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March 29, 2010 Page 1
Technical Report of the Independence Gold and Silver Project
Battle Mountain Mining District
Lander County, Nevada USA
Prepared for
General Metals Corporation
&
General Gold Corporation
1155 West Fourth Street, Suite #210
Reno, Nevada 89503
Report Date: June 27, 2011
Effective Date: May 31, 2011
James Ashton, P.E.
Sam G. Nunnemaker, R.P. Geo.
March 29, 2010 Page 2
TABLE OF CONTENTS
Section Page
1 EXECUTIVE SUMMARY ................................................................................................... 8 1.1 Introduction ......................................................................................................................... 8
1.2 Geology, Mineralization and Alteration ............................................................................. 8 1.2.1 Geology .......................................................................................................................... 8 1.2.2 Mineralization ................................................................................................................ 9 1.2.3 Alteration ..................................................................................................................... 10
1.3 Exploration and Mining History ....................................................................................... 11
1.4 Drilling and Sampling ....................................................................................................... 12 1.5 Metallurgical Testing ........................................................................................................ 13 1.6 Mineral Resource Estimation ............................................................................................ 13
1.6.1 Independence Shallow Resources ................................................................................ 13 1.6.2 Independence Skarn Hosted Resources ....................................................................... 14
1.7 Interpretations and Conclusions ........................................................................................ 15
1.8 Recommendations ............................................................................................................. 16
2 INTRODUCTION ............................................................................................................... 17
3 RELIANCE ON OTHER EXPERTS .................................................................................. 20
4 PROPERTY DESCRIPTION AND LOCATION ............................................................... 21 4.1 Location ............................................................................................................................ 21
4.2 Land Area.......................................................................................................................... 21 4.3 Agreements and Encumbrances ........................................................................................ 24
4.4 Property Boundary and Improvements ............................................................................. 26 4.5 Environmental Liabilities.................................................................................................. 26
4.6 Permits and Environmental Studies .................................................................................. 28
5 ACCESS, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, PHYSIOGRAPHY
29 5.1 Access ............................................................................................................................... 29
5.2 Climate .............................................................................................................................. 29 5.3 Local Resources and Infrastructure .................................................................................. 30 5.4 Physiography and Vegetation ........................................................................................... 30 5.5 Other Local Issues............................................................................................................. 31
6 HISTORY OF EXPLORATION AND PRODUCTION ..................................................... 32
6.1 Early District History ........................................................................................................ 32 6.2 History - Independence Mine............................................................................................ 32
6.3 Exploration and Development History ............................................................................. 35 6.4 Historic Resource and Reserve Estimates ......................................................................... 35
7 GEOLOGY SETTING......................................................................................................... 36 7.1 Regional Geology ............................................................................................................. 36
7.1.1 Mesozoic and Cenozoic Tectonics and Magmatism .................................................... 38
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7.1.2 Structure ....................................................................................................................... 40
7.1.3 Tertiary-Intrusive and Volcanic Rocks and Mineral Deposits .................................... 40 7.2 Local and District Geology ............................................................................................... 41 7.3 Property Structure ............................................................................................................. 43
8 DEPOSIT TYPE .................................................................................................................. 47 8.1 Shallow Chert Hosted Deposit Type ............................................................................. 47 8.2 Deep Gold Skarn Deposit Type ........................................................................................ 47 8.3 Gold-Copper Porphyry Target .......................................................................................... 48
9 MINERALIZATION ........................................................................................................... 49
9.1 Surface Chert Hosted Mineralization ............................................................................ 49 9.2 Deep Skarn Mineralization ............................................................................................... 49 9.3 Gold-Copper Porphyry Mineralization ............................................................................. 50
9.4 Additional Deep Mineralization ....................................................................................... 51
10 EXPLORATION BY ISSUER ............................................................................................ 51 10.1 2005 Exploration ............................................................................................................... 51
10.2 2007 2011 Exploration ................................................................................................... 51 10.3 Results ............................................................................................................................... 51
10.3.1 Tailing Characterization........................................................................................... 51 10.3.2 Reverse Circulation & Core Drilling 2007 2011 .................................................. 52
11 DRILLING ........................................................................................................................... 53
11.1 Summary ........................................................................................................................... 53 11.2 Drill Hole Collar and Down Hole Surveys ....................................................................... 56
11.3 Reverse Circulation Drilling and Logging ........................................................................ 56 11.4 Core Drilling and Logging ................................................................................................ 56
11.5 Underground Workings- Sampling and Mapping............................................................. 57 11.6 Drilling Outside of the Resource Area.............................................................................. 58
12 SAMPLING METHOD AND APPROACH ....................................................................... 60 12.1 Summary ........................................................................................................................... 60
12.2 Reverse Circulation Sampling .......................................................................................... 60 12.3 Reverse Circulation Sample Contamination ..................................................................... 60 12.4 Core Sampling .................................................................................................................. 61 12.5 Underground Sampling ..................................................................................................... 61 12.6 Soil Sampling .................................................................................................................... 61
13 SAMPLE PREPARATION, ANALYSIS, AND SECURITY ............................................ 62 13.1 Sample Preparation ........................................................................................................... 62
13.2 Analytical Procedures ....................................................................................................... 62 13.3 Security ............................................................................................................................. 62
14 DATA VERIFICATION ..................................................................................................... 64 14.1 Database Audit .................................................................................................................. 64 14.2 QA/QC, Check Samples, Check Assays ........................................................................... 64 14.3 Standard and Field Reference Material............................................................................. 69
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14.4 Twin Hole Comparisons: Independence 2007 & 2008 Drilling Programs ....................... 75
14.5 Sample Recovery .............................................................................................................. 79
15 ADJACENT PROPERTIES ................................................................................................ 80
16 MINERAL PROCESSING AND METALLURGICAL TESTING ................................... 82
16.1 Summary ........................................................................................................................... 82 16.2 Metallurgical Mineralogy ................................................................................................. 82 16.3 Metallurgical Samples ...................................................................................................... 82 16.4 Cyanide-Soluble vs. Fire assays ....................................................................................... 83 16.5 Bottle Roll Tests and Column Leach Tests....................................................................... 84
16.6 Metallurgical Process ........................................................................................................ 87
17 MINERAL RESOURCE ESTIMATE ................................................................................. 88
17.1 Data ................................................................................................................................... 88 17.2 Deposit Geology Pertinent to Resource Estimation.......................................................... 88
17.2.1 Independence Shallow Target .................................................................................. 88 17.2.2 Independence Deep Skarn Target ............................................................................ 93
17.3 Density .............................................................................................................................. 95 17.4 Resource Model ................................................................................................................ 95
17.4.1 Evaluation of Outlier Grades ................................................................................. 100 17.5 Block Model.................................................................................................................... 101 17.6 Composites ...................................................................................................................... 101
17.7 Geostatistics and Estimation Parameters ........................................................................ 102 17.8 Block Model and Estimation Parameters for the Deep Skarn Deposit ........................... 102
17.9 Definitions....................................................................................................................... 110
17.10 Resources ........................................................................................................................ 112
17.11 Validation ........................................................................................................................ 115 17.11.1 Model Volume Check ............................................................................................ 115
17.11.2 Comparison of Interpolation Methods ................................................................... 115 17.11.3 Grade Distribution of Composites versus Models ................................................. 116 17.11.4 Visual Review ........................................................................................................ 119
17.12 Qualifications .................................................................................................................. 119
18 MINERAL RESERVE ESTIMATES................................................................................ 121
19 OTHER RELAVANT DATA AND INFORMATION ..................................................... 122
20 INTERPRETATIONS AND CONCLUSIONS ................................................................. 123
20.1 Estimate........................................................................................................................... 123 20.2 Metallurgy ....................................................................................................................... 123
20.3 Economics ....................................................................................................................... 123 20.4 Exploration ...................................................................................................................... 123 20.5 Geology and Field Studies .............................................................................................. 124
RECOMMENDATIONS ............................................................................................................... 125 20.6 Resource Enhancement Independence Shallow Resource Area .................................. 125 20.7 Recommendations Non Resource Target Area ............................................................ 127
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21 REFERENCES .................................................................................................................. 129
22 DATE AND SIGNATURE PAGE .................................................................................... 131
23 CERTIFICATE OF QUALIFIED PERSON AND ASSOCIATES .................................. 132
List of Tables
Table Page
TABLE 1.1 INDEPENDENCE DRILLING SUMMARY .............................................................................. 12
TABLE 1.2 INDEPENDENCE GOLD AND SILVER RESOURCES .............................................................. 15 TABLE 1.3 RECOMMENDED INDEPENDENCE WORK PROGRAM: SHALLOW RESOURCE DEVELOPMENT
AND EXPLORATION DRILLING ................................................................................................... 16 TABLE 4.1 INDEPENDENCE PROJECT LAND HOLDINGS...................................................................... 21 TABLE 6.1 REPORTED PRODUCTION AND OPERATORS OF THE INDEPENDENCE MINE ....................... 32 TABLE 6.2 INDEPENDENCE DRILLING SUMMARY .............................................................................. 35
TABLE 11.1 SUMMARY OF DRILLING USED IN RESOURCE ESTIMATION ............................................ 53 TABLE 11.2 SUMMARY 2008 GMC DRILLING (CUTOFF 0.010 OPT AU) ............................................ 54
TABLE 11.3 SUMMARY 2009-2010 GMC DRILLING (CUTOFF 0.010 OPT AU) .................................. 55 TABLE 14.1 GMC CHECK AND DUPLICATE SAMPLES SUMMARY ..................................................... 65 TABLE 14.2 REFERENCE MATERIAL USED AT INDEPENDENCE .......................................................... 69
TABLE 17.1 SPECIFIC GRAVITY RESULTS BY LITHOLOGY ................................................................. 95 TABLE 17.2 SUMMARY DESCRIPTIVE STATISTICS OF MINERAL DOMAINS - GOLD & SILVER ........... 96
TABLE 17.3 SUMMARY DESCRIPTIVE STATISTICS BY SUB-DOMAIN FOR GOLD & SILVER ................ 96
TABLE 17.4 PROPORTION OF CONTAINED GOLD IN DECILE/PERCENTAGE OF SAMPLES .................. 100
TABLE 17.5 SUMMARY COMPOSITE STATISTICS BY DOMAIN GOLD AND SILVER ......................... 102 TABLE 17.6 SHALLOW DEPOSIT GOLD ESTIMATION PARAMETERS ........................................... 105
TABLE 17.7 SUMMARY OF SHALLOW DEPOSIT SILVER ESTIMATION PARAMETERS ........................ 106 TABLE 17.8 SUMMARY OF DEEP SKARN DEPOSIT GOLD ESTIMATION PARAMETERS ...................... 106 TABLE 17.9 INDEPENDENCE CLASSIFICATION PARAMETERS ........................................................... 112
TABLE 17.10 INDEPENDENCE GOLD AND SILVER RESOURCES ........................................................ 113 TABLE 17.11 INDEPENDENCE GOLD AND SILVER SHALLOW DEPOSIT RESOURCES BY CUTOFF GRADE
................................................................................................................................................ 113 TABLE 17.12 INDEPENDENCE GOLD RESOURCES DEEP SKARN DEPOSIT BY CUTOFF GRADE ......... 115
TABLE 17.13 MODEL-SOLID VOLUME COMPARISON ...................................................................... 115 TABLE 17.14 COMPARISON OF INTERPOLATED METHODS .............................................................. 116 TABLE 20.1 BUDGET FOR DRILLING, UPDATED 43-101 TECHNICAL REPORT AND PEA.................. 126
TABLE 20.2 BUDGET EXPLORATION OUTSIDE OF CURRENT SHALLOW RESOURCE AREA ............. 128
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List of Figures
Figure Page
FIGURE 4.1LOCATION MAP ............................................................................................................... 22
FIGURE 4.2 LAND MAP ................................................................................................................... 23 FIGURE 4.3 EXISTING FACILITIES & DISTURBANCE MAP ................................................................ 27 FIGURE 7.1 REGIONAL STRATIGRAPHY ............................................................................................. 39 FIGURE 7.2 LOCAL STRATIGRAPHIC SECTION ................................................................................... 43 FIGURE 7.3 LOCAL GEOLOGIC SURFACE MAP .................................................................................. 45
FIGURE 7.4 GEOLOGIC SECTION ....................................................................................................... 45 FIGURE 11.1 DRILL HOLE PLAN MAP ............................................................................................... 59 FIGURE 14.1 GMC 2007 GOLD CHECK ASSAY ON PULP SCATTERPLOT ........................................... 66
FIGURE 14.2 GMC 2007 SILVER PULP CHECK ASSAY SCATTERPLOT ............................................... 66 FIGURE 14.3 2009 GMC GOLD CHECK ASSAYS ON PULPS SCATTER PLOT ....................................... 67 FIGURE 14.4 2009 GMC SILVER CHECK ASSAYS ON PULPS SCATTER PLOT..................................... 67
FIGURE 14.5 2009 GMC RE-ASSAY OF THE NORANDA DEEP SKARN MINERALIZATION ON PULPS
SCATTER PLOT .......................................................................................................................... 68
FIGURE 14.6 2009 GMC RE-ASSAY OF GREAT BASINS DEEP SKARN MINERALIZATION ON PULPS
SCATTER PLOT .......................................................................................................................... 68 FIGURE 14.7 NEVADA BUREAU OF MINES CRM RESULTS - GOLD ................................................... 70
FIGURE 14.8 NEVADA BUREAU OF MINES SRM RESULTS SILVER ................................................. 71 FIGURE 14.9 UNCERTIFIED GMC FRM 2007 RESULTS GOLD & SILVER ....................................... 71
FIGURE 14.10 ORE RESEARCH CRM RESULTS GOLD & SILVER .................................................... 72 FIGURE 14.11 UNCERTIFIED GMC FRM 2008 AND 2009-2010 RESULTS GOLD & SILVER ............ 73
FIGURE 14.12 GMC RC-RC TWIN SETS: DOWN-HOLE PLOT OF 2007 GMC HOLES ........................ 75 FIGURE 14.13 GMC RC-RC TWIN SETS: DOWN-HOLE PLOT OF 2008 GMC HOLES ........................ 76 FIGURE 14.14 GMC RC-RC TWIN SETS: DOWN-HOLE PLOT OF 2007 VS. 2008 GMC HOLES ......... 77
FIGURE 15.1 LOCATION OF ADJACENT PROPERTIES .......................................................................... 81 FIGURE 16.1 GOLD CYANIDE SOLUBLE VS. FIRE ASSAY COMPARISON ............................................ 83
FIGURE 16.2 SILVER CYANIDE SOLUBLE VS. FIRE ASSAY COMPARISON........................................... 84 FIGURE 16.3 GOLD AND SILVER LEACH RATE PROFILES BOTTLE ROLL TEST ................................ 85 FIGURE 16.4 GOLD AND SILVER LEACH RATE PROFILES COLUMN LEACH TEST ............................ 86
FIGURE 17.1 GOLD DOMAINS AND GEOLOGY ................................................................................... 91 FIGURE 17.2 SILVER DOMAINS AND GEOLOGY ................................................................................. 92 FIGURE 17.3 GOLD ASSAYS VS. SILVER ASSAYS (0.007 AU OPT CUTOFF) ........................................ 93 FIGURE 17.4 DEEP SKARN MINERALIZED ZONE SOLIDS ................................................................... 94 FIGURE 17.5 INDEPENDENCE GEOLOGIC SOLID................................................................................. 97
FIGURE 17.6 INDEPENDENCE UNDERGROUND WORKINGS SOLID ...................................................... 97 FIGURE 17.7 LOG PROBABILITY PLOT GOLD SAMPLE DATA ............................................................. 97 FIGURE 17.8 LOG PROBABILITY PLOT SILVER SAMPLE DATA .......................................................... 98 FIGURE 17.9 SHALLOW DEPOSIT GOLD VARIOGRAMS (DOMAIN 1, 2. 3) ........................................ 103 FIGURE 17.10 SHALLOW DEPOSIT SILVER GLOBAL VARIOGRAMS (DOMAINS 1, 2) ........................ 104 FIGURE 17.11 SHALLOW DEPOSIT GOLD BLOCK GRADES .............................................................. 107 FIGURE 17.12 SHALLOW DEPOSIT SILVER BLOCK GRADES ............................................................ 107
FIGURE 17.13 DEEP SKARN DEPOSIT ISOMETRIC VIEW OF 0.100 OPT AU GRADE SHELL ................ 108 FIGURE 17.14 GRADE/VOLUME CURVES FOR ALL GOLD DOMAINS ................................................ 117
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FIGURE 17.15 GRADE/VOLUME CURVES FOR HIGH-GRADE GOLD DOMAIN ................................... 117
FIGURE 17.16 GRADE/VOLUME CURVES FOR ALL SILVER DOMAINS ............................................. 118 FIGURE 17.17 GRADE/VOLUME CURVES FOR HIGH-GRADE SILVER DOMAIN ................................. 118 FIGURE 17.18 GRADE/VOLUME CURVES FOR DEEP SKARN DEPOSIT .............................................. 119
Technical Report for the Independence Gold & Silver Project, Lander County, Nevada USA General Metals Corporation
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1 EXECUTIVE SUMMARY
This technical report on the Independence Gold and Silver project was prepared by James Ashton,
P.E. (the qualified person) with much assistance from Samuel G. Nunnemaker, known
collectively as the Authors, at the request of General Metals Corporation (GMC) and its wholly
owned subsidiary General Gold Corporation. The report was written in compliance with
disclosure and reporting requirements set forth in the Canadian Securities Administrators
National Instrument 43-101, Companion Policy 43-101CP as of December 31, 2005, and Form
43-101F1. The information in this report is current as of May 31, 2011 unless otherwise noted.
General Metals Corporation holds a 100% control, lease hold interest in the Property, subject to a
sliding scale royalty set at a maximum of 5% Net Smelter Return (NSR) above $475 per ounce
gold. The Company has the exclusive right to buy out the underlying owners for $3,000,000 (US)
during the first ten years of the lease agreement, subject only to a 1.5% NSR royalty thereafter.
Gold Range Company, a private Nevada domiciled LLC holds a 1% NSR royalty as the vendor of
the property to General Metals wholly owned subsidiary, General Gold. One of the authors of this
report, Samuel G. Nunnemaker is a shareholder of Gold Range.
In preparation of this report, the authors have relied on information obtained through the review of
private documents and reports, including previous operators project reports, as well as documents
of Independence Silver Gold Mines Inc., Robert Carrington, Carrington Consultants, ho provided
much of the geology and historic information, and General Metals. Mr. Nunnemaker, one of the
authors of this report, has extensive experience on the project and has been associated with the
property for many years. Title to the property was verified as of March 8, 2010 in an independent
title report by Erwin & Thompson LLP; the record title to the project fee surface lands, unpatented
mining claims, and GMCs leasehold interest in the unpatented claims, is confirmed in the mineral
status report (Erwin, 2010).
1.1 Introduction
The Independence project is located in Lander County, Nevada, adjacent to Newmont Golds
Phoenix Project and approximately 14 miles south of Battle Mountain, Nevada. The
Independence property consists of 14 unpatented load mining claims covering approximately 238
acres of BLM administered public lands situated in Sections 28, 29, 32, and 33, Township 31
North, Range 43 East. General Metals has also purchased 470 acres of private fee surface land
exclusive of mineral rights situated in Section 17, Township 30 North, Range 43 East, MDBM,
Lander County, Nevada in the Battle Mountain Mining District.
1.2 Geology, Mineralization and Alteration
1.2.1 Geology
The Independence project lies in the Battle Mountain Mining District located on the west side of
Pumpernickel Ridge in north central Nevada. The regional geology of north central Nevada is
defined by episodic tensional deformation, rifting, sedimentation and erosion, followed by wide
spread thrusting resulting from compressional deformation. Episodic tensional events followed by
compressional events include the Robert Mountains Allochtonon emplaced during the Antler
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orogeny. The Antler sequence hosts the Golconda Allocthon which was emplaced during the
Sonoma orogeny and contains the Havallah Sequence of Mississippian to Permian age rocks,
including the Pumpernickel Formation, host for near surface mineralization at the Independence
property. Rocks of the Roberts Mountain Allocthon, hosted the adjacent Fortitude deposit and are the principle host for the Phoenix deposit and the Independence Deep Skarn Target. These rocks are
structurally overlain by the Mississippian, Pennsylvanian, and Permian Havallah sequence of the
Golconda allochthon.
The Havallah sequence, which constitutes the upper plate of the Golconda thrust, is a Mississippian,
Pennsylvanian, and Permian allochthon consisting of an assemblage of chert, argillite, shale, siltstone,
sandstone, conglomerate, limestone, and metavolcanic rocks exposed over much of the western part of
the Battle Mountain District. The base of the Havallah sequence is the regionally extensive Golconda
thrust, which places the Havallah sequence structurally over the Antler sequence. This structural
relationship (the Havallah sequence over the Antler sequence along the Golconda thrust) represents the
principal tectonostratigraphic control on the distribution of ore deposits in the Battle Mountain mining
district (Doebrich and Theodore, 1996).
Two major rock units are exposed at the Independence project, the Paleozoic age Pumpernickel
Formation (Havallah Formation) and Tertiary (Eocene) age intrusive rocks of the Independence
Stock. Minor dikes in part appear to be contemporaneous with, and in part younger than the
Independence Stock. The oldest rocks exposed on the surface of the Property are silic-clastic
sediments of the upper Pennsylvanian Permian age Pumpernickel Formation, consisting of
interbedded chert, siltstone, and argillite, these units generally strike N5oE with a general dip of
50o to 60
o degree westerly. Locally on the surface and within the old underground Independence
Mine these sediments are deformed by folding and faulting.
Three distinct deposit types are present at the Independence property, (1) a shallow near surface
epithermal system, (2) a deeper high grade, gold rich skarn hosted system and (3) a possible
intrusive hosted stock work, gold-copper porphyry system.
1.2.2 Mineralization
Shallow (Chert hosted mineralization)
The shallow near surface mineralization at Independence is best characterized as a high level
epithermal system formed as a leakage halo above the deep Independence gold skarn, both related
to emplacement of Eocene age granodiorite porphyrys. The Independence deep gold skarn target
is a high grade, gold rich skarn system developed in the carbonate rich portions of the Battle
Mountain, Antler Peak and Edna Mountain formations of Roberts Antler Sequence in the lower
portion of the Roberts Mountain Allocthon. The Independence Stock, situated at the northern end
of the Independence Property hosts stockwork style gold-silver mineralization and disseminated
porphyry style gold-copper mineralization.
The main structural feature on the Property is the Wilson Independence fault zone, a series of sub-
parallel N5oW striking sub-vertical westerly dipping faults and shear zones. The main zone of
gold and silver mineralization and essentially all of the defined near surface resources lie along
these north striking structural zones in and near the thick bedded to semi massive chert units
where the competency contrast of the massive cherts and intercalated thin bedded shale and chert
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zones occurring above and below, resulted in refraction of the westerly to sub-vertical
Independence faults to steeply east dipping open fractures within the semi-massive cherts with
substantial attendant fracturing, developing open spaces, porosity and permeability available for
fluid flow. The predominant metal-bearing minerals in the shallow mineralization are oxidation
products of the original sulfide minerals and include goethite, hematite, cerargerite, argentiferous
plumbojarosite, scorodite, very fine grained native gold and rare native silver and precious metal
bearing colloidal clays developed during oxidation of the sulfide mineralization.
Oxidation in the shallow Chert Hosted deposits is pervasive and ubiquitous to depths of 400 feet
below the surface. A mixed sulfide oxide zone extends for roughly 100 feet below this, and may
extend to more than 1000 feet along certain structures and fractures which permit the circulation
of oxygen laden meteoric waters.
Skarn Hosted Mineralization
Skarn hosted precious metal mineralization consists of discrete grains of gold ranging from 2 to 20
and rarely up to 220 microns deposited on micro-fractures and crystal faces of all prior mineral
species developed in brittle skarnified units of the Battle Mountain, Edna Mountain and Antler
Peak formations in the Roberts Mountain Allocthon. Here early development of skarn minerals
resulted in masses of hard brittle rocks which suffered wide spread brittle fracturing with
subsequent tectonic stress. A very late stage high temperature gold only mineralizing event
deposited microscopic grains of free gold on these micro fractures and on crystal faces and
resulted in wide spread potassic alteration consisting of fine grained potassic feldspar (Larson,
2005). Gold mineralization appears to be independent of earlier mineral species including
sulfides. Thin and polished sections do not indicate any encapsulating minerals which would
represent potential metallurgical or recovery issues.
Intrusive hosted Stock-work and Porphyry gold copper Mineralization
Stock-work and possible porphyry style mineralization occurs in the Eocene age Independence
Stock at the north end of the Independence property. On the Independence Property, quartz
stockwork mineralization occurs at the surface and in drill intercepts. In the Sunshine pit
contiguous with the north boundary of the property, porphyry style gold copper mineralization
was mined from the Independence stock.
1.2.3 Alteration
Chert Hosted Deposits
Alteration in the chert sequences within the shallow chert hosted mineralization at the
Independence is dominated by intense recrystallization of the thick bedded to semi massive cherts
to nearly structurless, amorphous masses of chalcedonic silica cut by hairline to 1 centimeter
finely crystalline quartz veinlets. Silica is often remobilized into open spaces as either crystalline
quartz ranging from drussy quartz to rare crystals to 3 inches on the C axis and as younger iron
rich, flinty, chalcedonic silica. Euhedral quartz is early and appears to predate precious metal
mineralization whereas the chalcedonic silica often fills and floods spaces around the earlier
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quartz crystals, and grades imperceptibly into gossanous iron oxides and semi-massive to massive
scorodite.
In proximity to mineralization, clastic sediments and intrusive dikes have been argillicaly altered
to white to ocherous masses of clays. Locally some intrusive dikes exhibit phyllic alteration with
the development of sericite.
Skarn Hosted Mineralization
Precious metal mineralization in skarnified sediments of the Roberts Mountain Allocthon is
associated with intense potassic alteration consisting of widely developed zones of fine grained
cream to tan colored potassic feldspars visible in both hand specimen, thin and polished sections.
Stock-work and Porphyry Mineralization
Alteration in the stock work and porphyry style mineralization typically consists of potassic to
phyllic alteration selvages surrounding precious metal bearing quartz veinlets.
Potassic alteration consisting of development of secondary biotite is associated with porphyry gold
copper mineralization in the Independence stock in the Sunshine pit.
1.3 Exploration and Mining History
Activity in the Copper Canyon (Battle Mountain) District began in 1866 with the discovery and
mining of high-grade silver veins. Gold was discovered in the area in 1912. High grade copper
ores from the Glory Hole mine were produced starting in the 1920s.
Mining in the district was sporadic throughout the early part of the twentieth century until Duval
Corporation, then a subsidiary of Royal Dutch Shell Minerals, commenced open pit mining of
copper in 1966. Duval Corporation changed its name to Battle Mountain Gold Corporation in
1981when discovery of large bulk minable gold ores at the Fortitude deposit (2.4M oz Au) shifted
primary production in the district from copper to gold.
The Independence Mine produced intermittently from 1938 through 1987. Production came from
several miles of underground workings developed along a 1,500 ft. strike length of the
Independence fault zone (Carrington, 1997). Reported historic production by the various
operators totaled 750,200 ounces silver and 11,029 ounces gold.
Early prospecting in the Independence area occurred during the late 1800s. The property
apparently then lay idle until local rancher Dudley Wilson is reported to have discovered the
surface outcrops of the present day ore zone in 1937 and begun sinking a shallow shaft on the
mineral showing. Past producers include Wilson (1938 1943), local miner Bonner Cole (1945?),
Agricola Minerals (1973), APCO Oil Corporation (1974 1975), Silver King Mines Inc. (1976
1981), United Mining (1981 1985), Harrison Mining (1985 1987).
Exploration drilling on the property was first conducted by Union Pacific Minerals Division of the
Union Pacific Railroad with two NQ diameter core holes (1973). Subsequent drilling campaigns
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were completed by APCO Oil Corporation (1974 1975), United Mining Corp. (1981 1985),
Noranda Exploration (1984 1987), Battle Mountain Gold Corp. (1988?), Lansdowne Minerals
Inc. (1993 1994), Teck Corporation (1995 1996), Great Basin Gold Corporation (1997), and
General Metals Corporation (2007 - 2011).
In 2004 Gold Range LLC, a private Nevada Limited Liability Company acquired an option to
lease the Independence Property from Independence Gold and Silver Mines Company and
subsequently acquired the leasehold interest. Later in 2004, Gold Range negotiated an agreement
with General Gold Corporation which resulted in Gold Range assigning its interests to General
Gold. General Gold was subsequently acquired by General Metals Corporation.
1.4 Drilling and Sampling
Table 1.1 below shows the drilling to date by company and type of drilling for the property.
Table 1.1 Independence Drilling Summary
Company Drilling Type Holes Footage
Union Pacific Minerals Core 2 ?? APCO Oil Corporation Core 2 ??
United Mining Air Track 24 4,075
Noranda Core 7 19,073
Battle Mountain Gold Reverse Circulation 22 10,835
Landsdowne Minerals Reverse Circulation 5 2,535
Teck Corporation Reverse Circulation 14 7,010
Great Basin Gold RC Pre-collar,2640 Core,3943 2 6,583
General Metals Corp. Tailings RC 36 600 General Metals Corp. Reverse Circulation 128 40,895 General Metals Corp HQ Core 3 1,074
Totals* 241 92,680
* Total only includes holes with known footage.
The sampling and quality control procedures used during the different campaigns were highly
variable depending on the operator, type of drilling and industry standard practices at the time the
drilling was carried out. The results from the drilling by Union Pacific, APCO, and United
Mining were not of sufficient quality to use for resource calculations under current standards and
guidelines; however they were used to help determine where mineralization occurs. The rest of
the drilling met or exceeded industry standard practices at the time the drilling was carried out.
General Metals is currently conducting exploration drilling on the project, as part of an ongoing
program begun in the second half of 2007, consisting of Reverse Circulation (RC) and HQ core
drilling on the property. The first phase of this program was completed in 2008 and consisted of
84 RC drill holes with a total footage of 28,000 feet. The second phase started in the fall of 2009
and was completed in the winter of 2010. The latest phase of this drilling was completed in April
of 2011 and consisted of three HQ core holes with a total footage of 1,074 feet. These holes were
drilled as twins to previously drilled RC holes. The core was geotechnically logged and cut in half
for assaying. Results are pending as of the date of this report. The core will be available for
future metallurgical test work. The second phase program consisted of 44 RC holes drilling a total
of 12,895 feet. As of the effective date of this report, General Metals had completed 41,969 feet
Technical Report for the Independence Gold & Silver Project, Lander County, Nevada USA General Metals Corporation
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of RC drilling in 131 drill holes. This drilling has outlined a zone of near surface gold and silver
mineralization with a strike length of more than 3,000 feet, a down dip extent of more than 400
feet, and ranging from 30 to more than 100 feet thick. The mineralized zone is open to the north
and down dip. General Metals believes this surface mineralization is rooted in the gold skarn
below the Golconda Thrust approximately 3,000 feet below the surface.
1.5 Metallurgical Testing
Available metallurgical data is limited to cyanide-soluble gold and silver analyses of 2,301 drill
samples, bottle roll test work on one surface sample and one sample collected from the
underground workings run at 10 mesh, inch, 1.0 inch, and 2.0 inches, and two column tests
performed on the surface sample at sizes of 80% passing 2 inch and 80 % passing 4 inch. The
column leach tests for the underground sample are in progress and results are pending. These data
suggest that the Independence mineralization is highly amenable to the extraction of gold and
silver by cyanidation.
Past ore production from the relatively shallow underground workings was processed either by
directly shipping the ore to a smelter or treated in a conventional counter-current decantation
(CCD) circuit cyanide mill with gold and silver recovered through a Merrill-Crowe circuit.
1.6 Mineral Resource Estimation
Mineral Resources at the Independence are currently developed in two distinct zones and deposit
types, the Independence Shallow and the Independence Deep. The Independence Shallow consists
of chert hosted epithermal mineralization in the Golconda Allocthon, while the Independence
Deep consists of gold mineralization in late stage fracturing in skarnified sediments of the Roberts
Mountains Allocthon.
1.6.1 Independence Shallow Resources
The Independence shallow deposit lies entirely within the Pumpernickel Formation of the
Golconda Allocthon. General Metals has identified four units within the Pumpernickel,
designated the C-1, C-2, C-3 and Slts. These consist of variably altered interbedded thin to thick
bedded cherts, cherty argillaceous sediments, and argillite.
Gold resources at Independence were modeled and estimated by evaluating the drill data
statistically, developing three-dimensional lithologic solids to help interpret mineral domains on
cross sections spaced at irregular intervals (average spacing of 100 feet within the main portion of
mineralization), creating three-dimensional solids of the mineral domain interpretations, analyzing
the modeled mineralization statistically to establish estimation parameters, and estimating gold
and silver grades by inverse-distance methods into a block model with 20 feet(width) x 20 feet
(length) x 20 feet (height) blocks that were previously coded to the correct mineral domains using
the three-dimensional solids. The three-dimensional mineral domain solids were defined to
control the resource estimation.
The main portion of the shallow mineralized body is roughly 3,800 ft. long plunging -3o at an
azimuth of 5o. Silver occurs along with gold but has a larger cross-sectional extent that envelops
Technical Report for the Independence Gold & Silver Project, Lander County, Nevada USA General Metals Corporation
April 29, 2011 Page 14
much of the gold mineralization and the grade distribution is different enough from that of gold
that an independent silver model was warranted.
Two block models were created, one for gold and one for silver. These were later combined for
reporting and for future economic studies. Fields stored in the block model include percent
topography, percent of each domain, grade for each domain, block- and zone-diluted grades,
resource classification, tons per block, distance to the nearest composite, number of composites
and holes used in each estimate, and rock type. All of the shallow mineralization lies within the
oxide zone. A three-dimensional solid of the underground workings, not including the production
stopes due to lack of survey information, was created and the volume and grade of this solid was
subtracted from the estimated resource.
Geostatistics were completed on the 20-foot down hole composites. The gold and silver grades
were estimated by two different methods, once by inverse distance and once using the nearest
neighbor method. Resource reporting uses the inverse distance grades while model checking
makes use of the nearest-neighbor results. Composites from each domain were only used to
estimate into blocks from the same domain.
The estimated Measured, Indicated, Measured and Indicated, and Inferred resources based on gold
equivalent cutoffs at Independence are given in Table 1.2. The resource has been tabulated based
on a calculated gold equivalent grade to fairly represent the shallow deposit in situ metal content
from the two overlapping metal distributions. The silver to gold ratio used is 35:1 or the
equivalent of an $1100 gold price and $31.00 silver price. No metallurgical recoveries were used
to modify the ratio. There is no guarantee that any or all of the resources will be converted to
reserves, but based on historic work and prior economic studies of similar deposits, a good portion
of the shallow resource should be converted to reserves.
1.6.2 Independence Skarn Hosted Resources
Skarn hosted gold mineralization occurs in three distinct geologic units below the Golconda
Thrust in the Roberts Mountains Allocthon and is related to the emplacement of Eocene age
granodorite stocks. Mineralization is best developed in the carbonate rich sediments of the Antler
Sequence including the Battle Conglomerate, the Antler Peak Limestone and the Edna Mountain
Limestone formations. Gold occurs as fine grains of native gold deposited on crystal faces and
fracture surfaces. Silver is almost entirely lacking from the deep skarn deposit.
Gold mineralization in the deep skarn has been encountered in drill holes over an area more than
1,400 feet wide and 3,400 feet long which occurs as sub horizontal blankets that have been locally
modified by post mineral faulting. The majority of the skarn target is roughly 2,800 to 2,900 feet
beneath the surface, except along the eastern margin of the property where faulting displaces the
receptive horizon to roughly 2,600 feet beneath the surface. The mineralized zones range from
five to twenty feet thick with typically shallow dips, rarely up to 30 degrees westerly and south
westerly.
The relatively good geologic continuity of the deep skarn deposit in conjunction with the limited
number of drill holes allows for only an inferred resource classification. No cutoff grade has been
applied to the deep skarn deposit as a three-dimensional solid was created to capture and constrain
Technical Report for the Independence Gold & Silver Project, Lander County, Nevada USA General Metals Corporation
April 29, 2011 Page 15
the mineralization. During the development of the solid, a grade cutoff of 0.100 Au opt was
generally used. Geostatistics were completed on the ten foot composites, which honored the solid.
The gold grade was estimated by inverse distance method. The inferred resource is shown in
Table 1.2.
This report includes only estimates for mineral resource. No mineral reserves are prepared or
reported in this Technical Report.
Table 1.2 Independence Gold and Silver Resources
Shallow Deposit
Measured Resources Cutoff Tons Grade Ounces Grade Ounces Grade Ounces
(oz AuEq/ton) (oz AuEq/ton) Gold Eq.* (oz Au/ton) Gold (oz Ag/ton) Silver
0.008 8,328,000 0.024 198,800 .015 128,200 0.296 2,466,900
Indicated Resources Cutoff Tons Grade Ounces Grade Ounces Grade Ounces
(oz AuEq/ton) (oz AuEq/ton) Gold Eq. (oz Au/ton) Gold (oz Ag/ton) Silver
0.008 7,728,000 0.017 132,800 .012 95,000 0.170 1,317,500
Measured & Indicated Resources Cutoff Tons Grade Ounces Grade Ounces Grade Ounces
(oz AuEq/ton) (oz AuEq/ton) Gold Eq. (oz Au/ton) Gold (oz Ag/ton) Silver
0.008 16,056,000 0.021 331,600 0.014 223,300 0.236 3,784,400
Inferred Resources Cutoff Tons Grade Ounces Grade Ounces Grade Ounces
(oz AuEq/ton) (oz AuEq/ton) Gold Eq. (oz Au/ton) Gold (oz Ag/ton) Silver
0.008 4,592,000 0.011 52,400 0.010 46,400 0.046 211,200
* Gold equivalent is based on $1100 per ounce gold and $31 per ounce silver. No metallurgical recoveries used.
Deep Skarn Deposit
Inferred Resources Tons Grade Ounces
(oz Au/ton) Gold
4,182,000 0.190 796,200
1.7 Interpretations and Conclusions
The authors, through their reviews, site visits, and compilations completed for this report,
concludes that the Independence project is a property of merit, and that the Independence deposit
has the potential to become an economic gold and silver development. The authors believe that
the data provided by General Metals are accurate and can be used to determine a reasonable
representation both economically and geologically of the Independence project.
This report presents the first NI 43-101compliant estimate of the gold and silver resources at
Independence. Due to the small land package for the project, there is limited, though real
potential, to expand the shallow resource. Continued exploration of the deep skarn deposit will
continue to expand and upgrade this deposit.
Technical Report for the Independence Gold & Silver Project, Lander County, Nevada USA General Metals Corporation
April 29, 2011 Page 16
1.8 Recommendations
A two-track program is recommended for the Independence project. For the first track of the
program it is recommended that GMC complete the 2011 core/RC drilling program. This will
include cutting and assaying the HQ core and drilling an additional 30 RC holes in the Sunshine
Extension area to expand the resource. This first track program would also include a check
assaying program for the 2009-2010 RC drilling. It is also recommended that a Preliminary
Economic Assessment (PEA) be conducted on the shallow Independence deposit once the
metallurgical test work for the underground sample is complete. If the PEA is positive, plans are
for completing a plan of operations for the project and submitting it to the BLM. The second
track, which is not contingent on the first track, is to complete a broader infill drilling program to
upgrade the resource and add additional confidence to the project. Estimated costs for the Track 1
program are described below in Table 1.3 as well as an exploration budget that is not contingent
on successful results from the first track program but is an independent program.
Table 1.3 Recommended Independence Work Program: Shallow Resource Development and
Exploration Drilling
First Track - Shallow Resource
RC Definition drilling $300,000
Core Cutting and Assaying $33,000
Complete Metallurgical Testing $32,000
Relog and Assay old Noranda Core $33,000
Preliminary Economic Assessment & Updated Technical Report $90,000
Check Assays from 2009-2010 RC drilling $10,000
Contingency (10%) $50,000
Total Track I $ 548,000
Second Track - Project Exploration
Near Surface Exploration $857,000
Deep Target Exploration $3,107,000
Contingency (20%) $793,000
Total Track II $ 4,757,000
Drilling costs include contractor costs, site preparation and reclamation, assaying, and geologic personnel.
Should the PEA show that placing the Independence deposit into production is economically
attractive, additional work towards placing the project into production should be undertaken. The
additional work would include programs consisting of follow-up definition drilling, infill core
drilling, additional metallurgical testing, a pre-feasibility study, and progressing with the
permitting process. As stated, this additional work is contingent on positive results from the first
track programs.
Technical Report for the Independence Gold & Silver Project, Lander County, Nevada USA General Metals Corporation
April 29, 2011 Page 17
2 INTRODUCTION
James Ashton, P.E., (qualified person) with assistance from Carrington Consultants and Samuel G.
Nunnemaker have prepared this technical report on the Independence project at the request of
General Metals Corporation (GMC). The information in this report is current as of May 31, 2011
unless otherwise noted.
General Metals Corporation holds a 100% control, lease hold interest in the Property subject to a
sliding scale royalty payable to Independence Gold Silver Mines Inc. This royalty is set at a
maximum of 5% Net Smelter Return (NSR) above $475 per ounce gold. The Company has the
exclusive right to buy out the underlying owners for $3,000,000 (US) during the first ten years of
the lease agreement, subject only to a 1.5% NSR royalty thereafter. Under the terms of the Gold
Range assignment Gold Range retained a further 1% NSR royalty on all mineral production from
the property.
The purpose of this report is to provide a technical summary of the Independence project for GMC
and to satisfy GMCs obligation to file a technical report to be made available to the public. The
technical report was written in compliance with disclosure and reporting requirements set forth in
the Canadian Securities Administrators National Instrument 43-101, Companion Policy 43-
101CP, as amended by the Canadian Securities Administrators on December 31, 2005, and Form
43-101F1. The resources for the Independence deposit were estimated during March through
April 2011 by J. Ashton, P.E.
The scope of this study included a review of pertinent technical reports and data in possession of
GMC relative to the general setting, geology, project history, exploration activities and results,
methodology, quality assurance, interpretations, resources metallurgy, land issues, and
environmental information.
The authors have relied on the data and information provided by GMC for the completion of this
report, including the supporting data for the estimate of the mineral resources. The information
reviewed by the authors in order to complete this report is the result of work by GMC and prior
operators on the Independence project; most of the conclusions made in this report are based on
the authors review of this work.
The authors have made such independent investigations as have been deemed necessary in the
professional judgment of the principal author to be able to reasonably rely upon the data presented
to the authors by GMC.
The authors mandate was to comment on substantive public or private documents and technical
information listed in Section 21. The mandate also required on-site inspections and preparation of
an independent technical report containing the authors observations, conclusions, and
recommendations. Each of the authors, James Ashton (qualified person) and Samuel G.
Nunnemaker, has visited the property. Mr. Nunnemaker has visited the property multiple times
during the past 12 months. Mr. Ashton visited the property on May 2, 2009 at which time he
collected samples to be tested for specific gravity and again visited the property on March 10,
2011 to witness the first of three HQ core holes being drilled to twin RC drill holes and collect
geotechnical data. These visits included: (1) field reviews of ongoing reverse-circulation and core
Technical Report for the Independence Gold & Silver Project, Lander County, Nevada USA General Metals Corporation
April 29, 2011 Page 18
drilling programs; (2) inspections of typical Independence mineralization exposed in the
underground workings; (3) review of outcrops that host mineralization in the subsurface; and (4)
independent sampling of exposures in the underground workings.
Currency, units of measure, and conversion factors used in this report include:
Linear Measure
1 inch = 2.54 centimeters
1 foot = 0.3048 meter
1 yard = 0.9144 meter
1 mile = 1.6094 kilometers
Area Measure
1 acre = 0.4047 hectare
1 square mile = 640 acres = 259 hectares
Capacity Measure (liquid)
1 US gallon = 4 quarts = 3.785 liter
Weight
1 short ton = 2000 pounds = 0.907 tonne
1 pound = 16 oz = 0.454 kg = 14.5833 troy ounces
Analytical Values grams per troy ounces per
percent metric tonne short ton
1% 1% 10,000 291.667
1 gm/tonne 0.0001% 1 0.0291667
1 oz troy/short ton 0.003429% 34.2857 1
10 ppb 0.00029
100 ppm 2.917
Currency
All references to dollars ($) in this report refer to currency of the United States.
Technical Report for the Independence Gold & Silver Project, Lander County, Nevada USA General Metals Corporation
April 29, 2011 Page 19
Frequently used acronyms and abbreviations
AA atomic absorption spectrometry
Ag silver
Au gold
BLM U.S. Department of the Interior, Bureau of Land Management
CIM Canadian Institute of Mining, Metallurgical, and Petroleum
cc cubic centimeter
F degrees Fahrenheit
ft. foot or feet
GMC General Metals Corporation
g gram
g/cc grams per cubic centimeter
g/t grams per metric tonne
ha hectare
in inch
Ma Millions of years before present
mi miles
Newmont Newmont Mining Corporation
NSR net smelter return
oz troy ounce
oz Ag/ton troy ounces silver per short ton (oz/ton)
oz Au/t on troy ounces gold per short ton (oz/ton)
oz AuEq/ton troy ounces gold equivalent/ton
RC reverse circulation drilling method
t metric tonne
ton short ton
tpd tons per day
Geological Terminology
Allocthon rocks above a thrust fault commonly referred to as the upper plate.
Autocthon rocks below a thrust fault commonly referred to as the lower plate.
Dike tabular body of intrusive rock, normally with steep orientation
Formation A distinct package of sedimentary or volcanic rocks which contain
certain
identifiable characteristics which serve to identify that suite.
Sequence Large package of rocks which may have variable characteristics and
multiple formations, but which generally part of a normal geological
progression
Sill tabular body of intrusive with sub-horizontal to low angle
orientation
Stock Smallish body of intrusive rocks from which sills and dikes may
emanate
Skarn Thermally metamorphosed rocks where there has typically been
extensive development of calc-silicate minerals which are usually
more brittle than un-altered sedimentary rocks.
Technical Report for the Independence Gold & Silver Project, Lander County, Nevada USA General Metals Corporation
April 29, 2011 Page 20
3 RELIANCE ON OTHER EXPERTS
The authors have relied almost entirely on data and information provided by GMC some of which
was obtained or derived from prior operators of the Independence project. Much of the historic
descriptions and chronology made in this report are based on the work of these previous operators.
The authors have reviewed the available data and visited the project site and believe that the data
presented by GMC are accurate representations of the project.
This report contains information relating to mineral titles, environmental matters, permitting,
regulatory matters, and legal agreements. While the authors are generally knowledgeable
concerning these issues in the context of the mineral industry, the authors do not qualify as legal
or regulatory experts. The information in the report concerning these matters is presented as
required by Form 43-101F1 but is not a professional opinion. Readers requiring assurance on
these topics should consult qualified experts.
GMC has provided copies of legal documentation regarding agreements with Gold Range and
Independence Gold Silver Mines Inc. for the unpatented mining claims covering the
Independence project and documents covering the purchase agreement for the fee surface lands,
although the authors are not qualified experts for assessing the legal documents regarding title and
the validity of mining claims. GMC has presented evidence of its due diligence review of the
claims and commissioned independent title and mineral status report by Erwin & Thompson LLP
that document the existing royalty burdens and discuss the title status of the unpatented mining
claims and fee lands. The authors are relying on the conclusions of the mineral status report as to
the title of the project properties. The documentation provided by GMC and the independent title
report are referenced or included in this report.
GMC has provided copies of documentation with regard to environmental conditions, permits and
their status for the Independence project. The authors are not qualified experts with respect to
these issues in Nevada or elsewhere, and consequently the firm of Dyer Engineering Consultants,
Inc. of Reno, Nevada was contracted to conduct a review of the documentation and permitting
requirements for a new mine in Nevada and initiate the permitting process.
Technical Report for the Independence Gold & Silver Project, Lander County, Nevada USA General Metals Corporation
April 29, 2011 Page 21
4 PROPERTY DESCRIPTION AND LOCATION
4.1 Location The Independence Property is located in Sections 28, 29, 32, and 33, Township 31 North, Range
43 East, MDBM, Lander County, Nevada. The property is centered at N40o 31 30.672 Latitude
and W117o 08 45.014 Longitude due south of, and adjacent to Newmonts Phoenix Project and
approximately 14 miles south of Battle Mountain, Nevada. The location of the Independence
project is shown in Figure 4.1.
4.2 Land Area
The Independence Property covers approximately 238 acres and consists of 14 full and fractional,
unpatented lode mining claims situated in Sections 28, 29, 32, and 33, Township 31 North, Range
43 East, MDBM, Lander County, Nevada, as identified in Table 4.1 below. The mineral property
is situated entirely on BLM administered lands in the Battle Mountain Mining District, Lander
County, Nevada. GMC has purchased an additional 480 acres of private fee surface land
exclusive of mineral rights and consisting of the W1/2 and the NE1/4 of section 17, Township 30
North, Range 43 East, MDBM, Lander County, Nevada. The property land map is shown in
Figure 4.2.
Table 4.1 Independence Project Land Holdings
Claim Name
BLM
Serial
Number
Year
Located
Independence 66957 1937
Independence No.1 66958 1937
Independence No.2 66959 1938
Independence No.3 66960 1938
Independence No.4 66961 1939
Independence No.5 66962 1939
North Independence No. 1 66964 1972
North Independence No.2 66965 1972
North Independence
Fraction 66963 1972
Old Glory 105694 1969
DC 80 105695 1965
DC 81 105696 1965
DC 82 105697 1965
DC 83 105698 1969
The annual holding costs are $38,555. The holding costs consist of payments of the annual fee to
the United States Bureau of Land Management, county claim recording fees, taxes to Lander
County, and annual lease payments.
Technical Report for the Independence Gold & Silver Project, Lander County, Nevada USA General Metals Corporation
April 29, 2011 Page 22
Figure 4.1Location Map
Technical Report for the Independence Gold & Silver Project, Lander County, Nevada USA General Metals Corporation
April 29, 2011 Page 23
Figure 4.2 Land Map
LAND MAP
INDEPENDENCE PROJECTGeneral Metals Corporation
Telephone (775) 583-4636www.generalmetalscorporation.com
Reno, Nevada 89511
(STATE PLANE NAD83 NEVADA CENTRAL)
(Minus 1,500,000 from Easting, Minus 21,000,000 from Northing)
FeeLand
IndependenceResourceArea
SECTION32
SECTION33
SECTION34
SECTION30
SECTION29
SECTION28
SECTION27
SECTION19
SECTION20
SECTION21
SECTION22
SECTION19
SECTION20
SECTION21
SECTION22
No
rth
In
de
pe
nd
en
ce N
o.1
No
rth
In
de
pe
nd
en
ce N
o.2
Ind
ep
en
de
nce
No.3
Ind
ep
en
de
nce
No.2
Independence N
o.4
N.
Inde
pe
nd
en
ce F
rac.
Ind
ep
en
de
nce
No.5
Ind
ep
en
dence
Ind
ep
en
de
nce
No.4
Old Glo
ry
DC
-83
DC
-82
DC
-81
DC
-80
T30N
R4
3E
T31N
5550
5600
5650
5750
5850
5900
5950
6000
6050
6100
6150
6200
5550
5150
5200
5250
5300
5350
SECTION18
SECTION17
4650
4700
4700
4700
SECTION16
SECTION15
SECTION7
SECTION8
SECTION9
SECTION10
SECTION6
SECTION5
SECTION4
SECTION3
SECTION31
Technical Report for the Independence Gold & Silver Project, Lander County, Nevada USA General Metals Corporation
April 29, 2011 Page 24
4.3 Agreements and Encumbrances
The authors are not experts for assessing the legal validity of claims in the United States; the
authors have relied on the conclusions of Erwin & Thompson LLP as to the title of the
Independence property. The authors have also relied on GMC to provide full information
concerning all corporate relationships and other corporate dealings, current legal title, and
environmental permitting pertaining to the Independence property.
The unpatented claims expire automatically on September 1 of each year unless the maintenance
fees have been paid to the Bureau of Land Management. Taxes on the private land holding are to
be paid to Lander County by September 30 of every year, but they can be paid late along with the
required penalty without losing title. The title to the real property is valid as long as the taxes are
paid.
The property owner is Independence Silver and Gold Mines Incorporated of Seattle, Washington.
Gold Range Company LLC, a Nevada corporation, acquired the Independence Mining Lease and
Option Agreement (Agreement) from Independence Gold and Silver Mines Inc. on July 6th
, 2005.
General Gold, Inc., then a private US corporation domiciled in Nevada, acquired a 100% control
leasehold interest in the Independence Property by means of an assignment from Gold Range
dated April 29th
, 2005. Gold Range Company retained a 1% NSR royalty on future production
from the Property. On January 25, 2006, General Metals Corporation acquired all of the
outstanding and issued shares of General Gold, Inc. by means of a share exchange. General
Metals now holds a 100% leasehold control interest in the Independence Property through its
100% ownership of General Gold, Inc., subject to the above royalties. Under the terms of the
assignment General Gold and General Metals assumed all of the rights and obligations set forth in
the Lease and Option Agreement between Gold Range LLC and Independence Silver and Gold
Mines Inc.
The term of the Mining Lease, formally executed on July 6, 2005, with its initial twenty-year term
to begin on October 1, 2005 and ending at midnight on September 30, 2025 unless General Metals
elects to extend the Lease which may be done in additional one year increments as long a General
Metals is active on the property.
Under the Agreement General Metals is obligated to pay Independence Gold and Silver Mines Inc.
the following sums on the prescribed dates. GMC used stock instead of cash for the payment
made on February 1, 2010 and a portion of the payment made on February 1, 2011(stock worth
$25,000).
Date Amount
October 1, 2005 $10,000
October 1, 2006 $15,000
February 1, 2007, 2008, 2009, 2010 $17,500
October 1, 2007, 2008, 2009, 2010 $17,500
February 1, 2011 $52,500
October 1, 2011 $52,500
Technical Report for the Independence Gold & Silver Project, Lander County, Nevada USA General Metals Corporation
April 29, 2011 Page 25
Minimum Advance Royalty payments due from October 1, 2012 through February 1, 2018 shall
be $52,500.00 increased by the greater of 25% or the percentage increase in the producer price
index for the six (6) calendar years ending December 31, 2011, the base index date being
December 31, 2005. Minimum advance royalty payments due from October 1, 2018 through
February 1, 2025 shall be the February 1, 2018 payment, increased by the greater of 25% or the
percentage increase in the producer price index for the six calendar years ending December 31,
2017, the base index being December 31, 2011. All cumulative Minimum Advance Royalty
payments paid by General Metals to Independence Gold and Silver Mines Inc. under the
Agreement will be credited against any Production Royalty due Lessor.
General Metals is also obligated to conduct certain amounts of work with a minimum value as
specified below.
Prior to September 30, 2010, General Metals must expend not less than Six Hundred Twenty Five
Thousand Dollars ($625,000.00) per the schedule set forth below (net after any administrative,
overhead or other indirect costs) towards the exploration, development and commercial production
of ores, minerals or materials as follows:
Before September 30, 2006 $50,000
Before September 30, 2007 $75,000
Before September 30, 2008 $125,000
Before September 30, 2009 $175,000
Before September 30, 2010 $200,000
As of April 30, 2011 GMC has spent a total of $2,861,936 on the project. GMC has met the
obligated work expenditures as specified above.
General Metals is also obligated to pay a production royalty equal to 3% of the Net Smelter
Returns (NSR) on all ores or minerals produced other than gold or silver. General Metals must
pay a Production Royalty percentage rate for the sale of all gold, silver or platinum contained in
leased substances from the claims. The production royalty will be based upon the average daily
price of gold on the London Metal Exchange ("LME") for the twenty (20) trading days
immediately preceding the date of sale of such leased substances:
Gold Price per Troy Ounce Royalty Rate
less than $375 3%
greater than $375, but less than $475 4%
$475 or more 5%
Technical Report for the Independence Gold & Silver Project, Lander County, Nevada USA General Metals Corporation
April 29, 2011 Page 26
The Agreement contains a provision that in the event of the imposition of the payment of any new
royalty on production from the mining claims, the NSR may be reduced by the amount of the new
royalty to a minimum rate equal to 2.5% of the NSR.
During the initial ten years of the Agreement, General Metals has the exclusive option to purchase
all of the right, title and interest of Independence Gold and Silver Mines Inc. for the sum of
$3,000,000 (US). All Production Royalty payments will apply toward the purchase price but any
non-recouped Advance Minimum Royalty payments will not be applied to the purchase price.
Independence Gold and Silver Mines Inc. will then have a residual royalty of 1.5% of the NSR.
Independence Gold and Silver Mines Inc. has entered into a Temporary Easement and Right of
Way for the Pioneer Haul Road with Newmont Mining Corporation for access to the Sunshine Pit.
This easement, which predates the General Metals Lease and Option Agreement, crosses the
northwest corner of the property and does not impact any known mineralization.
There are no back-in rights, agreements or other encumbrances of which the authors are aware.
4.4 Property Boundary and Improvements
The property Boundary is established by wooden 4 X 4 inch posts set in stone mounds. The
authors visited random posts and found 4 X 4 wooden posts marked with scribed metal tags
present. In most cases the wooden post was laying on the ground adjacent to the original stone
mound. In Nevada there is no requirement that posts be maintained after the claims are originally
staked. The Company has since undertaken a survey of the property and the boundary markers.
Claim Stakers Inc. conducted the survey of the property and has presented the results of this
survey to GMC.
Existing improvements on the property include the Independence Mill Complex, Independence
underground mine complex and related waste dumps and tailings ponds. All of these
improvements are situated within the limits of the Independence property. The lower tailings dam
for the historic lower Independence tailings impoundment encroaches upon the common property
line between the property and adjacent property of Newmont Gold.
4.5 Environmental Liabilities Potential environmental liabilities associated to the project deal with historical mining and milling
operations exists in the form of the mill, associated buildings, the tailings, and tailings ponds. The
disposition of these historical environmental liabilities will likely be raised during the permitting
process. The benign debris can be incorporated with waste rock disposal and the tailings can be
possibly incorporated with the leachable material and placed on an approved lined containment
system at little added expense. A new mine with an approved operating plan and reclamation
permit will result in a reclaimed area that is environmentally clean and ready for post mining use
once mining is complete. Figure 4.3 shows the existing site facilities, historic disturbance and area
containing the known mineral resource.
Technical Report for the Independence Gold & Silver Project, Lander County, Nevada USA General Metals Corporation
April 29, 2011 Page 27
Figure 4.3 Existing Facilities & Disturbance Map
Technical Report for the Independence Gold & Silver Project, Lander County, Nevada USA General Metals Corporation
April 29, 2011 Page 28
4.6 Permits and Environmental Studies Presently all exploration and development work is being conducted under two Notice of Intents
(NOI or Notice) required under Surface Management Regulations 3809 and filed with the BLM as
Notice NVN-081431(07-1A), which covers the southern portion of the project and NVN-087957,
which pertains to the northern portion of the project area. Notice level exploration operations are
limited to five (5) acres of disturbance. Current permitted disturbance for each Notice is 4.13
acres (NVN-081431(07-1A) and 4.90 acres (NVN-087957). A reclamation bond is attached to
each Notice in the amount of $15,160 for NVN-081431(07-1A) and $16,900 for NVN-087957.
As exploration activities expand it will likely become necessary for the Company to advance its
existing Notices to a Plan of Operations (POO). The Company has begun initial work required for
establishing such a POO which will allow expanded exploration/development work on the project. The Independence mine operated as an underground mine with an onsite cyanide, counter current decantation mill almost continuously from 1973 to 1987. The mine production was an estimated 65,000 tons containing 11,000 gold ounces. The mine never acquired operating permits during its active operation and no other permits, other than the Notice level exploration permits, have been acquired since the secession of mining. Background studies and threatened and endangered species studies done as part of the environmental review process have removed many of the unknowns from the project with respect to potential environmental problems. Presently, none of the required permits are in place which will be needed for the development,
construction, and operation of the property. GMC has engaged the services of Dyer Engineering
Consultants, Inc. (DEC) of Reno, Nevada to facilitate the application and permitting process.
Future permitting may be aided by the extensive environmental studies that have been completed
on the adjacent large operating open pit mine and that the project area has already been exposed to
extensive surface disturbance associated with past production. DEC is currently working on the
Water Pollution Control Permit and Reclamation permit for the Nevada Division of
Environmental Protection (NDEP) and the Plan of Operations for the BLM.
Utilizing the services of DEC, GMC has applied for two water permits to obtain water from
underground sources for mining and milling operations. One permit (# 77922), for 1.34 cubic feet
per second or 970 acre-feet per year has been granted by the Nevada, Division of Water resources
(NDWR) and fees paid. DEC indicates that this permit would be sufficient for a small, maximum
2,400 gpm process plant and heap leach operation. The second water permit application for a 900
gpm well in Section 17, Township 30 North, Range 43 East, MDBM is pending with NDWR.
Three environmental studies have been completed for the project. These include two bat surveys
and a mine baseline biological study. The bat surveys included a cold season study (February,
2009) and a warm season study (July, 2009) completed by JBR consultants. The cold season
survey found no hibernating bats in the historic underground workings. The warm season survey
found no bats in the underground workings. JBR concluded the Independence underground
workings receive only limited bat use during the majority of the year. The biological baseline
study completed by Great Basin Ecology, Inc. (GBE) found the project site to contain no sensitive
or unique issues which may slow the permitting process.
Technical Report for the Independence Gold & Silver Project, Lander County, Nevada USA General Metals Corporation
April 29, 2011 Page 29
5 ACCESS, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE, PHYSIOGRAPHY
5.1 Access
The property is locally accessed via all-weather paved and gravel roads from the town of Battle
Mountain, Nevada. To access the property travel south from Battle Mountain on State Highway
305 approximately 13 miles to the turnoff of the Buffalo Valley road, thence south on the Buffalo
Valley Road 4 miles to the Willow Creek Reservoir Road, thence northerly on the Willow Creek
Reservoir Road approximately 3 miles past Newmonts Phoenix project to the mine site and onto
the Property after crossing the Sunshine haul road.
Regional access from larger population centers at Elko, Winnemucca and Reno Nevada is via
Interstate 80 to Battle Mountain.
5.2 Climate The climate of the property is typical of the high deserts found in the northern Great Basin, with
cool, mild winters and warm dry summers. Maximum summer temperatures occur in July and
August rarely exceeding 95oF and with winter lows usually occurring during the months of
December and January. Freezing conditions sufficient to result in operational problems for
milling or heap leaching may occur from late November through mid-February. The region is
sunny enjoying more than 265 day of sun per year.
Precipitation is light with total average annual precipitation of 7.5 inches. Precipitation occurs
mostly as snow during the winter and spring months from December through June. Heaviest
precipitation occurs during April, May and June, with the lightest precipitation falling in July and
August. The region has an annual evaporative deficit exceeding 200 inches per year. The
evaporative potential exceeds two inches per day during the warm dry months of July and August
and may be aggravated by windy conditions during this time. The following data is from the
World Climate web site at www.worldclimate.com
Average Max. Temperature, Battle Mountain, Nevada
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
C 5.1 8.9 12.6 17.3 22.7 28.4 34 32.7 27.2 20.4 11.2 5.4 18.8
F 41.2 48 54.7 63.1 72.9 83.1 93.2 90.9 81 68.7 52.2 41.7 65.8
Average Min. Temperature, Battle Mountain Nevada
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
C -8.8 -5.6 -3.5 -1.1 3.4 7.6 10.7 9.3 4.2 -1 -4.7 -8.8 0.1
F 16.2 21.9 25.7 30 38.1 45.7 51.3 48.7 39.6 30.2 23.5 16.2 32.2
Average Monthly Precipitation, Battle Mountain Nevada
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year
Mm 16 14.1 16.5 19.8 23.6 19.5 8.3 7.4 13.2 16.5 17.1 18.1 191.2
Inches 0.6 0.6 0.6 0.8 0.9 0.8 0.3 0.3 0.5 0.6 0.7 0.7 7.5
http://www.worldclimate.com/
Technical Report for the Independence Gold & Silver Project, Lander County, Nevada USA General Metals Corporation
April 29, 2011 Page 30
The operating season is year round and is generally unaffected or only slightly affected by
extremes in temperature. Precipitation generally does not affect operating conditions.
5.3 Local Resources and Infrastructure
The nearest population center is the town of Battle Mountain with a population of approximately
6,000 located approximately 15 miles north of the property along Interstate 80. The property is
easily accessed by car over all-weather county maintained roads from Battle Mountain.
Other larger population centers accessible by car from the property are Elko and Winnemucca,
Nevada, with populations of approximately 18,500 and 7,600 respectively. Elko is located 70
miles east of the property on Interstate 80 and Winnemucca is located 55 miles west of the
property on Interstate 80. Reno, Nevada, the largest population center in northern Nevada is
situated approximately 218 miles southwest of the property along Interstate 80. .
A small regional airport provides air access via private or chartered flights. There is no
commercial air service to Battle Mountain.
Commercial power currently services the adjacent Phoenix mine operated by Newmont Gold, Inc.
It is believed that the commercial power could be extended to the property with minimal problem.
A right of way would be necessary from BLM and Newmont Gold, Inc. to extend the power lines.
5.4 Physiography and Vegetation
The property lies in an area of gently rolling hills and subdued topography on the west side of
Pumpernickel Ridg