Developing GOLD Assets in
North America

Isabella Project

Overview

Ely Gold’s Isabella Project (Au) is located in Mineral County, Nevada and is one of its key focus properties.Isabella comprises 153 unpatented IS and IW lode claims (~2700 acres) located on Bureau of Land Management (BLM) land in the Santa Fe Mining District of the Walker Lane Structural Province; the claims have no underlying royalties. The Walker Lane Province hosts a number of gold-silver deposits mined in modern times (FMC’s Paradise Peak mine 13 miles to the northeast, Echo Bay’s Borealis mine 35 miles to the southwest, and Homestake’s Santa Fe mine 2 miles to the east-southeast) as well as significant historical producers such as Tonopah and the Comstock Lode.The Project is immediately adjacent to, and likely an extension of, Gold Resource Corporation’s Isabella-Pearl mine development property, which contains hydrothermal alteration, structural ground preparation and gold mineralization similar to that exposed on Ely’s property.

Exploration History

The Santa Fe District was established in the 1870s and 1880s upon discovery and development of base and precious metal-bearing skarn deposits just a few miles south of Ely’s present land position. Between 1912 and 1921 some 40,000 tons of copper, 125 tons of lead, 233,000 ounces of silver and 5,000 ounces of gold were produced from tabular skarn zones in limestone near contacts with igneous intrusive rocks in the District. Old mine shafts and prospect pits from this era are scattered throughout the Gabbs Valley Range, including locations currently held by Ely such as Prospect Mountain. Production from old workings within Ely’s existing claims is unknown, but most likely was relatively limited.

This portion of the Walker Lane was extensively explored for volcanic hosted gold-silver mineralization in the 1970s and 1980s by numerous exploration companies, resulting in the discovery of gold and silver mineralization at the Santa Fe Mine in the late 1970s and the nearby Isabella-Pearl deposit in the late 1980s. Homestake’s Santa Fe mine produced 345,499 ounces of gold and 710,629 ounces of silver from 1983 to 1994 at an average grade of 0.034 ounces (1.06 grams per tonne) gold and 0.25 ounces (7.8 grams per tonne) silver. Exploration surveys and prospect drilling during that same time period identified a number of discrete occurrences of alteration and gold-silver mineralization similar to those discoveries on the ground now owned by Ely Gold. Reconnaissance drilling by Combined Metals Reduction Company in 1991 identified isolated but significant gold and silver mineralization less than a mile from the Isabella and Pearl discoveries that was not followed up by additional drilling.As described more fully below, development plans by Gold Resource Corporation for the Isabella-Pearl will add to this district production.

Geology and Deposit Model

The Walker Lane Structural Province is a major structural zone that extends approximately 500 miles from the Mojave Desert north westward to just northwest of Reno. It is characterized by pervasive, northwest-trending, right lateral strike-slip faults that offset middle Tertiary (Oligocene-Miocene) volcanic rocks including lava flows, ash-flow tuffs, and hypabyssal rhyolite intrusions. It hosts significant gold and silver producers such as Goldfield, Tonopah, Aurora, Comstock, Rawhide, Paradise Peak and Santa Fe.

The Isabella Project is situated in the Santa Fe Mining District in the central Walker Lane and is immediately adjacent to Gold Resource Corporation’s Isabella-Pearl property. The Santa Fe mine area lies 1.5 miles southeast of the Isabella deposit area; the two are linked by east-west striking structures containing granitic dikes along with silicification and weak gold mineralization. The Santa Fe mine deposits are controlled by northwest-trending fault zones at intersections with north-south striking faults. Gold mineralization in the Isabella-Pearl deposits occurs in highly silicified Tertiary volcanic rocks in close proximity to northwest-trending faults; it also extends into altered granitic basement rocks, as shown in accompanying cross sections. These northwest-trending high angle faults (Civit Cat Fault Zone) and the unconformity between the volcanics and the granite basement extend to the northwest onto Ely’s claim block, as shown on the accompanying property map.

Gold mineralization at Isabella is associated with silicification within a broader zone of argillization. Quartz with abundant very fine-grained disseminated pyrite is gray to black in color, where not oxidized, due to as much as 40% pyrite. Past workers in the district noted that rocks with both silicification and pyrite contain anomalous to ore grade gold values. Other alteration assemblages, including widespread argillic alteration, abundant alunite and presence of minor amounts of base metals, all indicate these gold-silver deposits belong to the high sulfidation (acid sulphate) class of epithermal mineral deposits. Isabella-Pearl mineralization is depicted in ideal and typical cross sections in the map section.

Target areas on Ely’s ground (such as Silica Knob, Scarlet and Twin Hills) contain silicification and anomalous gold mineralization in outcrop and soils, including a sample with 0.11 ounces per ton (opt) in a silicified fault zone southwest of Silica Knob. In a widely spaced drill program designed to test some of these surface anomalies, Combined Metals Reduction Company in 1991 encountered encouraging gold grades including DH-32 which intercepted 70 feet at an average grade of 0.032 opt gold from 110’-180’ at the Silica Knob wash area, and DH-37 intercepting 215 feet at an average grade of 0.032 opt from 445’-650’ from the Scarlett Area, as shown on the accompanying property map. None of these areas of mineralization have been extensively explored by follow-up drilling. There are additional areas with similar alteration and associated gold values further to the northwest on the IS and IW claim group.

Adjacent Properties and Resources

Gold Resource Corporation’s Isabella-Pearl project includes estimated Proven and Probable reserves of 2,733,500 tonnes grading 2.18 grams per tonne (191,400 oz Au) (Mine Development Associates, November 11, 2013).Minor by-product silver will be recovered and used to off-set gold production costs.Development plans envision two open pits with the Isabella pit averaging 1.0 gm/t gold and mineralization starting at surface.The deeper Pearl deposit averages 3.7 gm/t gold and includes a higher grade core averaging ~5.0 gm/t gold.The estimated strip ratio for the project is 5:1.Metallurgical tests indicate 80-85% gold recovery for crushed oxide ore using conventional heap leach technologies (Gold Resources Corporation website).

Outlook

Ely Gold’s Isabella property contains numerous occurrences of alteration and mineralization similar to the adjacent Isabella-Pearl gold-silver deposit owned by Gold Resource Corporation that have only been superficially explored to date.The presence of gold in drilling on Ely’s claim block that approaches the widths and grades of nearby gold resources is encouraging and worthy of additional follow-up exploration.

Status

The Isabella property was sold to Gold Resource Corporation in January 2017. Ely Gold retains a 2.5% NSR royalty, of which Gold Resource can purchase 0.5% for US$500,000.

Qualified Person

Stephen Kenwood, P. Geo, is director of the Company and a Qualified Person as defined by NI 43-101. Mr. Kenwood has reviewed and approved the technical information herein.

Maps & Schematics

Isabella Claims
Isabella Claims
Isabella Targets
Isabella Targets
Isabella Stratigraphy
Isabella Stratigraphy
Isabella Deposit Model
Isabella Deposit Model
Isabella Deposit Model
Isabella Deposit Model
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