2) Musgrove Creek Gold Project - Idaho, USA - 100% Owned
Low cost, open-pit gold mine potential - JNY.V aims to sizeably increase resources
Figure 1. Drilling at Musgrove Creek JNY.V owns its own drill; a two year old hydacore 2000 drill.
Journey Resources' flagship project, Musgrove Creek, is located in the state of Idaho near Salmon Idaho, ~12miles away from Meridian Gold's Beartrack Mine which operated between 1995 and 2001 (Beartrack produced ~650Koz gold at an average grade of 1g/t, was a large open-pit heap leach operation and it was reported their average costs were between $US190-200/oz.). The Musgrove Creek deposit is very similar to the Beartrack deposit – it is similar in grade, in metallurgy, and in stripping ratio. Journey Resources has a 43-101 report which shows 8 million tonnes at 1.22 g/t Au at 0.8 g/t cut off for 313,822oz Au. That report was done using ~$300 gold. Using what Meridian Gold mined at 1 g/t JNY.V should have over 423Koz gold. Mining MarketWatch Journal thru its research projects a near term achievable resource estimate of 1M ounces gold. Management of Journey Resources contacted by Mining MarketWatch were able to confirm we were not out of line in our expectations. President & CEO of Journey Resources, Jack Bal, had the following synopsis: "I believe Musgrove Creek has the potential to be a 1M ounce target ... with some additional drilling and the fact we have lots of holes that were never offset that aren’t included in our resource calculation." Past operators have provided reams of information for JNY.V to build on and a review of past drill holes show this is not a spotty resource, it has good depth to it.
History: Musgrove Creek was originally drilled by Newmont between 1990 and 1994. They had optioned this and many other projects from Atlas Gold and then due to the proximity of this to Meridian Gold's project 12 miles away Newmont optioned the property to Meridian Gold and Meridian did a major drill program as well. Due to market conditions and the requirement of their first gold mine at Beartrack Meridian let it revert back to the original land owner. At that time this area was hotly staked; Newmont, Meridian, Home Stake, Atlas, and many other companies were in the area -- what Journey Resources have been able to do over the last four years is create a good sized land package that previously belonged to some of the majors, JNY.V has a good land package and is negotiating on acquiring the original patent claims that has a high grade underground mine that was operated between ~1900 – 1910. They mined high grade quartz veins between half an ounce and one ounce gold per tonne – which is probably the feeder system for Journey Resources claims.
100% Ownership: JNY.V has a 100% lease interest in some of the claims and a 100% interest in the claims that they staked themselves. The lease is a 10 year lease with two additional 10 year options to renew, and currently their advance royalty payment is $40K per year, there is a 2% NSR on the lease interest parts of the project. The leased claims are owned by the geologist that originally discovered the deposit, Ray Robinson. The Johny NW area that JNY.V made a major discovery on ~two years ago is entirely on claims that JNY.V control. The Johnys Point resource area is mainly on the Robinson claims. JNY.V has targets on land the Company staked themselves that go all the way up the property as well.
NEW DISCOVERY at Johny northwest target: Drill results from the Johny northwest target released on February 18, 2010 PM (See release entitled “Preliminary Results from the 2009 Drilling of the Musgrove Creek Gold Project”) show Journey has a newly discovered zone with values being the highest intercepts that they have had on the deposit so far. The new discovery is ~200m northwest of Journey’s current main area where they have their resource and the grades in this newly discovered zone are much higher. Journey had two previous holes (one in 2004, and one in 2006) that intersected some high grade near this new discovery, so Journey had a snip of what was suspected to be there. The new drill results (just released) are based on 10 holes drilled right in that target area -- eight out of the ten holes hit on target and the best hole, which had three zones of mineralization, ended in mineralization at 250 feet and obviously goes deeper. This translates into very good news for investors as these results will add to the overall tonnage of the deposit and come spring Journey Resources will likely drill to offset some of these holes. Journey’s model at Musgrove is taking a large leap; having intersected good values on eight out of ten holes with some of the holes actually ending in mineralization indicating depth greater than 250 feet. By offsetting some of these holes JNY.V will be in a position to add to their tonnage/resource.
Journey has conducted four years of drilling since the last resource estimate and plans to complete a new resource estimate on Musgrove prior to Q3 2010. A minimum doubling of the current 313,822oz gold resource is a realistic expectation based on the fact the old resource was calculated in 2005 when gold was ~$350/oz using a 0.8g/t cut-off -- higher gold prices coupled with these new drilling results and a lower cut-off will allow a substantial increase.
Note: JNY.V owns its own drill; a hydacore 2000 drill which they paid about $500,000. Using their own equipment allows the Company to keep costs quite low.
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