CMX GOLD & SILVER CORP.
The Clayton Silver Mine was discovered in the late 1800's and historically was one of the most active underground mines in the Bayhorse Mining District in central Idaho for lead, zinc, copper and silver. Clayton is comprised of 29 patented mining claims that cover 565 acres. The Company also holds 6 unpatented lode claims that cover 119 acres. Small scale mining operations were carried out on a regular basis from 1935 to 1986. Historical production records until mining operations ceased in 1986 indicate recovery of 7 million Troy ounces of silver, 86.8 million pounds of lead, 28.2 million pounds of zinc, 1.7 million pounds of copper, and minor gold. The old mine workings extended to a depth of 1,100 feet, but earlier drilling indicated that the mineralization likely extends 427 feet deeper than the 1,100 feet level. The strike length of the mined zone averages 410 feet with variable width due to the nature of the replacement. Historical production information, which is found in a Master's Thesis prepared by B. Hillman written in 1986, is not NI 43-101 compliant, but the Company and the Qualified Person, Dr. Jennifer Thomson, who wrote the Clayton Report, consider this information to be reliable. The Clayton Report dated March 7, 2013, was prepared at the request of CMX so as to conform to NI 43-101.
The information below has been extracted from the Clayton Report and provides a summary of the physical setting, geology, mining history, and mineral exploration potential of the Clayton Exploration Project and provides recommendations for exploration. Certain figures and tables from the Clayton Report are included below. The remaining figures and tables are contained in the full Clayton Report, which has been filed on SEDAR at www.sedar.com, and a copy of which can be found under the Technical Report tab. Most of the information about the Clayton Exploration Project and surrounding areas are given in U.S. terms and units, although metric units are also used at times. References to currency are in U.S. dollars. For more information on the references used to identify the below tables, please see the Clayton Report.
Clayton Historical Information
Historic production, mainly of silver, lead and zinc, has a gross metal value using more recent prices of about USD $248 million ($20/oz silver, $0.85/lb lead, $1.00/lb zinc, $1,300/oz gold). The mine operated for several decades, mainly from the 1950s to the 1980s and was economic. Our strategy would be to run a mill that had twice or three times the capacity of the old mill, greatly improving economies of scale and increasing the present value of the potential resource.
Previous operators did very little exploration or development drilling to look for other resources. If resources with recoverable metals values several times what has been recovered previously are confirmed through drilling, the present value of the Clayton Silver Property will increase the enterprise value of CMX substantially. This would create share value many times greater than the current price.
Clayton Underground Potential
CMX considers the significant prize at the Clayton Silver Mine to be the potential for confirming and adding mineral resources underground. This is the Company’s primary long term goal. Our review of the historical data has led us to conclude that the potential upside is much greater than we initially thought. See our March 31, 2015 news release. Our geologist, Rick Walker's analysis has shown the potential for proving up substantial ore reserves. Resources available from previous work include drilling for mining purposes on the North Ore Body at the 1100 foot level and deeper drilling several hundred feet below the old workings to the 1500 foot depth. There is also potential for resources to exist at shallower depths below and adjacent to the South Ore Body. All of this points to the possibility of finding resources that are many times more than what has been mined previously.
Mine Dump Potential
From a short term perspective, the preliminary sampling program on the mine dump pile suggests potential to process the material at a profit, subject to confirmation by the proposed comprehensive sampling program, and eventually obtaining a positive preliminary economic assessment. See our February 20, 2015 news release. CMX's fall 2016 work program will include a follow-up comprehensive sampling program to confirm metals values and potential tonnage from the mine dump. A successful follow-up dump sampling program that confirms values similar to the preliminary results will enable CMX to proceed with initial engineering work to confirm milling costs and recovery rates. There is potential for up to one million tonnes of dump material available for processing.
Prior Sampling Results
The 2014 Dump Sampling Program statistical averages of the 16 locations were as follows:
• Au – 0.80 gms/t
• Ag – 24.31 gms/t
• Mn – 0.60%
• Pb – 0.44%
• Zn – 0.27%
Tailings also had significant Manganese with the 3 locations averaging 1.28% Mn.
Grades from the initial sampling program had the following gross metals values at prices similar to those referred to above (which we expect will rise in future):
16 Sample Locations from Dump (US$ per tonne) without Manganese
with 80% recovery - $50.73
16 Sample Locations from Dump (US$ per tonne) with Manganese
with 80% recovery - $58.61
3 Sample Locations from Tailings (US$ per tonne) without Manganese
with 80% recovery - $28.94
3 Sample Locations from Tailings (US$ per tonne) with Manganese
with 80% recovery - $45.83
Clayton Property Description and Location
The Clayton Exploration Project is located approximately 1.5 miles from the town of Clayton in Custer County, in central Idaho in parts of Sections 11, 12, 13, 14, 23, 24, and 25, T. 11 N., R. 17 E. The mine is located in Section 13, T. 11 N., R. 17 E, within the U.S.G.S. 7.5 minute Clayton topographic quadrangle map (the "Clayton Silver Mine"). The 685 acre Clayton Property is located along Kinnikinic Creek, a tributary to the Salmon River.
The Clayton Property encompasses private land as well as patented lode claims within lands under the jurisdiction of the U.S. Bureau of Land Management ("BLM"). The Clayton Exploration Project consists of 29 patented mining claims and 2 patented mill sites. Lode mining claims include the following: Ella Group – Mineral Survey No. 3144A, Camp Bird Group – Mineral Survey No. 3196, Rose Group – Mineral Survey No. 3327 and the Rose No. 4 Lode Claim – Mineral Survey No. 3336. Main rock types in the immediate vicinity of the Clayton Silver Mine consist of Paleozoic age (Cambrian-Ordovician) sedimentary rocks including the Kinnikinic Quartzite, Ella Dolomite and the Clayton Mine Quartzite. The Ella Dolomite is the host rock for the mineralization at the Clayton Silver Mine and the adjacent Rob Roy property to the north of the Clayton Silver Mine. Rocks of the Cretaceous Idaho batholith are exposed to the west and the youngest rocks that cover the Paleozoic sedimentary rocks and the Idaho batholith are Eocene Challis volcanic rocks which are poorly exposed in the ridges to the west of the mine. The Paleozoic rocks are deformed into a northwest trending asymmetric anticline (the "Clayton Anticline"). Ore deposits appear to be restricted to the east flank of this fold and are associated with shear zones that parallel bedding in the Ella Dolomite.
Regional thrust faults, high angle normal and reverse longitudinal faults, and transverse strike slip faults have been identified in the region. The latter faults cut the form structures and the anticline.
A location map illustrating the mine site is shown above. An outline of the claim block and the patented claims are shown below with proposed drilling locations. Claims are available to the Company for surface and drilling exploration.
Economic minerals mined in the Bayhorse Mining District occur in mineralized shear zones or as replacement lenses in calcareous rocks. The host rocks from most of the mines in the district are the Ramshorn Slate and the Bayhorse Dolomite. Some of the deposits are associated with granitic intrusive rocks. Sulfides, such as galena, sphalerite, pyrite, tetrahedrite and chalcopyrite are found in the deposits. Both the galena and tetrahedrite are argentiferous. Fluorspar deposits have also been exploited in some of the mines. At the Clayton Silver Mine, Pb-Zn-Cu-Ag mineralization occurs in replacement and open space filling deposits, which show both structural and stratigraphic controls. The tabular mineralized zones are associated with shear zones that are parallel to the bedding of a quartz-rich horizon within the Ella Dolomite. Folding and faulting have altered the original nature of the mineralization. The mineralized shoots are characterized by galena, pyrite, sphalerite, tetrahedrite, chalcopyrite, pyrargyrite, and arsenopyrite, which are developed in a siderite gangue. During the 50 or so years of operations, several mineralized areas have been developed within the Clayton Silver Mine.
The Clayton Silver Mine, discovered in 1877, and historically one of the most active mines in the Bayhorse Mining District in central Idaho, was an underground Pb-Zn-Cu-Ag mine. The town of Bayhorse, located a few miles southwest of Challis, ID, is currently a State Park. The Clayton Silver Mine was one of the largest silver producers in Custer County, Idaho and in the state of Idaho outside of the Coeur d’Alene district (Doe and Sanford, 1995; Mitchell, 2010). The Bayhorse Mining District was most active between 1882 and the 1890s. A smelter for the district operated in Clayton from 1880 to 1902 and reopened again in 1912 (Ross, 1935, 1963). Renewed activity and productivity in the Bayhorse Mining District occurred between 1920 and 1925. Prospect mining at the Clayton Silver Mine site began in 1927 (Clark Mining Co.), at which time the property consisted of 25 patented and seven unpatented claims and was known as the Camp Bird Group. Mining was sporadic until 1935. The Clayton Silver Mine, one of nearly 50 in the district, was largely operational from 1935 through 1986. Until mining operations ceased in 1986, the mine produced approximately 7 million Troy ounces of silver, 86.8 million pounds of lead, an estimated 28.2 million pounds of zinc, 1.7 million pounds of copper and 1,454 Troy ounces of gold