Western Sierra Resource Corp (WSRC)

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FROM WSRA - QUARTERLY REPORT:


NOTE 4 - Mining Properties
Gold Basin Mine:
The Company is in discussions with Pine Creek Mining to return the Gold Basin Mine to production. The Gold Basin Mine is comprised of four mining claims located on 332 acres in Central Arizona. Total proven gold reserves for the mine exceed 150,000 ounces with additional probable and indicated gold reserves of 400,000 ounces. It is anticipated that a final agreement between the Company and Pine Creek Mining will be executed in 2011.


Gold River Mines:

On May 5, 2008, the Company acquired eight mining properties from Gold River Exploration Inc. in exchange for 56,555,166 shares of the Company’s common stock and $50,000 in cash. The mines have a total of 102,000 oz. proven gold reserves, 593,000 oz. proven silver reserves, 423,000 oz. probable/indicated gold reserves and 362,000 oz. probable/indicated silver reserves. At $800/oz. gold and $12/oz. silver, the proven gold reserves total $81,000,000, the proven silver reserves total $8,000,000, the probable/indicated gold reserves total $358,000,000 and the probable/indicated silver reserves total $6,000,000. SFAS 123 specifies that this transaction be recorded on the Company’s books at the fair value of the consideration received or the fair value of the common stock issued, whichever is more reliably measured at the date of the transaction. Since the Company’s stock had little or no activity in the six months preceding the date of the acquisition of the mining properties and since the reserves on the mining properties are well documented and certified by a licensed geologist, the Company has determined that the acquisition should be valued and recorded on the books based on the discounted value of the reserves in accordance with SFAS 123. The Company therefore calculated the net value of the reserves, net of estimated production costs and discounted over the recovery period and to reflect uncertainties, to be $18,530,408. On June 8, 2010, the Company sold the Sun Gold and Treasure Gulch Mines to VHGI Holdings, Inc. in exchange for $550,000 cash, 5,000,000 shares of VHGI common stock and a royalty of 2% of gross sales.
The remaining properties have a total of 241,000 oz. proven/probable/indicated gold reserves and 950,000 oz. of proven/probable/indicated silver reserves. At $1,200/oz. gold and $30/oz. silver, the gold reserves total $289,000,000 and the silver reserves total $28,500,000.

Mud Springs:

On July 27, 2005, the Company entered into an agreement with ASDI, LLC, (“ASDI”), whereby the Company obtained the rights to mine barite and placer gold on certain mineral claims owned by ASDI located in Crescent Valley, Nevada, hereafter referred to as Mud Springs., in exchange for a total of 20,522,634 shares of the Company’s common stock valued at $.075 per share for a total of $1,539,137. Under the terms of the agreement, the Company will pay ASDI a royalty of $5.00 per ton for each ton of barite mined and delivered. The Company will also pay ASDI 25% of the net profits from production from all placer gold removed from the Mud Springs property. SFAS 123 specifies that this transaction be recorded on the Company’s books at the fair value of the consideration received or the fair value of the common stock issued, whichever is more reliably measured. It was determined that the Company’s stock, based on recent sales and market activity, was more reliably measured as of the date of the acquisition than the consideration received. The Company recognized an impairment loss of $615,679 on this property at December 31, 2010.

Table Mesa:


Table Mesa was first located May 11, 2011 and then again September 8, 2011. Table Mesa is a single placer claim located in Yavapai County, Arizona. The claim lies adjacent to other existing claims with contiguous geology not far from Milk Creek. The Milk Creek Placers have a reported estimated resource of 704,000 ounces gold contained in 17 million cubic yards of gravel. Western will continue its evaluation of the property over the next several months.

Gold Crown:

The Gold Crown property consist of a large placer claim located on Arizona State land. The property consists of approximately 500 acres located in Mule Canyon in Yavapai County, Arizona. Western has applied for and received an exploration permit for the property and is awaiting final approval of its Plan of Operations from the State of Arizona.

Gold Star:

The Gold Star placer claims are contiguous with the Gold Crown property. These claims are located on BLM land in the Mexican Gulch drainage system and will be developed along with the Gold Crown claims. In 2005, the property was tested by a professional placer mining specialist. He and others reported some 67 million tons of Gold Bearing gravels. The property was historically mined as was the upper canyons of Mexican Gulch. Western will continue to try and further define the possible resource contained on this property.

Sale of Mining Properties:

On June 8, 2010, the Company sold the Sun Gold and Treasure Gulch Mines to VHGI Holdings, Inc. in exchange for $550,000 cash, 5,000,000 shares of VHGI common stock and a royalty of 2% of gross sales. The 5,000,000 shares of VHGI stock were subsequently distributed to two officers in payment of accrued compensation and a shareholder as payment on debt.

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