EXECUTIVE SUMMARY OF THE MOORE REPORT for a quick overview of his 87 page Technical Report which you should read in its entirety.
I think Investors need time to read the 87 page report provided to Sugo by Independent Geologist, Randall Moore, which contains quite a lot to think about. In general terms, Moore says:
"Conglomerate Mesa hosts multiple large-scale hydrothermal gold-silver systems that are similar in style, geology, and geochemistry to the highly productive Carlin-type systems of northern Nevada (P.1)..."Carlin-type systems commonly contain multi-million ounce gold deposits as seen in Northern Nevada." (P. 25).... "The Conglomerate Mesa is a remarkable property that is a clone of a Carlin-type system." (P.56) "The drilling programs were successful in verifying the presence of ore grade gold mineralization on the Conglomerate Mesa project in numerous areas over a very large area....It is remarkable that most of the holes that have been drilled on the property intersected significant gold mineralization.These types of results are seldom found in such a high percentage of holes and over such an extensive area at the beginning of exploration programs." (P. 51) ...Work by previous companies was successful in defining 12 gold targets, most of which have drill holes containing significant gold intervals." (P.1) It lies in the Inyo Mountains near other known metal deposits, including the Cerro Gordo mine, the Santa Rosa mine, and the Belmont and Newsboy mines, but the gold is described as "newly discovered..by Newmont." (P. 10) He also discusses that there is access to the CM by 4 wheeled vehicles (P.8), and that it is "easily accessible from Lone Pine, which is capable of supplying most of the labor, equipment, or service requirements for conducting exploration or mine-related activities.
Moore also verified that Sugo had paid its lease fees through 8/1/2010 and the next installment would be due 8/1/2011 (which the Sugo PR says has been handled by bridge financing they have arranged).
Moore says, "Conglomerate Mesa has the potential to host multiple, large gold deposits, which is why it has been the focus of attention from major mining companies." (P.39)The prior work that Moore reports, based on " an extensive amount of data through geologic mapping, geophysical surveys, rock chip, soil and stream sediment sampling and drilling" (P.32) was conducted by the following companies in different areas of the CM:
1). Mobil's metal exploration group in 1984
2). Asamera in 1985
3). Newmont Exploration Ltd in 1989 thru 1993
4). BHP Minerals in 1995 thru 1997 and,
5). Timberline Resources in 2006 thru 2008
Moore says that all the aforesaid companies verified the existence of Gold mineralization and I believe that if you read his report, you will have no doubt that there are substantial gold anomolies. If you understand how to read "Gold in opt" [opt = Ounces per ton"] data, you will find a rich set of data in drill charts. Some of these values are very good. See P. 41-43, 46-48. In addition, Moore describes and charts a very large "gold-in-soil anomaly" and, in addition to the strong findings of gold from drilling and rock chip samples, he says there is gold all over the place and "it is clear that the property remains essentially untested by drilling outside of a few limited areas." See Figure 10. (P. 34) There also is silver on the property. See Fig 14. (P.38)
There also are other mineral findings regarding Zinc, Silver, Cooper and Lead. See eg, P.49-51. Moore comments that, "In addition to the numerous gold targets it is important to keep in mind both the porphyry copper and the replacement targets are a high priority for exploration activities. (P.52)
Moore discusses problems and deficiencies with the data but says, "It is reasonable to assume that these companies conducted their work in a professional manner and that the work was done in a way that met professional standards." (P. 27) He also says, "In general the BHP data is well organized and incorporates all of the Newmont work." (P. 27) And he says, "There is complete data for drilling results for both the BHP and Newmont data and all that information has been reviewed and the reported intercepts confirmed." (P. 38)
OF GREAT IMPORTANCE TO ME, Moore says he checked the mineralization findings, "All data have been reviewed to the extent possible, and verified by the Author...This combination of various analytical checks and field verification ensures proper data integrity...Fourteen samples were collected in order to provide a check and to verify mineralization reported in the historical reports." See Moore's own data. P. 53-54. READ THIS STATEMENT FROM MOORE: "The results confirm the presence of gold, silver, copper, lead, and zinc mineralization and in therelative value ranges that have been reported by the historical documents." (p. 55) See Moore's personal conclusions on P.55-
However, there are some technical problems and issues with the data for reporting to the authorities, as "All of the reported results from Asamera, Mobil, Newmont ,and BHP were generated prior to 43-101 requirements" (P52), thus he says that "most of this data will need to be regenerated to provide optimum usefulness in analysing controls on mineralization and the prioritization (sic)of targets." (P. 32)
Moore discusses the drilling results and findings of each of the prior companies, saying that Mobil's team identified some of the the important geology and some specific drill targets, while Asamera continued Mobil's work by completing extensive surface sampling and numerous drill holes showing "significant gold mineralization."
Newmont worked in a different area and drilled 22 more holes "that established an estimated resource (non 43-101 compliant) of 2.9 million tons grading 0.059 opt Au (2.02 gpt Au), or approximately 175,000 ounces gold" (P.2) The report contains a useful diagram of Newmont's findings that you ought to look at on P. 69. Keep in mind that, during this period the CM was designated a Wilderness Study Area and the price of Gold ranged between $300 and $410/oz. Moore says, "Newmont dropped their claims in 1993 while the WSA was still in effect." (P.11)
The most important work was done by BHP Minerals. They are the ones that reportedly "lead to the recognition of a much larger
hydrothermal and mineralized system then had been identified by Newmont. They believed the area could host bulk mineable gold deposits in excess of 2,000,000 ounces (as stated in an intercompany report) and designated Conglomerate Mesa as one of the company’s premier exploration properties." During this period, the Wilderness Study Area designations were dropped and the CM mostly "reverted to multiple use status".
Moore says that BHP identified eight targets that "exhibited extraordinrily good surface rock chip geochemistry" (P.2) Additionally, in 1997, BHP drilled 10 "widely spaced holes" that disclosed "significant gold mineralization" in all of them disclosing a "resource area" that was 8,060 feet long.
Moore then says, BHP subsequently dropped the property prior to drill testing all of their target areas as they made a corporate decision to terminate all gold exploration programs. It merits attention that the price of gold fell from a high of just over $410 in 1996 to a low under $290/oz in 1997, the year that BHP dropped its gold mining operations. It is not hard to see why BHP abandoned the property; but, with gold now almost 5x the price it was then, and worldwide mining recovery of gold having fallen to less than the annual usage, the economics certainly have changed!!
Timberline Resources, a much smaller company, with two projects at the time, abandoned the CM project in favor of a less expensive one when, in about 2008, when environmental groups opposed their proposed 7 drill hole plan and, says Moore, "the underlying claim owners would not postpone payments pending approval" of the drill program. Timberline could not afford the costs or risks. During that time, Gold was advancing from $600/oz and passed $1000/oz briefly in 2008, so you need to do some investigation of Timberline to see why it chose to use its limited resources elsewhere. What struck me is that Timberline did not see CM as low hanging fruit that would be easy to get at for low prices. It is not clear if they had all the information that Moore has compiled from the prior work or how they would choose now that gold is nearing $1400 again. More says, events surrounding land uncertainty with the wilderness designation have kept this property from being explored on any more than a cursory basis." (P.39)
Moore makes it clear that the purpose of his report is to offer an independent view on the "technical merits of the project and the appropriate manner of conducting continuing exploration." (P.4)
In compiling his report primarily from the work of the above listed companies, Moore says he did visit the property for 3 days in 2009 and for 2 days in 2011 "to review the surface sampling, mapping, and drilling programs completed by prior companies on the Property, to directly examine the geological units, style of mineralization, and to conduct limited independent sampling. This information was utilized in compiling this report." However, Sugo has not done any drilling or significant exploratory work yet and Moore mostly relys on other "experts".
I would call your attention to a chart on P. 45 that shows a drawing of the gold mineralization and mining Target zones based on the Newmont and BHP drill and rock chip data showing gold concentrations in PPB, in a very helpful and clear manner. You can also look at the map of well defined drill targets that Moore prepared. (P.29)
Some final thoughts from Moore, "Conglomerate Mesa is a quality prospect that should be drilled on a grid system and several
+2000 foot drill holes should be placed in strategic locations based on geology, geochemistry and geophysics. If this prospect was in Nevada, it would have hundreds of drill holes, as properties of this quality are difficult to find." P. 56
Also provided are his recommendations (P.57) and his proposed plan for development of the property with a detailed budget of $5.5 MM. (See P. 58-60)
