Re-opening a famous Montana gold mine
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Objective Capital's Precious Metals, Diamonds & Gemstones

Objective Capital's Precious Metals, Diamonds & Gemstones
Investment Summit 2011
Ironmongers' Hall, City of London
6 April 2011
Speaker: Murray Nye, RX Exploration

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Re-opening a famous Montana gold mine Presentation Transcript

  • 1. PRECIOUS METALS,DIAMONDS & GEMSTONESINVESTMENT SUMMIT Re-opening a famous Montana gold mine Murray Nye – CEO, RX ExplorationIRONMONGERS’ HALL, CITY OF LONDON ● WEDNESDAY, 6 APR 2011www.ObjectiveCapitalConferences.com
  • 2. April 2011
  • 3. Safe HarbourThe following presentation may include certain “forward-looking statements” within the meaning of the United StatesPrivate Litigation Reform Act of 1995 and applicable Canadian Securities Laws. All statements, other than statements ofhistorical fact, included in the presentation, including, without limitation, statements regarding potential mineralizationand reserves, exploration results, and future plans and objectives of RX Exploration Inc., are forward-looking statements.Words such as “expect”, “anticipate”, “estimate”, “may”, “will”, “should”, “intend”, “believe” and other similar expressionsare forward-looking statements. Forward-looking statements are not guarantees of future results and conditions butrather reflect our current views with respect to future events and are subject to risks, uncertainties, assumptions andother factors, and actual results and future events could differ materially from those anticipated in such statements. Therecan be no assurance that such forward-looking statements will prove to be accurate.Some of the important factors that could cause actual results to differ materially from our expectations are disclosedunder the heading “Risk Factors” and elsewhere in documents filed from time to time with the Canadian provincialsecurities regulators. We base our forward-looking statements on information currently available to us and we do notassume any obligation to update them, except as required by law.An additional Cautionary Note to Investors – In the event that we use certain terms in this presentation, such as“resource”, “measured resource”, “indicated resource” and “inferred resource”. U.S investors are cautioned that, whilesuch terms are recognized and required by Canadian Securities Laws, the United States Securities and ExchangeCommission does not recognize them. Under U.S. standards, mineralization may not be classified as a “reserve” unlessthe determination has been made that the mineralization could be economically and legally produced or extracted at thetime the reserve determination has been made. U.S. investors should not assume that all or any part of measured orindicated resources will ever be converted into reserves. In addition, “inferred resources” have a great amount ofuncertainty as to their existence and as to whether they can be mined legally or economically. Accordingly, informationconcerning descriptions of mineralization in this presentation may not be comparable to information made public bycompanies that are subject to the SEC’s Industry Guide 7. 3
  • 4. The RX Exploration Team Management CEO: Murray Nye – Co-founder, director, principal of Venbanc, Inc., an investment and merchant bank specializing in the structuring and financing of start-up companies; provides follow-up financial and management advisory assistance. Murray has extensive experience in financing many start-up natural resource companies. CFO: Max Polinsky, B.Comm (Hons.) – Co-founder, director and principal of Venbanc, Inc. In addition to many years in the merchant bank industry Max has extensive operational experience running a national company with offices across the country Vice President of Mining Operations: Mike Gunsinger – Mike has over 40 years experience in mine development and production in North America. He has extensive experience in Montana and Utah. Mike also established his own underground mining contracting company which has been active in Canada and USA. Consulting Mine Geologist: Ben Porterfield - Ben leads a team of geologists at the Drumlummon mine. He was formerly a geologist for Kennecott, focused on their Terra gold project in Alaska. Vice President of Operations: L. Joseph Bardswich, P.Eng. – Joe is a graduate of the University of Windsor (B.A.Sc.,Civil Engineering) and received his Masters Degree (M.Eng. Mining) from McGill University. His career has ranged from contract miner, through production supervision, mining engineering, heavy civil engineering and mine management in both underground, open pit and alluvial operations in Canada, the United States, Europe and Africa. Joe a registered Professional Engineer in the Province of Ontario, a member of the Society of Mining Engineers, and a life member of the Canadian Institute of Mining and Metallurgy (CIM). He is a “Qualified Person” as defined in NI-43-101. 4
  • 5. The RX Exploration Team Board of Directors John O’Donnell (B.A. Econ, L.L.B.) Chairman Murray Nye Chief Executive Officer Max Polinsky Chief Financial Officer John Ryan (CGA) President, Spruce Ridge Resources Edward Ellwood (MBA) Management Consultant Paul Teodorovici Property Management Consultant 5
  • 6. Share Capital Exchange Listings TSX-V: RXE OTCQX: RXEXF Recent share price1 CAD $0.50 52 week low–high CAD $0.28–$0.79 159.9 million – basic Shares outstanding 187 million – fully diluted Market capitalization CAD $79.95 million Share ownership RX Management (~10%); Spruce Ridge Resources (~5%) Funds (December 2010) Sprott Asset Management (8%)1 As of April 1, 2011 6
  • 7. RX Exploration: Why Invest?– Produced 4,277 ounces of gold and 76,492 ounces of silver in 2010– Forecast production of 32,000 ounces gold equivalent in 2011– High grade gold and silver with average grade .42 ounces (14 grams) per ton gold equivalent– Underground drill program and mine development underway– Aggressive 70,000 foot drilling program in 2011 to expand NI- 43-101 resource by Q3 and define multiple veins– One of largest past gold producers in the western USA 7
  • 8. High Grade Gold and Silver Producer– No debt, no gold or silver hedge– High-grade gold and silver production from the Drumlummon Mine in Marysville, Montana USA (100% owned).– Historical data infers that silver to gold ratio runs 15 : 1– May 2010 test mining and milling commenced. Produced 4,277 ounces gold and 76,492 ounces of silver in 2010.– Expected production in 2011 of 32,000 ounces of gold equivalent with an expected grade of .42 ounces per ton.– Fully permitted 1,000 ton per day leased mill located in Philipsburg, Montana– Goal is to increase production to 500 tons per day mine and mill rate– Aggressive exploration drill program has identified multiple gold and silver veins on the property.– Current NI-43-101 resource of 70,703 ounces Au and 1,915,560 ounces Ag (September 2009).• NI 43-101 resource: 155,518 tonnes grading 15.6 grams per tonne Au, and 422 grams per tonne silver 8
  • 9. Location of Mine and MillMarysville, Montana is located 25 miles North-West of Helena, Montana’s capital city. Contact Mill, Philipsburg, 114 miles by road southwest from Marysville Drumlummon Mine Helena USA Philipsburg Mill - Year round access by paved roads - Grid power at mine and mill - $15 million spent in past two years opening mine. 9
  • 10. History of the Drumlummon MinePrice of gold in USD 1400 1876: Drumlummon deposit discovered by Thomas Cruse. 1883 - 1910: Montana Co. (Rothschilds) puts mine into production with two shafts and 25 miles 1200 of drifts down to 1,600 foot level. Loses claim dispute in 1901 and floods mine. 1910: U.S. Supreme Court rules against the Rothschilds. Production ceases after producing 1.1 million ounces of gold and 10 million ounces of silver 1000 1910 - 1929: St Louis Company achieves minor production. 1941 - 1951: Montana Rainbow Co. restarts production in 1946. Mill burns down. 800 2007: RX consolidates all land claims, initiates surface drilling, completes NI-43-101 report. Begins underground rehabilitation of old workings on 400 foot level. 600 2008: Charly Vein system discovered 2010: RX reopens the mine 400 200 0 1884 1889 1894 1899 1904 1909 1914 1919 1924 1929 1934 1939 1944 1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 10
  • 11. Drumlummon: Property MapThe property consists of 48 patented mining claims and 132 staked claims totaling 2,680 acres. Only 5% of the property has been explored. Marysville, MT Drumlummon Mine N Bald Butte Mine Patented Ground Staked Claims 1 km 11
  • 12. Drumlummon: Known Veins Empire Vein Frankie Vein 400 Level AditN North Star Vein Castletown Vein D Block Charly Vein Xmas Vein Drumlummon Vein St Louis Vein 9-hr Workings 500 metres
  • 13. Development Progress 2009 - 2010March 2009 Water discharge permit granted by Montana DEQ, completing necessary permits to restart mining operations.December 2009 Water treatment plant commissioned. Dewatering of mine begins.April 2010 Ramp accesses Charly vein system. Samples include 2.3 metres of 107.2 grams per tonne gold and 1,904 grams per tonne silverSeptember 2010 Completed 60,472 feet of drilling and two hanging wall drill stationsDecember 2010 Production through test mining and milling produced 4,277 ounces of gold and 76,492 ounces of silver 13
  • 14. Development Progress (cont.)Water pump/treatment plant dewatering mine. Has currently dewatered to600 foot level with a plan to dewater to 800 foot level.Currently working on new 2,485 foot Drumlummon decline to access 610foot level. Anticipated completion March 2011. New decline will providesecondary escape way and ventilation for the mine. Charly Vein 14
  • 15. New Decline– The new 2,485 foot Drumlummon decline will provide access to the 610 foot level– Drill stations are planned approx. every 400 feet in the hanging wall– Decline will provide secondary escape way and ventilation for the mine– Estimated decline capacity is 1,500 tons per day– Budgeted cost of $4,000,000 15
  • 16. New Decline 16
  • 17. Longitundinal Map 17
  • 18. Exploration Drill Program– Two underground drills to be used on a full time basis with expectation of approx. 70,000 feet of drilling– Budgeted cost of $1,750,000– Purpose of Drill Program:– Continue drilling most promising targets: the Charly vein, Christmas vein, Drumlummon vein, Empire vein, Frankie vein, North Star vein, Castletown vein and New Castletown vein– To identify further ore headings and work within the significant potential of discovering unknown vein systems– Expand NI-43-101 resource calculation 18
  • 19. Exploration Drill Program 19
  • 20. Exploration – Underground Drilling Plan View 800 Level N 450’ level Drill Station #9 Proposed Drill Holes800’ level Company has several planned drill holes from drill station #9 20
  • 21. Selected Drill Results to DateDrill Hole From To Width Gold Silver Charly Vein ExtensionDDH 11-235 238 ft 242 ft 4.0 ft .72 opt 56.68 opt 72.6 m 73.8 m 1.2 m 24.6 g/t 1,943 g/t And 284 ft 288 ft 4.0 ft 2.41 opt 73.55 opt 86.6 m 87.8 m 1.2 m 84.0 g/t 2,522 g/tDDH 11-238 294 ft 298 ft 4.0 ft .58 opt .55 opt 89.7 m 90.9 m 1.2 m 19.9 g/t 18.8 g/tDDH 11-223 202 ft 222 ft 20.0 ft .33 opt .62 opt 61.6 m 67.7 m 6.1 m 11.4 g/t 21.3 g/t 21
  • 22. Selected Drill Results to DateDrill Hole From To Width Gold Silver Xmas VeinDDH 11-250 360 ft 390 ft 30.0 ft .34 opt .57 opt 109.8 m 118.9 m 9.1 m 11.7 g/t 19.9 g/t Including 372 ft 378 ft 6.0 ft 1.09 opt .88 opt 113.4 m 115.3 m 1.9 m 37.5 g/t 30.3 g/tDDH 11-251 372 ft 392 ft 20.0 ft .38 opt 1.05 opt 113.4 m 119.5 m 6.1 m 13.0 g/t 36.0 g/t Including 374 ft 380 ft 6.0 ft .92 opt 2.35 opt 114.1 m 115.9 m 1.8 m 31.8 g/t 80.5 g/t 22
  • 23. Selected Drill ResultsDrill Hole From To Width Gold Silver D BlockDDH 11-249 70 ft 104 ft 34 ft .22 opt 1.53opt 21.3 m 31.6 m 10.3 m 7.58 g/t 52.46 g/tDDH 11-281 84 ft 100 ft 16.0 ft 1.95opt 18.22 opt 25.5 m 30.4 m 4.8 m 67.17 g/t 624.69 g/t Including 84 ft 86 ft 2.0 ft 14.72 opt 127.46 opt 25.5 m 26.1 m .61 m 504.82 g/t 4370.06 g/t 23
  • 24. Selected Drill ResultsDrill Hole From To Width Gold Silver D Block SouthDDH 11-298 104 ft 140 ft 36ft .32 opt 1.71 opt 31.6 m 42.5 m 10.9 m 11.04 g/t 58.63 g/t Including 116 ft 122 ft 6 ft 1.25 opt 14.43 opt 35.2 m 37.0 m 1.8 m 43.03 g/t 494.74 g/tDDH 11-308 80 ft 84 ft 4 ft 2.78 opt 15.38 opt 24.3 m 25.5 m 1.2 m 95.62 g/t 527.31 g/tDDH 11-311 106 ft 136 ft 30 ft .26 opt 1.3 opt 32.2 m 41.3 m 9.1 m 9.05 g/t 44.57 g/t Including 130 ft 134 ft 4 ft .94 opt 3.2 opt 39.5 m 40.7 m 1.2 m 32.26 g/t 109.71 g/t 24
  • 25. Selected Drill Results to DateDrill Hole From To Width Gold Silver Empire VeinSDDH-10-28 364 ft 374 ft 10.0 ft .18 opt 1.06 opt 111.0 m 114.0 m 3.0 m 6.1 g/t 36.2 g/tSDDH-10-39 335 ft 339 ft 4.0 ft .63 opt 17.30 opt 102.1 m 103.4 m 1.3 m 21.5 g/t 593.4 g/tSDDH-10-40 360 ft 366 ft 6.0 ft .34 opt 2.33 opt 109.8 m 111.6 m 1.8 m 11.6 g 79.7 g/tSDDH-10-41 406 ft 414 ft 8.0 ft .32 opt 1.62 opt 123.8 m 126.2 m 2.4 m 10.9 g/t 55.4 g/t 25
  • 26. Continuous Mining and Milling Schedule Tons per Tons in Grade Au Ounces Recovered Day Period Eq (opt) Ounces*Q2 2011 200 – 300 8,000 0.32 2,816 2,590Q3 2011 300 – 400 22,000 0.32 7,040 6,476Q4 2011 500 33,000 0.32 10,560 9,715* Assumes all recovery, refinery and NSR charges Items Costs Mining (development ore) $85/ton Milling $55/ton Transportation $21/ton Total Cost $161/ton 26
  • 27. Permitting and Community Relations RX has received all permits and exemptions required for production: o Approval of exploration license including water discharge by the Montana Department of Environmental Quality o Approval of small miner exemption which permits the company to mine so long as surface operations do not exceed five acres o Approval of the alternative mine rescue capabilities by the U.S. Mine Safety and Health Administration o Approval of the ventilation, escape and evacuation plan by the U.S. Mine Safety and Health AdministrationRX has been conducting regular TownHall meetings to encourage communityinvolvement and has addressed all of theconcerns of the people of Marysville. 27
  • 28. Appendix
  • 29. Appendix A NI 43-101 Compliant Resource - Charly Vein and Historic Resource – Calculated from 59 drill holes drilled into the Charly Vein System – A cutoff mining width of 5 feet was used as well as a minimum grade of 0.1 oz/t Au 400E Vein Tonnage Grade Au Grade Ag Ounces Au Ounces Ag oz/Ton g/Ton oz/Ton g/Ton A 67,284 0.39 13.4 12.2 418 26,192 820,166 B 39,740 0.53 18.2 7.3 250 21,097 291,053 C 48,494 0.48 16.5 16.6 569 23,414 804,341 Total 155,518 0.45 15.6 12.3 422 70,703 1,915,560 Inferred Tonnage Grade Au Grade Ag Ounces Au Ounces Ag oz/Ton g/Ton oz/Ton g/Ton Historic 841,000 0.50 17.14 5.00 171.43 463,000 4,635,000 Resource* Historic Resource is not NI 43-101 compliant 29
  • 30. Appendix B – Selected Drill ResultsDrill Hole From To Width Gold Silver D Block cont’dDDH 09-111 32 ft 54 ft 22.0 ft .62 opt 1.69 opt 9.7 m 16.4 m 6.7 m 21.2 g/t 57.8 g/tDDH-10-115 23 ft 41 ft 18.0 ft .49 opt 1.66 opt 7.0 m 12.5 m 5.5 m 16.7 g/t 56.8 g/tDDH 10-120 30 ft 40 ft 10.0 ft .58 opt 1.13 opt 9.1 m 12.2 m 3.1 m 19.8 g/t 38.6 g/tDDH-10-123 98 ft 106 ft 8.0 ft .78 opt 9.32 opt 29.8 m 32.3 m 2.5 m 26.7 g/t 319.1 g/t 30
  • 31. Appendix C - Selected Drill ResultsDrill Hole From To Width Gold Silver Charly VeinDDH 08-05 392 ft 398 ft 6.0 ft 1.10 opt 31.50 opt 119.5 m 121.4 m 1.8 m 37.7 g/t 1,078.7 g/tDDH 08-26 406 ft 412 ft 6.0 ft .95 opt 13.64 opt 123.8 m 125.7 m 1.9 m 32.5 g/t 467.1 g/tDDH 08-28 469.5 ft 477 ft 7.5 ft 1.51 opt 11.10 opt 143.2 m 145.5 m 2.3 m 51.7 g/t 380.1 g/tDDH 08-29 4 ft 12 ft 8.0 ft .29 opt 53.01 opt 1.2 m 3.6 m 2.4 m 9.9 g/t 1815.3 g/tDDH 09-102 240 ft 252 ft 12.0 ft 1.17 opt 16.70 opt 73.2 m 76.8 m 3.7 m 40 g/t 571.9 g/t 31