PRECIOUS METALS,
DIAMONDS & GEMSTONES
INVESTMENT SUMMIT
                12.15 – 12.40
                Focus on Gold: Chall...
Gold and Silver Production in North
              America


             May 2010
Safe Harbor
 The following presentation may include certain “forward-looking statements” within the meaning of the United ...
RX Exploration : Gold and silver developer
   100% ownership of Montana’s Drumlummon mine, subject to 2%
    NSR
       ...
Share Capital
Listing                  CNSX
Symbol                   “RXE”
Recent share price1      CAD $0.61/share
52 wee...
The RX Exploration Team
Management
CEO: Murray Nye – Co-founder, director, principal of Venbanc, Inc., an investment and m...
The Drumlummon Mine - Marysville, Montana
Marysville, Montana is located 25 miles North-West of Helena, Montana’s capital ...
Drumlummon Mine Property Map
The property consists of 26 patented mining claims (290 acres) and 68 staked
claims (1,390 ac...
History of the Drumlummon Mine
                                                       1876:           Drumlummon deposit d...
Mining Strategy - 2010
   Bulk sampling, leading to trial mining, will target ore from two key areas of the
    Drumlummo...
Drumlummon Development Vision
    Mine development will expand from existing workings – drilling will
    extend the targe...
Drumlummon Development philosophy
“Drill for Structure…”
  Drill Hole   From      To        Width          Gold    Silver
...
Drumlummon Development philosophy
“… drift for Grade”

                                                         D-block
  ...
Development Progress
   400 level haulage drifts and internal ramps
    fully operational for test mining (over 500
    t...
RX’s Fully Permitted Philipsburg Mill
   Existing mill 114 miles from mine
    accessible by paved highway ($20.50 per
  ...
Bulk Sampling and Exploration Schedule




                                         16
Property Exploration of Resource Potential
   Objectives : Consolidate medium-term mine plan and drill/drift on multi-
  ...
Permitting and Community Relations
   RX has received all permits and exemptions required
                       for prod...
RX Exploration : Programs to Add Value
                        Develop the Drumlummon mine
                         plan ...
Value Drivers: Assessing RX’s value by gold produced
Peer Group High-Grade Gold Producers <100,000 oz gold/year

         ...
How the market values high grade gold producers
Investors should compare RX to this peer group
 Potential Enterprise Value...
RX Exploration : Summary
   Cash on hand - C$6 million
   Achieving immediate serial
    production in high grade
    Dr...
Drumlummon – A Golden Future for a Historic Mine




                                 406 – 138 Portage Ave. East
        ...
Appendix A: NI 43-101 Compliant Resource - Charly
Vein and Historic Resource
     Calculated from 59 drill holes drilled ...
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Objective Capital Precious Metals, Diamonds and Gemstones Investment Summit: Focus on Gold: Challenges of gold mining in the US – reopening the Drumlummon Mine in Montana - Bill Fisher

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Objective Capital Precious Metals, Diamonds and Gemstones Investment Summit
Focus on Gold: Challenges of gold mining in the US – reopening the Drumlummon Mine in Montana
20 May 2010
by Bill Fisher - RX Exploration Inc

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Objective Capital Precious Metals, Diamonds and Gemstones Investment Summit: Focus on Gold: Challenges of gold mining in the US – reopening the Drumlummon Mine in Montana - Bill Fisher

  1. 1. PRECIOUS METALS, DIAMONDS & GEMSTONES INVESTMENT SUMMIT 12.15 – 12.40 Focus on Gold: Challenges of gold mining in the US – reopening the Drumlummon Mine in Montana Bill Fisher – Director, RX Exploration THE LONDON CHAMBER OF COMMERCE AND INDUSTRY ● THURSDAY, 20 MAY 2010 www.ObjectiveCapitalConferences.com 1
  2. 2. Gold and Silver Production in North America May 2010
  3. 3. Safe Harbor The following presentation may include certain “forward-looking statements” within the meaning of the United States Private Litigation Reform Act of 1995 and applicable Canadian Securities Laws. All statements, other than statements of historical fact, included in the presentation, including, without limitation, statements regarding potential mineralization and 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 expressions are forward-looking statements. Forward-looking statements are not guarantees of future results and conditions but rather reflect our current views with respect to future events and are subject to risks, uncertainties, assumptions and other factors, and actual results and future events could differ materially from those anticipated in such statements. There can 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 disclosed under the heading “Risk Factors” and elsewhere in documents filed from time to time with the Canadian provincial securities regulators. We base our forward-looking statements on information currently available to us and we do not assume 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, while such terms are recognized and required by Canadian Securities Laws, the United States Securities and Exchange Commission does not recognize them. Under U.S. standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination has been made. U.S. investors should not assume that all or any part of measured or indicated resources will ever be converted into reserves. In addition, “inferred resources” have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Accordingly, information concerning descriptions of mineralization in this presentation may not be comparable to information made public by companies that are subject to the SEC’s Industry Guide 7. 3
  4. 4. RX Exploration : Gold and silver developer  100% ownership of Montana’s Drumlummon mine, subject to 2% NSR  Historic development at numerous levels up to 1600 feet  1 million ounces gold produced, 1885 -1905  Never fully explored or exploited by previous operators  Fully permitted; Grid power and year round paved road access  Test mining operations in progress  Development drift averages 41 g/t gold and 1,901 g/t silver over 3.2 metre width  Gold and silver bulk sampling commenced April 2010  1,000 tpd permitted Philipsburg mill leased May 2010  Multiple Exploration targets. Drill results include: 178 g/t (5.2 opt) gold and 97.3 g/t (2.84 opt) silver over 0.30 metres 4
  5. 5. Share Capital Listing CNSX Symbol “RXE” Recent share price1 CAD $0.61/share 52 week low–high CAD $0.165–$0.65 Shares outstanding 109 million – basic 196 million – fully diluted Market capitalization CAD $66.5 million Cash CAD ~$6 million Share ownership RX Management (~20%); Spruce Ridge Resources (~10%) Funds (May 2010) Sprott Asset Management (4.6% basic or ~ 5.1% fully diluted) The company has commenced application for listing on the TSX Venture Exchange. All of the company’s filings are current. 1 As of May 12, 2010 5
  6. 6. 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. CFO: Max Polinsky, B.Comm – Co-founder, director and principal of Venbanc, Inc. Director of Mining Operations: Mike Gunsinger – Mike was employed for 40 years by Patrick Harrison and Co., underground mining contractor, servicing major mining companies such as Inco and Noranda, and the US Military. Upon retirement, established his own underground contracting company and has been active in Utah and Montana. 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. Following Kennecott’s divestiture of the project, Ben continues to develop the project independently. Board of Directors Chairman John O’Donnell, (B.A. Econ, L.L.B.) Directors Murray Nye Max Polinsky Bill Fisher, (P.Geo.) Former Chairman, Aurelian Resources and VP Exploration, Boliden Ltd. John Ryan (CGA) President, Spruce Ridge Resources Edward Ellwood (MBA) Management Consultant Paul Teodorovici Property Management Consultant 6
  7. 7. The Drumlummon Mine - Marysville, Montana Marysville, Montana is located 25 miles North-West of Helena, Montana’s capital city. Contact Mill, Philipsburg, 114 miles by road southwest from Marysville RX Exploration Drumlummon Mine and Contact Mill locations Marysville HELENA Philipsburg 7
  8. 8. Drumlummon Mine Property Map The property consists of 26 patented mining claims (290 acres) and 68 staked claims (1,390 acres) May 2010 added Bald Butte Gold/Moly projects A’ A 8
  9. 9. History of the Drumlummon Mine 1876: Drumlummon deposit discovered by Thomas Cruse 1883 - 1901: Montana Co. puts mine into production. Loses claim dispute in 1901 and floods mine to 400 foot level. 1902 – 1910: Production continues above 400 foot level by Montana Co while claim appeals in Annual Average Gold Prices in US Dollars per progress. Loses appeal. 1000 1910 - 1929: St Louis Company takes ownership. Leases mine periodically. Production 900 sourced above the 400 foot level. Market crash of ’29 stops production. 800 1941 - 1951: Montana Rainbow Co. dewaters and restarts production in 1946. Mill burns down in 1950 and production ceases. Rebuilding the mill not economically viable. 700 2007: RX consolidates all land claims, initiates surface drilling, completes NI 43-101 report. Begins underground rehabilitation. Ounce 600 2008: Charly Vein system discovered 500 2010: RX reopens the mine 400 300 200 100 0 83 92 01 10 19 28 37 46 55 64 73 82 91 00 09 18 18 19 19 19 19 19 19 19 19 19 19 19 20 20 Year 9
  10. 10. Mining Strategy - 2010  Bulk sampling, leading to trial mining, will target ore from two key areas of the Drumlummon Mine (D Block and Charly Vein)  Both areas are being developed by drifting, followed by trial stoping  Currently taking bulk sample with a target grade of over 10 g/t gold and 400 g/t silver  Contracted trucking fleet already shipping ore to mill  Company is processing a series of 100+ ton bulk samples to fine tune existing gravity and flotation circuits (Metallurgy lab tests showed gold recovery of 92%)  Bulk sampling in May 2010 estimated at a rate of 200 tons per day increasing to trial mining at a rate of 500 tons per day by Q1 2011  Ore to be shipped to RX’s leased mill, at Philipsburg, for processing 10
  11. 11. Drumlummon Development Vision Mine development will expand from existing workings – drilling will extend the target envelope, with follow up from rehabilitated workings A A’ South South 9 Hour North North Surface Workings Drumlummon Workings Drumlummon Workings Surface Setup 400 Level Exploration 400 Level 9 Hour Target Workings Previously 700 Level Exploration Disputed 700 Level Target Ground 1000 Level Exploration Charly Vein Previously 1000 Level Exploration Disputed Target Shaft No.2 Charly Vein Ground Xmas Vein Vein Xmas Target Shaft No.2 1600 Level 1600 Level 11
  12. 12. Drumlummon Development philosophy “Drill for Structure…” Drill Hole From To Width Gold Silver (m) (m) (m) (g/t) (g/t) DDH 08-05 119.5 121.4 1.8 37.8 1,081.4 DDH 08-15 122.9 125.8 2.9 44.1 1,393.0 DDH 08-26 123.8 125.6 1.8 33.5 350.4 DDH 08-28 143.2 145.5 2.3 51.8 380.6 DDH 08-29 1.2 3.6 2.4 9.9 1,821.3 DDH 09-102 73.2 76.8 3.7 41.1 572.6 6.8 DDH 10-115 9.7 16.5 21.1 57.8 (true width 3 m) 8.0 DDH 10-120 4.3 12.3 19.76 45.2 (true width 3 m) 12
  13. 13. Drumlummon Development philosophy “… drift for Grade” D-block D Block 400 Level 500 level cross-cut Xmas Vein through Charly Vein 700 Level 1000 Level Charly Vein 1600 Level 70 metres of Charly vein development drift averaged 41 g/t gold and 1,901 g/t silver over faces averaging 3.2 metres in width (PR May 2010) 13
  14. 14. Development Progress  400 level haulage drifts and internal ramps fully operational for test mining (over 500 ton per day ore and waste capacity)  By April 2010,142 holes (44,863 feet) of drilling completed defining multiple high grade gold and silver zones. New hanging wall drill station commissioned (May 2010) Charly Vein  Fully permitted water treatment plant currently dewatering mine – able to drain system at 100 ft depth per month  Portal completed for 800 level decline decision in Q3 2010 – for haulage capacity to reach 1,000 tpd 500 level cross-cut 14
  15. 15. RX’s Fully Permitted Philipsburg Mill  Existing mill 114 miles from mine accessible by paved highway ($20.50 per ton hauling cost), on care and maintenance from 2008  Two separate 500 ton per day circuits including crusher, regrind mills, gravity and flotation circuits  Facility has milled more than 1 million tons of ore from Inspiration’s poly metallic Black Pine Mine  1.5 million tons of tailings space currently available at the mill site  Leased for $30,000 per month plus per ton milling fee 15
  16. 16. Bulk Sampling and Exploration Schedule 16
  17. 17. Property Exploration of Resource Potential  Objectives : Consolidate medium-term mine plan and drill/drift on multi- million ounce gold/silver potential along strike and at depth  Continue exploration of D Block, Charly Vein and newly discovered mineralization to upgrade known resource  Charly vein remains open to the north, south and at depth; may represent the extension of the partially mined high-grade Xmas Vein.  New drill stations in the hanging wall of the Charly vein enables exploration of new and existing targets laterally as well as at depth  Continue rehabilitating historical workings over 1500 m. to the south in order to access and drill “Previously Disputed Ground” and beyond  This ground was never mined due to the historic claim dispute  Additional land has been acquired in the vicinity of the mine for future exploration  Specifically the Bald Butte Moly/gold/silver property located 5 km to the SW 17
  18. 18. Permitting and Community Relations  RX has received all permits and exemptions required for production:  Approval of exploration license including water discharge by the Montana Department of Environmental Quality  Approval of small miner exemption which permits the company to mine so long as surface operations do not exceed five acres  Approval of the alternative mine rescue capabilities by the U.S. Mine Safety and Health Administration  Approval of the ventilation, escape and evacuation plan by the U.S. Mine Safety and Health Administration  RX has been conducting regular Town Hall meetings to encourage community involvement and has addressed all of the concerns of the people of Marysville 18
  19. 19. RX Exploration : Programs to Add Value  Develop the Drumlummon mine plan systematically, at a sustainable rate for short, medium and long term profitable operations  Step up mine production over time to match the 1,000 ton per day Phillpsburg mill capacity while maintaining grade and recoveries  Consolidate existing resources and their extensions, and convert to formal 43-101 reserves  Aggressively drill to test multi- million ounce gold/silver potential using the first class access down to 500 metres depth and for over 1.5 kilometres in length 19
  20. 20. Value Drivers: Assessing RX’s value by gold produced Peer Group High-Grade Gold Producers <100,000 oz gold/year Shares Enterprise Recovered Grade 2009 EV/Oz Outstanding Value (gold equivalent - Production Produced Company (millions) (USD grams per tonne) (ounces) (US$) millions) Wesdome Gold Mines 100.4 $229 9.0 96,150 2,381 Richmont Mines 26.1 $99 5.0 63,500 1,555 Orvana Mineras Corp 115.2 $110 5.1 62,644 1,758 Medusa Mines 170.8 $693 16.7 47,869 14,481 Apollo Gold Corp 261.6 $195 2.7 44,739 4,358 Kirkland Lake Gold 63.3 $443 11.9 43,545 10,163 Alexis Minerals 147.7 $41 5.8 38,461 1,067 San Gold Mines 266 $1,133 18.0 23,500 48,234 Olympus Pacific Minerals 322.7 $114 10.3 23,000 4,987 Metanor Resources 122.4 $80 7.4 20,000 3,975 St Andrews Goldfields 326 $342 6.5 15,000 22,767 Avnel Gold Mining 79.2 $28 12.1 13,045 2,161 RX Exploration 109 $55 22.1* NA NA Average $274 10.2 40,952 $9,824 *NI 43-101 grade and 92% met recovery 20
  21. 21. How the market values high grade gold producers Investors should compare RX to this peer group Potential Enterprise Value ($US Millions) $600,000,000 $500,000,000 $400,000,000 $300,000,000 $200,000,000 $100,000,000 $- 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000 60,000 Potential Annual Production (oz Au)  Based on average Enterprise Value per Ounce Gold produced (US $9,824) 21
  22. 22. RX Exploration : Summary  Cash on hand - C$6 million  Achieving immediate serial production in high grade Drumlummon mine, with operations to pay for all development and exploration work  Continuous exploration by drilling and rehabilitation of old workings to follow up encouraging drilling results  Surface exploration of Drumlummon extensions and nearby mineralization  Build treasury for development and future corporate development (in- the-money warrants would bring in C$29 million) 22
  23. 23. Drumlummon – A Golden Future for a Historic Mine 406 – 138 Portage Ave. East Winnipeg, Manitoba Canada R3C 0A1 T: (204) 989-2434 F: (204) 989-2433 23
  24. 24. 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 Ounces (oz/t) (g/t) (oz/t) (g/t) Au Ag 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 Inferred 155,518 0.45 15.6 12.3 422 70,703 1,915,560 Resource Tonnage Grade Au Grade Ag Ounces Ounces (oz/t) (g/t) (oz/t) (g/t) Au Ag 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 24

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