison is made a cut-off of 0, for all estimation passes

Table 14.12.3.2: Comparison of IDW and NN Tonnage and Grade at a 0 oz/t Silver Cut-off – All Estimation Passes at Virginius

Model kt Ag Grade

(oz/t)

IDW 3,710 8.45 NN 3,710 9.61 Relative Percent Difference (IDW - NN)/IDW -12

Note: Comparison is made at a cut-off of 0, for all estimation passes

The comparison of the interpolation methods show the NN model to be higher than the IDW model in

both cases as expected. There is a larger variation at Virginius with the IDW method producing an

average grade 12% less than the NN method. This is interpreted as the result of the influence of the

channel samples, the distribution of drillholes and the influence of blocks near the edges of the

wireframes.

14.12.4 Swath Plots

Figures 14.12.4.1 and 14.12.4.2 are swath plots (drift analysis) for the Yellow Rose along an azimuth

of 308 and by elevation, respectively. The Virginius is shown in Figures 14.12.4.3 and 14.12.4.4 for

azimuth 322 and elevation, respectively. In the Yellow Rose, there is a large spike in gold in the

block model at approximately section 8 in the main vein. There are four composites, two from

drillholes and two from channel samples with raw assay grades ranging from 0.06 to 0.305 oz/t Au

that are influencing the block estimation in this area. The Virginius plots include the Terrible, which

represents the northeast end and highest elevations of the swath plots.

The plots show smoothing in the estimated blocks, but reasonable agreement overall. The strongest

variations tend to be near the ends of the veins. The elevation plots for Virginius and Terrible show

an area where block grades are greater than composite grade. This is the break between the

Virginius and Terrible zones in the bock model. This is an indication that more drilling is required

between these two areas.

Model kt Ag Grade

(oz/t)

IDW 3,099 1.78 NN 3,099 1.83 Relative Percent Difference (IDW - NN)/IDW -3



Figure 14.12.4.1: Yellow Rose Drift Analysis along Azimuth 308° Direction by Metal



Figure 14.12.4.2: Yellow Rose Drift Analysis by Elevation by Metal



Figure 14.12.4.3: Virginius Swath Plots in Azimuth 322° Direction by Metal



Figure 14.12.4.4: Virginius Drift Analysis by Elevation by Metal



14.13 Resource Classification Since 2013, Star has acquired a detailed topographic survey, determined tonnage factors based on

material from the Project area, obtained detailed surveys of drilling completed since 2012, conducted

verification and infill drilling and collected channel samples in the underground. Channel sampling

has specifically been collected from the Yellow Rose vein along workings and in stope development.

On the Yellow Rose, the veins have been sampled in the underground, at surface and in drilling. The

main vein has been mapped over 16,000 ft. On the Virginius a bulk sample was collected from the

Main vein for metallurgical recovery work. In addition better control has been established on

underground workings. Questions regarding downhole survey locations have been answered by

investigating the historic drill logs and correcting data entry errors. Because of these factors, SRK

has increased the confidence in the resource classification for the deposit.

The Resources at the Project have been classified as Measured, Indicated and Inferred at Yellow

Rose and as Indicated and Inferred for the Virginius. The classification is based on standards as

defined by the “CIM Definition Standards - For Mineral Resources and Mineral Reserves”, prepared

by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council on

December 17, 2010.

Classification of the resources reflects the relative confidence of the grade estimates. The

classification parameters are defined by the search radius, number of composites and number of

drillholes in the estimation. The classification criteria are intended to encompass zones of reasonably

continuous mineralization. The Virginius has been extensively sampled in workings and in stope

development by Sunshine and Ranchers but the limited historic QA/QC data supporting this

sampling effort limits the classification to Indicated.

Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability.

Mineral resource estimates do not account for mineability, selectivity, mining loss and dilution. These

mineral resource estimates include Inferred mineral resources that are normally considered too

speculative geologically to have economic considerations applied to them that would enable them to

be categorized as mineral reserves. There is also no certainty that inferred mineral resources will be

converted to Measured and Indicated categories through further drilling, or into mineral reserves,

once economic considerations are applied.

14.13.1 Yellow Rose Classification

Measured Mineral Resources at Yellow Rose are those blocks having a minimum of three samples

and three drillholes or channels which are within an anisotropic search of 125 ft x 125 ft x 50 ft within

the Yellow Rose Main Vein. This classification takes into consideration that there has been sampling

in workings around the Yellow Rose Main vein in addition to drilling.

Indicated Mineral Resources at Yellow Rose are those blocks having a minimum of three samples

and three drillholes or channels which are within an anisotropic search of 250 ft x 250 ft x 50 ft within

the Yellow Rose Main Vein.

Inferred Mineral Resources at Yellow Rose are those blocks having a minimum of three samples

and three drillholes which are a maximum block-composite separation distance within an anisotropic

search of 375 ft x 375 ft x 50 ft within the Yellow Rose Main Vein and in all other veins with the

exception of the Silver Queen veins.



14.13.2 Virginius and Terrible Classification

Indicated Mineral Resources at Virginius are those blocks having a minimum of three samples an

anisotropic search of 100 ft x 100 ft x 50 ft within the Virginius Main and Footwall Veins only. These

are the two veins that have been sampled extensively by Sunshine. .

Inferred Mineral Resources are those blocks having a minimum three samples within an

anisotropic search of 200 ft x 200 ft x 50 ft on the Virginius Main, Hangingwall, Footwall, Main splay,

Main splay2 and Terrible Veins.

14.14 Mineral Resource Statement All results from channel samples and drilling at the Project that are within the wireframes have been

used in the mineral resource estimate. The resource estimation for both the Yellow Rose and the

Virginius are reported at a minimum total recovered block metal value using a mining and milling cost

provided by Star of US$150/t. Tons are short tons. Total recovered block metal is based on the

following prices and recoveries provided by Star:

Ag price of US$20/oz and recovery of 95%;

Au price of US$1250/oz and recovery of 90%;

Cu price of US$3.15/lb and recovery of 80%;

Pb price of US$1/lb and recovery of 90%; and

Zn price of US$1/lb and recovery of 85%.

Copper was not estimated for the Yellow Rose due to validation of the copper database. The data

was hand entered from historical assay certificates and there were too many data entry errors for

inclusion at this time. With additional data review and data entry corrections, there is potential to add

this data to the resource estimate. Tables 14.14.1 and 14.14.2 present the Yellow Rose and

Virginius Resource statements, respectively.

Table 14.14.1: Mineral Resource for the Yellow Rose at a Cut-off of US$150/t as of April 18, 2014

Category Tons Ag

(oz/t)Au

(oz/t)Pb(%)

Zn(%)

Contained Metal Ag

(Moz )Au

(oz) Pb

(Mlb)Zn

(Mlb)Measured 215,300 10.08 0.034 1.71 1.69 2.17 6,400 7.37 7.28Indicated 100,700 10.92 0.036 1.96 1.74 1.10 4,000 3.95 3.50Measured & Indicated 316,100 10.35 0.035 1.79 1.71 3.27 10,490 11.31 10.78Inferred 38,100 11.01 0.025 1.69 0.92 0.49 700 1.28 0.701



Cut-off is based on a minimum total recovered metal value using a mining and milling cost provided by Star of US$150/t. Recovered block metal value = (Ag oz/t * Ag recovery * US$/oz Ag) + (Au oz/t * Au recovery * US$/oz Au) + (2000 * Pb

% / 100 * Pb recovery * US$/lb Pb) + (2000 * Zn % / 100 * Zn recovery * US$/lb Zn). The following metals prices and recoveries were used: Ag price of US$20/oz and recovery of 95%; Au price of

US$1,250/oz and recovery of 90%; Pb price of US$1/lb and recovery of 90%; Zn price of US$1/lb and recovery of 85%.



Table 14.14.2: Mineral Resource at the Virginius at a Cut-off of US$150/t as of April 18, 2014

Category Tons Ag

(oz/t) Au

(oz/t)Pb(%)

Cu(%)

Zn(%)

Contained Metal Ag

(Moz )Au

(Oz ) Pb

(Mlb) Cu

(Mlb) Zn

(Mlb)Indicated 485,600 26.95 0.044 4.30 0.25 1.37 13.10 21,000 41.80 2.4 13.3Inferred 646,100 14.93 0.038 3.04 0.13 0.99 9.65 24,500 39.25 1.6 12.8



Cut-off is based on a minimum total recovered metal value using a mining and milling cost provided by Star of US$150/t. Recovered block metal value = (Ag oz/t * Ag recovery * US$/oz Ag) + (Au oz/t * Au recovery * US$/oz Au) + (2000 * Cu

% / 100 * Cu recovery * US$/lb Cu) + (2000 * Pb % / 100 * Pb recovery * US$/lb Pb) + (2000 * Zn % / 100 * Zn recovery * US$/lb Zn).

The following metals prices and recoveries were used: Ag price of US$20/oz and recovery of 95%; Au price of US$1,250/oz and recovery of 90%; Cu price of US$3.15/lb and recovery of 80%; Pb price of US$1/lb and recovery of 90%; Zn price of US$1/lb and recovery of 85%.

14.15 Mineral Resource Sensitivity In order to assess the sensitivity of the resource to changes in value based on metal content, SRK

summarized tonnage and grade above cut-off at a series of increasing total recovered block metal

value cut-offs. The sensitivity analysis is shown in Tables 14.15.1 and 14.15.2 for Yellow Rose and

Virginius, respectively. It can be observed that the resources are reasonably insensitive to cut-off

grades based on the silver content. The base case is shown in bold.

Table 14.15.1: Yellow Rose Mineral Resource Sensitivity as of April 18, 2014

Cut-off US$

Tons (kt)

Ag (oz/t)

Au (oz/t)

Pb (%)

Zn (%)

AgEq(oz/t)

Ag (Moz)

Au (oz)

Pb (M lb)

Zn (M lb)

AgEq(Moz)

Measured 100 325 7.78 0.032 1.42 1.45 12.32 2.53 9,800 9.24 9.43 4.1 110 301 8.18 0.032 1.48 1.51 12.83 2.46 9,000 8.90 9.08 3.8 120 276 8.66 0.033 1.55 1.57 13.49 2.39 8,300 8.55 8.66 3.8 130 254 9.12 0.033 1.60 1.61 14.03 2.32 7,600 8.14 8.19 3.5 140 233 9.60 0.034 1.66 1.66 14.67 2.24 7,000 7.75 7.75 3.4 150 215 10.08 0.034 1.71 1.69 15.23 2.17 6,500 7.37 7.28 3.3160 200 10.53 0.035 1.75 1.73 15.81 2.10 6,000 6.99 6.91 3.2 170 186 10.94 0.035 1.80 1.77 16.30 2.03 7,400 6.70 6.59 3.0 180 174 11.33 0.036 1.85 1.81 16.83 1.97 7,000 6.44 6.30 2.7 Indicated 100 163 8.01 0.027 1.68 1.51 12.55 1.30 4,900 5.47 4.91 2.0 110 147 8.55 0.029 1.77 1.59 13.37 1.25 4,400 5.19 4.67 2.0 120 127 9.46 0.032 1.81 1.63 14.53 1.20 3,800 4.59 4.13 1.9 130 114 10.16 0.034 1.85 1.66 15.41 1.16 3,400 4.21 3.78 1.7 140 106 10.59 0.035 1.91 1.71 16.00 1.12 3,200 4.06 3.63 1.8 150 101 10.92 0.036 1.96 1.74 16.47 1.10 4,000 3.95 3.51 1.6160 96 11.24 0.037 2.01 1.75 16.90 1.08 3,800 3.85 3.35 1.7 170 91 11.52 0.038 2.06 1.76 17.30 1.05 3,700 3.77 3.22 1.5 180 87 11.83 0.038 2.11 1.76 17.65 1.03 3,500 3.68 3.07 1.6 Inferred 100 61 8.54 0.02 1.31 0.71 11.60 0.52 1,200 1.61 0.87 0.7 110 54 9.18 0.021 1.42 0.77 12.46 0.49 1,100 1.52 0.83 0.6 120 47 9.80 0.023 1.52 0.84 13.35 0.46 900 1.44 0.80 0.7 130 43 10.32 0.024 1.59 0.88 14.03 0.44 900 1.37 0.76 0.6 140 40 10.75 0.024 1.65 0.91 14.55 0.43 800 1.32 0.73 0.6 150 38 11.01 0.025 1.69 0.92 14.91 0.42 800 1.29 0.70 0.6160 37 11.22 0.025 1.71 0.94 15.16 0.41 700 1.25 0.69 0.6 170 35 11.39 0.025 1.73 0.96 15.37 0.40 1,100 1.23 0.68 0.6 180 33 11.72 0.026 1.76 0.99 15.81 0.39 1,000 1.17 0.66 0.5



Table 14.15.2: Virginius Mineral Resource Sensitivity as of April 18, 2014

Cut-off US$

Tons (kt)

Ag (oz/t)

Au (oz/t)

Pb(%)

Cu(%)

Zn(%)

AgEq(oz/t)

Ag (Moz)

Au(oz)

Pb (M lb)

Cu (M lb)

Zn (M lb)

AgEq(Moz)

Indicated 100 578 23.22 0.040 3.78 0.22 1.25 30.87 13..41 23,000 43.61 2.49 14.42 17.8 110 555 24.03 0.041 3.89 0.22 1.28 31.87 13.35 22,700 43.2 2.47 14.18 17.7 120 532 24.93 0.042 4.02 0.23 1.30 33.00 13.27 22,300 42.78 2.44 13.87 17.6 130 513 25.73 0.043 4.13 0.24 1.33 34.02 13.20 22,100 42.09 2.41 13.62 17.4 140 498 26.37 0.043 4.22 0.24 1.35 34.76 13.14 21,400 41.79 2.39 13.46 17.3 150 486 26.95 0.044 4.30 0.25 1.37 35.52 13.09 21,400 41.80 2.70 13.3 17.3 160 473 27.53 0.044 4.38 0.25 1.39 36.19 13.03 21,000 41.49 2.36 13.13 17.1 170 462 28.06 0.045 4.45 0.25 1.40 36.86 12.98 20,800 41.19 2.34 12.97 17.0 180 450 28.68 0.045 4.54 0.26 1.42 37.61 12.91 20,800 40.84 2.31 12.77 16.9 Inferred 100 918 11.50 0.033 2.52 0.10 0.85 16.87 10.57 30,300 46.36 1.87 15.58 15.5 110 843 12.28 0.034 2.65 0.11 0.88 17.88 10.35 28,700 44.60 1.80 14.89 15.1 120 773 13.11 0.036 2.77 0.11 0.92 18.98 10.13 27,800 42.89 1.75 14.16 14.7 130 722 13.77 0.037 2.87 0.12 0.94 19.84 9.95 26,700 41.52 1.71 13.59 14.3 140 685 14.32 0.038 2.95 0.12 0.96 20.54 9.81 26,000 40.42 1.67 13.19 14.1 150 646 14.93 0.038 3.04 0.13 0.99 21.29 9.65 24,500 39.25 1.63 12.79 13.8 160 609 15.55 0.039 3.12 0.13 1.01 22.06 9.48 23,700 38.06 1.60 12.36 13.4 170 577 16.15 0.040 3.20 0.14 1.04 22.85 9.31 23,100 36.92 1.57 11.99 13.2 180 542 16.84 0.041 3.28 0.14 1.07 23.70 9.13 22,200 35.61 1.53 11.59 12.8

14.16 Relevant Factors Silver is the metal in the resource estimate. However, zinc has been reported as part of the resource

estimate. The resource could be impacted if it is determined that a saleable zinc concentrate cannot

be produced. Fortune and Star have informed SRK that they have a contract in place with the

smelter in Trail, British Columbia Canada to purchase and process the concentrate produced in the

mill. SRK has not independently confirmed this.

The current DRMS-permitted product lines are for silver, gold and zinc and the CDPS-permitted

product lines are for silver, gold, zinc and lead. The differences in the permits will require resolution,

but copper is not mentioned in either permit. SRK does not anticipate that there would be an issue

adjusting the permits to include all metals in the resource estimate.



15 Mineral Reserve Estimate No mineral reserves have been estimated for the Project to date, as no Prefeasibility or Feasibility

studies have been conducted which are compliant to modern reporting standards.



16 Mining Methods The available geotechnical information and historic mining information indicates that shrinkage

stoping is a suitable method for the deposit. The mine is currently in startup production and

development with underground mine personnel working two 10 hr shifts/day targeting a production

rate of 400 t/d.

Shrinkage mining blocks are approximately 250 ft along strike and 125 ft vertical spacing between

levels. Sill and dip pillars are left between mining blocks and stopes are left empty as backfill is

currently not used at the mine. All current mining equipment is pneumatic and there is no diesel

equipment underground. The veins are accessed from horizontal levels located in or near

mineralization. Raises connect levels and personnel can be transported between levels using an

Alimak or by ladders in raises. Lateral development on track levels is conducted using a track

mounted jumbo. Raise development is completed using conventional raise methods or Alimak raise

climber. Production mining is achieved by use of stopers and jacklegs. Air slushers are used to

transport mineralized material from the production faces to the mineralized material passes. A

system of mineralized material passes is used when required to move material from a production

area to main collection level with access to mill.

The mine design process involved using stope optimizer in Vulcan software to determine mine plan

areas based on a cut-off grade and minimum mining widths. The optimized stopes were then

grouped into stope panels leaving sill and rib pillars as required. Dilution and recovery were added to

the designed tonnage to account for unplanned stope dilution and unrecoverable material within the

stope.

Access and infrastructure development was designed to support the mining method and sized based

on mining equipment and production rate requirements. Figure 16.1 shows the general layout of the

mine and mill.



Figure 16.1: General Layout of Mine and Mill

16.1 Cut-off Grade Calculations Net Smelter Return (NSR) is a commonly accepted method of evaluating polymetallic mineralized

material. NSR is defined as the proceeds from the sale of mineral products after deducting off-site

processing and distribution costs. NSR is typically expressed on a dollar per ton basis. For this

project the NSR calculation takes into account revenue for four elements (Zn, Pb, Ag and Au) and

production of two concentrates (lead concentrate and zinc concentrate).

Plant recoveries from Tables 13.3.1 and 13.2.2 are used to estimate concentrate production.

Recovery of metals into a lead or zinc concentrates are extrapolated from previous test work

completed at Hazen. Gravity recovery is assumed at 2% for both silver and gold and is included in

the estimated overall recovery.

Treatment and refining charges are based on current terms contracts. Tables 16.1.1 and 16.1.2

present the input parameters used to calculate the NSR.



Table 16.1.1: NSR Calculation Inputs

Lead Con Met Recovery Zinc Con Met Recovery Gravity Met Recovery Total Recovery Zinc 54% Zinc 31% Zinc 0% Zinc 85% Lead 85% Lead 0% Lead 5% Lead 90% Silver 92% Silver 1% Silver 2% Silver 95% Gold 87% Gold 1% Gold 2% Gold 90%

Table 16.1.2: Concentrate Payability

Parameter Ag Au Pb Zn

Lead Con Payable (%)* 95% 94% 94% 0% Zinc Con Payable (%)* 57% 0% 0% 67% Price US$21.50/oz US$1,350/oz US$1.00/lb US$1.00/lb *Includes treatment and refining charges which vary slightly based on grade

Table 16.1.3: Concentrate TC/RC*

Parameter Ag Au Pb Zn

Lead Con. $2/oz $12/oz $0.31/lb - Zinc Con. - - - $0.78/lb *Includes treatment and refining charges which vary slightly based on grade

The basis for the mine design work is the resource block model. The NSR was evaluated for each

block in the 3-D geologic block model. Figures 16.1.1 and 16.1.2 show grade/ton curves for the

Revenue Virginius area and the Yellow Rose area, respectively.



Figure 16.1.1: Revenue Virginius Grade/Ton Curve

Figure 16.1.2: Yellow Rose Grade/Ton Curve

‐

100

200

300

400

500

600

700

‐

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

75 125 175 225 275

Average

NSR

(US$/t)

Tons (t)

NSR Cut‐off ($/t)

Revenue Virginius Grade/Ton Curve

Tons NSR

‐

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

450.00

‐

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

75 125 175 225 275

Average

NSR

(US$/t)

Tons (t)

NSR Cut‐off ($/t)

Yellow Rose Grade/Ton Curve

Tons NSR



The mining, milling and other costs are based on Fortune’s current costs and estimated future mining

costs. Table 16.1.4 shows the cut-off grade calculation cost buildup. The total calculated NSR cut-off

of US$130/t serves as the basis for stope optimization and mine design.

Table 16.1.4: Cut-off Grade Calculation

Items Cost (US$/t) Mining 65.00 Milling* 30.00 G&A 20.00 Surface 15.00 Total Costs $130.00

*Based on 400t/d throughput

16.2 Geotechnical Parameters No geotechnical studies have been conducted to collect data on rock mass characterization. Ground

conditions used as the basis for assessing mine design parameters are based on observations made

during a sit visit to the underground workings. SRK conducted a one-day site visit to the mine on

May 15, 2014 for the purpose of examining ground conditions. The site visit included observations in

underground workings that had been rehabbed and the underground mill operations. SRK observed

ground conditions in portions of the Yellow Rose and Virginius Vein workings as well in the Revenue

haulage on the way into the workings. The underground crusher chamber and mill chamber were

also toured as part of the site visit.

The geology of the mineralized veins is associated with sub-vertical dikes that cut the sub-horizontal

San Juan Formation. The dikes have been significantly hydrothermally altered in locations and veins

are generally located in the hangingwall and/or footwall of the dike, or even interior to the dike. The

hangingwall volcanic rocks can be hydrothermally altered above the hangingwall vein for 2 to 3 ft.

The characteristics of the altered wall rocks are softer and more fractured than the unaltered

hangingwall volcanic rocks.

Several rock units from the San Juan Formation are exposed within the Project area but not all are

exposed in the underground workings of the mine. Table 7.2.1.1 is a summary of the rock units

which, within the area of the mine, span a vertical thickness of nearly 3,500 ft. Figure 16.2.1 shows a

longitudinal section through the Virginius Vein with an illustration of the stratigraphy as it intersects

the historic mining.



Figure 16.2.1: Longitudinal Section through the Virginius Vein showing the Stratigraphy and Historic Mining



The veins mined historically have consisted of the following veins structures:

Yellow Rose Vein (primary);

Virginius Vein (primary);

Terrible Vein;

Wheel of Fortune Vein;

Cumberland Vein; and

Torpedo Vein.

The Virginius vein has been mapped at surface over a distance of approximate 4,000 ft and the

Yellow Rose has been traced 16,000 ft, extending beyond the Star property. Figure 16.2.2 shows a

plan view section through the Revenue Level indicating the vein locations relative to the historic

mining.

Figure 16.2.2: Plan View Section through the Revenue Level showing the Vein Locations and Historic Mining

In general, the rock mass exposed drifts was quite tight. Fractures were closed and the rock was

competent. In heavily supported areas (i.e., where bolting spacing was less than 3 ft) the ground

remains tight and only a few areas had the rock loosened. The evidence of elevated horizontal

stresses should be examined in greater detail as it might impact ground stability and dilution.



The vein varies in thickness, proximate location to the dikes, and undulates along both strike and dip.

Rock mass quality was observed to vary from Very Good, Class I rock (RMR> 80) to Fair, Class III

rock (40 < RMR < 60). Under these anticipated ground conditions, SRK is of the opinion that several

different mining methods will be required and that flexibility be maintained to change methods in any

given area of the mine if ground conditions change within the active mining area.

The block model indicates that the approximate width of mineralization is an average of 3.5 ft wide in

the Revenue Virginius and 5.5 ft wide in the Yellow Rose. There are areas where vein splay resulting

in parallel sub-parallel veins with variable spacing between (i.e., 50 to 100 ft waste lens).

The estimated rock mass conditions for mining areas are summarized in Table 16.2.1.

Table 16.2.1: Summary of Estimated Average Rock Properties

Parameter Weak Rock Typical Rock Strong Rock Units Percent of each rock type in Yellow Rose Vein 40% 45% 15% Percent of each rock type in Virginius Vein 25% 55% 20% RMR 45 75 85 UCS 100 180 220 MPa Density 2.75 2.75 2.75 t/m3

Underground Design Constraints

SRK has not conducted a detailed review of optimal mining methods. The PEA relies on historic

mining methods used in the historic ground conditions.

Cut-and-Fill Mining – The cut-and-fill mining is a relatively surgical mining method that opens only

small areas of ground at one time. Its main advantage is that mined openings are more stable and if

necessary local ground support can be installed in the back and HW. Dilution is relatively easy to

control with such a surgical method and large variations in vein consistency (i.e., thickness and

undulations) can be managed. The disadvantages of this method are that productivity can be low,

costs can be significantly higher, and to make up for this many active mining faces are required. This

method is an option for the Virginius and Yellow Rose Veins in highly variable mineralized material

areas. The PEA assumes this method will not be required.

Resue Method – This method is a modification of the cut-and-fill method, but works well when the

vein is thinner than the minimum mining equipment width because the waste rock serves as backfill

as the stope is advanced overhand. It relies on short production drill lengths to maintain stability of

the adjacent waste rock. It is a lower productivity method than shrinkage stope method but it allows

greater control of ground conditions and it minimizes dilution when the vein is thinner than the

minimum mining width. The advantages of this method are that it can be employed in less competent

ground conditions using small openings, it does not necessarily rely on a distinct discontinuity with

the HW contact (but it helps), and mineralized material dilution can be minimized. This method has

been used in historic areas of the mine. With some minor changes this method could become a

mostly mechanized mining method. The PEA assumes this method will not be required.

Open Stoping Method – The open stoping method relies heavily on competent hangingwall ground

conditions to minimize rock fall and dilution. When stope heights get high there can be a safety risk

from in-stope rockfalls. This can be mitigated by using non-entry remote mechanical mucking. When

the vein gets thinner than the accuracy of maintaining drilling within the vein, then dilution becomes a

problem. It is possible to decrease level heights to increase drilling accuracy and keep blast holes



within the mineralized vein. This however leads to lower productivity and higher costs. The

advantage of this method is that it can be a cost effective method if ground conditions are favorable

for stope stability. This method is an option for the Virginius and Yellow Rose Veins in wide

mineralized material areas where the hangingwall is competent. The PEA assumes this method will

not be required.

Shrinkage Stope Method – The shrinkage method is effective in medium to steeply dipping

mineralization (65° to 75°). Longitudinal stopes are overhand mined. The broken mineralized

material is dropped to the bottom of the stope and drawn from drawpoints on a production level. The

objective is to keep the open portion of the stope nearly full of broken mineralized material to help

stabilize the hangingwall. This method works well in ground conditions where the rock is competent

and a clean break can be created at the HW contact. As long as the stope remains full with broken

rock the hangingwall maintains stability. As the rock quality decreases and the hangingwall contact

becomes less discrete, the HW will begin to loose stability and blocks will fall into the stope. The

remedy is to decrease the stope size. The advantages of this method are that fewer production

levels are required, drilling levels can be kept small, and the production cycle can be decoupled from

the drilling cycle. This method has been used in historic areas of the mine. In the absence of rock

mass characterization data, the PEA assumes all stopes will be mined using this method.

Stope Design Parameters

SRK has made a preliminary assessment of empirical design criteria for sizing pillars and stopes at

the mine. The following stope design parameters have been assumed based on anticipated ground

conditions. The parameters are based on the assumed rock properties in Table 16.2.1.

The allowable open stope dimensions are based on Stability Graph method (Mathews, et. al., 1981).

The method estimates the maximum hydraulic radius (exposed area divided by perimeter) of an

open stope given the stability number of the hangingwall rock mass. The stability number is

estimated from Q (Barton, et. al., 1974) estimate of rock mass quality modified by the failure potential

of the natural jointing.

The sill pillars and rib pillars dimensions are based on an empirical comparison of pillar width-to-

height ratio to the rock mass strength to stress ratio (Lunder and Pakalins, 1997). This method

assumes tributary loading (no support from backfill) and average UCS values for the pillar.

The following design parameters have been used in stope design:

Use shrinkage stope method and keep stopes as full as practicable until end to maintain

hangingwall stability;

Mine veins from hangingwall to footwall in locations with multiple veins nearby;

Hangingwall stopes vertically lead footwall stopes by 1 level (125 ft);

Rib pillars are 1.5 times the mined vein thickness (about 6 ft);

The crown pillar at the surface is 2.0 times the mined vein thickness (about 7.5 ft);

Sill pillars between levels are 3.5 times the mined vein thickness (about 12.5 ft);

The maximum stope length is 125 ft. Hangingwall collapse is anticipated for the range of

anticipated rock quality, but bulking of hangingwall rock is anticipated to choke off any

progressive caving. Cave distance should be less than 60% of vein thickness (about 2 to

4 ft)



Dilution will likely range between 10% to 20% (about 4 to 10 inches) during shrinkage

stoping; and

New footwall access drives are set-back from vein by four times mined vein thickness.

Ground Support

The Q System (Barton, et. al., 1974) has been used to estimate ground support requirements. For

the range of ground conditions (Table 16.2.1), the anticipated support requirements are shown on

Figure 16.2.3.

The historic mine has benefited from small openings that have not required heavy bolting. The

historic mining would have made extensive use of passive timber support. There were drifts that

appeared to have been rehabbed in the 1980’s where bolts were used. In the main haulage areas

both off-vein and on-vein there were no active timber supports; however, timbers were observed just

beyond closed off areas. The hangingwall-to-footwall timbers, 8 to 12 inches in diameter, would have

been a typical support method for thin-vein open stopes.

Recent rehabbed areas have made extensive use of active ground support. This support typically

includes 4 ft and 6 ft split sets and both wire and chain-link mesh. There were areas that had

Dywidag threaded anchor-end rock bolts. The combination of split sets as primary support and

Dywidag bolts as secondary support is considered effective in blocky ground conditions.

The PEA design assume only spot bolting will be required. This has been incorporated into the

design by including 4 ft long split sets on a 4-ft spacing over 5% of the new workings. It is assumed

that 10% of the historic workings that are rehabbed will require this average level of ground support.

Source: Barton, et al, 1974

Figure 16.2.3: Ground Support Chart



Dilution

Dilution into the stopes has been estimated using empirical design method for Equivalent Linear

Overbreak/Slough (ELOS) based on work by Clark & Pakalnis (1997). For the stope parameters

selected the ELOS chart estimates about 1.0 ft of sloughing when the top 6 ft of the shrinkage stope

remains open. It is estimated that unplanned dilution of about 15% should be anticipated.

16.3 Mine Design Figure 16.3.1 shows a long section of the Revenue and Yellow Rose veins showing blocks above a

NSR cut-off grade of US$130/t as well as historic workings. This model formed the basis of the stope

design.

Figure 16.3.1: Rotated View approximating Long Section through Block Model

Stope optimization was completed in Vulcan using a minimum mining width of 3 ft and an NSR cut-

off grade of US$130/t. 12.5 ft x 12.5 ft stopes were generated in the optimization and were then

combined to form larger stopes as per geotechnical recommendations (~125 ft along strike and

125 ft vertical). Figure 16.3.2 shows the stope optimizer shapes and an example of how they are

grouped together to form a stoping block. For future mine design work it should be noted that the

size of the blocks in the resource model is coarse for mine planning purposes and either smaller

block resolution in the block model is required or stope optimization should be run with a stope

height equal to the block height in order to identify mine plan resource areas without influence of

block size on the mine plan.



Figure 16.3.2: Rotated View approximating Long Section of Stope Optimizer Shapes

There are two accesses into the mine via portals. The main access is via main Revenue Tunnel

portal (10,600 ft amsl). Approximately 300 ft to the east is the portal entrance to the mill which is

located underground at the same elevation. The underground mill connects to the Revenue Tunnel

underground at a location approximately 300 ft in from the main portal of the Revenue Tunnel.

Figure 16.3.3 shows the general layout of this area. There are other entrances to the mine, through

old workings, collapsed stopes, etc., and it is believed these do not connect to the main parts of the

mine and are not sufficiently sized for men/materials to pass. There are old raises and shafts to the

surface that may in the future provide ventilation or access.

Figure 16.3.3: General Layout



Currently, waste air escapes upwardly from the Virginius part of the mine via historic raises and

stopes, and it is believed the air eventually exhausts through the old Virginius winze and out of the

#3 portal which is currently not in use. Improved ventilation and secondary egress is currently being

developed in the Yellow Rose part of the mine via the #8 raise. Once raise #8 is driven to final

design height, a new drift will be driven out laterally to surface. A man-lift will be installed in the raise

for secondary egress.

Levels in new working areas will be connected through roybal raises in mineralized material with

separate compartments for men/materials and muck. These raises were not designed in detail

however a schematic explaining how the raises fit within the mining block are shown in

Figure 16.3.4. A 70% extraction ratio was applied to the designed shape to simulate recovery of

material within the shape.

Figure 16.3.4: Schematic of Raises in Stoping Areas

Figure 16.3.5 shows the completed mine design. Historically mined levels are planned to be used as

accesses throughout the mine. These areas will be rehabilitated prior to stope development. The

design encompasses the majority of the material above cut-off; however, small, narrow, and/or

distant blocks have been excluded from the design.



Figure 16.3.5: Rotated Long Section View of the Completed PEA Mine Design

16.4 Mine Plan Resource The underground mine design process results in mine plan resources of 888 kt (diluted) with an

average grade of 14.6 oz/t Au, 0.02 oz/t Au, 2.26% Pb, and 0.90% Zn.

This estimate is based on a NSR cut-off grade of US$130/t for design purposes and applying a

marginal cut-off grade of US$50/t for reporting purposes. These numbers include a 90% mining

recovery to the designed stope wireframes in addition to the 15% unplanned waste dilution within

stopes. Additional development of 5% to 10% was applied based on development type to account for

detail currently not in the design. Zero grade was used for the waste dilution.

Table 16.4.1 summarizes the mine plan resources.

Table 16.4.1: Mine Plan Resources Classification *

Description Tons (kt) Ag (oz/t) Au (oz/t) Pb (%) Zn (%)

Revenue Virginius

Measured Indicated 369.8 19.68 0.03 2.91 0.83 Measured + Indicated 369.8 19.68 0.03 2.91 0.83 Inferred 310.9 12.43 0.02 1.98 0.69

Yellow Rose

Measured 141.6 8.38 0.02 1.28 1.31 Indicated 45.2 11.29 0.01 2.21 1.63 Measured + Indicated 186.86 9.08 0.02 1.51 1.39 Inferred 20.7 5.19 0.01 1.05 0.73

*Includes Measured, Indicated, and Inferred reported using a marginal cut-off grade of US$50/t.

This PEA is preliminary in nature, and is based on technical and economic assumptions which will be

further evaluated in more advanced studies. The PEA is based on a resource model that contains

Measured, Indicated and Inferred mineral resources. Inferred mineral resources are considered too


them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized.



16.5 Production Schedule The production schedule is based on the rate assumptions shown in Table 16.5.1.

Table 16.5.1: Productivity Rates

Activity Type Dimensions (ft) Rate*Main Haulage Drift 9 x 9 10 ft / day Sub-level Drift 8 x 9 10 ft / day Cross Cut from Sub-level Drift 8 x 9 10 ft / day Ramp (Virginius Vein) 11 x 10 10 ft / day Cross Cut between Roybal Raises 6 x 6 10 ft / day Slusher Drift 6 x 6 10 ft / day Alimak Raise (W x L) 7 x 10 10 ft / day Roybal Raise Two 6x6 with crosscuts between 2.5 ft / day Stope mucking 30 tons/day/stope Rehabilitation of historic workings 40 ft / day *All rates are per face. Multiple areas/faces are mined together to generate the production schedule.

The mining operation schedule is based on 350 days/year, 7 days/week, with two 10 hr shifts each

day. A production rate of 400 t/d was targeted with ramp-up to full production as quickly as possible.

Table 16.5.2 presents the annual mining scheduled based on these assumptions. The schedule was

completed using iGantt scheduling software. Minor rehabilitation/development begins in August 2014

in the production schedule. A three month period of minimal development was scheduled to establish

secondary egress in both mining areas. Once ventilation and egress are established production

mining can begin and the mine ramps up as quickly as possible to 400 t/d.

Table 16.5.2: Annual Mining Schedule

Year Mineralized Tons (kt) Ag (oz/t) Au (oz/t) Pb (%) Zn (%) Waste Tons (kt) 2014 24.2 8.13 0.02 1.60 0.94 35.8 2015 122.8 13.66 0.02 2.04 1.00 99.5 2016 141.4 13.61 0.03 2.44 0.87 89.7 2017 140.3 11.23 0.03 1.84 0.95 73.9 2018 142.4 9.79 0.03 1.67 0.88 21.4 2019 141.8 14.26 0.02 2.25 0.81 10.2 2020 140.7 23.04 0.02 3.01 1.00 0.2 2021 34.7 27.83 0.03 3.92 0.58 0 Total 888.3 14.63 0.02 2.26 0.90 330.7

This PEA is preliminary in nature, and is based on technical and economic assumptions which will be





Table 16.5.3 summarizes the production schedule totals by area and development type.



Table 16.5.3: Production Schedule Totals by Area and Development Type

Description Unit Virginius Vein Development with Rail ft 0.0 Development without Rail ft 30,843.0 Stoping ft3 4,820,252 Standard Roybal Raises ft 16,154.0 Reinforced Roybal Raises ft 0.0 Alimak Raises ft 638.0 Scram Drift ft 15,016.0 Rehabilitation ft 9,100.0 Mined Mineralized Material t 680,729 Mined Waste t 281,512 Tons with truck haul (lower levels) t 822,152 Total Material Mined t 962,241 Daily Mining Rate t/d 240 Gold Grade, Mined oz/t 0.03 Silver Grade, Mined oz/t 16.37 Lead Grade, Mined % 2.49% Zinc Grade, Mined % 0.76% Contained Gold, Mined oz 17,033.28 Contained Silver, Mined oz 11,145,254 Contained Lead, Mined lb 33,910,189 Contained Zinc, Mined lb 10,393,942 Yellow Rose Vein Development with Rail ft 4,758.0 Development without Rail ft 1,342.0 Stoping ft3 1,682,750 Standard Roybal Raises ft 3,878.0 Reinforced Roybal Raises ft 183.0 Alimak Raises ft 1,043.0 Scram Drift ft 2,893.0 Rehabilitation ft 0.0 Mined Mineralized Material t 207,554 Mined Waste t 49,226 Total Material Mined t 256,780 Daily Mining Rate t/d 87 Gold Grade, Mined oz/t 0.02 Silver Grade, Mined oz/t 8.93 Lead Grade, Mined % 1.50% Zinc Grade, Mined % 1.36% Contained Gold, Mined oz 4,494.38 Contained Silver, Mined oz 1,853,156 Contained Lead, Mined lb 6,241,089 Contained Zinc, Mined lb 5,657,567

Figure 16.5.1 shows the mine production schedule colored by year.



Figure 16.5.1: Mine Production Schedule Colored by Year (rotated long section view)



16.6 Mining Operations Mining widths are very narrow, a width of 3 ft in the Revenue Virginius vein, and 4 ft in the Yellow

Rose vein. Within a stope, two compartment raises on each side of the stope are developed for

man/materials access and for mucking. Horizontal (breast) holes are drilled within the stope at a

length of 6 ft. Each stope is undercut by a 4 ft wide by 8 ft tall scram drift that is developed on strike

and in mineralized material. The dimensions of the scram drift were chosen such that dilution is

minimized and material from this drift is sent to the process facility as it is developed.

The scram drift is fitted with slushers that pull the mineralized material towards chutes located on

500-ft centers. At the chutes, mineralized material is loaded into muck cars and trammed by electric

locomotive to a stockpile that consists of a slusher trench and can accommodate 500 tons of

material. The slusher trench feeds into a grizzly with 12 inch x12 inch openings, then into a chute

and reciprocating feeder that eventually feeds into the primary jaw crusher which crusher material to

minus 2-1/2 inches.

The mine plans to use pneumatic equipment and currently has no diesel equipment underground. In

most areas the mine intends to make use of existing mine track and tracked mining equipment such

as battery-powered locos, muck cars, track mounted jumbo and Eimco overhand mucking machines.

Once additional ventilation is established, diesel equipment will be used underground to develop a

ramp to lower levels of the Revenue Virginius area.

The mine is using standard 24-inch gauge and 4-ton muck cars (5 tons heaped), with five cars per

train. Typical rail haulage cycle time is approximately one hour and mine personnel are able to cycle

nine trains per shift. There are still suppliers of track mining equipment and the company currently

use is Mining Equipment Limited of Durango, Colorado.

Approximately 10 working stopes are required to meet the production target of 400 t/d. An additional

two to three stopes should be prepared and scheduled into the mining cycle to account for delays

and transitions between the main production stopes.

Development

There is a development drift in the footwall of each mucking level. This drift is developed in waste

and connects to a raise system which allows dropping of the material to a haulage level. The drifts

on each level access the stopes. All other stope development is completed in mineralized material

within the stoping area. Figure 16.6.1 shows an example development layout.



Figure 16.6.1: Example Development Layout

Drilling

Drilling both in scram drifts and in stopes will be undertaken by jack leg drills. Compressed air and

water will be provided throughout the mine for drilling operations.

Blasting

The mine is dry enough to allow the use of pneumatically loaded ANFO. In case of wet areas

cartridge explosives will be used. For planning purposes an estimate of 80% ANFO and 20%

cartridge explosives has been used. Blasting is initiated from each main level or from surface at the

end of shift. If the ventilation system at the mine is improved blast on demand may be used.

Mucking and Hauling

Material in the Yellow Rose will be railed to the mill using a series of raises where necessary.

Material in the Revenue Virginius above the existing access level will be railed as well; however, all

material below this level will need to be truck hauled to the main level before transferring the material

to the rail system. Truck and LHD are assumed to be diesel. An additional haulage/material handling

cost has been applied to this material.

Backfill is currently not used at the mine however waste generated from development can be placed

in mined out areas or alternatively be railed to surface.

16.7 Mine Services Ventilation

A ventilation design has not been designed in detail at this time for the life of mine plan. Currently a

ventilation plan has been submitted to MSHA is summarized in the following paragraphs.



The Revenue ventilation system consists of:

Two dual 30 hp (60 hp per fan) main fans installed at the Revenue air doors;

40 hp booster fan located at the mill;

60 hp fan at the Yellow rose drift;

50 hp fan at the south Virginius; and

10 hp fan with VFD at the shop area.

Approximately 30,000 cfm of air is drawn in through the portal. Of this 14,000 cfm ventilates the mill

and the remaining air travels down the Revenue tunnel. Vent doors and 24-inch vent pipes control

the delivery of air to working areas. The air exhausts upward vertically from the Virginius part of the

mine via historic raises and stopes, and it is believed the air eventually exhausts through the old

Virginius winze and out of the #3 portal which is currently not in use.

Table 16.7.1 summarizes the fans throughout the mine.

Table 16.7.1: Mine Fans

Main Fans

Area of Mine

Spendrup Model Delivery System

Blade Setting

Measured Air Volume

(cfm)

Est. Pressure in

w.g.

1 Revenue Tunnel

Spendrup 071-035-3600-B-1

Air Door Rigid Duct

Fixed 8,000 17 inch

2 Revenue Tunnel

Spendrup 071-035-3600-B-1

Air Door Rigid Duct

Fixed 8,000 17 inch

3 Yellow Rose

Spendrup 071-035-3600-B-1

Rigid Duct Fixed 10,400 22 inch

4 Virginius South

Spendrup 063-040-3600-C-1

Vent Bag 8 12,900 6 inch

5 Mill ABC 25 inch 40 HP 3600 rpm

Rigid Duct Fixed 14,000 5 inch

6 Shop Jetair AA-1-A Rigid Duct Unknown 5,400 4 inch 7 – Booster Fan

As Needed Jetair AA-1-A Vent Bag Unknown 3,000 ~1 inch

Once the ventilation system is ramped up (currently planned for 2014), there will be approximately

5,000 cfm per stope or working area totaling a full mine airflow of over 65,000 cfm. Total calculated

airflow requirement at the mine is based on having perceptible airflow in working areas as there is no

diesel equipment underground at this time. If diesel equipment is introduced underground airflow will

need to be increased and be based on a standard 125 cfm/bhp.

Continued improved ventilation and secondary egress is currently being developed in the Yellow

Rose part of the mine via the #8 raise. Additional booster fans and vent bag should be considered

near working areas to ensure sufficient airflow and timely clearing of blasts. Air doors and bulkheads

should be installed as required.

Compressed Air

The mine production equipment is primarily air powered. The mine utilizes three compressors

connected into a surface header that provides air to the mine through a various sized air pipeline (4

to 8 inch line) designed to provide 125 psig to the operations. The air line then branches and is

6 inch into the Yellow Rose and Revenue Virginius vein areas. From there a 4 inch line is run into the



stopes. Table 16.7.2 shows a summary of the compressors that provide air to the system. All air

compressors are electric driven.

Table 16.7.2: Fortune Compressors

Manufacturer Power Capacity

Model Type (hp) (cfm)

Ingersol Rand 200 892 SSREP-200 Rotary Screw Ingersol Rand 250 1,249 SSR-EPE-250-2S Rotary Screw Ingersol Rand 300 1,476 SSR-EOE-300-2S Oiless Rotary Screw Total 750 3,617

This compressed air capacity appears adequate for the current and planned operations.

Dewatering

Mine dewatering is accomplished by use of electric pumps located at the sump areas and by air

powered pumps that are placed in vein locations on an as needed basis. All water is drained to the

main Yellow Rose/Virginius level and transported to the portal through the drainage ditch located

next to the track in the main haulage drift. Future considerations include additional electrical pumps

to be located in sumps as required.

Electrical Supply

The underground electrical supply initiates in the project substation transformer and is provided by a

power line (4160 V) suspended from the back in the main haulage to the mine workings in the Yellow

Rose and Virginius zones. Table 16.7.3 presents the current and future projected underground

electrical requirements for the mine operating at 300 t/d. Minor adjustments to the electrical load will

allow the mine to scale up to 400 t/d.



Table 16.7.3: Underground Electrical Power Estimate

Item # of

Units

Unit Power Rating

(KW)

Connected Power

(KW)

Load Factor

(%)

Load

(KW)

Utilization Factor

(%)

Operating Total Load (Kw)

Energy/Month (KWhr/ Month)

Existing Dual 30hp Vent Fan 8 22.38 179 95 170 100 170 124,164 40hp Vent Fan (Mill) 1 29.84 30 84 25 100 25 18,298 10hp Vent fan (UG Shop + Virginius-Exhaust) 2 7.46 15 95 14 100 14 10,347 30hp Slusher (231) 1 22.38 22 80 18 25 4 3,267 10hp drill water pump (Yellow Rose, Blue Lagoon) 4 7.46 30 85 25 80 20 14,813 5hp spring water pump (Atlas) 1 3.73 4 85 3 50 2 1,157 Convenience single phase power 12 6 72 80 58 30 17 12,614 Heaters (Element) 4 1.2 5 100 5 100 5 3,504 Existing Subtotal 289 254 194 141,603 Planned (Additional) Yellow Rose #4 Hoist 1 74.6 75 70 52 50 26 19,060 Yellow Rose #8 Hoist (Emergency Escape) 1 37.3 37 70 26 10 3 1,906 Yellow Rose Elec. Train Charging 4 26.856 107 90 97 50 48 35,289 Yellow Rose Elec. Slushers 2 11.19 22 65 15 30 4 3,186 Yellow Rose Aux Vent Fans 20 7.46 149 85 127 100 127 92,579 10hp drill water pump 4 7.46 30 85 25 80 20 14,813 Convenience 1ph power 12 6 72 80 58 30 17 12,614 Virginius Primary Auxiliary Fan 20 7 149 85 127 100 127 92,579 Virginius Ramp Fan 1 37 37 85 32 100 32 23,145 Virginius Electric Slushers 1 22 22 65 15 30 4 3,186 Virginius Train Charging 4 13 54 90 48 50 24 17,644 Virginius #4 Hoist 1 75 75 70 52 40 21 15,248 Virginius #8 Hoist (Emergency Escape) 1 37 37 70 26 10 3 1,906 10hp drill water pump 8 7 60 85 51 80 41 29,625 Convenience single phase power 12 6 72 80 58 30 17 12,614 Virginius Electric LHD 2 149 298 80 239 90 215 156,839 Virginius Jumbo 2 71 142 85 120 40 48 35,180 Main Haul Train Chargers 2 27 54 80 43 50 21 15,684 Heaters (Element) 8 1 10 100 10 100 10 7,008 Mine Portal Heater 1 22 22 80 18 70 13 9,149 Exploration Drills 2 93 187 80 149 90 134 98,024 Planned Addition Subtotal 1,771 1,437 70 1,006 734,309 Miscellaneous 20% allowance 287 70 201 146,863 Total 1,724 1,401 1,022,775



Health and Safety

The mine has an emergency escape plan (SMO escape plan 3-11-14) which has been accepted by

MSHA. There is a refuge station and first-aid/lunch room in both the Yellow Rose and Virginius

sections of the mine. A stench warning system is installed on the compressed air line entering the

mine as well as the air intake for the mine ventilation. Underground communications consists of mine

telephones at key locations and future plans are for the mine supervisors to also have hand-held

radios.

In the Virginius section of the mine, an 8 ft diameter raise borehole will be drilled from the Virginius

haulage level to surface. The 1,465 ft long raise borehole will act as an exhaust vent and will be

outfitted with a man-lift conveyance for emergency egress. In the Yellow Rose, a secondary escape-

way is being developed that will also make use of a man-lift conveyance installed in the #4 raise.

Miners will take the man-lift conveyance to the top of #4 raise, then walk along sub-level access to

the #8 raise. From there, the miners will climb a ladder-way approximately 45 ft up the #8 raise to the

next sub-level which connects to surface via a portal.

A tag in/tag out board is used at both portals. All underground personnel are issued with portable

self-rescuer units. A total of 12 Ventis MX4 portable gas detectors are at the mine and made

available for use in underground and confined space entry. The mine’s current policy is that at least

one person in each working area of the underground mine will carry a MX4 detector. The alarms

have been set on these detectors to go off at 35 ppm CO, 19.5% oxygen, 3 ppm NO2, and 10% LEL.

The safety department also has two Ibrid MX6 gas detectors – one set up for Oxygen, CO, H2S, and

LEL and the other set up for oxygen, CO, SO2, H2S, and LEL. The latter is equipped with a pump. All

pumps are on a regular calibration schedule.

Manpower

The mine operates a 10-hour work shift with two shifts per day. A third shift is at rest at any given

time. The three shifts work a staggered rotation with 7 days on, 3 days off, followed by 7 days on and

4 days off. The project currently has 110 employees and expects to grow to 120 at full capacity. The

mine currently has 70 underground workers and is non-unionized.

For productivity calculations Fortune assumes 8 productive hours of work out of a 10-hour shift. This

gives time for meal breaks, travel time, safety meetings, etc. Travel distances to some areas can be

quite long and as the mine is developed further minimizing time to get personnel to working areas

will be important.

Equipment

Table 16.7.4 shows the current equipment at the mine.



Table 16.7.4: Current Mine Equipment

Equipment Quantity1-Ton Mancha Locomotive 3 4-Ton Locomotive 2 8-Ton Locomotive 2 Eimco 22-Mucking machine 2 Eimco 12-B Mucking machine 5 4-Ton Muck Cars 20 48”X96” Flat Cars 4 Low-Boy flat Car (short, and only 5,000-lb capacity) 1 Ballast Car 1 Powder Cars 2 Anfo Loading Car 1 Man-Trip Cars (both need work) 2 Jack-Leg Drill Flat Car 1 24” Gauge Car Pass Air Powered 1 2”x double stage 30-H.P. ventilation fans 3 18”x 10-H.P. ventilation fans 4 10-H.P. Ingersoll Air Tuggers 4 15-H.P. Ingersoll Air Tugger 1 20-H.P. Ingersoll Wide Drum Air Tugger 1 20-H.P. Joy Sir Slusher 1 15-H.P. Gardner Denver Air Slushers 2 10-H.P. Joy Air Slushers 2 30-H.P. Joy Electric Slushers 4 40-H.P. Joy Electric Slusher 1 40-H.P. Joy Electric Slusher (parts unit) 1 24” Slusher Bucket 2 36” Slusher Bucket 4 40” Slusher Bucket 1 48” Slusher Bucket 1 Ingersoll Small Timber Tuggers 2 Joy Small Timber Tuggers 2 Air Powered Chain Saw 1 25-Ton Track Jacks 2 20-Ton Track Jack 1 10-Ton Track Jack 2 Hydraulic Rail Bender (Jim Crow) 2 Spare Jim Crow Cylinder 1 Alimak Raise Climbers 3 Alimak Alicab Safety Climbers 3 Alimak Hose Reels 5 Alimak 2-Meter Rail 135-PC Alimak Brow Sections (1-meter) 2 Alimak Automatic Air/Water Central 2 Alimak Spare Parts Assortment 1 small lot Alimak Wall Brackets & Spacers 1-Lot Electric over Hydraulic Car Dumpers 2 Canon (secan) Stopper Drills 8 Gardner Denver Stopper Drills 2 Gardner Denver Jack-Legs 12 Gardner Denver Air Powered Drill Jumbo 1 PR-55 Drills 3 China Chute (steel) 1 Assorted Track hand Tools 1-Lot Assorted Miners Tools 1-Lot Rock-Bolting Tools 1-Lot Small electric Blasting Box 2 Anfo 300-lb. Air Powered Loader 1



Equipment QuantityFMC-20, Electric Drill Water Pumps 4 Wilden Air Powered Diaphram Water Pumps 3 Melcher Brothers Air Powered Gear Water Pump 1

Table 16.7.5 shows anticipated main equipment purchases to support the life of mine plan.

Table 16.7.5: Anticipated LOM Mine Equipment Purchases

Equipment Unit Cost (US$)

Quantity for YR and VN (6 months) Order Date Delivery Date

Jack leg Stoper Drill S83F MW 4,985 2 Aug 2014 Aug 2014 20 hp Air Slusher 18,000 5 Jul 2014 Aug 2014 Slusher Bucket 36" Card 4,000 5 Jul 2014 1-Sep Alimak Raise Climber Rail 2 meter 900 100 Oct 2014 Nov 2014 Alimak Raise Climber Rail 1 meter 900 40 Oct 2014 Nov 2014 Alimak Raise Climber Rail Anchor 2,000 8 Oct 2014 Nov 2014 Rail 4 Ton Locomotive /w battery and charger 40,000 1 Jul 2014 Jul 2014 4 ton battery 18,000 1 Jul 2014 Jul 2014 Long Deck flat car Boggied 20,000 1 Jul 2014 Jul 2014 Low Bow Flat car Boggied 18,000 1 Jul 2014 Jul 2014 small standard flat car 9,000 1 Nov 2014 Dec 2014 20 hp Fan @ 24" 17,015 2 Jul 2014 Aug 2014 Been 20 electric pump 11,000 2 Aug 2014 Aug 2014 Tugger @ 5000lb pull 12,000 4 Jul 2014 Aug 2014 Man Certified Air Hoist 35,000 1 Jul 2014 Oct 2014 Man certified Cage 60,000 1 Aug 2014 Oct 2014 24" Sheave Wheel 50 ton 5/8 cable 7,686 1 Jul 2014 Oct 2014 5/8" 6x19 Cable at 2400 ft 10,980 1 Sep 2014 Oct 2014 Core Drill 25,000 1 Jul 2014 Jul 2014 10t UG Mine Haul Truck* 180,000 1 Aug 2014 Oct 2014 1 Yd LHD* 280,000 1 Aug 2014 Oct 2014

*Additional truck/loader will be necessary later in the mine life as haulage distance increases. Prices assume used purchase.

Maintenance of both surface and underground equipment is performed in the existing underground

shop by Fortune personnel.



17 Recovery Methods Preliminary test work on bulk samples taken from the mine indicate that metals and precious metals

may be recovered using standard crushing, grinding and flotation methods. Historically in 1912,

mineralized material was treated using what today would be considered a conventional flotation

process. Based on these preliminary results and historical information, Star Mines directed CH2M

HILL to provide a detailed engineering design for a 300 t/d plant.

CH2M HILL designed a conventional plant to process Virginius and Yellow Rose mineralized

material that included two-stage crushing, ball mill grinding, reagent storage, flotation, flotation

concentrate filtration for product shipment and a tailings filtration circuit for dry tailings disposal. At

the time of this writing the plant is being commissioned.

Additionally, Fortune is in the process of increasing plant throughput to 400 t/d. The major

components in crushing, grinding and flotation appear to have sufficient capacity for such a change.

17.1 Processing Methods Silver bearing mineralized material will be treated using conventional methods. Processing will

consist of crushing, grinding, flotation, concentrate filtration and tailings filtration. Tailings will be dry

stacked.

Water supply for the Project will be from the existing underground workings, which currently make

sufficient water for the plant requirements.

17.2 Flowsheet The mill is designed to treat 300 t/d of mineralized material to produce a lead-silver concentrate and

a zinc-silver concentrate. Alternatively, the plant may be reconfigured to produce a lead-silver-zinc

bulk concentrate. The plant is situated in an underground section of the mine.

Railcars from the mine face will discharge into a mineralized material storage bin at a rate of 30 t in

10 minutes.

Mineralized material will be fed to a primary jaw crusher using a slusher system to drag material to

the crusher feed chute at a rate of 70 t/h. Crusher product will fall onto a conveyor that transports the

material to a vibrating screen. Screen undersize will be conveyed to a fine mineralized material bin.

Screen oversize will be conveyed back to the secondary cone crusher. Secondary crusher product

will be discharged onto the vibrating screen feed conveyor with the jaw crusher product.

Vibrating screen product will be conveyed to a crushed mineralized material bin. The material will be

reclaimed from the mineralized material bin with a slot feeder and fed to a single stage ball mill at the

rate of 12.5 t/h.

The ball mill will operate in closed circuit with hydro-cyclones and will grind the material to a

140 mesh (106 μm) product size.

A gravity concentrator for coarse gold recovery takes a slip stream from the cyclone feed stream,

which will then be recycled back to the ball mill circuit. Gravity concentrate will be tabled to produce a

gold/silver concentrate for sale.



Cyclone overflow will flow by gravity to a conditioning tank where flotation reagents will be added.

Conditioned slurry will be fed to a flotation circuit that may be configured to produce a bulk lead-silver

and a zinc-silver concentrate. The flotation cells will be configured in a standard rougher-cleaner

circuit.

Flotation concentrate will be filtered for shipment at a rate of approximately 20 t/d.

Tailings will be filtered and dumped from the filter press onto the filter press building floor. Tailings

will then be reclaimed with a front-end loader to be loaded into trucks for transport to a disposal area.

17.3 Plant Design and Equipment Characteristics

The design is based on a plant throughput rate of 300 t/d or 12.5 t/h. Considering mine availability

and plant maintenance downtime, the annual rate is estimated to be 91,000 t/y.

The crusher and screening circuits will be designed to run at 70 t/h until the fine mineralized material

bin is full, then shut down.

The Revenue mine is located at an elevation of approximately 10,600 ft above sea level, which was

considered in the equipment and motor design.

Tables 17.3.1 and 17.3.2 show the key process design criteria and major process equipment for the

crushing, grinding, flotation and filtration operations for the plant.

Table 17.3.1: Key Process Design Criteria

Process Area Units Description Plant Capacity

t/y 91,000 t/d 300

Mineral Characteristic Bulk Density lb/ft3 110 Specific gravity 2.8 Moisture content % 7 Crushing ROM size inches 12 Product size inches 0.375 Grinding Bond Work Index hp/t 18.4 Ball mill feed (F80) inches 0.375 Product size (P80) micron 106 Flotation Slurry density % 33 Lead rougher cells retention time minutes 17.5 Lead cleaner cells retention time minutes 21 Zinc rougher cells retention time minutes 17.5 Zinc cleaner cells retention time minutes 25 pH 9 Tailings Filtration Production rate lb/ft2-hr 19



Table 17.3.2: Major Equipment List

Process Area Quantity Units Description HP Crushing Primary jaw crusher 1 inches 32 x 21 125 Crusher screen 1 ft 5 x 16 (single deck) 15 Secondary cone crusher 1 inches 36 125 Fine mill feed bin 1 ton 270 Grinding Ball Mill 1 ft 8 diameter x 12 EGL 400 Cyclones 2 inch 10 Flotation Lead circuit roughers 3 ft3 50 (bank of three cells) 25 Zinc circuit roughers 3 ft3 50 (bank of three cells) 25 Lead circuit cleaners 8 ft3 10 (4 banks of two cells) 12 Zinc circuit cleaners 8 ft3 10 (4 banks of two cells) 12 Filtration Tailings filters 2 mm 1200 x 1200 (63 chambers) 46 Concentrate filters 2 mm 800 x 800 (22 chambers) 15

17.3.1 Plant Expansion to 400 Tons per Hour

Several major pieces of equipment were sized conservatively in the plant design. As an example the

crushing circuit is designed to process 70 t/h, which requires that the plant only be operated five

hours per day to provide the required tonnage for a single day of operation. Similarly, the ball mill is

equipped with a 400 hp motor but calculations show that it would require only 300 hp to process the

300 t/d to the specified grind size of 106 μm. Ball mill power requirements already include de-rating

of the motor for altitude and a 20% contingency. The lead and zinc rougher flotation cells have a

scale-up factor from laboratory test work of 3.5, which is higher than a conventional scale-up of 2.5.

Increasing plant throughput to 400 t/h would likely be feasible. The major components in crushing,

grinding and flotation appear to have sufficient capacity for such a change. Capacity of pumps,

piping and tailings filters would need to be reviewed. Operation is currently assessing capacity of the

different components and has plans to maximize throughput.

17.4 Consumable Requirements The conventional nature of this plant would indicate that the major consumables utilized would be

known in the industry and would be readily available. The consumables used in the process are

listed in Table 17.4.1. Reagent consumptions shown in Table 17.4.1 are based on preliminary

laboratory data and have not been optimized.

Table 17.4.1: Consumable Requirements

Process Area Consumption Delivery Method Description Flotation Potassium amyl xanthate 130 lb/day 55 gallon drums Liquid reagent MIBC 38 gal/day 55 gallon drums Liquid reagent Copper sulfate 130 lb/day 50 pound bags Solid Zinc sulfate 130 lb/day 50 pound bags Solid Sodium hydroxide 430 gal/day 450 gallon totes 30% NaOH solution



18 Project Infrastructure

18.1 Accessibility The Project is located approximately 5.5 miles southwest of Ouray, Colorado, near the headwaters

of Sneffels Creek. Ouray is small town with 854 people (2004) and most of Silver Star’s workers live

in Ouray. The surrounding Ouray County has a population of 4,300 (2005). The immediate region

around the town has a long history of underground mining dating back to almost the mid-19th

Century. There are two other underground mines nearby that are currently closed. Silver Star states

that there are experienced miners available in Ouray and in other nearby towns.

According to Ouray’s web site, the region’s largest employers are the government, education, and

tourism sectors with additional opportunities in the real estate and construction industries. Ouray

County has its own physicians and staff, volunteer emergency medical technicians, volunteer fire

department and a mountain rescue team.

The mine is located halfway between the towns of Ouray and Telluride and the portal of the Revenue

Tunnel is located at the historic town site of Sneffels. There are several historical mines in the area

comprising what is known as the Sneffels Mining District which is host to both the Camp Bird and the

RV, two famous and very productive mines within the greater San Juan Mountains. The road to the

mine is maintained by the county of Ouray between May 1st and November 1st, of each year. During

the remaining months of the year the county maintains approximately half of the road and the mine is

responsible for the remaining distance. The road is dirt and challenging for full length semi-trucks.

18.2 Power Electric power to the mine is supplied on overhead lines by San Miguel Power Association. The

power is three phase, 12,470 volts, and has a capacity of up to 3 MW with currently installed lines.

San Miguel Power Association is the local electric company and Century Link is the land line phone

provider. Cost for the power at the mine is US$0.08/KWH.

In case of loss of permanent power a diesel powered backup generator is being installed. The

generator is a 1 MW 480V CAT which is sized to provide power for critical motors like compressors,

fans and pumps. There is a 10,000 gallon diesel storage tank at the mine to fuel the standby

generator.

18.3 Water The mine has water rights for sufficient water supply for all activities. The water comes from both

flowing and storage water decrees. There are several underground water storage areas throughout

the mine.

In the Virginius area there is storage for approximately 12,000 gallons. The Virginius area also has a

steady flow of around 5 to 10 gpm in summer months and dries up as the surface starts freezing. In

the Yellow Rose area the historic Anglo Saxon workings have been dammed up and hold an

estimated 615,000 gallons. Water flow is this area is continuous throughout the year at an estimated

100 to150 gpm. Current water use for mining is estimated to be approximately 25 gpm.



All the water used in the mill process comes from drainage in the mine collected in a cistern and

added to the process water tank as required. Water consumption at the mill varies with grades and

tonnage. Typically for a process capacity of 300 t/d, the water requirement is approximately 12 gpm.

For a 400 t/d process capacity the water requirement would be proportionately higher at

approximately 16 gpm.

18.4 Mining Personnel The mine has approximately 105 employees, with 94 of those being hourly and 11 being salaried

management employees. The work force is broken down into the following categories:

Underground Mining;

Mill;

Safety;

Electrical;

Maintenance;

Warehouse;

Geology; and

Engineering.

The majority of the employees live in Ouray; however, some live in the more distant communities of

Ridgway, Montrose, and Silverton.

The mine is also supported by a group of approximately 20 managerial and executive staff from

Fortune Minerals Limited (London, Ontario), the owner of the mine. Personnel from Fortune include

mining engineers working on the mine design and production plans.

Table 18.4.1 summarizes the personnel at the mine.

Table 18.4.1: Underground Mine Personnel**

Personnel Type Current Number Full Production Number Wages (US$/hr)* Miner 1 10 35 $40 Miner 7 17 $35-37 Miner Helper 10 19 $27-31 Shifters & Forman 5 7 $40-50 Total 32 78 * Does not include burden. ** Mine maintenance and technical support included in other areas.

18.5 Tailings & Waste Disposal Areas There are two tailings storage areas, Revenue and Atlas as shown in Figure 18.5.1. The Revenue

storage capacity is 333 kt tons and the currently permitted Atlas has a capacity of 149 kt. This

current capacity will provide storage for 4.2 years of mining at 400 t/d. Additional permitting through

Army Corp of Engineers to relocate a wetland would expand the Atlas pile to 810 kt tons. The

Company has stated that with a permit modification the capacity could be increased to approximately

4 Mt.



Source: Fortune

Figure 18.5.1: Tailings and Waste Disposal Area Location



Waste rock from the mine is railed to surface and will be co-disposed with tailing at either/both the

Revenue and Atlas TSF dry stack features Waste rock can also be placed underground in mined out

areas if need be. A portion of the waste rock is also used as road building material.

18.6 Processing Plant Site The underground mill was designed by CH2M HILL to operate at a capacity of 300 t/d or 91,000 t/y

assuming 90% availability. It will produce lead-silver and zinc-silver concentrates. A primary crusher

circuit, also located underground, has been designed to operate at 70 t/hr and will only be operated

as required. Both the mill and crushing assembly are located in a section of existing underground

drift near the main portal. Figure 18.5.1 shows the location of the underground mill.

The mills capacity can be increased, with minor modifications to the circuit, to process 400 t of

material per day. These modifications are currently in progress.



19 Market Studies and Contracts At this time specific market studies have not been completed. There are existing contracts for lead

and zinc concentrates with Teck for their smelting facility in Trail, B.C. Fortune states that the gravity

gold concentrate will be sent to Johnson Matthey in Salt Lake City.

Existing contracts establish the approximate qualities for both zinc and lead concentrates, which are

presented below:

Lead Concentrate Qualities:

o Pb (%): 50;

o Ag (g/dmt): 300;

o Au (g/dmt): 0.1;

o Zn (%): 5;

o S (%): 17;

o SiO2 (%): 3;

o Fe (%): 10;

o Al2O3 (%): 0.4;

o Cu (%): 1.5;

o CaO (%) 1;

o Mn (%): 1;

o MgO (%): 1;

o Sb (%): 1;

o As (%): 0.25;

o Cd (%): 0.25; and

o F (%): 0.25.

Co (%): 0.25;Zinc Concentrate Qualities:

o Zn (%): 25;

o Ag (g/dmt): 60;

o Au (g/dmt): 0.05;

o Pb (%): 5;

o S (%): 25;

o SiO2 (%): 5;

o Fe (%): 5;

o Al2O3 (%): 2.2;

o Cu (%): 1;

o CaO (%) 1;

o Mn (%): 1;

o MgO (%): 1;

o Sb (%): 0.5;

o As (%): 0.25;

o Cd (%): 0.25;

o F (%): 0.25; and

o Co (%): 0.25.



20 Environmental Studies, Permitting and Social or Community Impact The following sub-sections provide discussion of relevant aspects of Project permitting and status,

ongoing environmental studies, and potential social and/or community impacts.

20.1 Required Permits and Status Inasmuch as the Revenue Mine surface operations (as permitted in the DRMS 112D permit) are to

occur only on patented mining claims that are located within Ouray County, Colorado, the permitting

requirements are greatly simplified. By virtue of restricting operations to patented claims only,

Fortune is not confronted with certain environmental obligations imposed by the National

Environmental Policy Act (NEPA) or related statutes that would typically accompany the

development and operation of a mining operation on federal lands (which by definition would include

unpatented claims). Further, since mining is considered a “use by right” within the confines of Ouray

County, typical land use ordinances (other than those associated with building and code related

issues) do not apply. Therefore, the primary required permits (and the status thereof) are limited to

those described below.

Colorado Division of Reclamation, Mining and Safety (DRMS) 112D Reclamation Permit

The Project holds an approved DRMS 112D Reclamation Permit. The 112 D Permit is applicable to a

hard rock mine that DRMS terms a “large mine” (i.e., encompassing 10 acres or greater surface

disturbance and/or annual production in excess of 70,000 t/y). The Project operations, as permitted,

are indicated to occupy a 34.19 acre permit area and produce at a nominal rate of approximately

80,000 t/y (of mineralized material); however, the Company indicates that mineralized material

production could increase to on the order of 134,000 t/y. The “D” component of the permit number

refers to what DRMS terms a “designated mining operation” (DMO) which is by definition a “mining

operation at which toxic or acid-forming materials will be exposed or disturbed as a result of mining

operations”. In the case of the Revenue Mine, it is considered a DMO by virtue of two contributing

factors: (1) mine water emanating from the mine may contain levels of certain metals that could

exceed Colorado Department of Public Health and Environment (CDPHE) limits absent any specific

action taken to mitigate; and, (2) chemical reagents utilized in the milling process are potentially

hazardous, resulting in specific storage, handling, and use requirements. Under planned milling

processes, the resultant mill tailing is anticipated to be virtually “inert” (i.e., non-acid generating and

minimal residual metals content), and as such, the mill tailing does not contribute to the DMO status.

As a DMO, the Project is required to develop an approved (integral to the Permit approval; as Exhibit

T attached to the application) “Environmental Protection Plan” (EMP). Relative to the discharge of

Revenue Mine portal water to Sneffels Creek, the Company has largely based its plan around

mitigation of zinc concentrations (as the most significant constituent of concern) through employing a

combination of methodologies: (a) enhanced zinc precipitation within the Revenue mine ditch; (b)

detention and dilution of mine water within a pond; and (c) use of source reduction processes

underground, inclusive of the sealing off of poor water quality contribution zones. With respect to mill

tailing characteristics, the Company has employed a mill process flow sheet that incorporates a high

percentage recovery flotation process targeting optimal removal of sulfides (recovered in the

concentrate and subject to appropriate smelter penalties and/or credits, dependent on the contained



metal), with the objective being the rendering of the resultant tailing virtually “inert”, following which

tailing is to be disposed via dry stack methods (using engineered/compacted fill methods) at the

Revenue Waste Pile and/or the Atlas Waste Pile (usage to vary on the basis of seasonal constraints

imposed by avalanche potential at the Revenue waste pile). Given that mill tailing materials would be

virtually “inert”, no base liners or capping layers are specified for the dry stacks in the EMP. Waste

rock (with anticipated production to be on the order of 20,000 t/y) is also anticipated to be virtually

“inert” (i.e., non-acid generating); it is anticipated that the majority of waste rock produced may be

sold or donated (as aggregate) to nearby municipal entities (such as the City of Ouray and/or Ouray

County) and that any remaining amounts can be directly incorporated into existing waste rock

features and/or co-disposed within the tailing matrix. Onsite chemical/reagent storage and use is

addressed in the EMP through various “best management practices” such as an internal collection

sump within the underground mill tunnels and area, as well as surface staging areas and

storage/handling procedures established and operated in conjunction with an approved Spill

Prevention, Control, and Countermeasures (SPCC) Plan, Primary reagents anticipated to be utilized

in milling operations include calcium oxide (powder), sodium hydroxide (50% solution), sodium

hydrogen sulfide (granular), sodium bisulfate (granular), copper sulfate (granular), zinc sulfate,

potassium amyl xanthate, MIBC, and AERO 404 promoter.

DRMS issued approval of the 112D Reclamation Permit No. M-2012-032 on January 17, 2013, with

subsequent permit issuance on February 5, 2013. An annual report and fee (currently set at

US$1,150) is required on the permit anniversary date (February 5) each year. In conjunction with

DRMS Permit No. M-2012-032, the Company has been obligated to establish and guarantee a

reclamation bond in the amount of US$277,078 (established as Corporate Surety No. 1060997). This

reclamation bond amount has been calculated on the basis of the planned operations, as permitted.

Any pending or subsequent modification of the Plan of Operations will result in a recalculation and

can result in a possible adjustment of the required bond amount. While the DRMS reclamation permit

is a key permit required to allow mining operations to commence, it should be recognized that the

112D Permit is a “reclamation permit” focusing on operational aspects that may influence ultimate

site closure and reclamation requirements. More importantly, the Permit requires that the Operator

assure (by certification) that all aspects of operations are carried out in conformance/compliance with

all other applicable federal, state and municipal laws and ordinances.

Incremental stipulations and conditions associated with the permit approval were imposed by DRMS,

as follows:

1. The Operator is required to continue a water quality monitoring program (as approved by

CDPHE) associated with underground and surface water quality sampling for the life of the

permit.

Relative to this Condition, SRK notes that Fortune installed a series of six groundwater

monitoring wells (two wells at each of three locations in order to address two discrete

intervals of groundwater occurrence), and conducted an initial round of sampling in early

June 2014. Typically, DRMS requires five calendar quarters of monitoring results as a

minimal baseline requirement; however, Fortune indicates that it may be allowed to address

this requirement through an additional monitoring event in combination with

utilization/interpretation of certain historical data. Final resolution of this rests with DRMS,

and negotiations are ongoing as of this review. Accordingly, SRK cannot issue an opinion in



this regard other than stating that it is likely that the five calendar quarter requirement would

represent a “worst case” scenario.

2. The Operator is restricted from implementing production level operation of the mill until a

limited test run of the mill has generated an amount of tailing material sufficient to be

analyzed and certified (i.e., 250 t or greater, if required) by DRMS. The tailing must be

demonstrated as being capable of not adversely affecting the “hydrologic balance” when

disposed in a manner in accordance with the Plan of Operations. Written acceptance by

DRMS (and written authorization to proceed) is required prior to elevating operations to

production status.

With respect to this Condition, SRK notes that DRMS is interested in ensuring that mill tailing

characteristics are such that moisture content, residual metal content, and sulfide content

are within “acceptable ranges” (although no specific performance criteria have been

specified by DRMS) so as to not pose a concern relative to dry stack geotechnical stability

and potential impacts to surface and/or groundwater. DRMS indicates that a subjective

analysis of Synthetic Precipitation Leach Potential (SPLP) and/or Meteoric Leaching

Potential test procedure results will be applied against “stream standards” within the

receiving segment of Sneffels Creek to determine acceptability or non-acceptability.

As of the June 19, 2014 site inspection, initial test runs of the Revenue mill suggest that

achieving optimal moisture content may prove challenging under current conditions

(significant clay and moisture content appears present in the filtered tail). At present, tailing

pulp is routed directly from the flotation cells to the pressure filtration equipment. Given that

test-scale process runs are proving problematic in achieving optimum moisture content (with

this configuration), SRK believes that the current pressure filtration configuration may prove

to be a bottleneck when scaling up to the planned production level (and any subsequent

scale-up to 400 t/d). However, SRK believes that process refinement/optimization and/or

appropriate plant modifications can be timely completed (coincident with other start-up

activities) in order to render the tailing “acceptable” to DRMS (and facilitate the authorization

for production-scale activities) without significantly impacting the project schedule.

In the event an “acceptable” mill tailing cannot be produced on an ongoing basis, Fortune is

prepared to advance other tailing disposal options, which could include: (a) engineering

design modifications to the planned disposal option; or (b) incorporation of underground

cemented paste backfill disposal; or (c) potential offsite disposal. Each of these alternatives

would require permit modification and as such may have attendant timeline implications as

well as an associated variance in capital and operating costs as pertaining to tailing disposal.

3. The Operator is required to conduct “periodical” geochemical analyses of both waste rock

and mineralized material. Waste rock analysis is to be performed on a quarterly basis during

each calendar quarter that waste rock is generated and disposed of in a waste rock disposal

area. Mineralized material analysis is to be performed quarterly or when new areas not

previously tested are initially opened for production.

With respect to this Condition, Fortune anticipates that only nominal quantities of waste rock

will be produced during production-scale operations, with disposition being either through co-

disposal with tailing or through outright sale or donation to local municipalities (for use as

road base, etc.). To date, all indications are that the primarily andesitic waste rock will have



negligible acid generating potential and as such should be readily manageable within the

TSF; however, the results of initial analyses are pending. SRK believes that waste rock

management is (or can be) satisfactorily addressed through current facility design or minor

modification thereto.

4. The Operator is restricted from installing a proposed perforated line to be buried within the

existing waste rock dump (in lieu of discharging mine-derived water into the existing mine

pond) until such time that all waste rock analysis has been performed and accepted by

DRMS (in accordance with specific parameters).

The net effect of Condition #4 has been a DRMS-imposed deferral of the construction (and

activation) of the mine discharge leach field/water management feature. As discussed above

(under Condition #3), the results of waste rock analyses remain pending as of the date of

this review. In the interim, Fortune is authorized to discharge direct to Sneffels Creek. SRK

believes that this Condition will be satisfactorily addressed once waste rock analyses are

completed and “accepted” by DRMS; however, we note that no “specific parameters” have to

date been identified by DRMS.

Technical Revision No. 1 (TR-01) to Permit M-2012-032 was approved/issued by DRMS on

November 8, 2013. TR-01 established engineering design criteria for the proposed mine water

discharge leach field. Although TR-01 resulted in a minor reduction in the calculated reclamation

bond amount (to US$276,217.80), the previously established bond amount (US$277,078) was

retained.

Technical Revision No. 2 (TR-02) to Permit M-2012-032 was approved/issued by DRMS on April 1,

2014. TR-02 authorized Star to carry out a “reduction in the area of the Phase 2 Atlas waste pile in

order to avoid wetlands”. While a net reduction in disturbed acreage was realized with this Technical

Revision, the previously established bond amount of US$277,078 was retained. However, one effect

of TR-02 was to reduce the available (currently permitted) tailing storage capacity, with an interim but

corresponding reduction in mine life (as invoked by tailing storage capacity only) to approximately

6.6 years (inclusive of start-up and shut-down activities). However, by initially constructing the

smaller footprint facility, Fortune has strategically established a secondary (winter) tailing disposal

facility. SRK notes that commissioning and utilization of the Atlas facility will be contingent on the

completion of a bridge across Sneffels Creek, as tailing is to be transported from the mill to the dry

stack feature by truck. SRK has not been provided with any information relative to the design,

permitting, or construction schedule associated with such a bridge, and as such cannot provide

further comment in this regard.

Fortune is (or will be) timely addressing the USACE 404 permitting requirements (individual permit)

associated with a future expansion of the Atlas TSF feature which, when accomplished, will result in

a corresponding increase in mine life (as determined by available tailing storage capacity only).

Given that the need for additional storage capacity is several years out, SRK is of the opinion that

Fortune can satisfactorily address the 404 permitting concerns associated with the Atlas facility

expansion such that ongoing production can continue uninterrupted.

Technical Revision No. 3 (TR-03) to Permit M-2012-032 was approved/issued by DRMS in May

2014. TR-03 pertains to a modification of the planned monitoring well construction details in order to

address the unanticipated encountering of two discrete vertical zones of groundwater occurrence.



SRK understands that all wells have been installed and properly documented (see TR-04) and that

TR-03 resulted in no modification of the reclamation bond amount.

Technical Revision No. 4 (TR-04) to Permit M-2012-032 was submitted to DRMS on July 1, 2014,

with DRMS review/approval pending. TR-04 pertains to: (a) provision of “as-built” details for the six

groundwater monitoring wells that were the subject of TR-3; (b) incorporation of additional

disturbance area in a location proximal to and north of the mine portal to accommodate equipment

storage and a temporary tailing staging area; and (c) an incremental bond amount (to a proposed

new total of US$330,000) to accommodate concurrent use of the Revenue and Atlas waste disposal

(TSF) features.

CDPS Wastewater Discharge Permit – CDPHE Water Quality Control Division

The Project has an approved Colorado Discharge Permit System (CDPS) wastewater discharge

permit (Permit No. CD000003), for which the State of Colorado holds primacy for issuance and

enforcement pursuant to the US EPA’s National Pollutant Discharge Elimination System (NPDES)

program. The permit originally issued on August 31, 2013, but was amended, and reissued on March

28, 2014 with the effective date remaining August 31, 2013. CDPS permits are subject to renewal on

five year intervals.

CDPS Permit No. CO000003 is considered a new industrial minor permit, authorizing discharge to

surface water (Sneffels Creek) via Outfall 001A, associated with a lined retention pond (a Class D

wastewater facility). Outfall 001A serves as the point of compliance for the permit, which

accommodates a facility flow of up to 1.75 MGD. This flow is derived from mine water discharging

from the Revenue portal. As discussed above, the mine is currently authorized to discharge directly

to Sneffels Creek; however, once DRMS determines water management facilities (leach field and

mine water pond) to be “acceptable” and the facilities are made operational, Fortune becomes

subject to all conditions of the issued CDPS permit.

The permit basis establishes the facility as a mine where silver is the principal product, with gold,

zinc, and lead listed as additional extraction products. As indicated previously, mineralized material

is milled at an underground mill that incorporates flotation processes to achieve incremental metal

recovery(ies) such that the tailing is virtually “inert” (i.e., low residual metal content and leachability

potential, as well as low sulfide content). The tailing is to be dry-stacked on existing waste rock

dumps (with commingled quantities of waste rock) such that there would be no anticipated oxidation

or leaching of constituents (of significance) that could adversely affect surface or groundwater. The

permit, as approved, does not allow for any chemical usage in the waters that are to be discharged;

future approval must be achieved prior to such usage, if chemical treatment or modification is to be

employed.

Monitoring requirements associated with the permit commenced on permit issuance and continue for

the life of the permit: flow volume and water temperature are to be monitored continuously by

recorder; pH two days per month by grab sample; and remaining constituents such as total

suspended solids (TSS), oil and grease, total dissolved solids (TDS), and a metals suite comprising

(total and/or dissolved forms) arsenic (As), cadmium (Cd), chrome 3 plus (Cr+3), Cu, cyanide (CN)

cyanide as weak acid dissociable (WAD), iron (Fe), Pb, manganese (Mn), mercury (Hg), Ag, and Zn

at various frequencies. In addition, Star is required to conduct chronic Whole Effluent Toxicity (WET)

testing on a quarterly basis.



CDPS Stormwater Discharge Permit – CDPHE Water Quality Control Division

The Project has an approved Stormwater Discharge Permit (CDPS General Permit No.COR040000

– Certification No. COR040273) issued September 19, 2012. The General Permit for Stormwater

Discharges Associated with Metal Mining Operations and Mine-Waste Remediation expired on

September 30, 2011; however, the General Permit has been administratively continued by CDPHE

and the permit remains in effect. The current annual fee for the permit is US$375.

Facility stormwater runoff discharges to Sneffels Creek within Segment 09 of the Uncompahgre

River Sub-basin. Segment 09 is reviewable and classified for the following beneficial uses: Aquatic

Life (Class 2 Cold); Recreation (Class P); and Agriculture. CDPHE WQCD has determined that the

practice-based effluent limits are adequate to protect all water quality standards and meet any Total

Maximum Daily Load (TMDL) requirements applicable to the Project facility. However, Segment 09 is

listed as “impaired” for cadmium and zinc, in accordance with Section 303(d) of the federal Clean

Water Act, and CDPHE water quality control discharge (WQCD) has not developed a TMDL for

these parameters for this segment. Therefore, site-specific benchmark sampling for cadmium and

zinc is required for the Project.

In conjunction with Permit No. COR040000, is the requirement to monitor, on a quarterly basis, the

site-specific benchmark criteria of (potentially dissolved) cadmium and zinc. In addition, benchmark

monitoring for discharges from the “waste rock and overburden piles” is required for a number of

parameters (TSS, turbidity, pH, and a suite of metals). Sampling from facility holding ponds or other

impoundments is to be performed at the outlet of the pond; however, if the pond does not discharge,

no sampling is necessary. Facility inspections and annual reporting are required.

Air Emission Permit(s) – CDPHE Air Quality Control Division

The Project is required to submit an appropriate Air Pollutant Emissions Notice (APEN) form

descriptive of all identified emissions sources. It is presumed that exceedence of threshold limits will

not be demonstrated, in which case the representative sources would be exempt from permitting

requirements. Fortune has indicated that the appropriate APEN application has been completed and

submitted, and that CDPHE response is pending.

US EPA Spill Prevention, Control, and Countermeasures Plan

The Company has reportedly developed and put in place a formal Spill Prevention, Control, and

Countermeasures (SPCC) Plan in accordance with applicable regulations. The SPCC Plan (or an

enhanced equivalent) is stated to incorporate storage, handling, and emergency response actions

associated with not only petroleum-based products, but also all other chemicals, reagents, etc. that

are managed and/or used onsite.

USACE Section 404(d) Permitting Authority

Effective April 22, 2014 the Company secured authorization under Nationwide Permit (NWP) No. 44

Mining Activities relative to expanding the Revenue waste rock dump into a portion (0.21 ac) of the

existing Revenue Pond. All work is required to be completed with the general terms of NWP 44, to

include avoidance measures identified in the report “Cultural Resource Inventory of Proposed

Disturbance Areas at the Revenue Tunnel” and additional identified measures. In addition, the

Company is obligated to compensate the unavoidable impacts to Revenue Pond through

construction of a new Mine Water Pond (0.24 acres).



As mentioned above, future tailing disposal options may incorporate areas immediately surrounding

the Atlas Waste Pile feature. It is likely that any such action may require an individual permit (i.e., the

action would not fall under the purview of the NWP 44). At this juncture, this and other tailing

disposal options (such as underground paste backfill) are at the evaluation stage.

Federal Mine Safety and Health Administration (MSHA) Authorization

The Project holds a valid MSHA Authorization (ID No. 0503528), reportedly obtained in October

2011 via transfer from the prior operator.

Ouray Count Permit(s)

Ouray County Land Use Code Section 22 specifies mining as a “use by right”, therefore no special or

conditional use permit is required to commence mining operations. This was confirmed by the Ouray

County Land Use Department in a letter dated March 27, 2012.

The Project is subject to conformance with standard building code and code enforcement criteria as

associated with construction and use/occupancy of the various involved infrastructure facilities, to

include structures and associated sanitary facilities. The Company represents that all required

permits and authorizations associated with Ouray County building and/or zoning guidelines have

been satisfactorily addressed and that the planned mining operation can commence accordingly.

Subsequent additions or modifications to existing facilities will be subject to similar

permits/approvals. Except as may be indicated, SRK has not attempted to confirm compliance status

relative to Ouray County codes and ordinances.

20.2 Environmental Study Results No significant environmental studies (beyond routine baseline and design documentation as

associated with project development and permitting) have been identified.

DRMS Permit M2012-032 does require that the Company conduct quarterly sampling/reporting of

materials emplaced in waste disposal facilities (e.g., the Revenue Waste Pile and the Atlas Waste

Pile where tailing is to be dry-stacked and potentially commingled with waste rock). This is reportedly

to be a life-of-mine ongoing effort incorporating SPLP (leaching) testing of deposited materials

(tailing and waste rock), as well as compaction testing as associated with placement of waste

material lifts within the feature(s).

Chronic Whole Effluent Toxicity (WET) testing is also required over the life of the wastewater

discharge permit (Permit CDPS Permit No. CO000003).

Study results and findings will be utilized by DRMS and/or CDPHE in subsequent modifications (if

any) of associated permits.

20.3 Environmental Issues No significant environmental issues have been identified.

Items of minor significance which have been noted include the following:

Presence of an avalanche run-out zone in alignment with the Revenue Waste Rock Pile. The

Company indicates that facility design and operational measures have been identified to



mitigate or reduce concerns in this regard. SRK believes that facility design and/or

operational measures adequately address this item;

The Company has identified/recognized the probable need for a USACE Section 404

individual permit in association with potential expansion of the Atlas Waste Rock Pile area.

Appropriate wetland delineation studies and mitigation measures will need to be pursued in

a timely manner as appropriate for the planned scheduling for usage of the area – at current,

being several years out. SRK believes Fortune is capable of addressing this issue in a timely

manner such that there would be no interruption in ongoing production; and

The Company is apparently evaluating the potential application of paste backfill placement

(underground) as a means of disposal for some portion of future produced tailing.

Appropriate hydrologic investigations/evaluations and UIC permitting efforts will be required

as appropriate for the planned scheduling of such – at current, being several years out. SRK

believes Fortune has sufficient interim tailing storage capacity available at the Revenue and

Atlas TSF features, and thus sufficient time to address all requirements associated with a

paste backfill option.

20.4 Operating and Post Closure Requirements and Plans Operating and post-closure requirements and plans are discussed in Sections 20.7 through 20.10.

20.5 Post-Performance or Reclamation Bonds At this juncture, there exists only the DRMS reclamation bond attached to the DRMS 112D

Reclamation Permit in the amount of US$277,078 (Corporate Surety No. 1060997) and which is

subject to a proposed increase to US$330,000 if the pending Technical Revision 4 is approved as

submitted/calculated.

Fortune indicates that it has in place various “agreements” with Ouray County which obviate the

requirement for any winter road use or maintenance bonds (as were required of the previous

operator) as associated with usage of county roads accessing the mine. SRK has not verified such

but presumes the statement to be factually correct.

Any future exploration activity carried out at the Project site, inclusive of areas external to the

prescribed permit area boundaries, will be subject to bonding requirements as attached to any

approved Notice of Intent to Prospect permit administered by DRMS. Typically, such bond amounts

are minimal and directly related to mitigation of surface disturbance associated with drilling,

trenching, access road development, etc., as may be necessary in the conduct of exploration

activities. In this regard, it is indicated that there are two outstanding Notice of Intent to Prospect

bonds, one for approximately US$12,000 as associated with a total area of approximately 5 acres (or

less), and one for approximately US$7,000 as associated with approximately 2 acres (or less),

respectively. SRK has not undertaken to confirm this information but presumes the information to be

factually correct.

20.6 Social and Community The Project has not been subjected to a National Environmental Policy Act (NEPA) analysis as the

Plan of Operations does not incorporate activities on federal lands. Therefore, a formal evaluation of

social and community impacts has not been completed.



It can be stated, however, that the Project will result in the provision of a significant number of direct

employment jobs (skilled and unskilled), as well as a resultant multiplier effect for associated goods

and services in the city of Ouray and the surrounding Ouray County area where a large measure of

the local/regional economy is traditionally based on recreation and/or tourism. On this basis, the

prevailing local/regional sentiment is generally favorable toward Project development.

As with any proposed mine project, there are typically concerns expressed by non-governmental

organizations (NGOs) or other stakeholder entities, as well as affected individuals. With respect to

the Revenue Mine Project, identified potential concerns include the potential for increased

traffic/road usage on the County road extending past the Revenue mine on up to Yankee Boy Basin,

a popular summer tourist feature. Similarly, increased traffic associated with mine activities will likely

result in increased fugitive dust emissions along that same route. SRK is not aware of any significant

local, regional or national-level opposition to the proposed action.

20.7 Mine Closure A mine closure plan has been developed for implementation upon cessation of operations at end of

mine life. As indicated below (Section 20.8 – Reclamation Measures during Operations and Project

Closure), closure of the Revenue and Atlas Waste Piles is planned to occur concurrent with mine

operations.

The indicated general closure sequence (following capping of the Atlas Waste Pile and

decommissioning/salvage of underground equipment) then incorporates backfilling of the

underground storage and mill portal areas as well as removal of Sediment Pond 1. This is followed

by removal of certain surface facilities and backfilling of the remaining underground storage portal

and tailing loadout portal. Once the foregoing activities are accomplished, the site will be graded,

capped, and revegetated in accordance with the approved reclamation plan. Closure activities are

anticipated to require approximately 6.5 months duration.

The Plan of Operations incorporates three ventilation shafts: the 960 Raise, the Yellow Rose shaft,

and the Monongahela shaft. Each of these features will be closed by cutting the casing below ground

surface, followed by installation of a steel plate with concrete seal, placement of backfill, and

topsoiling/revegetation.

Structures to be removed at the Revenue portal area include: the surface equipment and storage

shop; mine office; compressor room; dry-room; mill loadout; and structural cribbing.

Portal areas (inclusive of the mill portal, and underground storage portals) are to be closed by

placement of waste rock backfill to a distance of approximately 25 ft of the portal crown. The exterior

face is to be sloped, topsoiled, and seeded. The Revenue Portal will be retained intact to facilitate

mine discharge, and it is to be affixed with a bat access gate.

Sediment Pond 1 is to be backfilled following successful revegetation of reclaimed mine areas that

drain to it. Minor drainage diversions and collection ditches are to be reclaimed as well; however,

Sediment Pond 2 and the Mine Water Pond are to remain intact following closure (with the Mine

Water Pond being the post-closure receiving body for the Revenue portal discharge.

Final site grading, topsoiling, and revegetation will incorporate: grading (where feasible) to a

maximum 3H:1V slope; placement of a topsoil cover (recognizing that topsoil resources are limited at

the site) to a nominal depth of 12 inches on waste rock features and 6 inches on non-waste



disturbed areas; and, seeding (in accordance with an approved seed mixture). Star acknowledges

that topsoil importation will be required (due to the limited quantities present and available onsite). To

address this topsoil deficiency, the Company has determined overall topsoil volume requirements

over the life-of-mine and established an importation schedule to assure that operations never

encounter a deficit (shortage) in excess of 4,000 yd3 at any point in time.

Seeding application is proposed to be accomplished via drill seeding methods, with a specified

application rate of 15.6 lb/ac pure live seed. If/where broadcast seeding is employed, the application

rate is to be doubled. The reclamation plan incorporates a species mixture targeted toward

establishment of high elevation rangeland; however, the Company has indicated that final seed

mixture determinations will be jointly coordinated with DRMS and Ouray County.

20.8 Reclamation Measures during Operations and Project Closure The indicated reclamation and closure plan associated with Permit M2012-032D addresses 34.19 ac

of Permit Area with surface disturbance identified in Table 20.8.1:

Table 20.8.1: Surface Disturbance Permit Area

Feature/Description Area (acres)Revenue Waste Pile 7.39 Atlas Waste Pile (Including Sediment Pond 1) 4.64 Operations Area 2.35 Lower Pond Area (Sediment Pond 2 and Mine Water Pond) 1.37 Slopes Between Operations Area and Lower Pond Area 2.50 Shaft Collars 0.69 Atlas Access Road 0.66 Undisturbed Surface Area Within Permit Boundary 14.59 Total Permit Area: 34.19

The Company proposes to return most of the disturbed area to a post-mine land use classification of

high elevation rangeland. The “Operations Area” and the Atlas Access Road areas will be left intact

for future use by the underlying landowner.

Certain operational components are to be reclaimed concurrently during the operational mine life.

For example, the Revenue Waste Pile may be used intermittently for the placement of dry stack

tailing (and limited quantities of waste rock), while capping topsoil will be stored on an interim basis

at the Atlas Waste Pile. If the Revenue Waste Pile is completed first (to capacity), a 12 inch topsoil

cover is to be placed, followed by revegetation. Tailing disposal will then reach capacity at the Atlas

Waste Pile, with interim storage of cover topsoil atop the closed Revenue Waste Pile until (at end of

mine life) it too is closed, in a similar manner. However, sequencing may be subject to seasonal

operational constraints as associated with avalanche risk inherent with use of the Revenue waste

rock facility.

In general, all remaining disturbance areas will be subject to reclamation only at the end of mine life

as usage is required during production operations.

20.9 Closure Monitoring Post-closure monitoring will include regular observation and monitoring of revegetation success

(including prevention of invasive and/or noxious weed species) and minimization of erosion, both of



which must be achieved prior to bond release. An access road will remain in place to facilitate site

access for monitoring. The Atlas Waste Pile access road is to remain intact as well.

In addition to the routine reclamation monitoring, the Project will remain subject to monitoring

obligations as associated with CDPS Permit No.CO0000003 (as pertaining to wastewater discharge

through Outfall 1A at the Mine Water Pond; and, post-closure monitoring requirements as associated

with requirements for an “inactive mine” under CDPS Permit No COR040273 (Stormwater Permit –

General). It should be noted that a prior operator at the site successfully terminated the facility’s

CDPS wastewater discharge permit at conclusion of operations.

20.10 Reclamation and Closure Cost Estimate As indicated above, the reclamation and closure cost estimate as determined by The Company and

accepted by DRMS has resulted in a current reclamation bond amount of US$277,078. This total

bond amount may be subject to change over the life-of-mine due to factors that may include

permitting new areas, changes to the Plan of Operations and/or approved reclamation plan, material

changes in environmental conditions that have yet to manifest, changes in regulatory requirements,

and/or inflation,. SRK has not undertaken to examine the calculation of the reclamation bond

amount; it is presumed sufficient as it has been verified and accepted by DRMS. We note that TR-04

(approval pending) would result in an increase in the total bond amount to US$330,000, if approved

as submitted/calculated.



21 Capital and Operating Costs

21.1 Introduction This Section of the report presents the Capital Expenditure (CAPEX) and Operating Expenditure

(OPEX) estimates for Revenue Silver project.

The audited project is currently in operation; the capital investment included in this report is related to

the expansion of the operations and is split into the following:

Development;

Raises;

Drifts;

Raise to Surface;

Expansion Mine Equipment;

Plant Expansion; and

Environmental Rehabilitation.

The capital cost estimates developed for this study comprise the costs associated with the

engineering, procurement, construction, and commissioning required for all items. The cost estimate

was based on site specific historic data from Fortune.

Operating costs associated with the projects are subdivided into the following categories:

Surface Costs;

Virginius Mining;

Yellow Rose Mining;

Processing;

Concurrent Environmental Rehabilitation; and

G&A.

All of the operating cost estimates are based on site specific data. All operating costs include

supervision staff, operations labor, maintenance labor, consumables, electricity, fuels, lubricants,

maintenance parts and any other operating expenditure identified by contributing engineers.

All financial data is second quarter 2014 and currency is in U.S. dollars (US$), unless otherwise

stated.

21.2 Costs Assumptions and Qualifications

21.2.1 Tax

Estimates that compose the capital and operating costs consist of domestic and international

services, equipment, labor, etc. Where required, the following were included:

Sales tax;

Freight; and

Duty.



21.2.2 Work Schedule

Surface Operations

The mine operation is based on the following:

1 shifts per day; and

12 hours per shift.

The surface operations schedule is proposed to run seven days per week for 350 days per year.

Mine Operations

The mine operation is based on the following:


10 hours per shift.

The mine operations schedule is proposed to run seven days per week for 358 days per year, which

includes an annual allowance of 7 days downtime for weather delays or maintenance operations.

Plant Operations

The plant operation is based on the following:


12 hours per shift.

The plant operations schedule is proposed to run seven days per week for 350 days per year and

includes downtime for maintenance and weather related delays. The assumed plant throughput rate

is 400 t/d.

G&A Operations

The G&A operation is based on the following:

1 shift per day; and

10 hours per shift.

The G&A operations schedule is proposed to run five days per week for 250 days per year.

21.3 Capital Costs Fortune estimated the capital costs for the Revenue Mine. The estimate is based on historic costs

incurred at the site, existing contracts with service providers and expected expansion necessary in

the mine to achieve the reserves production schedule. Table 21.3.1 summarizes the capital cost

estimate.

Note that there are other outstanding payments to acquisition which are currently not included in the

cashflow. These are related to Fortune’s Project financing strategy. Results presented herein are

based on a 100% equity assumption.



Table 21.3.1: Project Capital Cost Summary

Item LoM Capital (US$000s) Mine Development 20,656 Mine Equipment 1,679 Plant Expansion 912 Environmental 2,897 Total $26,144

21.3.1 Mining Capital

Table 21.3.1.1 shows the mine development capital for the Project.

Table 21.3.1.1: Mine Development Capital

Item LoM Capital (US$000s) Development with Rail 1,665 Development without Rail 10,058 Standard Roybal Raises 51 Reinforced Roybal Raises 0 Alimak Raises 504 Scram Drift 5,820 Raise to Surface RV 2,307 Raise to Surface YR 250 Total $20,656

Table 21.3.1.2 shows the mine equipment capital.

Table 21.3.1.2: Mine Equipment Capital

Item LoM Capital (US$000s) Engineering- software 5 Jack leg Stoper Drill S83F MW 10 Legs long and short for jack leg drill 3 20 hp Air Slusher 36 Rail 4 Ton Locomotive /w battery and charger 40 Low Boy Flat car Boggied 18 Man Certified Air Hoist 35 Man certified Cage 30 24" Sheave Wheel 50 ton 5/8 cable 8 5/8" 6x19 Cable at 1000 ft 5 10 HP fans 39 Survey equipment 55 Ventilation equipment (for engineering) 1 Air Powered Chain Saws 8 2 1/2 ton Mancha Battery 10 Timber Tugger & Fabrication for hoisting supplies 25 Ventilation for Virginius 117 Air Doors Material 10 M.P.C. 120 Combo Starter 15 Power Cable 4160-Volt 80 Power Cable 480-Volt 120 1st 10t Underground Haul Truck 180 2nd 10t Underground Haul Truck 180 1cy LHD 280 Mine Air Heater 250 Total $1,679



21.3.2 Process Facility Capital

Table 21.3.2.1 shows the process facility capital which includes the expansion to 400 t/d.

Table 21.3.2.1: Process Facility Capital

Item LoM Capital (US$000s) Computer for Supervisor's Crew 1-2 1 Computer for Supervisor's Crew 3-4 1 Computer for Lab Supervisor 1 Office desk/Chair for Conference Room 1 Office desk/Chair for Admin. Assistant 1 Office desk/Chair for Supervisor's Crew 1-2 1 Office desk/Chair for Supervisor's Crew 3-4 1 Office desk/Chair for Lab Supervisor 1 Storage Area Development 21 Met. Lab / Assay Lab 75 Transformer 2000 kVA, 4160-480/277, 3 ph, 60 Hz 9 Forklift for Mill (Propane) 17 Extra Vehicle - one per shift 9 Purchase Second Trommel 7 Install Backup Ball Mill Cyclone Feed Pump 18 Modify Ball Mill Cyclone Feed Pump box 10 Install Lead Rougher Tails Pumps & P'box 9 Spare Filter Feed Pump 72 400 TPD Pumps 150 Dust Collector - Crushing Building 41 Concentrate Filter Press Pan Doors 86 Overhead Crane Crusher Area 15 Crane Trolley to Maintain Tailings Filters 17 Complete Circuits Copper Flotation/Filtration 26 Mag Flow Meters for Ball Mill Dilution Water 21 Class I Steel 51 Total $662

21.3.3 Environmental Capital

Table 21.3.3.1 shows the environmental capital.

Table 21.3.3.1: Environmental Capital

Item LoM Capital (US$000s) Compliance Project(mine water pond/ditching) 2,640 Water Sampling Equipment 4 Moisture Compaction Density Test Equipment 3 New Crusher 250 Total $2,897

21.4 Operating Costs Table 21.4.1 summarizes the operating costs. The following sections present additional detail for

each area.



Table 21.4.1: Operating Cost Summary

Description LoM (US$000s) LoM (US$/t-Mineralized Material) Surface 25,813 21.18 Underground Mining* 57,272 46.98 Process 25,407 20.84 Environmental 5,128 4.21 G&A 30,479 25.00 Total Operating $144,099 $118.21

*A portion of the mine development has been capitalized

21.4.1 Surface Costs

Surface costs were developed by Fortune. Cost estimate is based on requirements of equipment,

operating labor, supervision and administrative labor, consumables and maintenance, etc.

Surface costs are considered fixed and amount to a total of approximately US$25.8 million over the

life of mine.

The basis of the operating costs is an owner operated mine. Tables 21.4.1 to 21.4.1.3 summarize

the surface operating costs of the Revenue Mine.

Table 21.4.1.1: Surface Consumables Assumptions

Surface Cost Assumptions Value Unit Consumables Cost Gasoline 4.00 US$/gallon Diesel 4.00 US$/gallon Propane 3.00 US$/gallon Power 0.08 US$/KWh Power Demand 14.00 US$/unit Consumables Usage Power 500 HP Gasoline use of 10 gal/shift Diesel use of 175 gal/shift



Table 21.4.1.2: Surface Costs Labor

Surface Labor Cost Quantity Value Unit Yearly Costs Hourly Labor Annualized 52 Weeks Shift Supervisor 3 28.00 US$/hr 396,950 Shift Boss 2 35.00 US$/hr 330,792 Electrician 4 35.00 US$/hr 99,238 Equipment Operator 4 28.00 US$/hr 529,267 Construction 2 28.00 US$/hr 264,634 Custodian 2 22.00 US$/hr 207,926 General Laborer 2 20.00 US$/hr 189,024 Mechanic 3 35.00 US$/hr 173,666 Assistant Mechanic 3 28.00 US$/hr 138,933 Fixed Salary Labor Cost Annual Rate Allocation Total Allocated Cost Surface Manager 80,000 100% 80,000 Safety Manager 83,000 33.33% 27,664 Safety Manager 100,000 33.33% 33,330 Electrical Manager 105,000 100.00% 105,000 Maintenance Manager 92,000 35% 32,200 Total Labor $2,608,624

Table 21.4.1.3: Surface Costs Consumables

Surface Consumables Cost Value Unit Yearly Costs Auto Repair & Parts 10,500 US$/month 126,000 Caterpillar Supplies 8,000 US$/month 96,000 Contract Hauling 0 US$/month 0 Contract Welding 0 US$/month 0 Diesel 20,883 US$/month 250,600 Equipment Rental 0 US$/month 0 Fire Extinguishers & Alarms 500 US$/month 6,000 Garage Doors 0 US$/month 0 Gasoline 1,193 US$/month 14,320 Gravel 0 US$/month 0 Hardware 3,500 US$/month 42,000 Heating 0 US$/month 0 Home Depot 3,000 US$/month 36,000 Lumber 200 US$/month 2,400 Metal Supplies 500 US$/month 6,000 Miscellaneous 12,000 US$/month 144,000 Power 10,740 US$/month 128,880 Power Demand/Month 7,000 US$/month 84,000 Propane 1,000 US$/month 12,000 Pumps & Pipe 1,000 US$/month 12,000 Rigging & Chain 2,000 US$/month 24,000 Signs 200 US$/month 2,400 Spire Construction 7,500 US$/month 90,000 Towing 200 US$/month 2,400 Consumables Total $99,917 US$/month $1,079,000 Surface Total Annual Fixed Costs 3,687,624 Quarterly Costs $921,906



21.4.2 Underground Mining Costs

Operating costs were developed by Fortune and modified by SRK to be consistent with the

productions schedule. Cost estimate is based on requirements of equipment, operating labor,

supervision and administrative labor, mine consumables, maintenance, etc.

The basis of the operating costs is an owner operated mine. Table 21.4.2.1 summarizes the

operating costs of the Revenue Mine underground mining costs.

Table 21.4.2.1: Revenue Mine Underground Mining Cost Summary

Type LoM Cost (US$000s) US$/t-RoM US$/t oz-Ag Development with Rail 1,665 1.37 0.14 Development without Rail 10,058 8.25 0.84 Virginius Stoping 24,383 20.00 2.03 Virginius Incremental Truck Haul 1,118 0.92 0.09 Yellow Rose Stoping 7,767 6.37 0.65 Standard Roybal Raises 6,010 4.93 0.50 Reinforced Roybal Raises 59 0.05 0.00 Alimak Raises 552 0.45 0.05 Scram Drift 4,477 3.67 0.37 Rehabilitation 1,183 0.97 0.10 Total $57,272 $46.98 $4.76

These costs were derived from the assumptions presented in Table 21.4.2.2. The mining operations

section of this report presents a more complete discussion of such cost assumptions

Table 21.4.2.2: Revenue Mine Underground Mining Cost Assumptions

Type Cost Unit Rehabilitation (Average) 130.00 US$/ft Development Drifting with rail 700.00 US$/ft Development Drifting no rail 625.00 US$/ft Standard Roybal Raise 600.00 US$/ft Reinforced Roybal Raise 650.00 US$/ft Alimak Raise 657.00 US$/ft Scram Drift 500.00 US$/ft Raise Bore 950.00 US$/ft Stope Production (Yellow Rose) 4.62 US$/ft3 Stope Production (Virginius) 5.06 US$/ft3 Revenue Virginius Incremental Truck Haulage 1.36 US$/t

21.4.3 Processing Costs

Mineral processing costs were developed by Fortune and are based on a production schedule for the

mine site. Cost estimate is based on requirements of equipment, operating labor, supervision and

administrative labor, process consumables and maintenance, etc.

The processing cost is estimated at US$28.60/t of plant feed, which amounts to approximately

US$25.4 million over the life of mine.

The basis of the mineral processing costs is an owner operated mine. Tables 21.4.3.1 to 21.4.3.3

summarize the mineral processing costs of the Revenue Mine.



SRK notes that the reagent consumptions used were based on laboratory tests that were overdosed

to ensure flotation recovery. Operating experience shows less reagent is required and as such the

costs presented here are conservative.

Table 21.4.3.1: Revenue Mine Plant Consumables Summary

Plant Consumables Unit Costs Value Unit Power Mill Equipment 1,000 KW/hr Power 0.080 US$/KWh Demand Charge 14.000 US$/KW Demand Draw 1,300 KW/month Grinding Media Balls 0.60 US$/lb Liners 25,000 US$/yr Reagents PAX 1.65 US$/lb SEX 0.00 US$/lb Lime 0.30 US$/lb Zinc Sulfate 1.31 US$/lb Sodium Sulfite 0.00 US$/lb Copper Sulfate 2.05 US$/lb NaOH 610.00 US$/tote MIBC Frother 765.00 US$/drum Parts & Supplies Mill Equipment 50.00 US$/hr

Table 21.4.3.2: Revenue Mine Plant Consumption Rates Summary

Plant Consumption Assumptions Quantity Value Unit Consumables Usage Grinding Media Balls 0.50 lb/t Liners 1.00 set/yr Reagents PAX 0.43 lb/t Lime 0.10 lb/t Zinc Sulfate 0.43 lb/t Copper Sulfate 0.43 lb/t NaOH 432.00 gal/day MIBC Frother 38.40 gal/day Parts and Supplies Miscellaneous 200 US$/shift Consumables Power 80.0 KWh/t Power Demand Parts and Supplies Miscellaneous 3.00 US$/t



Table 21.4.3.3: Revenue Mine Plant Cost Summary

Plant Operating Cost Quantity Unit Unit Cost Unit Cost/t Hourly Labor Lead Operator 31.50 US$/hr 1.89 Assistant Operator 28.35 US$/hr 3.40 Laborer 24.15 US$/hr 2.90 Mechanic 38.50 US$/hr 0.31 Assistant Mechanic 30.80 US$/hr 0.25 Electrician 38.50 US$/hr 0.96 Salary Labor Mill Manager 140,000 US$/yr 0.98 Safety Manager* 55,333 US$/yr 0.39 Maintenance Manager* 13,800 US$/yr 0.10 Consumables Power 80.00 KWh/t 0.08 /KWHR 6.40 Demand Charge 0.11 KWh/t 14.00 KW 1.53 Grinding Media Balls 0.50 lb/t 0.60 US$/lb 0.30 Liners 0.000009 set/t 25,000 US$/set 0.23 Reagents PAX 0.43 lb/t 1.65 US$/lb 0.71 SEX 0.00 lb/t 0.00 US$/lb 0.00 Lime 0.10 lb/t 0.30 US$/lb 0.03 Zinc Sulfate 0.43 lb/t 1.31 US$/lb 0.56 Sodium Sulfite 0.00 lb/t 0.00 US$/lb 0.00 Copper Sulfate 0.43 lb/t 2.05 US$/lb 0.88 NaOH 1.08 gal/t 1.36 US$/gal 1.46 MIBC Frother 0.10 gal/t 13.91 US$/gal 1.34 Parts and Supplies Mill Equipment 0.06 hr/t 50.00 US$/hr 3.00 Miscellaneous 0.0050 shift/t 200.00 US$/shift 1.00 Total $28.60

*Shared with other areas

21.4.4 Concurrent Environmental Rehabilitation

Concurrent environmental rehabilitation costs were provided by Fortune and are considered as the

following:

2014: US$175,000;

2015: US$237,000;

2016: US$1,067,000; and

2017 and beyond: US$167,000.

Included in these costs is on-going permitting, water evaluations, various sampling and lab testwork

costs, and permitting including estimated permit costs to expand the tailings/waste stockpile area.

The majority of the expense in 2016 is a US$700,000 expense for wetland mitigation.

21.4.5 G&A

G&A costs were developed by Fortune and are based on a production schedule for mine site. The

cost is estimated as a fixed amount of US$4.36 million on a yearly basis. All labor burden for



employees including health and benefits, pension, workers compensation and bonuses have been

included in the G&A category as detailed below.

Tables 21.4.5.1 and 21.4.5.2 present the basis for the cost estimate.

Table 21.4.5.1: Revenue Mine G&A Assumptions

Consumables Usage Gasoline Vehicles 30 gal/shift Diesel Vehicles 30 gal/shift Consumables Cost Gasoline 4.00 US$/gallon Diesel 4.00 US$/gallon Propane 3.00 US$/gallon Power 0.08 US$/KWh

Table 21.4.5.2: Revenue Mine G&A Costs

G&A Costs Yearly Costs (US$) Fixed Salary 285,000 Parts Runner 58,080 Warehouse Technician 79,200 Geotechnician 66,000 Assaying 30,000 Avalanche Control 12,000 Communications 12,000 Community Donations 6,000 Contract Work 60,000 Credit Card 60,000 Expense Reports 12,000 FICA Match 648,000 Fireman/EMT/Driver 36,000 Fuel for Vehicles 89,040 Garbage 1,620 Health Insurance 1,020,000 Liability Insurance 180,000 Lab Supplies 6,000 Legal 18,000 Management Bonuses 480,000 Merlin Airplane 36,000 Miscellaneous 180,000 Office Supplies 3,000 Permit Fees and Work 30,000 Physical/Drug Testing/Payroll Management 84,000 Safety Bonuses 48,000 Safety Eyewear Perk 7,200 Shipping and Mail 12,000 Vehicle Reimbursement 87,000 Vehicle Replacement 12,000 Warehouse Rent 156,000 Workers Comp 540,000 Total Annualized Other Operating Costs $4,354,140



22 Economic Analysis

22.1 Introduction The financial results are derived from annual inputs provided by Fortune engineers and review by

SRK. Cash flows are reported on a yearly basis. All financial data is second quarter 2014 U.S.

dollars.

22.2 External Factors

22.2.1 Market for Products

Fortune currently holds contracts for the provision of its products. This study was prepared under the

assumption that the project will sell the following products.

Lead Concentrate (Trail, BC);

Zinc Concentrate (Trail, BC); and

Gravity Concentrate (Salt Lake City, UT).

Lead and zinc concentrates also contain gold and silver.

Assumed prices are based on historic and spot prices. Table 22.2.1.1 presents the prices used in

this PEA.

Table 22.2.1.1: Revenue Mine Price Assumptions

Description PEA Price Current Spot Price 3 Yr Avg Price Unit

Gold 1,350.00 1,306.00 1,524.00 US$/oz Silver 22.00 20.92 27.55 US$/oz Lead 1.00 0.99 0.97 US$/lb Zinc 1.00 1.07 0.90 US$/lb

Current contracts also define net smelter return terms for each type of product, these terms are

summarized and presented in Table 22.2.1.2.



Table 22.2.1.2: Revenue Mine Net Smelter Return Terms

Description Value Unit Lead Concentrate

Treatment Charges 254.01 US$/t-conc. Impurities Penalties 0.00 US$/t-conc. Third Party Participation 0.05 US$/t-conc. Payable Gold 95% Gold Smelting & Refining Charges 12.00 US$/oz-Au Payable Silver 95% Silver Smelting & Refining Charges 2.00 US$/oz-Ag

Payable Zinc 0% Payable Lead 95% Price Penalty 0.01 US$/lb-Pb

Zinc Concentrate Treatment Charges 226.80 US$/t-conc. Impurities Penalties 0.00 US$/t-conc. Third Party Participation 0.00 US$/t-conc. Payable Gold 0% Silver Deduction 3.00 oz/t

Payable Silver 75% Payable Lead 0% Payable Zinc 85%

Zinc Price Participation Base Price 2,000.00 US$/t-Zn Upper Deduction 6.00 US¢/lb-Zn Lower Premium 2.00 US¢/lb-Zn

Gravity Concentrate Treatment Charges 50.00 US$/t-prec. Impurities Penalties 0.00 US$/t-prec. Third Party Participation 0.00 US$/t-prec. Payable Gold 95% Gold Smelting & Refining Charges 2.00 US$/oz-Au Payable Silver 95% Silver Smelting & Refining Charges 0.30 US$/oz-Ag

22.2.2 External Costs

The projects will depend on logistics solutions that are considered external to the project, the

products will be transported from the site by truck to local smelters. The following is the considered

the transportation costs for each product, estimated by historic prices practiced at each site.

Table 22.2.2.1: Product Logistics Cost

Items Value UnitLead Concentrate 175.00 US$/t Zinc Concentrate 175.00 US$/t Gravity Concentrate 175.00 US$/t

All concentrates assume 9% moisture content.

22.3 Main Assumptions Common prices for consumables, labor, fuel, lubricants and explosives were used by all engineering

disciplines to derive capital and operating costs. Included in the labor costs are shift differentials,



vacation rotations, all taxes and the payroll burdens. All currency is in U.S. dollars (US$) unless

otherwise stated.

No pre-production period has been considered, as the site is already under development. Mine

production targets 400 t/d and achieves this rate for five years before ramping down. The mine

schedule does not include stockpiling as all blending of RoM is done in the mine. Table 22.3.1

presents the LoM mine assumptions.

Table 22.3.1: Revenue Mine Production Assumptions*

Description Value Units Mine Production

Mineralized Material 888.3 kt Waste Material 330.7 kt

RoM Grade Gold 0.02 oz/t Silver 14.63 oz/t Lead 2.26% Zinc 0.90%

Contained Metal Gold 21.5 koz Silver 12,998 koz Lead 40,151 klb Zinc 16,052 klb

Avg. Yearly Contained Metal** Gold 3.1 ktoz Silver 1,856.9 koz Lead 307.3 klb Zinc 5,735.9 klb

*This PEA is preliminary in nature and is based on technical and economic assumptions which will be further evaluated in more advanced studies. The PEA is based on a resource model that contains Measured, Indicated and Inferred mineral resources. Inferred mineral resources 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 PEA will be realized. ** Calculated using a half year of production in 2014 and 2021

The processing circuit is designed to recover a lead concentrate and a zinc concentrate and is

assumed to operate 350 days/yr at a capacity of 400 t/d. A gravity gold circuit is also used at times

and the concentrate will be delivered to the smelter with the lead concentrate. Table 22.3.2 presents

the projected LoM plant production.



Table 22.3.2: Revenue Mine Mill Production Assumptions

Description Value Units RoM Milled 888.3 kt Lead Concentrate

Moisture Content 9% Concentrate Gold Grade 16.81 oz/t Concentrate Silver Grade 10,735 oz/t Concentrate Lead Grade 49.25% Concentrate Zinc Grade 12.51% Recovery Gold 87% Silver 92% Lead 85% Zinc 54% Concentrate Yield 34.6 kt (dry)

Zinc Concentrate Moisture Content 9% Concentrate Gold Grade 0.19 oz/t Concentrate Silver Grade 117 oz/t Concentrate Lead Grade 9.72% Concentrate Zinc Grade 24.1% Recovery Gold 1% Silver 1% Lead 5% Zinc 31% Concentrate Yield 10.3 kt (dry)

Gravity Concentrate Moisture Content 9% Concentrate Gold Grade 5 oz/t Concentrate Silver Grade 3,019 oz/t Recovery Gold 2% Silver 2% Concentrate Yield 0.09 kt (dry)

22.4 Taxes, Depreciation and Royalties Total paid taxes are calculated as 40.88% of taxable income, the taxes are composed of the

following:

Federal Income Tax: 34%;

State Tax of 4.63%; and

Colorado State: 2.25%.

Overall tax rate calculates to 12.42% of the Project’s income.

A 7-year declining balance depreciation is used in the calculation of taxable income. Existing

undepreciated assets are also depreciated; the existing undepreciated asset value is US$20 million.

Deductions for the mineral resource depletion is considered in the taxable income calculation, the

adopted rate is of 15%, as indicated for a silver deposit in the U.S.

The project will pay a royalty of 2% over gross income.



22.5 Results All results presented herein use a 100% equity basis.

Results indicate that the Project has a potential after tax present value of approximately

US$58.8 million, based on a 6% discount rate. Figure 22.5.1 shows the project after-tax metrics.

The PEA is preliminary in nature, and is based on technical and economic assumptions which will be





Figure 22.5.1: Project After-Tax Metrics

Indicative economic results are presented in Table 22.5.1.



Table 22.5.1: Project Indicative Economic Results (Dry Basis)

Description Value Units Market Prices

Gold 1,350 US$/oz Silver 22.00 US$/oz Lead 1.00 US$/lb Zinc 1.00 US$/lb

Estimate of Cash Flow (all values in US$000s) Concentrate Net Return US$/oz-Ag Gold Sales 24,250 2.02 Silver Sales 257,000 21.37 Lead Sales 31,729 2.64 Zinc Sales 3,324 0.28 Total Revenue $316,304 $26.30 Treatment Charges (12,287) (1.02) Smelting & Refining Charges (23,007) (1.91) Freight, Impurities & Third Parties (8,665) (0.72) Gross Revenue $272,346 $22.64 Royalties (5,447) (0.45) Exploration Expense 0 0.00 Marketing 0 0.00 Concurrent Reclamation (5,128) (0.43) Social Responsibility/Community Relations Expense 0 0.00 Net Revenue $261,771 $21.76 Operating Costs Surface Costs (25,813) (2.15) Underground Mining (57,272) (4.76) Process (25,407) (2.11) G&A (30,479) (2.53) Total Operating ($138,971) ($11.55) Operating Margin (EBITDA) $122,800 Initial Capital 0 LoM Sustaining Capital (26,144) Income Tax (15,246) Pre Tax Free Cash Flow $96,656

Pre Tax NPV @: 6% $69,632 Pre Tax IRR 76.4% After Tax Free Cash Flow $81,410 After Tax NPV @: 6% $58,848 After Tax IRR 73.2%

Table 22.5.2 shows annual production and revenue forecasts for the life of the project.



Table 22.5.2: Project LoM Annual Production and Revenues

Year RoM/

Plant Feed (kt)

Lead Conc.

(t)

ZincConc.

(t)

GravityConc.

(lb)

Free Cash Flow

(US$ 000s)

DiscountedCash Flow(US$000s)

2014 24.19 668 292 1.93 (9,488) (9,488)2015 122.82 4318 1585 11.20 1,424 1,3442016 141.39 5943 1583 15.31 11,642 10,3612017 140.30 4448 1712 15.00 6,537 5,4882018 142.40 4111 1608 15.90 8,967 7,1022019 141.78 5515 1475 11.34 17,188 12,8442020 140.69 7297 1810 11.26 30,462 21,4742021 34.72 2349 259 4.17 13,614 9,0542022 0.00 0 0 0.00 1,064 668

Total 888.28 34,648 10,324 86.11 $81,410 $58,848

Table 22.5.3 presents the composition of the Revenue Mine cash costs.

Table 22.5.3: Project Cash Costs

Cash Costs US$000's Direct Cash Cost Surface Costs 25,813 Underground Mining Cost 57,272 Process Cost 25,407 Site G&A Cost 30,479 By-Product Credits (59,304) Cash Costs Before Freight and TC-RC 79,668 $/ t-RoM 65.35 $/Ag-oz 6.62

Treatment Charges 12,287 Smelting & Refining Charges 23,007 Impurities Penalties 0 Third Party Participation 0 Freight 8,665 C1 Direct Cash Costs 123,626 $/ t-RoM 101.41 $/Ag-oz 10.28 Indirect Cash Cost Royalties 5,447 Exploration Expense 0 Marketing 0 Concurrent Reclamation 5,128 Social Responsibility/Community Relations Expense 0 Indirect Cash Costs 10,574 US$/t-RoM 8.67 US$/Ag-oz 0.88 Total Cash Costs $134,201 US$/t-RoM $110.09 US$/Ag-oz $11.16

The calculated free cash flow break even silver price is US$13.56/Ag-oz. This includes the direct and

indirect cash costs, outstanding capital investment, and is calculated on an after tax basis.



22.6 Sensitivities Sensitivity on discount rates and different metal prices scenarios were conducted. The results of

these studies are presented in Figures 22.6.1 to 22.6.2.

Figures 22.6.1 presents the behavior of the accumulated after-tax NPV, where:

Distressed metal prices are 20% lower than neutral prices;

Neutral metal prices as presented in this section; and

Robust metal prices are 20% higher than neutral prices.

Figure 22.6.1: Cumulative NPV Curves



Figure 22.6.2 present the sensitivity of the after-tax net present values to the hurdle rate.

Figure 22.6.2: Sensitivity to Discount Rate

A sensitivity analysis for key operating and economic parameters is shown in Table 22.6.1.

Table 22.6.1: NPV Sensitivity (US$ Millions)

NPV @ 6% -25% -20% -15% -10% -5% Base 5% 10% 15% 20% 25% Recovery 8 20 32 41 50 59 67 75 83 92 100 Capital Costs 63 62 61 60 60 59 58 57 56 56 55 Operating Costs 79 75 71 67 63 59 54 50 45 40 35

Figure 22.6.3 shows the sensitivity to recovery, capital, and operating costs graphically.



Figure 22.6.3: Project Sensitivity



23 Adjacent Properties The Project is located in the Mount Sneffels District and there are many adjacent past producers.

The Smuggler, a past producer, is located on the Telluride side of the ridge to the south of the

Virginius vein system; the Camp Bird Mine is located approximately 1.3 miles to the east of the

Project; and the Idarado Mine is located approximately 5 miles southeast of the Project. In addition,

there are numerous named and unnamed adits within a 5 mile radius of the Project, many of which

are abandoned.

Mineralization on these properties is not indicative of mineralization at the Project and there are no

immediately adjacent properties that have any bearing on the Project.



24 Other Relevant Data and Information There is no additional relevant data, that SRK is aware of that would materially impact the

conclusions of this report.



25 Interpretation and Conclusions

25.1 Exploration The Project has been actively explored through drilling and limited channel sampling. Exploration

drilling is limited in the Virginius vein because of both surface and underground access. Surface

access is limited by steep terrain in the area around the Virginius and that the current drilling targets

are extremely deep. Underground access is limited by the current mine access. Workings that are

available for drilling would not provide appropriate intercepts on the vein zone. SRK recommends

that the Company collect confirmation channel samples of the Virginius Veins from the existing

workings. Drilling to intercept the Virginius vein at an appropriate angle may require additional drifting

in the footwall.

25.2 Mineral Resource Estimate The mineral resource has been classified as Indicated and Inferred at Virginius based on the age of

the channel samples and lack of modern confirmation of analytical results. The channel samples

were not analyzed using a contemporary industry practice QA/QC program. Additional verification is

necessary to increase confidence in the classification of resources at Virginius. Both Yellow Rose

and Virginius need verification of the density measurements made by Star. Star used an industry

standard method but it is industry best practice to have these measurements independently verified

by a certified commercial laboratory. SRK recommends that Fortune Revenue undertake verification

of density measurements.

Silver represents the primary metal in the resource estimate. However, zinc has been reported as

part of the resource estimate. The resource could be impacted if it is determined that a saleable zinc

concentrate cannot be produced. Fortune and Star have a contract in place with the smelter in Trail,

British Columbia Canada to purchase and process the concentrate produced in the mill.

The current DRMS-permitted product lines are for silver, gold and zinc and the CDPS-permitted

product lines are for silver, gold, zinc and lead. The differences in the permits will require resolution,

but copper is not mentioned in either permit. SRK does not anticipate that there would be an issue

adjusting the permits to include all metals in the resource estimate.

25.3 Mining The available data indicate that underground operations are viable for the Project. The near vertical

dip of the veins, competent host rock, and existing infrastructure positively influence the Project.

Additional geotechnical information will be required to determine optimal stope sizes and confirm

mining methodology. Progress on the Project will be dictated by the development schedule and

number of operating faces available. The establishment of permanent ventilation and secondary

egress from both mining areas is a key consideration. The schedule and costs presented herein

assumes that ventilation/egress is established by November 1, 2014. If ventilation/egress is not

constructed in this timeframe, mining will likely be delayed with production schedule and cashflow

assumptions needing to be updated.



25.4 Metallurgy and Processing Historical operations and recent metallurgical studies indicate that material from the Revenue Mine

can be processed by conventional flotation processes to recover silver and gold in a flotation

concentrate.

Filtration studies indicate that some sections of the Mine can be successfully filtered for dry disposal.

Test samples to date have been limited to bulk samples that were in accessible locations in the

Mine. Mineralized material samples from other areas of the Mine are required to confirm the recovery

numbers of 95% for silver, 90% for gold, 80% for copper, 90% for lead and 85% for zinc, which at

this time may be considered only as estimates for recovery.

25.5 Environmental No major or significant environmental concerns have been identified.

It appears that potential future permitting issues have been identified and planned for accordingly

within the scheduled Project life-of-mine to be addressed in a timely fashion. SRK is of the opinion

that permitting requirements can be achieved in a manner that would not adversely affect Project

progress or interrupt production continuity.

SRK notes that the Company indicates the employed flotation processes will incorporate incremental

recoveries such that the resultant tailing material will be rendered virtually “inert”(with respect to

residual metal content, metal leaching potential, and reactive sulfide content). To the extent

recovered, sulfides will therefore be contained within the concentrate, and smelter credits or

penalties will reflect the “as-received” content of the concentrate. It is anticipated that ongoing

monitoring of tailing and waste rock materials will demonstrate/confirm the predicted insignificant

residual metal content and low acid generating potential upon which the “inert” classification is

predicated. SRK notes that DRMS has incorporated an ongoing monitoring requirement within the

permit to address this latter issue. Regardless, in the event the virtually “inert” or “neutral metal

leaching potential” status (as well as desired post-filtration moisture content) is determined to be

operationally non-achievable, SRK is of the opinion that satisfactory modified engineering controls

can be implemented relative to tailing disposal, and that such can be readily integrated into existing

permits through appropriate permit modification processes.



26 Recommendations

26.1 Exploration and Geology SRK makes the following additional exploration recommendations for both Yellow Rose and

Virginius:

Continue infill and step out drilling to explore the vein systems along strike and down dip.

This may require driving a development drift in the hangingwall of the Virginius vein system;

Discontinue the use of pulp blanks and incorporate preparation blanks into the QA/QC

program;

Monitor the QA/QC program as an ongoing process and closely monitor the gold RMs;

Add check assays to the QA/QC program. Check assays are second analysis by a second

laboratory of the original pulp submitted to the primary laboratory;

Verify collar locations and elevations for all locatable pre-2012 drillholes; and

Develop a geotechnical data collection program to identify changes in rock quality to assist

in stope design.

At Yellow Rose, SRK recommends to continue step out and infill drilling to the southeast along the

trace of the vein within the claim block.

26.2 Mineral Resource Estimate For Resource estimation, SRK recommends that the Company submit a subset of its density

samples that were measured in-house to an independent laboratory such as ALS for verification.

Star has used an industry standard method for density measurements, but it is also industry practice

to have these independently verified.

At Yellow Rose, SRK recommends that Fortune Revenue construct a clean and verifiable database

of the historic and copper analysis for use in resource estimation.

SRK recommends that at Virginius, Fortune Revenue collect representative samples for density

measurements throughout the deposit collecting both mineralization and wall rock. A sub-set of the

in-house measurements must be duplicated using an independent laboratory such as ALS as a

check. SRK recommends that the Company conduct a verification program through drilling and

channel sampling within the Virginius accompanied by an industry standard QA/QC program. SRK

also recommends that the Company complete the ongoing reconciliation between historical channel

samples and drill core, to include nearby drill holes and modern channel samples where modern

industry QA/QC data has been collected.

26.3 Mineral Reserve Estimate and Mining SRK recommends that the following work be performed as part of the next phase of work:

Collection of geotechnical data to support mine design. Once data is collected and analyzed

the mine design/mining method/stope configurations should be re-evaluated and optimized.

Development of a grade control sampling program in order to report accurate grades being

sent to the mill. This could include sampling along development workings and pre-drilling

stopes in advance of mining.



Mine stope design, using stope optimization software, was completed using a cut-off grade

of US$130/t. Subsequent costing work and capitalization of development shows a variance

in the operating cost. Additional review of cost should occur and subsequent update of the

mine design based on a more detailed cut-off grade estimate.

Tradeoff study to evaluate truck haulage vs. LHD haulage on the Revenue Virginius lower

levels.

Tradeoff study to evaluate rail vs. small LHD haulage options in the Yellow Rose on the

upper levels

Optimization of the production schedule by delaying development to an as-needed basis.

Based on additional geotechnical information the stopes may also be scheduled in a

different order allowing higher grade material to be mined first.

26.4 Metallurgy SRK recommends that additional metallurgical testing be conducted on composites representative of

the resource. Bulk samples to date have been limited to accessible locations in the mine. Future

testing should consider:

Core that has been drilled and identified as part of the mine plan resource should be

assembled into composites;

The composite samples should be subjected to a full suite of metallurgical tests including

grindability, flotation and filtration;

Flotation tests for the production of either a separate lead/silver concentrate and zinc/silver

concentrate or a combined lead/silver/zinc bulk concentrate;

The existence of gravity gold and the ability to recover the gold; and

Coordination with the mine plan to determine the amount of zinc and antimony produced to

avoid or reduce smelter penalties.

26.5 Environmental Inasmuch as the Project is at this time entering the startup mode, much information is yet to be

obtained through monitoring and startup observations. Therefore, it is difficult to render significant

recommendations at this time.

SRK recommends that ongoing evaluations of tailing and waste rock materials be closely monitored

to ensure conformance with stipulated permit conditions as related to moisture content, metals

concentrations (and leaching potential thereof) and acid-generating potential. Inasmuch as tailing

characteristics are directly related to the specific mineralized material being milled and flotation

recoveries, the tailing characteristics will differ over time and reflect mill performance (recovery) of

targeted metal sulfides, both individually and collectively.

26.6 Costs SRK estimates that potential costs for the recommended work programs would be in the order of

US$4.3 million. A breakdown of the costs estimated for this work is shown in Table 26.1.1. The costs

for drilling are based on the number of proposed holes, an average of 500 ft at Virginius and 800 ft at

Yellow Rose and an estimated US$150/ft including analytical.



Table 26.1.1: Summary of Costs for Recommended Work

Work Cost Estimate (US$) Additional Metallurgical Test work 250,000 Mine Planning and Schedule 400,000 Drilling at Yellow Rose 840,000 Drilling at Virginius (drilled from underground) 2,250,000 Development Drift in Virginius for drill access 600,000 Total $4,340,000

These recommended work program costs are not included in the cashflow presented herein.



27 References ALS Geochemistry, 2013. Schedule of Services and Fees, 2013 USD.

Ashwill, W. R., 1984. Revenue-Virginius Trial Stope Ore Reserve, Internal Memo to Paul Matthews

dated January 27, 1984, 2p.

Barton, N.R.; Lien, R.; Lunde, J., 1974. Engineering classification of rock masses for the design of

tunnel support. Rock Mechanics and Rock Engineering (Springer) 6 (4): 189–236.

doi:10.1007/BF01239496

Benham, J. L., 1980. Camp Bird and the Revenue: Bear Creek Publishing Company, Ouray,

Colorado, 68p.

Burbank, W. S., 1941. Structural Control of Ore Deposition in the Red Mountain, Sneffels, and

Telluride Districts of the San Juan Mountains, Colorado: Colorado Scientific Society

Proceedings, V. 14, No. 5, p. 141-261.

Burbank, W. S. and Luedke, R. G., 1964. Geology of the Ironton Quadrangle, Colorado: U.S.G.S.

Geologic Quadrangle Map GQ-291.

Burbank, W. S. and Luedke, R. G., 1966. Geologic Map of the Telluride Quadrangle, Southwestern

Colorado: U.S.G.S. Geologic Quadrangle Map GQ-504.

Burbank, W. S. and Luedke, R. G., 1968. Geology and Ore Deposits of the Western San Juan

Mountains, Colorado; in Ridge, J. D., Ed., Ore Deposits of the United States, 1933-1967,

(Graton – Sales Vol.): New York, American Institute of Mining, Metallurgical and Petroleum

Engineers, p. 714-733.

Burbank, W. S. and Luedke, R. G., 1969. Geology and Ore Deposits of the Eureka and Adjoining

Districts, San Juan Mountains, Colorado: U. S. G. S. Pro. Pap. 535, 73 p.

Casadevall, T. and Ohmoto, H., 1977. Sunnyside Mine, Eureka Mining District, San Juan County,

Colorado, Geochemistry of gold and base metal ore formation in the volcanic environment,

Economic Geology, v. 72, p. 1285-1320.

Clark, L, and Pakalnis, R., 1997. An Empirical Design Approach for Estimating Unplanned Dilution

from Open Stope Hangingwalls and Footwalls. 99th annual AGM-CIM conference,

Vancouver, B.C.

Coxe, B. W., 1985. The Virginius Vein Ore Deposit, Northwestern San Juan Mountains, Colorado: A

Study of the Mineralogy, Structure and Fluid Inclusions of an Epithermal Base Metal and

Silver Vein in a Volcanic Environment: M.S. Thesis, University of New Mexico, 126 p.

Garrey, G. H., 1947. Progress Report on the Properties of the Revenue Development Corporation,

Ouray, Colorado, Internal Company Report, 16p.

Garrey, G. H., 1949. Outline of Future Ore Possibilities in The Revenue Groups of Mines Near

Ouray, Colorado, Internal Company Report, 6p.

Hazen Research Inc., 1984. Metallurgical Studies, Revenue-Virginius 210 Level and Yellow Rose

Ores, Golden, Colorado, September 26, 1984.



Knelson Concentrators, 2012. Gravity Test Work Report, Silver Star Resources, Revenue-Virginius,

Langley, British Columbia, September 17, 2012.

Larson, R., August 6, 1984. Memo to file RE: Production Costs, 1p.

Lipman, P. W., Steven, T. A., Luedke, R. G., and Burbank, W. S., 1973. Revised volcanic history of

the San Juan, Uncompahgre, Silverton and Lake City calderas in the western San Juan

Mountains, Colorado, U. S. G. S. Journal Research, v. 1, no. 6 p. 627-642.

Lipman, P. W. , Fisher, F. S., Mehnert, H. H., Naeser, C. W., Luedke, R. G., and Steven, T. A., 1976.

Multiple Ages of mid-Tertiary Mineralization and Alteration in the Western San Juan

Mountains, Colorado: Economic Geology, V. 71, p. 571-588.

Luedke, R. G. and Burbank, W. S., 1962. Geology of the Ouray quadrangle, Colorado: U.S.G.S.

Geologic Quadrangle Map GQ-152.

Lunder, P.J. and Pakalnis, R.C., 1997. Determination of the strength of hard-rock mine pillars. Bull.

Can. bst. Min. Metall., 90(1013): 51-55.

Mathews, K.E., Hoek, E., Wyllie, D.C., and Steward, S.B.V., 1981. Prediction of stable excavation

spans for mining at depths below 1000 Metres in hard rock mines; CANMET Report DSS

Serial No. 0SQ80-00)81, Apr. 1981.

Mayor, J. N., 1971. Ore Reserves, definition of categories and calculation, Internal Memorandum

Dated, March 4, 1971, Unpublished, 3 p.

Mayor, J. N. and Fisher, F. S., 1972. Middle Tertiary Replacement Ore Bodies and Associated Veins

in the Northwest San Juan Mountains, Colorado: Economic Geology, v. 67, p. 214-230.

Moore , G. E., 2004, Mines, Mountain Roads and Rocks, Geologic Road Logs of the Ouray Area,

San Juan Mountains, Southwestern Colorado: Guidebook No. 1, Ouray County Historical

Society, Ouray, Colorado, 250 p.

Perry, Robert, 2013. Internal Star research related to historic mining and geology including

background material in support of project reporting.

Pocock Industrial, Inc., 2012. Results of Direct Pressure Filtration Tests on Silver Star Tailings, Salt

Lake City, Utah, August 27, 2012.

RDI, 2012. Silverstar Progress Report, Resource Development Inc., Wheat Ridge, Colorado,

October 18, 2012.

SRK Consulting, 2012. Resource Report on Revenue_Virginius and Yellow Rose Mines Sneffels,

Colorado, unpublished report for: Silver Star Resources LLC, 51 p.

Steven, T. A. and Lipman, P. W. 1976. Calderas of the San Juan Volcanic Field, Southwestern

Colorado: U. S. G. S. Pro. Pap. 958, 35 p.

Sunshine Mining and Refining Company, 2001. Revenue Virginius Property, Information

Memorandum, January 12, 2001, No specific author, 19p.

Sunshine Mining & Refining Company, 2000, 10-K Filing for Fiscal Year 2000, 66 p.

Tremlett, C. P., 1975. Report on the Camp Bird Revenue Mines Complex, Ouray, Colorado,

Prepared for Federal Resources Corporation, Salt Lake City, Utah, 24p.



Tremlett, C. P., 1976, Report on the Virginius Mine, Ouray, Colorado, Internal Consulting Report,

32p.

Trujillo, J. R., 2012. Personal Communication.

Trujillo, J. R. and Trujillo R. S., 1977. Longitudinal Section of the Virginius Vein Workings, Sunshine

Mining Company, 1”=200’, April 15, 1977.

Trujillo, John, 2013. Notes on F-9 Stope Report, email to Rory Williams on December 5, 3013.

Varnes, D. J., 1963. Geology and Ore Deposits of the South Silverton Mining Area, San Juan

County, Colorado: U.S. G. S. Pro. Pap. 378 a, 56p.

Zahony, Steve, 2013. Property Report, Internal report on the property prepared for Jim Williams and

Rory Williams, Nov., 2013, 19p.

Zahony, Steve, 2013B. Grade Resolution for Ranchers 210-F-9 Stope – Probable Mining Grade,

Memo to Jim Williams and Rory Williams, November 15, 2013.



28 Glossary

28.1 Mineral Resources The mineral resources and mineral reserves have been classified according to the “CIM Standards

on Mineral Resources and Reserves: Definitions and Guidelines” (November 27, 2010). Accordingly,

the Resources have been classified as Measured, Indicated or Inferred, the Reserves have been

classified as Proven, and Probable based on the Measured and Indicated Resources as defined

below.

A Mineral Resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic

material in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has

reasonable prospects for economic extraction. The location, quantity, grade, geological

characteristics and continuity of a Mineral Resource are known, estimated or interpreted from

specific geological evidence and knowledge.

An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and grade or

quality can be estimated on the basis of geological evidence and limited sampling and reasonably

assumed, but not verified, geological and grade continuity. The estimate is based on limited

information and sampling gathered through appropriate techniques from locations such as outcrops,

trenches, pits, workings and drillholes.

An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or

quality, densities, shape and physical characteristics can be estimated with a level of confidence

sufficient to allow the appropriate application of technical and economic parameters, to support mine

planning and evaluation of the economic viability of the deposit. The estimate is based on detailed

and reliable exploration and testing information gathered through appropriate techniques from

locations such as outcrops, trenches, pits, workings and drillholes that are spaced closely enough for

geological and grade continuity to be reasonably assumed.

A ‘Measured Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or

quality, densities, shape, physical characteristics are so well established that they can be estimated

with confidence sufficient to allow the appropriate application of technical and economic parameters,

to support production planning and evaluation of the economic viability of the deposit. The estimate

is based on detailed and reliable exploration, sampling and testing information gathered through

appropriate techniques from locations such as outcrops, trenches, pits, workings and drillholes that

are spaced closely enough to confirm both geological and grade continuity.

28.2 Mineral Reserves A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource

demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate

information on mining, processing, metallurgical, economic and other relevant factors that

demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve

includes diluting materials and allowances for losses that may occur when the material is mined.

A ‘Probable Mineral Reserve’ is the economically mineable part of an Indicated, and in some

circumstances a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility



Study. This Study must include adequate information on mining, processing, metallurgical,

economic, and other relevant factors that demonstrate, at the time of reporting, that economic

extraction can be justified.

A ‘Proven Mineral Reserve’ is the economically mineable part of a Measured Mineral Resource

demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate

information on mining, processing, metallurgical, economic, and other relevant factors that

demonstrate, at the time of reporting, that economic extraction is justified.

28.3 Definition of Terms The following general mining terms may be used in this report.

Table 28.3.1: Definition of Terms

Term DefinitionAssay The chemical analysis of mineral samples to determine the metal content. Capital Expenditure All other expenditures not classified as operating costs. Composite Combining more than one sample result to give an average result over a larger

distance. Concentrate A metal-rich product resulting from a mineral enrichment process such as gravity

concentration or flotation, in which most of the desired mineral has been separated from the waste material in the mill feed.

Crushing Initial process of reducing mineralized material particle size to render it more amenable for further processing.

Cut-off Grade The grade of mineralized rock, which determines as to whether or not it is economic to recover its gold content by further concentration.

Dilution Waste, which is unavoidably mined with mineralized material. Dip Angle of inclination of a geological feature/rock from the horizontal. Fault The surface of a fracture along which movement has occurred. Footwall The underlying side of an mineralized material or stope. Gangue Non-valuable components of the mineralized material. Grade The measure of concentration of gold within mineralized rock. Hangingwall The overlying side of mineralized material or slope. Haulage A horizontal underground excavation which is used to transport mined mineralized

material. Hydrocyclone A process whereby material is graded according to size by exploiting centrifugal

forces of particulate materials. Igneous Primary crystalline rock formed by the solidification of magma. Kriging An interpolation method of assigning values from samples to blocks that minimizes

the estimation error. Level Horizontal tunnel the primary purpose is the transportation of personnel and

materials. Lithological Geological description pertaining to different rock types. LoM Plans Life-of-Mine plans. LRP Long Range Plan. Material Properties Mine properties. Milling A general term used to describe the process in which the mineralized material is

crushed and ground and subjected to physical or chemical treatment to extract the valuable metals to a concentrate or finished product.

Mineral/Mining Lease A lease area for which mineral rights are held. Mining Assets The Material Properties and Significant Exploration Properties. Ongoing Capital Capital estimates of a routine nature, which is necessary for sustaining operations. Pillar Rock left behind to help support the excavations in an underground mine. RoM Run-of-Mine. Sedimentary Pertaining to rocks formed by the accumulation of sediments, formed by the erosion

of other rocks. Shaft An opening cut downwards from the surface for transporting personnel, equipment,

supplies, mineralized material and waste.



Term DefinitionSill A thin, tabular, horizontal to sub-horizontal body of igneous rock formed by the

injection of magma into planar zones of weakness. Smelting A high temperature pyrometallurgical operation conducted in a furnace, in which the

valuable metal is collected to a molten matte or doré phase and separated from the gangue components that accumulate in a less dense molten slag phase.

Stope Underground void created by mining. Stratigraphy The study of stratified rocks in terms of time and space. Strike Direction of line formed by the intersection of strata surfaces with the horizontal

plane, always perpendicular to the dip direction. Sulfide A sulfur bearing mineral. Tailings Finely ground waste rock from which valuable minerals or metals have been

extracted. Thickening The process of concentrating solid particles in suspension. Total Expenditure All expenditures including those of an operating and capital nature. Variogram A statistical representation of the characteristics (usually grade).



28.4 Abbreviations The following abbreviations may be used in this report.

Table 28.4.1: Abbreviations

Abbreviation Unit or TermAA atomic absorption Ag silver Au gold cfs cubic feet per second ° degree (degrees) °F degrees Fahrenheit FA fire assay ft ft (feet) ft2 square ft (feet) g/m US gallons per minute ft3 cubic ft (feet) ft3/t cubic ft per short ton hp/t horse power per ton ICP induced couple plasma ID2 inverse-distance squared ID3 inverse-distance cubed K-Ar potassium-argon koz thousand troy ounce kWh/t Kilowatt hour per ton lb pound Ma million annum or million years Moz million troy ounces Mt million tons NI 43-101 Canadian National Instrument 43-101 oz troy ounce oz/t troy ounce/short ton % percent QA/QC Quality Assurance/Quality Control SG specific gravity t short ton TDS total dissolved solids TSS total suspended solids t/d short tons per day t/h short tons per hour

SRK Consulting (U.S.), Inc. Preliminary Economic Assessment – The Revenue Mine Appendices


Appendices

SRK Consulting (U.S.), Inc. Preliminary Economic Assessment – The Revenue Mine Appendices


Appendix A: Certificates of Qualified Persons

SRK Denver 7175 West Jefferson Avenue. Suite 3000 Lakewood, CO 80235 T: 303.985.1333 F: 303.985.9947 [email protected] www.srk.com

CERTIFICATE OF QUALIFIED PERSON

I, Dorinda Bair, B.Sc. Geology, CPG do hereby certify that:

1. I am a Principal Geologist of SRK Consulting (U.S.), Inc., 7175 W. Jefferson Ave, Suite 3000, Denver, CO, USA, 80235.

2. This certificate applies to the technical report titled “NI 43-101 Technical Report, Preliminary Economic Assessment, The Revenue Mine, Sneffels, Colorado” with an Effective Date of April 18, 2014 (the “Technical Report”).

3. I graduated with a Bachelor of Science degree in Geology Earth Science from Lewis-Clark State College in 1987. I am a Certified Professional Geologist of the American Institute of Professional Geologists. I have worked as a Geologist for a total of 25 years since my graduation from university. My relevant experience for the purpose of this technical report includes domestic and international experience in exploration, mining and environmental projects for gold, silver, base metals, iron, copper and industrial minerals. Specific activities and companies are: • Exploration Geologist for International Curator Resources, Ltd., Nova Gold, WGM, Inc. Kennecott

and Placer Dome, 1987 to 1991. Work included exploration for mesothermal gold deposits, volcanogenic massive sulfide deposits and gold copper porphyry systems.

• Echo Bay Mines, 1991 to 1996. Activities included work in Nevada and Alaska USA and the Russian Far East. Deposit types included, mesothermal gold deposits, Carlin-style replacement deposits, and skarns. Positions held included mine geologist, site geologist, exploration geologist and work was primarily overseeing drilling programs, mapping, core logging and resource estimation support.

• United States Geological Survey 1997 to 2000. Geologist assisting in research on mesothermal gold deposits, Carlin-style replacement deposits, epithermal deposits and Mississippi Valley type lead-zinc deposits.

• American Geological Services, 2001 to 2007. Senior Geologist conducting mineral and environmental assessments of mining claims in the United States of America assessing primarily precious and base metals.

• SRK Consulting (U.S.) Inc. 2007 to present. Principal Geologist advising, management and due diligence on exploration programs including drilling, core logging, Quality Assurance/Quality Control, resource review and database management on domestic and international project in USA, Canada, Mexico, Colombia, Peru, Chile, Brazil, Turkey and Kazakhstan. These projects include gold and silver deposits, base metal deposits, copper, iron and industrial minerals.

• As a consultant, I contributed to several NI 43-101 Technical reports, 2007 - 2013. 4. I have read the definition of “qualified person” set out in National Instrument 43-101 (NI 43-101) and

certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

5. I visited the Revenue Mine property on April 3, 2013 for one day. 6. I am responsible for the preparation of Geology and Resources Sections 1.1 to 1.5, 4.1 through 4.3, 4.5,

5.1 through 5.4, 6 through 12, 25.1, 25.2, 26.1 and 26.2 of the Technical Report. 7. I am independent of the issuer applying all of the tests in section 1.5 of NI 43-101.

U.S. Offices: Anchorage 907.677.3520 Denver 303.985.1333 Elko 775.753.4151 Fort Collins 970.407.8302 Reno 775.828.6800 Tucson 520.544.3688

Mexico Offices: Querétaro 52.442.218.1030

Canadian Offices: Saskatoon 306.955.4778 Sudbury 705.682.3270 Toronto 416.601.1445 Vancouver 604.681.4196 Yellowknife 867.873.8670

Group Offices: Africa Asia Australia Europe North America South America

SRK Consulting (U.S.), Inc. Page 2 8. I have had prior involvement with the property that is the subject of the Technical Report. The nature of

my prior involvement is preparation of resource estimation for Silver Star Resources in 2012 and 2013. 9. I have read NI 43-101 and Form 43-101-F1 and the sections of the Technical Report I am responsible for

have been prepared in compliance with that instrument and form. 10. As of April 18, 2014, to the best of my knowledge, information and belief, the sections of the Technical

Report I am responsible for contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Dated this 23rd Day of July, 2014. “Signed” “Sealed” ________________________________

Dorinda Bair, B.Sc. Geology, CPG



I, Joanna Poeck, B.Eng, SME-RM, MMSA do hereby certify that:

1. I am a Senior Mining Engineer of SRK Consulting (U.S.), Inc., 7175 W. Jefferson Ave, Suite 3000, Denver, CO, USA, 80235.


3. I graduated with a degree in Mining Engineering from Colorado School of Mines in 2003. I am a QP member of the MMSA. I have worked as a Mining Engineer for a total of 10 years since my graduation from university. My relevant experience includes open pit and underground design, mine scheduling, pit optimization and truck productivity analysis.

4. I have read the definition of “qualified person” set out in National Instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

5. I have not visited the Revenue Mine property. 6. I am responsible for the preparation of Mining Methods, Project Infrastructure, Market Studies and

Economic Analysis Sections 1.6.1, 1.6.3, 1.6.4, 1.6.6 through 1.6.8, 1.7, 2, 3, 5.5, 15, 16, 18, 19, 21 through 24, 25.3, 26.3, 26.6, 27 and 28 of the Technical Report.

7. I am independent of the issuer applying all of the tests in section 1.5 of National Instrument 43-101. 8. I have not had prior involvement with the Revenue Mine that is the subject of the Technical Report. 9. I have read NI 43-101 and Form 43-101F1 and the sections of the Technical Report I am responsible for

have been prepared in compliance with that instrument and form. 10. As of the aforementioned Effective Date, to the best of my knowledge, information and belief, the

sections of the Technical Report I am responsible for contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.


Joanna Poeck, B.Eng, SME-RM, MMSA MMSA 01387QP





QP_Cert_Poeck_Joanna_20140723.docx



I, James M. Beck, P.E., MMSA and SME (Registered Member) QP do hereby certify that:

1. I am currently employed as a consulting mining and environmental engineer to the mining and minerals exploration industry and I am currently under contract as an Associate/Sr. Mining Engineer - Environmental with SRK Consulting (U.S.) Inc., 7175 W. Jefferson Ave, Suite 3000, Denver, CO, USA, 80235.


3. I graduated with a B.S. degree in Mining Engineering from the Michigan Technological University in 1977. I am a Mining and Metallurgical Society of America (MMSA) certified QP, Founding Registered Member of the Society for Mining, Metallurgy, and Exploration (SME-AIME) QP, and a Registered Professional Engineer in nine (9) states (U.S.). I have worked as a mining engineer for over thirty-six (36) years since my graduation from university.

4. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

5. I visited the Revenue Mine property on June 19, 2014 for one day. 6. I am responsible for the preparation of Environmental Sections 1.6.5, 4.4, 20, 25.5 and 26.5 of the

Technical Report. 7. I am independent of the issuer applying all of the tests in section 1.5 of NI 43-101. 8. I have not had prior involvement with the property that is the subject of the Technical Report. 9. I have read NI 43-101 and Form 43-101F1 and the sections of the Technical Report I am responsible for



Dated this 23rd Day of July, 2014. “Signed” “Sealed” _________________________ James M. Beck, P.E., MMSA and SME Registered QP







I, Mark K Jorgensen, Chemical Engineer B.Sc., do hereby certify that:

1. I am an Associate of SRK Consulting (U.S.), Inc., 7175 W. Jefferson Ave, Suite 3000, Denver, CO, USA, 80235.


3. I graduated with a degree in Chemical Engineering from the University of Nevada (Reno) in 1978. In addition, I have worked as a Metallurgist for a total of 32 years since my graduation from university. My relevant experience includes precious metals processing, design and operation of comminution circuits and design and operation of floatation circuits.

4. I have read the definition of “qualified person” set out in National Instrument 43-101 (NI 43-101) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

5. I visited the Revenue-Virginius property on April 10, 2012 and on May 6 to 8, 2014. 6. I am responsible for the preparation of Metallurgy, Processing and Recovery Sections 1.6.2, 13, 17, 25.4

and 26.4 of the Technical Report. 7. I am independent of the issuer applying all of the tests in section 1.5 of NI 43-101. 8. I have had prior involvement with the property that is the subject of the Technical Report. The nature of

my prior involvement is as a supplier of engineering services for design and construction of the plant. 9. I have read NI 43-101 and Form 43-101F1 and the sections of the Technical Report I am responsible for




Mark K Jorgensen, Chemical Engineer B.Sc.





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