Pride of the West - Mill

"We have received many more solicitations for custom milling since the first of the year than we ever anticipated. We believe that accelerating re-activation of the Pride of the Wes Mill is a wise strategic move, particularly as the uncertain economy forces other mining companies to roll back their plans." John Ferguson, Director of Operations for Colorado Goldfields.

Of the many inquiries received, one U.S.-based investor group will be making a site visit at the end of April. This group intends to begin mining operations north of Ouray this summer. As part of an Alliance presently in formation with the Company and the investor group, between $500,000 and $700,000 will be deployed for facilities improvements directed toward the tailings ponds, electrical upgrades, and new drainage excavation. That will greatly accelerate the re-activation project.

A report by Robert Larson of Monadnock Mineral Services reveals that the property generating the ore for Colorado Goldfields to mill consists of approximately 800 acres of patented mining claims, from which significant gold has been produced. Surface and underground mapping and sampling was conducted along with approximately 43 core drill holes.

Analysis estimated potential gold resources of 344,000 tons of 0.41 ounce per ton gold as “near-term” targets, and 780,000 tons of 0.40 ounce per ton gold as ´intermediate-term´ targets. ´Near-term´ targets are defined as those adjacent to, or within several hundred feet of existing mine workings, whereas ´intermediate-term´ targets were up to 4,000 feet to the east of the existing workings.

One of the drill holes in the ´near-term´ targets encountered 70.7 feet of 0.127 ounce per ton gold, with one interval of 3.8 feet of 1.262 ounce per ton gold. One of the drill holes in the ´intermediate-term´ targets encountered 7.2 feet of 0.368 ounce per ton gold.

Larson went on to say, "This is an ideal venture for a small to medium-sized mining company to begin development and initiate test-mining with custom-milling within the existing mine workings. These properties have the potential of producing 400,000 ounces of gold from near and intermediate-term.

"The collaborative synergy is at its best, By leveraging the best from the investor group and Colorado Goldfields, we will be moving toward significant operating revenue much more quickly than planned. This project represents an initial gross revenue stream of $40,000 per month, which is only 20% of the Mill’s capacity. One or two additional custom milling projects could bring us to $2,000,000 per year in gross revenue very quickly," - C. Stephen Guyer, CFO for Colorado Goldfields.

The Pride of the West Mill is a modern gravity, flotation and cyanide leach mill located on 120 acres, with offices, laboratory and water rights. The Mill has the capacity to refine up to 700 short tons per day. The Gold King, Mayflower and Mogul mines are all within a nine-mile radius of the Pride of the West Mill with good roads connecting the mines to the mill.

Colorado Goldfields acquired the Pride of the West Mill for $900,000 and the assumption of $300,000 in reclamation permit bond requirements. The mill was valued over $12M. Historically, milling operations in Southwestern Colorado similar in scope to the Pride of the West Mill have generated from $5 million to $15 million annual gross revenue and typically are profitable in the first year of operations

The comprehensive re-activation plan has several components developed collaboratively with the Colorado Division of Reclamation Mining and Safety that includes a new pond high water line and re-grading for proper drainage for sand tailings or inert material from the upper pond and a new perforated piping system that will constantly monitor the ground water level.

The stockpile pad at the mill entrance, after drainage verification, will then be ready to accept new ore.

Re-activating the assay lab at the mill includes the installation of an electronic microbalance for weighing the doré (semi-purified gold), beads derived from the fire assay and the gold bead remaining after the silver in the doré is dissolved, and an inductively coupled plasma atomic absorption spectrographic machine.

"Mining companies are facing unacceptable delays in getting assay results, sometimes as long as 60 days. Operating our own lab and offering those services to neighboring mines is a bonus to our clients and gives a boost to the bottom line." - C. Stephen Guyer, CFO for Colorado Goldfields.