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Show U UTAH PRESS ASSOC 307 U 200 S SUITE 5005 SALT LAKE CITY, UT 84101 Celebrating more than 90 years of service to the citizens of Eureka. Volume Ninety 3 A Price $.40 EUREKA, UTAH --AUGUST 25, 1995 Number 34 Chief Mine chairman updates shareholders on mining status by Leonard Weitz Chairman and Chief Executive Officer To Chief Shareholders: Now that your Company is a fully operational mining company as it conducts its extensive underground drilling and development program, it is inmportant for Chief shareholders to be aware of the magnitude of the "world class" orebody that your Management is in the process of developing, and the impact the program will have. Increase in Reserves: The significance of the results to date of Chiefs East Tintic District underground drilling program cannot be overemphasized. Your Companys objective to at least double the current proven and probable reserves of the Burgin orebody is well on its way to becoming a reality. The first nine underground drillholes intercepted the high grade silver, lead and zinc values contained in the ever expanding dimensions of the known area of the Burgin orebody. Prior to the initiation of the drilling program, the proven and probable Burgin orebody reserves were: 1 ,032,000 tons of ore containing an estimated 23.9 million ounces of silver, 550 million pounds of lead and 180 million pounds of zinc. The drilling to date has also resulted in the discovery of a new ore zone containing gold values in addition to silver, lead and zinc values. Additional drilling in this gold area to dcliniatc the size of the gold zone has resulted in an increase in the number of planned drillholes from thirteen to twenty two. The gold discoveries will add a new dimension to your Companys reserves when they arc compiled after the completion of the drilling program. Acquisition of South Standard Mining Company: Before reporting the drilling results, it is important for shareholders to be aware of the significance of your Companys acquisition of South Standard Mining Company, announced by Chief and South Standard on July 12, 1995. The acquisition of Standard by Chief is based on an offer to exchange three shares of Chief stock for each ten shares of South Standard stock outstanding. South Standard has 1,241,717 shares outstanding and, in exchange, your Company will issue some of 370,000 (approximately its shares to complete the merger. Acquisition of South Standard by Chief is subject to execution of a formal merger agreement and the approval of South Standards 8) shareholders. The acquisition of South Standard would put under your Companys ownership all of the properties originally incorporated in the Kennecott Unit Lease, which then included the properties of Tintic Standard, Eureka Standard, Eureka Lily, South Standard and Chief. South Standards properties total approximately 2,550 acres contiguous to the south and west of your Companys East Tintic properties. The Trixie gold mine, located on South Standard's property, produced gold and silver ores when it was in operation, initially by Kennecott Corp., and then by Sunshine Mining Company until Sunshine terminated mining the Trixie in October, 1992. On November 13, 1992 Sunshine agreed to relinquish its two leases with your Company and South Standard. The Trixie Mine production shaft, during the entire period of its operation, lifted gold and silver ores well under its rated capacity. The reason for this limited production was that the ores were used as a fluxing agent (catalyst) in copper smelters, rather than being processed in the burgin concentrating mill and were therefore subject to the limited requirements of smelter outlets. According to a published South Standard report, beginning with the start of production in 1969 through closing in 1992, the Trixie Mine produced 713,478 tons of ore with an average grade of 6.55 ounces of silver and 0.21 ounces of gold per ton for a total production of 4,670,289 ounces of silver and 150,048 ounces of gold. There arc currently no Trixie Mine ore reserve figures available. Once the acquisition of South Standard is completed. South Standards properties will be included in the future ChiefAkiko joint venture area, which will then increase in size to approximately 11,500 acres. Two operational shafts, the Apex HI shaft and the Trixie shaft, will then be located on the properties subject to the joint venture. Akiko Gold Rcsourcwes, Ltd., can earn a 50 vested joint venture interest in Chiefs East Tintic District Operations Area properties after making payments totaling $10,140,000, of which $2,140,000 has been received by your Company to date. (Mr. Weitz then gave the drilling results to date in detail, adding that "In all, it is anticipated that a total of twenty two drillholes will be completed by the end of September, 1995.) OTHER PROJECTS Plutus Mine: In addition to Chiefs operations in the East Tintic District, your Company is moving forward with its plans to reopen Plutus gold and silver mine. The Plutus mine has been closed since December 1984 when Asarco, after spending in excess of $2 million and rehabilitating the Chief HI shaft and Plutus Mine underground workings, relinquished its lease on the property. Yout call the for Companys plans initiation of the same underground drilling program planned by Asarco, but never implemented. Current work on the project includes site work on the surface in preparation for shaft rehabilitation. The Plutus mine is located on the 5,500 acres of your Company's properties in the Main Tintic District that are not included in the East Tintic joint venture area. Ilomansvillc Project: Your Company is continuing examine several financing options regarding separate funding for its Homansville Gold Mine project. The next step in the Homansville project requires rehabilitation of the Copper Leaf Shaft down to the 1200 foot level to initiate an underground drilling program. The purpose of this work will be to confirm the existence of one or more projected gold orebodies, based on the significant gold values contained in surface drillholes put down at separate times by Kennecott, Sunshine and Chief. Surface Real Estate Develop- to ment: Your Company is continuing in its efforts to initiate development of its estimated 6,000 acres of buildable surface real estate in the Eureka Valley to take advantage of the ever increasing Utah industrial and residential growth. Chiefs buildable surface properties arc all located in the Main Tintic District and are not part of the joint venture properties. Recent sales by Chief of small parcels of surface real estate, the largest of which was two acres, have been at prices from $7,000 to $10,00 per acre. In March 1995, Micron Technology Corp. announced its plans to build a $1.3 billion semiconductor plant in Lchi, Utah which is located less than 40 miles from Chiefs Eureka Valley properties. The plant is expected to employ 3,500 full time workers and generate an additional 12,000 construction and plant-relate- d Mine (Cent, on page 2) |