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EXHIBIT 99
NEVADA MANHATTAN MINING, INC.
MANHATTAN MINE PROJECT REVIEW &
BUSINESS PLAN
By William R. Wilson
July 1995
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TABLE OF CONTENTS
PAGE
INTRODUCTION 1
HISTORY AND OWNERSHIP OF PROPERTY 2
REGIONAL AND PROJECT GEOLOGY 2
MINERAL RESOURCE 3
DEVELOPMENT & MINING 4
PROCESSING 5
ENVIRONMENTAL SETTING AND PERMITS 6
PROJECT REVIEW 7
RECOMMENDED BUSINESS PLAN 8
SUMMARY 10
APPENDIX A - MAPS (POCKET) 11
APPENDIX B - FINANCIAL INFORMATION 12
APPENDIX C - MILL INFORMATION 13
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NEVADA MANHATTAN MINING, INC.
MANHATTAN MINE PROJECT REVIEW &
BUSINESS PLAN
By: William R. Wilson(1)
INTRODUCTION
William R. Wilson was engaged by Nevada Manhattan Mining, Inc. ("Nevada
Manhattan") in May 1995 to prepare a project review and business plan for their
mining properties in the Manhattan Mining District 45 miles northeast of
Tonopah, Nevada, in which Nevada Manhattan has a 24.5% ownership. The purpose of
the project review was to prepare a valuation of Nevada Manhattan's ownership.
The purpose of the business plan was to present various options that would
provide short-term cash flow for Nevada Manhattan and its joint venture partners
in the properties through initial production. The business plan also presents a
method to expand potential ore deposits in existing mine workings and establish
access to deeper targets.
Two alternative mining plans are examined that utilize the 1,200 foot
long decline ("Decline") constructed by Nevada Manhattan and its joint venture
partners in 1994. The first plan considers mining ore from the Consolidated
Manhattan Mine accessed from the Decline; drifting to the area near the high
grade WC 49 Drill Hole, drilled by Freeport in 1985 and mining ore in that area;
extending the existing decline ("Decline") to the existing but caved White Caps
shaft, rehabilitating the White Caps shaft to the 1,300' Level and mining high
grade ore in all the levels connected to White Caps Shaft below the 565' Level.
The second plan considers all of the same elements except stopping at the 565'
Level; mining the remaining high grade ore in the 565' Level without
rehabilitating the White Caps shaft below the 565' Level. The second alternative
mining plan is recommended as this plan still allows continued exploration in
the lower levels leading to additional ore development and requires less
capital.
Two milling alternatives were examined. The first alternative considered
was being to purchase a used crushing plant and process plant and recover only
free gold in a gravity circuit. The second alternative is to wait until New
Concept Mining, Inc. completes the construction of the mill, scheduled to be
completed in late 1995 and mill the ore in that new mill. The second alternative
was the preferred option because of the mill's accessibility in a short period
of time.
(1) Wilson has a professional degree in metallurgical engineering from
the Colorado School of Mines and an MBA from the University of Southern
California. His more than thirty years of experience includes ten years in
senior positions with engineering, construction and consulting firms and ten
years as president of several mining companies operating in the United States
and internationally. He is a part chairman of the Colorado Mining Association
and currently is president of Gold King Mines Corporation, a subsidiary of
Taylor Rand Incorporated, a publicly traded resource company based in Toronto,
Ontario, Canada.
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The work in this report was conducted primarily by William R. Wilson,
President, Gold King Mines Corporation. He was assisted by Jeff Kramer, Senior
Vice President, Nevada Manhattan and his staff; Marlowe Harvey, the project
operator and president of Calais Resources and Argus Resources, Inc.; Robert
Martin, Vice President, Construction of Harrison Western, a well known
underground mining contracting company; Bill Foster, President and Dale Moore,
Mill Superintendent of New Concept Mining, Inc., the owners of the new mill at
Manhattan; and Bill Carlson, Manager, Process Design of Lynteck, Inc. a process
metallurgical contracting company.
HISTORY AND OWNERSHIP OF PROPERTY
The historic mining in the Manhattan district extends from 1866 to
present with the major activity in the late 1860's, between 1906 and 1921, and
from the 1960's until present. Placer and lode mining took place principally
in the Reliance, the White Caps Mine, the Union Amalgamated Mine, the Manhattan
Consolidated mine, the Earle Mine, the Big Four Mine and the April Fool Mine.
The United States Geological Survey reports historic production through 1959 of
280,000 ounces of lode gold and 206,000 ounces of placer gold mined in the
district. since that time the more significant production was from the Echo
Bay and Nevada Goldfields mines (bordering the subject property) totaling in
excess of 500,000 ounces of gold.
Several companies and individuals have owned part or all of the various
mines currently shared in ownership by Nevada Manhattan (24.5%) with Argus
Resources Inc. (24.5%) and Marlowe Harvey (51%). Included in the property are
28 patented and 83 unpatented claims totaling approximately 1,800 acres.
REGIONAL AND PROJECT GEOLOGY
The bedrock in the Manhattan district contains the Gold Hill Formation
including quartzite, limestone and schist, phyllite and slate of the Cambrian
age and chert, slate, quartzite and limestone of the Palmetto Formation of
Ordovician age. The Gold Hill formation over thrusts the Palmetto Formation
with gold production normally found in the hanging wall of the thrust fault, in
limestones and quartzose schist of the Gold Hill Formation. Mineralization
generally occurs as assemblages of pyrite, stibnite, realgar, orpiment,
cinnabar and free gold associated with calcite, quartz, fluorite, sericite,
leverrierite and sparse adularia. The most productive ore bodies have been in
quartzose schist in networks of small quartz-adularia veins containing pyrite
and free gold. Mineralization is generally theorized to be the result of
epidermal deposition in the limestone and related to secondary replacement in
the volcanic activity associated with the south margin of the Manhattan caldera.
The Manhattan property lies in several shallow gullies at 7,500 to
7,800 feet elevation. Further, mineralization appears to be structurally
controlled by a series of parallel east-northeast trending faults, dipping from
50 to 75 degrees southwest and with some cross or perpendicular faults.
Geophysical studies indicate the structure contains magnetic highs and
resistivity lows and geochemical studies indicate outcrops and mineralization
associated with arsenic and mercury. Mineralization is consistent with the
district and is
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often in highly altered areas and in limestone with gold and silver found in
quartz, quartz-carbonate including pyrite, arsenophyrite, stibnite and
cinnabar. Veins tend to range in size from stringers of less than six inches
to larger veins of seven feet. The deeper ores lie in the Consolidated
Manhattan and White Caps mines while shallow ores in the area frequently
contain disseminated, lower grade gold in larger ore bodies.
MINERAL RESOURCE
Several studies have been made to help quantify and delineate ore
targets in the remaining portions of existing mines, the areas between the old
mines and the un-mined areas to the south of the Consolidated Manhattan and
White Caps mines. A summary of geologic investigations conducted by Nevada
Manhattan and its joint venture partners of mineralized areas along the fault
zone through the center of the property includes general surface sampling,
underground sampling, production records, drilling (surface and underground),
geochemical sampling and geophysics. Historic mining records and accounts add
to the total picture but often lack completeness or substantiation in more
recent times. As is often the case in epithermal, veined systems all
information points toward more ore grade material, often of higher grade, and
the potential for bonanza-type ore bodies. Satisfying the standards for
reserve definition imposed by the Securities and Exchange Commission and other
technical societies such as the Society for Mining, Metallurgy, and
Exploration, Inc. is always difficult in this setting, i.e., small high grade
vein systems with little widely disseminated mineralization. Therefore, this
report does not include discussions relating to reserves in any category.
The work in this report identified areas in and adjacent to the Decline
constructed by Nevada Manhattan and its joint venture partners in 1994. The
areas considered for mining include the Adit Level of the Consolidated
Manhattan Mine, the area around the high grade intercept in Drill Hole WC49
(reported by Freeport to be twenty-five feet of 0.698 ounces per ton of gold)
and the mined levels in the White Caps Mine from the 565' Level to the 1,300'
Level. From the identification of mining targets, ore blocks were estimated on
underground sampling, historic production, drill hole assays and level maps for
the White Caps Mine (See Maps VII and VIII). These areas were then quantified
using simple geometry, tonnage calculations and average grade. The average
grade selected was based on the same information as the estimated ore blocks
and was further defined by an average of 0.25 ounces per ton as a minable
underground grade and a minimum cut off grade of 0.10 ounces per ton.
The resulting estimated ore blocks were used in an economic model. The
model further identified the capital required to initiate mining in the various
areas, mill the ore at the New Concept Mining, Inc.'s mill, and an estimated
cash flow and a NPV (net present value) analysis at 10% and 15% discount rates
of the cash flow for the two alternate plans. The resulting analysis was
intended to be used by Nevada Manhattan and its joint venture partners to
determine the advisability of proceeding immediately with development and
mining. The work included is not intended to be a reserve calculation of any
type and no reference is made to proven, probable or possible reserves.
However, initial investigations indicate commercial grade mineralization.
Details of the calculations are shown in Appendix B, Schedules 1, 2 and
3 and can
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be summarized as follows:
1. Mining on Adit Level of Manhattan Consolidated Mine (access from
Decline). The total estimated ore block for this area is 4,293 tons.
Using a 20 per cent dilution factor and average grade of 0.25 ounces per
ton at a 0.10 ounces per ton cutoff, this block is estimated to contain
859 minable ounces. Additional tonnage may be quantified as a result of
additional sampling and development in this area.
2. Drifting from an approximate depth on the Decline in the area of the
high grade, intercept the WC49 drill hole. The total estimated ore
block in this area is 1,555 tons. Using the same factors with an
average grade of 0.50 ounces per ton, this block contains 1,555 minable
ounces. Additional tonnage may be quantified as a result of additional
sampling and development in this area.
3. Rehabilitating the White Caps shaft below the 565' Level and mining
in the old workings on the 565', 670', 800', 910', 1,100', 1,200',
1,300' Levels. The total estimated ore block in the White Caps is
18,306 tons. Using the same factors but with a 0.75 ounce per ton
average grade for the 1,300' Level, these blocks contain 7,420 minable
ounces. Again, additional tonnage may be quantified as a result of
additional sampling and development in this area.
The total minable ounces in all the calculated blocks are 9,833 ounces
of gold. Typically silver grades are about equal or less than the gold grade
so no silver grades were calculated. The total estimated ore blocks total
26,487 tons is not an even number because areas of ore in the blocks were
estimated by cubic footage and then converted to tons using a factor of 162
pounds per cubic foot for converting to tonnage.
The higher grade ore shoots associated with the East Fault, the Morning
Glory Fault, the White Caps Faults appear to be continuous and extend at least
to the 1,300' Level. Grades, if anything, appear to increase with depth with a
reported ore shoot on the 1,300' Level of 2.73 ounces of gold per ton
(Reference - Map VIII). Because of limited drilling information below 450
feet, any confirmation of ore reserves in specific categories is not possible.
Structural control may, however, continue below the 1,300' Level. The project
operator intends to complete a surface geochemical survey coordinated with
magnetic and resistivity geophysics. The project operator will then drill
several targets to the south of the White Caps shaft as predicted by the recent
geo-chemical survey and geophysical examinations. Upon completion of this
work, a more accurate estimate of ore reserves should be possible.
Several geological studies of the White Caps area have predicted
bonanza-type ore bodies in the area but little has been quantified for a
resource or reserves of this magnitude. See the section PROJECT REVIEW for
more discussion of this subject.
DEVELOPMENT & MINING
The Manhattan District has experienced surface mining for placer
gravels, shallow underground mining using shafts and drifts to bedrock for
placer gravels, open pit mining for lower grade ores and underground mining in
open stopes for higher grade ores.
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Two alternate mining plans are considered in this report. The first
plan includes: extending the Decline to the 565' Level of the White Caps Mine;
mining remaining higher grade ore in the Consolidated Manhattan Mine; mining
higher grade ore in a small but high grade area around the WC49 Drill intercept
at approximately 300 foot depth and sixty feet from the existing Decline;
rehabilitating the White Caps Shaft from the 565' Level to the 1,300' Level; and
mining higher grade ore in the old workings of the White Caps Mine between the
565' Level and the 1,300' Level.
The second plan includes all aspects of the first plan but the
rehabilitation of the White Caps Shaft will not proceed until an extensive
evaluation of the ore grades in the old workings of the White Caps mine is
evaluated by detailed underground sampling. In both plans the rehabilitation
of the White Caps shaft will be dependent on the condition of the shaft upon
reaching the White Caps shaft on the Decline and evaluating the condition of
the shaft. The safety of working in the White Caps shaft and the costs of the
rehabilitation this shaft, depending on its condition, will be key elements in
determining the acceptability of either plan. A raised bore for ventilation
and access will also be considered. In other words, until the shaft can be
accessed from the Decline, additional ore evaluated and the condition of the
White Caps shaft and workings can be evaluated, much of the work and costs
related to the two plans is preliminary in nature.
Within the old workings of the Consolidated Manhattan Mine and the
White Caps mine, the mining will be accomplished using a modified cut and fill
or open stope method by drilling and blasting. The extension of the Decline
down to the 565' Level of the White Caps Mine will also be drilled and blasted.
Rehabilitation of the White Caps Shaft will be required to reach the
lower levels of the mine and will consist of re-timbering and rock bolting
where necessary. Depending on conditions encountered when the Decline is
connected to the White Caps mine shaft, a ventilation and escape shaft may be
required. Because of the uncertainty of the need for this shaft, no provision
has been made in this report for the cost is its installation. It is further
assumed that any ventilation and access will utilize the extended Decline. A
charge of $1 per ton was added to the Harrison Western estimate to provide for
pumping and ventilation using the Decline.
Equipment includes underground Jumbo drills, jackleg drills, scoop
trams, haul trams, fans and pumps. It is intended to use Harrison Western as a
mining contractor for both development and mining. A summary of their
estimated costs is included in the cash flow analyses. An allowance has been
provided for the pumping and treatment of mine water.
PROCESSING
A preliminary investigation was made to ascertain the feasibility of
"high grading" the old mine workings and then processing the free gold in a
used portable gravity processing plant. This option would also require
permitting because of the tailings produced from the gravity plant and possible
discharge from process water.
A used crushing plant priced at $36,000 was located. The unit included
a 10 X 16 jaw crusher, a 16 inch roll crusher and a double deck screen that
would size ore to -10
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mesh. A used ball mill for crushing to -200 mesh costing $8,000 needed to be
purchased.
A used gravity processing plant was located that included 4 X 8 Double
Deck Derrick Screens and thirty-eight MDL spirals were located for a price of
$200,000. It was felt that a cash payment of $125,000 would satisfy the seller.
The estimated cost of purchasing, shipping and installing this portable
plant was $200,000. Other items such a power line or portable generator,
electrical connections and controls, piping, conveyors, engineering and
installation represent 50 per cent of the total installed cost and therefore,
the portable facility was estimated to cost $400,000. The experience of the
writer is that a hurried schedule almost always is extended beyond original
estimates and milling equipment not specifically designed for the operation
requires modification and recovery suffers. Considering these factors and the
time to acquire and assemble to be at least sixty days or longer, and to secure
a permit to be six months, the alternative of securing this portable equipment
is not recommended.
New Concept Mining, Inc. provided a proposed flow sheet and equipment
list. (See Appendix C). The processing circuit includes crushing, grinding,
gravity separation, cyanide leach, flotation and thickening. A finalized
balanced flow sheet was not provided but a review of the proposed circuit and
equipment indicates the mill should provide approximately 200 to 250 tons per
day of production and the predicted 85 to 90 per cent recovery. Nevada
Manhattan has an agreement to utilize up to 30 per cent of the milling capacity
or approximately sixty tons per day.
The ore to be mined contains free gold and gold associated with pyrite
and arsenopyrite. The gold in the sulphides was assumed to be less than 10% as
suggested by Dale Moore, Mill Superintendent for New Concept Mining. He also
estimated ore recovery to be as high as 90 per cent. For purposes of this
report a mill recovery of 81 per cent was used to account for the loss of gold
in the sulphides. The mill flow sheet planned by New Concept Mining, Inc. will
not include a flotation circuit until the mill has operated up to one year.
(90% recovery times 90% gold from non-sulphide ore = 81% overall recovery.)
Mr. Moore estimated ore milling costs will be $15 per milled ton after a
two to three-month start up period when costs were expected to be $20 per
milled ton. Because the mill may take up to six months to construct, this
report assumes ore will be mined for six months, stockpiled and then milled.
This causes a six-month delay in cash flow from gold mined. The report also
assumes that the mill will produce Dore' cones that will be shipped to a
refinery to be further refined to gold and silver at a $2.00 per gold ounce
refinery charge. Since it is expected that less than one ounce of silver will
be produced for each ounce of gold, no credits for silver are shown in the
financial analyses.
ENVIRONMENTAL SETTING AND PERMITS
For purposes of this report, it was assumed all necessary permits are
held or will be obtained by Nevada Manhattan. New Concept Mining, Inc. has
applied for permits required for the milling operations including approval of
an operational plan by the BLM. Nevada Manhattan will pump water internally in
the underground mine but will not discharge water to the surface. No
reclamation is required for the ore mined other than restoration of the
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Decline portal area if the Decline is closed.
Should Nevada Manhattan sometime in the future decide to discharge mine
water to the surface a Point Source Discharge Permit will be required. Such a
permit would take from six months to two years to secure. In the interim
period it is recommended that Nevada Manhattan periodically (monthly) sample
any running water on its property and sample underground water at several
locations to establish a baseline for future operations.
PROJECT REVIEW
The auditing firm of Jackson & Rhodes has requested Nevada Manhattan to
provide a valuation in conjunction of capitalized acquisition and development
costs of the Manhattan property for the purposes of confirming the value
carried on the Company's balance sheet. Without a detailed ore reserve
available, an alternate method used by Gold king Mines Corporation in the past
is to place a value on the various tangible assets of a company and the
intangible assets that potentially can enhance the value of a company.
For Nevada Manhattan the following assets should be considered:
Acquisition Costs - Typically acquisition of a mining property of this
type, size and potential in Nevada in the last five years has ranged in
value between $2.5 million and $5 million. Nevada Manhattan has a
capitalized acquisition and development cost of $3.2 million on its
balance sheet. For the purposes of this report a conservative value for
capitalized acquisition and development costs is $1,600,000.
Manhattan Decline - The cost of construction of the Decline was a total
of $465,000. This has added significant value to the Consolidated
Manhattan Mine and potentially to the White Caps Mine and other
potential mineralization. Full value should be assigned to this asset
for those reasons. Nevada Manhattan's share of that cost is 24.5% or
$114,000.
Other Exploration and Development Costs - Total costs of exploration and
development by Nevada Manhattan including drilling, surface sampling,
geophysical work, assays and other development costs incurred by the
Nevada Manhattan attributable to future ore reserves are $830,000 less
the cost of the decline or a total of $710,000. Considering the
specific plans of the project operator to complete his exploration
program and the plan to achieve near-term production outlined in this
report, these costs form a basis of value for the Nevada Manhattan. The
full value of the accrued cost should be included in this valuation as
the cost can lead to future potential production and additional reserves
in the future.
Access to Milling Capacity - Nevada Manhattan controls 30 per cent of
the milling capacity in the New Concept Mining, Inc.'s mill
approximately one mile from the Manhattan Decline portal. This mill,
now under construction, will be rated at approximately 200 to 250 tons
per day. Mills of this capacity and type are currently worth a minimum
of $2,000,000. For Nevada Manhattan to permit and build their own mill
including tailings disposal would cost at a minimum of $3,000,000. As
the New Concept mill is under construction and the required permits are
anticipated to
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be in place by January 1, 1996, a value of Nevada Manhattan's interest
in the mill can be established. A thirty per cent interest has a value
of $900,000 but as the mill is not in place, a value of $450,000 is
assigned to these mill rights.
Minable Ore Blocks - As stated in the section on MINERAL RESOURCE,
estimated ore blocks total 9,800 ounces of which 7,900 ounces may be
recovered. As the recovery of these ounces is predicated on
implementation of the proposed business plan, a conservative approach is
to place a value of $15 per ounces on this projected production. This
total value is therefore $118,500 of which $30,000 can be assigned to
Nevada Manhattan.
Other Mineral Value - The Hughes and Cameron report indicate a resource
of 250,000 ounces in the lower levels of the White Caps mine. This was
further substantiated by drilling in the 1960's on the 1,200 foot level.
At $10 per ounce this has a value of $2,500,000 of which $600,000 can be
assigned to Nevada Manhattan.
The $15 and $10 values are frequently assigned to un-mined reserves and
resources. In this case, the $15 value was assigned to the minable ore
blocks. However, in the future, Nevada Manhattan may recover much
higher value than the value assigned in this valuation.
Infrastructure - The Manhattan property is approximately 45 miles from
Tonapah, Nevada and approximately one mile from Manhattan, Nevada. As
Tonapah has facilities for most mine supply requirements and available
employees and community infrastructure, the Manhattan property requires
minimal local infrastructure in the form of an office and a maintenance
shop. Therefore, a value of $100,000 can be placed on infrastructure
related to the Manhattan property and approximately $25,000 for Nevada
Manhattan's portion.
Based on the above assets valuation, the total value of Nevada
Manhattan's portion of the Manhattan Property is $3,529,000.
RECOMMENDED BUSINESS PLAN
As described in the section, DEVELOPMENT AND MINING, two alternative
plans are considered in this report.
Plan 1
Work Item 1. Extend Decline to White Caps 565' Level
Work Item 2: Rehabilitate and mine old workings in Consolidated
Manhattan Mine
Work Item 3: Drift and Mine new area near WC49
Work Item 4: Rehabilitate White Caps Shaft
Work Item 5: In White Caps Mine, mine 565' Level, 670' Level,
800' Level, 910' Level, 1,120' Level, 1,200' Level
and 1,300' Level
The major advantage to this plan is that access would be improved
considerably to
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the lower levels of the White caps mine, very possibly into high grade ore and
also provide access to the high grade ore anticipated as a result of the
proposed deep drilling contemplated by the project operator.
A cash analysis of this plan was prepared and is shown in Appendix B,
Schedule 4A & 4B. The project schedule would involve a period of 24 months and
include a capital cost of $1,463,290 and an operating cost of $1,719,699 with
production of 7,960 ounces of gold resulting in revenues of $3,088,430. This
plan results in a positive cash flow of $92,804. The expenditure of the $1.4
million in capital provides the access required for any deep ore bodies and the
gold production offsets a large portion of the capital cost. The cash flow may
be improved by encountering lower shaft rehabilitation costs in the White Caps
shaft and possibly higher than projected ore grade in the old White Caps
workings. Additionally, the possibility exists to increase the total tonnage of
ore through the planned sampling program.
Plan 2
Work Item 1. Extend Decline to White Caps 565' Level
Work Item 2. Rehabilitate and mine old workings in Consolidated
Manhattan Mine
Work Item 3. Drift and Mine new area near WC49
Work Item 4. In White Caps Mine, mine the 565' Level only
Work Item 5. Underground sampling in the 670' through 1,300' Levels
The major advantage to this plan is the reduced cash cost and the
opportunity to sample underground in the White Caps mine without rehabilitating
the White Caps shaft. The disadvantages of this plans are that mining access to
the lower portions of the White Cap Mine may not be completed and it is still
not known whether access can be obtained to each of the levels below the 565'
Level. This plan is a compromise plan that can be modified as the project
proceeds.
A cash analysis of this plan was prepared and is shown in Appendix B,
Schedule 5. The project schedule would involve a period of 12 months and
include a capital cost of $605,840 and an operating cost of $1,046,063 and
production of 4,568 ounces of gold resulting in revenues of $1,772,539. This
plan results in a positive cash flow of $425,326. As exploration continues in
the lower White Caps mine, additional ventilation will be required and was
included as an allowance in the capital cost. The underground sampling may
prove successful to the point that the lower levels can be opened. Further
study will be required at that point. The major advantages of this plan are
less capital is required, access to the lower levels of the White Caps Mine are
at least possibly accessed and positive cash flow is generated. Additionally,
the possibility exists to increase the total tonnage of ore through the planned
sampling program.
A third plan would be to mine only the Consolidated Manhattan Mine and
the WC49 Area. A cursory review of Schedule 5, would indicate that the capital
costs of this would be approximately $300,000 producing 2,400 ounces of gold
with some cash flow generated. Some additional ore may be located under this
plan.
The fourth plan will be to wait until the on-going drilling is
completed and New
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Concept Mining, Inc.'s mill is completed. This alternative is the lower risk
but provides nothing to the prospects of Nevada Manhattan. No cash flow is
possible for Nevada Manhattan.
SUMMARY
The mining industry and investment community recognizes that in
essentially all start up mining operations, negative cash flow can be
expected. Recognizing that the two principal plans presented in this report
are subject to the preliminary nature of the financial analyses prepared, both
plans do provide positive cash flow. The recommended Plan 2 provides the
opportunity to access the White Caps mine, explore for additional ore, generate
positive cash flow and with less capital than Plan 1.
The value of Nevada Manhattan's 24.5% interest in the Manhattan property
as determined in this report, based on the geology, work to date on the mine,
ownership and factors related to future mining and revenue was determined to be
$3,529,000. No proven and probable ore reserves were calculated but an
estimated ore block related to the business plan presented indicated it may be
possible to mine and recover as much as 7,960 ounces of gold should Nevada
Manhattan proceed with the first business plan developed in this report.
Further, some consideration was given to the resource reported by Hughes and
Cameron of a total resource in the White Caps of approximately 250,000 ounces of
gold.
The two principal plans presented, one providing for full production in
the Consolidated Manhattan Mine, the Drill Hole WC49 area and all of the lower
workings of the White Caps mine and the second being partial mining down to and
including the White Caps 565 Level each has advantages and disadvantages.
Plan 1 requires a larger capital cost ($1.46 million capital and a $93,000 cash
flow from 7,960 ounces of gold) over 24 months. Plan 2 requires less capital
with less gold produced ($606,000 of capital and a cash flow of $425,000 with
4,500 ounces of gold) over 12 months.
Assuming availability of capital funds, Plan 2 is the recommended plan
based on risk. If funding is limited, a modified form of Plan 2 could be
adopted by Nevada Manhattan.
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APPENDIX A
MAPS
(POCKET)
I CLAIM AND DRILL HOLE LOCATION MAP
II GEOLOGY MAP - WHITE CAPS MINE
III UNDERGROUND GEOLOGY AND SAMPLE LOCATION MAP - MANHATTAN CONSOLIDATED
MINE
IV DECLINE/WC 49 INTERSECTION MAP - MANHATTAN CONSOLIDATED MINE
V DECLINE LOCATION MAP
VI DECLINE LOCATION MAP - CROSS SECTION
VII WHITE CAPS MINE LEVEL MAP - SURFACE, 210' LEVEL, 310' LEVEL, 565' LEVEL,
800' LEVEL, 1,200' LEVEL, 1,300' LEVEL
VIII WHITE CAPS MINE LEVEL MAP - GEOLOGIC FEATURES - SURFACE, 310 LEVEL, 565
LEVEL, 800 LEVEL, 900 LEVEL, 1,100 LEVEL, 1,200 LEVEL, 1,300 LEVEL
IX MANHATTAN MINE - PROSPECTIVE LEVEL PLAN
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APPENDIX B
FINANCIAL INFORMATION
SCHEDULE 1
CUBIC FEET OF ESTIMATED ORE BLOCKS
SCHEDULE 2
ESTIMATED ORE BLOCKS, TONNAGE AND OUNCES OF GOLD
SCHEDULE 3
MINING SCHEDULE - SEQUENCE OF ESTIMATED ORE BLOCKS BY MONTH
SCHEDULE 4A
CASH FLOW ANALYSIS - MINE ALL ESTIMATED ORE BLOCKS - COMPLETE REHAB OF
WC SHAFT - 1ST 12 MONTHS
SCHEDULE 4B
CASH FLOW ANALYSIS - MINE ALL ESTIMATED ORE BLOCKS - COMPLETE REHAB OF
WC SHAFT - 2ND 12 MONTHS
SCHEDULE 5
CASH FLOW ANALYSIS - MINE ESTIMATED ORE BLOCKS DOWN TO AND INCLUDING
565 LEVEL
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NEVADA MANHATTAN MINING, INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
SCHEDULE 1 - CUBIC FEET OF ESTIMATED ORE BLOCKS
AREA BLOCK VOLUME TONS
CUBIC FT.
MANHATTAN CONSOLIDATED MINE 1
SLABBED OUT ADIT/DRIFT 700 FT. X 50 SQ. FT. 35,000 2,835
3 NEW STOPES 3 X 100 FT. X 6 FT. X 10 FT. 18,000 1,458
BLOCK TOTAL 53,000 4,293
WC49 - 300 LEVEL 2
8 NEW STOPES 8 X 100 FT. X 6 FT. X 10 FT. 48,000 3,888
WHITE CAPS MINE 565 LEVEL 3
EAST FAULT AREA STOPE 160 FT. X 50 FT. X 10 FT. 80,000 6,480
4 NEW STOPES 3 X 100 FT. X 6 FT. X 10 FT. 18,000 1,458
BLOCK TOTAL 98,000 7,938
WHITE CAPS MINE 670 LEVEL 4
EAST FAULT AREA STOPE 100 FT. X 40 FT. X 10 FT. 40,000 3,240
1 NEW STOPE 100 FT. X 6 FT. X 10 FT. 6,000 486
BLOCK TOTAL 46,000 3,726
WHITE CAPS MINE 800 LEVEL 5
3 NEW STOPES 3 X 100 FT. X 6 FT. X 10 FT. 18,000 1,458
WHITE CAPS MINE 910 LEVEL 6
EAST FAULT AREA STOPE 80 FT. X 20 FT. X 10 FT. 16,000 1,296
1 NEW STOPE 100 FT. X 6 FT. X 10 FT. 6,000 486
BLOCK TOTAL 22,000 1,782
WHITE CAPS MINE 1,120 LEVEL 7
4 NEW STOPES 4 X 100 FT. X 6 FT. X 10 FT. 24,000 1,944
WHITE CAPS MINE 1,200 LEVEL 8
2 NEW STOPES 2 X 100 FT. X 6 FT. X 10 FT. 12,000 972
WHITE CAPS MINE 1,300 LEVEL 9
1 NEW STOPE 100 FT. X 6 FT. X 10 FT. 6,000 486
TOTAL 327,000 26,487
16
NEVADA MANHATTAN MINING, INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
SCHEDULE 2 - ESTIMATED ORE BLOCKS, TONNAGE AND OUNCES OF GOLD
AREA BLOCK TONS IN PLACE GRADE CUTOFF MINABLE OUNCES
% % @ 20% DILUTION
MANHATTAN CONSOLIDATED MINE 1 4,293 0.25 0.10 859
WC49 - 300 LEVEL 2 3,888 0.50 0.10 1,555
WHITE CAPS MINE 565 LEVEL 3 7,938 0.50 0.10 3,175
WHITE CAPS MINE 670 LEVEL 4 3,726 0.50 0.10 1,490
WHITE CAPS MINE 800 LEVEL 5 1,458 0.50 0.10 583
WHITE CAPS MINE 910 LEVEL 6 1,782 0.50 0.10 713
WHITE CAPS MINE 1,120 LEVEL 7 1,944 0.50 0.10 778
WHITE CAPS MINE 1,200 LEVEL 8 972 0.50 0.10 389
WHITE CAPS MINE 1,300 LEVEL (1) 9 486 0.75 0.10 292
26,487 9,833
(1) GRADE INCREASE TO 0.75 OPT GOLD BASED ON REPORTED ASSAYS ON THIS
LEVEL IN EXCESS OF 2 OPT.
17
NEVADA MANHATTAN MINING, INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
SCHEDULE 3 - MINING SCHEDULE - SEQUENCE OF ESTIMATED ORE BLOCKS BY MONTH
MONTH PRODUCTION CUMLATIVE PRODUCTION BLOCK TONS - START TONS - END
TONS TONS
1 800 800 1 4,293 3,493
2 800 1,600 1 3,493 2,693
3 1,600 3,200 1 2,693 1,093
4 1,600 4,800 1 1,093 0
2 3,888 3,381
5 1,600 6,400 2 3,381 1,781
6 1,600 8,000 2 1,781 181
7 1,600 9,600 2 181 0
3 7,938 6,519
8 1,600 11,200 3 6,519 4,919
9 1,600 12,800 3 4,919 3,319
10 1,600 14,400 3 3,319 1,719
11 1,600 16,000 3 1,719 119
12 1,600 17,600 3 119 0
4 3,726 2,245
13 1,600 19,200 4 2,245 645
14 1,600 20,800 4 645 0
5 1,458 503
15 1,600 22,400 5 503 0
6 1,782 685
16 1,600 24,000 6 685 0
7 1,944 1,029
17 1,600 25,600 7 1,029 0
8 972 401
18 887 26,487 8 401 0
9 486 0
NMMI/D
7/12/95
18
NEVADA MANHATTAN MINING, INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
SCHEDULE 4A - CASH FLOW ANALYSIS - MINE ALL ESTIMATED ORE BLOCKS - COMPLETE REHAB OF WC SHAFT - lST 12 MONTHS
$390/oz Gold
MONTH 1 2 3 4 5 6 7
===================================================================================================================================
CAPITAL COSTS
Mine Contractor
Mobilization/Demobilization $30,000
Clean-up, resupport Decline $16,400
Slash entrance to Consolidated Manhattan $2,200
Drive drift for access to WC49 300 Level $9,600
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level) $22,000 $22,000 $22,000 $22,000
(10' x 12" Decline, 400 LF @220/ft)
Clean up/slash corners in Consolidated Manhattan $20,200
Access to 1,300 Level
Rehab WC Shaft to 670 Level $9,000 $9,000 $9,000
Install headframe & hoist at 565 Level $25,000 $25,000 $25,000
Rehab WC Shaft to 800 Level
Rehab WC Shaft to 910 Level
Rehab WC Shaft to 1,300 Level
Contractor supervision, overhead & profit $5,000 $5,000 $10,000 $10,000 $10,000 $10,000 $10,000
Subtotal - Mine Contractor $105,400 $27,000 $32,000 $32,000 $44,000 $44,000 $44,000
Other contract work
Underground sampling (140 days @$400/d) $4,000 $4,000 $2,000 $2,000 $2,000 $2,000 $2,000
Assays (140 days x 20/d x $15) $3,000 $3,000 $1,500 $1,500 $1,500 $1,500 $1,500
Engineering & Consulting $15,000
Working Capital $50,000 $50,000 $50,000
Contigency @ 10% Excl. Working Capital $12,740 $3,400 $3,550 $3,550 $4,750 $4,750 $4,750
-----------------------------------------------------------------------------
TOTAL CAPITAL REQUIRED $190,140 $87,400 $89,050 $39,050 $52,250 $52,250 $52,250
===================================================================================================================================
PRODUCTION
Area/block CM/1 CM/1 CM/1 CM/1 WC49/2 WC49/2 WC49/2
WC49/2 WC565/3
Ore Production-tons/mo 800 800 1,600 1,600 1,600 1,600 1,600
Diluted Head Grade - Troy Oz/ton (Au) 0.20 0.20 0.20 0.30 0.40 0.40 0.40
Ounces of gold mined 160.00 160.00 320.00 480.00 640.00 640.00 640.00
Tons of ore milled 0 0 0 0 400 400 1000
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.00 0.00 0.00 0.00 0.20 0.20 0.20
Ounces of gold milled (1) 0.00 0.00 0.00 0.00 80.00 80.00 200.00
Recovery (81%) 0.81 0.81 0.81 0.81 0.81 0.81 0.81
-----------------------------------------------------------------------------
Gold Production - Troy Oz 0 0 0 0 65 65 162
Average Gold Sales Price $/Troy Oz $0 $0 $0 $0 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 $2 $2 $2
-----------------------------------------------------------------------------
NET SMELTER RECEIPTS $0 $0 $0 $0 $25,142 $25,142 $62,856
ROYALTY (% of NSR) 0.00% $0 $0 $0 $0 $0 $0 $0
-----------------------------------------------------------------------------
INCOME AFTER ROYALTY $0 $0 $0 $0 $25,142 $25,142 $62,856
=============================================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1 $1 $1 $1
Processing & tailings $0 $0 $0 $0 $20 $20 $15
G & A @ 10% $4 $4 $4 $4 $6 $6 $6
-----------------------------------------------------------------------------
Total Cost $/Ton $48 $48 $48 $48 $70 $70 $65
OPERATING COSTS $36,960 $36,960 $73,920 $73,920 $84,800 $84,800 $93,070
=============================================================================
DEDUCTIBLE EXPENSES Depreciation Base $211,400 $211,400 $211,400 $211,400 $720,900 $720,900 $720,900
*Depreciation $7,558 $7,558 $7,558 $7,558 $8,591 $8,591 $8,591
Deductible Exploration $4,900 $4,900 $2,450 $2,450 $2,450 $2,450 $2,450
Amort. Non-deduct. Exp. & Dev. $1,050 $1,050 $525 $525 $525 $525 $525
Local taxes 1% $0 $0 $0 $0 $251 $251 $629
-----------------------------------------------------------------------------
Deductible Expenses Before Depletion $13,508 $13,508 $10,533 $10,533 $11,817 $11,817 $12,194
=============================================================================
Taxable Income Before Depletion ($50,468) ($50,468) ($84,453) ($84,453) ($71,475) ($71,475) ($42,408)
Maximum allowed depletion - 50% rule $0 $0 $0 $0 $0 $0 $0
Depletion at 15% $0 $0 $0 $0 $0 $0 $0
Depletion allowed $0 $0 $0 $0 $0 $0 $0
*Includes all startup costs
=============================================================================
TAXES
Taxable Income After Depletion ($50,468) ($50,468) ($84,453) ($84,453) ($71,475) ($71,475) ($42,408)
Loss Carried Forward Credit $50,468 $50,468 $84,453 $84,453 $71,475 $71,475 $42,408
Loss Carried Forward Credit Applied $0 $0 $0 $0 $0 $0 $0
Federal Income Tax (2) 0.34 $0 $0 $0 $0 $0 $0 $0
State Income Tax (2) 0.05 $0 $0 $0 $0 $0 $0 $0
-----------------------------------------------------------------------------
Net Income After Tax ($50,468) ($50,468) ($84,453) ($84,453) ($71,475) ($71,475) ($42,408)
Loss Carried Forward $0 $0 $0 $0 $0 $0 $0
Dep., Depl., & Amort. $8,608 $8,608 $8,083 $8,083 $9,116 $9,116 $9,116
Deductible Exploration $4,900 $4,900 $2,450 $2,450 $2,450 $2,450 $2,450
Capital expenditures ($190,140) ($87,400) ($89,050) ($39,050) ($52,250) ($52,250) ($52,250)
Reclamation $0 $0 $0 $0 $0 $0 $0
Salvage $0 $0 $0 $0 $0 $0 $0
-----------------------------------------------------------------------------
NET CASH FLOW ($227,100) ($124,360) ($162,970) ($112,970) ($112,159) ($112,159) ($83,093)
CUMULATIVE CASH FLOW ($227,100) ($351,460) ($514,430) ($627,400) ($739,559) ($851,718) ($934,811)
==================================================================================
12-MONTH
MONTH 8 9 10 11 12 TOTAL
=========================================================================================================================
CAPITAL COSTS
Mine Contractor
Mobilization/Demobilization $30,000
Clean-up, resupport Decline $16,400
Slash entrance to Consolidated Manhattan $2,200
Drive drift for access to WC49 300 Level $9,600
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level) $88,000
(10' x 12" Decline, 400 LF @220/ft)
Clean up/slash corners in Consolidated Manhattan $20,200
Access to 1,300 Level
Rehab WC Shaft to 670 Level $9,000 $9,000 $9,000 $9,000 $10,500 $73,500
Install headframe & hoist at 565 Level $25,000 $25,000 $25,000 $25,000 $25,000 $200,000
Rehab WC Shaft to 800 Level
Rehab WC Shaft to 910 Level
Rehab WC Shaft to 1,300 Level
Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $10,000 $10,000 $110,000
Subtotal - Mine Contractor $44,400 $44,000 $44,000 $44,000 $45,500 $549,900
Other contract work
Underground sampling (140 days @$400/d) $2,000 $2,000 $2,000 $2,000 $2,000 $28,000
Assays (140 days x 20/d x $15) $1,500 $1,500 $1,500 $1,500 $1,500 $21,000
Engineering & Consulting $15,000
Working Capital $150,000
Contigency @ 10% Excl. Working Capital $4,750 $4,750 $4,750 $4,750 $4,900 $461,390
-------------------------------------------------------------------
TOTAL CAPITAL REQUIRED $52,250 $52,250 $52,250 $52,250 $53,900 $825,290
=========================================================================================================================
PRODUCTION
Area/block WC565/3 WC565/3 WC565/3 WC565/3 WC565/3
WC670/4
Ore Production-tons/mo 1,600 1,600 1,600 1,600 1,600 17,600
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 0.40
Ounces of gold mined 640.00 640.00 640.00 640.00 640.00 6,240
Tons of ore milled 1600 1600 1600 1600 1600 9,800
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.30 0.30 0.40 0.40 0.40
Ounces of gold milled (1) 480.00 480.00 640.00 640.00 640.00 3,240
Recovery (81%) 0.81 0.81 0.81 0.81 0.81
-------------------------------------------------------------------
Gold Production - Troy Oz 389 389 518 518 518 2,624
Average Gold Sales Price $/Troy Oz $390 $390 $390 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 $2 $2
-------------------------------------------------------------------
NET SMELTER RECEIPTS $150,854 $150,854 $201,139 $201,139 $201,139 $1,018,267
ROYALTY (% of NSR) 0.00% $0 $0 $0 $0 $0
-------------------------------------------------------------------
INCOME AFTER ROYALTY $150,854 $150,854 $201,139 $201,139 $201,139 $1,018,267
===================================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1 $1
Processing & tailings $15 $15 $15 $15 $15
G & A @ 10% $6 $6 $6 $6 $6
-------------------------------------------------------------------
Total Cost $/Ton $65 $65 $65 $65 $65
OPERATING COSTS $103,840 $103,840 $104,000 $104,000 $104,000 $1,004,110
===================================================================
DEDUCTIBLE EXPENSES Depreciation Base $720,900 $720,900 $720,900 $720,900 $720,900
*Depreciation $8,591 $8,591 $8,591 $8,591 $8,591 $98,956
Deductible Exploration $2,450 $2,450 $2,450 $2,450 $2,450 $34,300
Amort. Non-deduct. Exp. & Dev. $525 $525 $525 $525 $525 $7,350
Local taxes 1% $1,509 $1,509 $2,011 $2,011 $2,011 $10,183
-------------------------------------------------------------------
Deductible Expenses Before Depletion $13,074 $13,074 $13,577 $13,577 $13,577 $150,789
===================================================================
Taxable Income Before Depletion $33,940 $33,940 $83,562 $83,562 $83,562 ($136,631)
Maximum allowed depletion - 50% rule $15,970 $16,970 $41,781 $41,781 $41,781 $159,283
Depletion at 15% $22,628 $22,628 $30,171 $30,171 $30,171 $135,769
Depletion allowed $15,970 $16,970 $30,171 $30,171 $30,171 $124,453
*Includes all startup costs
===================================================================
TAXES
Taxable Income After Depletion $16,970 $16,970 $53,391 $53,391 $53,391 ($261,084)
Loss Carried Forward Credit $0 $0 $0 $0 $0 $455,198
Loss Carried Forward Credit Applied ($16,970) ($16,970) ($53,391) ($53,391) ($53,391) ($194,114)
Federal Income Tax (2) 0.34 $0 $0 $0 $0 $0 $0
State Income Tax (2) 0.05 $849 $849 $2,670 $2,670 $2,670 $9,706
-------------------------------------------------------------------
Net Income After Tax $16,122 $16,122 $50,722 $50,722 $50,722 ($270,790)
Loss Carried Forward $16,970 $16,970 $53,391 $53,391 $53,391 $194,114
Dep., Depl., & Amort. $26,086 $26,086 $39,287 $39,287 $39,287 $230,759
Deductible Exploration $2,450 $2,450 $2,450 $2,450 $2,450 $34,300
Capital expenditures ($52,250) ($52,250) ($52,250) ($52,250) ($53,900) ($825,290)
Reclamation $0 $0 $0 $0 $0 $0
Salvage $0 $0 $0 $0 $0 $0
-------------------------------------------------------------------
NET CASH FLOW $9,377 $9,377 $93,599 $93,599 $91,949 ($636,907)
CUMULATIVE CASH FLOW ($925,433) ($916,056) ($822,456) ($728,857) ($636,907)
========================================================================
Total Net Cash Flow of The Project (24 mo.) $92,804
Net Present Value of The Project @ 15% (24 mo.) ($145,359)
Net Present Value of The Project @ 10% (24 mo.) ($78,637)
(1) Milled ounces vary slightly from Schedule 2 due to rounding.
(2) Taxes are calculated using existing federal tax credits. Tax credit base
is 7% of $9.0 million or $630,000.
19
NEVADA MANHATTAN MINING, INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
SCHEDULE 4B - CASH FLOW ANALYSIS - MINE ALL ESTIMATED ORE BLOCKS - COMPLETE REHAB OF WC SHAFT 2ND 12 MONTHS
MONTH 13 14 15 !6
- --------------------------------------------------------------------------------------------------------------------
CAPITAL COSTS
MINE CONTRACTOR
Mobilization/Demobilization
Clean-up, resupport Decline
Slash entrance to Consolidated Manhattan
Drive drift for access to WC49 300 Level
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level)
(10' x 12" Decline, 400 LF @220/ft)
Clean up/ slash corners in Consolidated Manhattan
Access to 1,300 Level
Rehab WC Shaft to 670 Level
Install headframe & hoist at 565 Level
Rehab WC Shaft to 800 Level $29,000 $31,000 $31,000
Rehab WC Shaft to 910 Level $25,000
Rehab WC Shaft to 1,300 Level
Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $10,000
Subtotal - Mine Contractor $39,000 $41,000 $41,000 $35,000
Other contract work
Underground sampling (140 days @$400/d) $4,000 $2,000 $2,000 $4,000
Assays (140 days x 20/d x $15) $3,000 $1,500 $1,500 $3,000
ENGINEERING & CONSULTING
WORKING CAPITAL
CONTIGENCY @ 10% EXCL. WORKING CAPITAL $4,600 $4,450 $4,450 $4,200
---------------------------------------------------
TOTAL CAPITAL REQUIRED $50,600 $48,950 $48,950 $46,200
====================================================================================================================
PRODUCTION
Area/block WC670/4 WC670/4 WC800/5 WC910/6
WC800/5 WC910/6 WC1,120/7
Ore Production-tons/mo 1,600 1,600 1,600 1,600
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40
Ounces of gold mined 640.00 640.00 640.00 640.00
Tons of ore milled 1600 1600 1600 1600
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40
Ounces of gold milled (1) 640.00 640.00 640.00 640.00
Recovery (81%) 0.81 0.81 0.81 0.81
---------------------------------------------------
Gold Production - Troy Oz. 518 518 518 518
Average Gold Sales Price $/Troy Oz $390 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2
---------------------------------------------------
NET SMELTER RECEIPTS $201,139 $201,139 $201,139 $201,139
ROYALTY ( % of NSR) 0.00% $0 $0 $0 $0
---------------------------------------------------
INCOME AFTER ROYALTY $201,139 $201,139 $201,139 $201,139
===================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1
Processing & tailings $15 $15 $15 $15
G & A @ 10% $6 $6 $6 $6
---------------------------------------------------
Total Cost $/Ton $65 $65 $65 $65
OPERATING COSTS $104,000 $104,000 $104,000 $104,000
===================================================
DEDUCTIBLE EXPENSES Depreciation Base $720,900 $720,900 $720,900 $720,900
*Depreciation $8,591 $8,591 $8,591 $8,591
Deductible Exploration $4,900 $2,450 $2,450 $4,900
Amort. Non-deduct. Exp. & Dev. $1,050 $525 $525 $1,050
Local taxes 1% $2,011 $2,011 $2,011 $2,011
---------------------------------------------------
Deductible Expenses Before Depletion $16,552 $13,577 $13,577 $16,552
===================================================
Taxable Income Before Depletion $80,587 $83,562 $83,562 $80,587
Maximum allowed depletion - 50% rule $40,294 $41,781 $41,781 $40,294
Depletion at 15% $30,171 $30,171 $30,171 $30,171
Depletion allowed $30,171 $30,171 $30,171 $30,171
*Includes all mine development costs
===================================================
TAXES
Taxable Income After Depletion $50,416 $53,391 $53,391 $50,416
Loss Carried Forward Credit $0 $0 $0 $0
Loss Carried Forward Credit Applied ($50,416) ($53,391) ($53,391) ($50,416)
Federal Income Tax (2) 0.34 $0 $0 $0 $0
State Income Tax (2) 0.05 $2,521 $2,670 $2,670 $2,521
---------------------------------------------------
Net Income After Tax $47,895 $50,722 $50,722 $47,895
Loss Carried Foreward $50,416 $53,391 $53,391 $50,416
Dep.,Depl.,& Amort. $39,812 $39,287 $39,287 $39,812
Deductible Exploration $4,900 $2,450 $2,450 $4,900
Capital expenditures ($50,600) ($48,950) ($48,950) ($46,200)
Reclamation $0 $0 $0 $0
Salvage $0 $0 $0 $0
---------------------------------------------------
NET CASH FLOW $92,423 $96,899 $96,899 $96,823
CUMULATIVE CASH FLOW ($544,484) ($447,585) ($350,685) ($253,862)
===============================================================
17 18 19 20 21
- --------------------------------------------------------------------------------------------------------------------
CAPITAL COSTS
MINE CONTRACTOR
Mobilization/Demobilization
Clean-up, resupport Decline
Slash entrance to Consolidated Manhattan
Drive drift for access to WC49 300 Level
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level)
(10' x 12" Decline, 400 LF @220/ft)
Clean up/ slash corners in Consolidated Manhattan
Access to 1,300 Level
Rehab WC Shaft to 670 Level
Install headframe & hoist at 565 Level
Rehab WC Shaft to 800 Level
Rehab WC Shaft to 910 Level $25,000 $27,000
Rehab WC Shaft to 1,300 Level $53,000 $55,000 $55,000
Contractor supervision, overhead & profit $10,000 $10,000 $5,000 $5,000 $5,000
Subtotal - Mine Contractor $35,000 $37,000 $58,000 $60,000 $60,000
Other contract work
Underground sampling (140 days @$400/d) $2,000 $2,000 $2,000 $2,000 $2,000
Assays (140 days x 20/d x $15) $1,500 $1,500 $1,500 $1,500 $1,500
ENGINEERING & CONSULTING
WORKING CAPITAL
CONTIGENCY @ 10% EXCL. WORKING CAPITAL $3,850 $4,050 $6,150 $6,350 $6,350
---------------------------------------------------------------
TOTAL CAPITAL REQUIRED $42,350 $44,550 $67,650 $69,850 $69,850
====================================================================================================================
PRODUCTION
Area/block WC1,120/7 WC1,200/8
WC1,200/8 WC1,300/9
Ore Production-tons/mo 1,600 887
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.44 0.40 0.40 0.40
Ounces of gold mined 640.00 390.28 0.00 0.00 0.00
Tons of ore milled 1600 1600 1600 1600 1600
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 0.40
Ounces of gold milled (1) 640.00 640.00 640.00 640.00 640.00
Recovery (81%) 0.81 0.81 0.81 0.81 0.81
---------------------------------------------------------------
Gold Production - Troy Oz. 518 518 518 518 518
Average Gold Sales Price $/Troy Oz $390 $390 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 $2
---------------------------------------------------------------
NET SMELTER RECEIPTS $201,139 $201,139 $201,139 $201,139 $201,139
ROYALTY ( % of NSR) $0 $0 $0 $0 $0
---------------------------------------------------------------
INCOME AFTER ROYALTY $201,139 $201,139 $201,139 $201,139 $201,139
===============================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1 $1
Processing & tailings $15 $15 $15 $15 $15
G & A @ 10% $6 $6 $6 $6 $6
---------------------------------------------------------------
Total Cost $/Ton $65 $65 $65 $65 $65
OPERATING COSTS $104,000 $70,489 $28,800 $28,800 $28,800
===============================================================
DEDUCTIBLE EXPENSES Depreciation Base $1,095,900 $1,095,900 $1,095,900 $1,095,900 $1,095,900
*Depreciation $19,589 $19,589 $19,589 $19,589 $19,589
Deductible Exploration $2,450 $2,450 $2,450 $2,450 $2,450
Amort. Non-deduct. Exp. & Dev. $525 $525 $525 $525 $525
Local taxes $2,011 $2,011 $2,011 $2,011 $2,011
---------------------------------------------------------------
Deductible Expenses Before Depletion $24,576 $24,576 $24,576 $24,576 $24,576
===============================================================
Taxable Income Before Depletion $72,564 $106,075 $147,764 $147,764 $147,764
Maximum allowed depletion - 50% rule $36,282 $53,037 $73,882 $73,882 $73,882
Depletion at 15% $30,171 $30,171 $30,171 $30,171 $30,171
Depletion allowed $30,171 $30,171 $30,171 $30,171 $30,171
*Includes all mine development costs
===============================================================
TAXES
Taxable Income After Depletion $42,393 $75,904 $117,593 $117,593 $117,593
Loss Carried Forward Credit $0 $0 $0 $0 $0
Loss Carried Forward Credit Applied ($42,393) ($11,077) $0 $0 $0
Federal Income Tax (2) $0 $22,041 $39,982 $39,982 $39,982
State Income Tax (2) $2,120 $3,795 $5,880 $5,880 $5,880
---------------------------------------------------------------
Net Income After Tax $40,273 $50,067 $71,732 $71,732 $71,732
Loss Carried Foreward $42,393 $11,077 $0 $0 $0
Dep.,Depl.,& Amort. $50,285 $50,285 $50,285 $50,285 $50,285
Deductible Exploration $2,450 $2,450 $2,450 $2,450 $2,450
Capital expenditures ($42,350) ($44,550) ($67,650) ($69,850) ($69,850)
Reclamation $0 $0 $0 $0 $0
Salvage $0 $0 $0 $0 $0
---------------------------------------------------------------
NET CASH FLOW $93,051 $69,330 $56,817 $54,617 $54,617
CUMULATIVE CASH FLOW ($160,811) ($91,482) ($34,665) $19,952 $74,568
===============================================================
12 MONTH GRAND
22 23 24 TOTAL TOTAL
- --------------------------------------------------------------------------------------------------------------------
CAPITAL COSTS
MINE CONTRACTOR
Mobilization/Demobilization $30,000
Clean-up, resupport Decline $16,400
Slash entrance to Consolidated Manhattan $2,200
Drive drift for access to WC49 300 Level $9,600
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level) $88,000
(10' x 12" Decline, 400 LF @220/ft)
Clean up/ slash corners in Consolidated Manhattan $20,200
Access to 1,300 Level
Rehab WC Shaft to 670 Level $73,500
Install headframe & hoist at 565 Level $200,000
Rehab WC Shaft to 800 Level $91,000 $91,000
Rehab WC Shaft to 910 Level $77,000 $77,000
Rehab WC Shaft to 1,300 Level $55,000 $55,000 $273,000 $273,000
Contractor supervision, overhead & profit $5,000 $5,000 $5,000 $90,000 $200,000
Subtotal - Mine Contractor $60,000 $60,000 $5,000 $531,000 $1,080,900
Other contract work
Underground sampling (140 days @$400/d) $2,000 $2,000 $2,000 $28,000 $56,000
Assays (140 days x 20/d x $15) $1,500 $1,500 $1,500 $21,000 $42,000
ENGINEERING & CONSULTING $15,000
WORKING CAPITAL $150,000
CONTIGENCY @ 10% EXCL. WORKING CAPITAL $6,350 $6,350 $850 $58,000 $119,390
---------------------------------------------------------------
TOTAL CAPITAL REQUIRED $69,850 $69,850 $9,350 $638,000 $1,463,290
====================================================================================================================
PRODUCTION
Area/block
Ore Production-tons/mo 8,887 26,487
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.00 0.00
Ounces of gold mined 0.00 0.00 0.00 3,590 9,830
Tons of ore milled 1600 550 0 16,550 26,350
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.34 0.00
Ounces of gold milled (1) 640.00 187.00 0.00 6,587 9,827
Recovery (81%) 0.81 0.81 0.81
---------------------------------------------------------------
Gold Production - Troy Oz. 518 151 0 5,335 7,960
Average Gold Sales Price $/Troy Oz $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2
---------------------------------------------------------------
NET SMELTER RECEIPTS $201,139 $58,770 $0 $2,070,162 $3,088,430
ROYALTY ( % of NSR) $0 $0 $0 $0 $0
---------------------------------------------------------------
INCOME AFTER ROYALTY $201,139 $58,770 $0 $2,070,162 $3,088,430
===============================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43
Mine water treatment & pumping $1 $1 $1
Processing & tailings $15 $15 $15
G & A @ 10% $6 $6 $6
---------------------------------------------------------------
Total Cost $/Ton $65 $65 $65
OPERATING COSTS $28,800 $9,900 $0 $715,589 $1,719,699
===============================================================
DEDUCTIBLE EXPENSES Depreciation Base $1,095,900 $1,095,900 $1,095,900
*Depreciation $19,589 $19,589 $19,589 $191,077 $290,033
Deductible Exploration $2,450 $2,450 $2,450 $34,300 $68,600
Amort. Non-deduct. Exp. & Dev. $525 $525 $525 $7,350 $14,700
Local taxes $2,011 $588 $0 $20,702 $30,884
---------------------------------------------------------------
Deductible Expenses Before Depletion $24,576 $23,152 $22,564 $253,428 $404,217
===============================================================
Taxable Income Before Depletion $147,764 $25,718 ($22,564) $1,101,145 $964,514
Maximum allowed depletion = 50% rule $73,882 $12,859 $0 $561,855 $721,138
Depletion at 15% $30,171 $8,816 $0 $310,524 $446,293
$0 $0
Depletion allowed $30,171 $8,816 $0 $310,524 $434,977
*Includes all mine development costs
===============================================================
TAXES
Taxable Income After Depletion $117,593 $16,903 ($22,564) $790,621 $529,537
Loss Carried Forward Credit $0 $0 $0 $0 $455,198
Loss Carried Forward Credit Applied $0 $0 $0 ($261,085) $455,198
Federal Income Tax (2) $39,982 $5,747 $0 $187,714 $187,714
State Income Tax (2) $5,880 $845 ($1,128) $39,531 $49,237
---------------------------------------------------------------
Net Income After Tax $71,732 $10,311 ($21,436) $563,376 $292,586
Loss Carried Foreward $0 $0 $0 $261,085 $455,198
Dep.,Depl.,& Amort. $50,285 $28,930 $20,114 $508,951 $739,710
Deductible Exploration $2,450 $2,450 $2,450 $34,300 $68,600
Capital expenditures ($69,850) ($69,850) ($9,350) ($638,000) ($1,463,290)
Reclamation $0 $0 $0 $0 $0
Salvage $0 $0 $0 $0 $0
---------------------------------------------------------------
NET CASH FLOW $54,617 ($28,159) ($8,222) $729,711 $92,804
CUMULATIVE CASH FLOW $129,185 $101,025 $92,804
===============================================================
(1) Milled ounces vary slighty from Schedule 2 due to rounding.
(2) Taxes are calculated using existing federal tax credits. Tax credit base
is 7% of $9.0 mllion or $630,000.
20
NEVADA MANHATTAN MINING COMPANY,INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
SCHEDULE 4D - CASH FLOW ANALYSIS - MINE ALL ESTIMATED ORE BLOCKS -
COMPLETE REHAB OF WC SHAFT
$390/oz Gold
MONTH 1 2 3 4
===================================================================================================================
CAPITAL COSTS
MINE CONTRACTOR
Mobilization/Demobilization $30,000
Clean-up, resupport Decline $16,400
Slash entrance to Consolidated Manhattan $2,200
Drive drift for access to WC49 300 Level $9,600
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level) $22,000 $22,000 $22,000 $22,000
(10' x 12" Decline, 400 LF @220/ft)
Clean up/ slash corners in Consolidated Manhattan $20,200
Access to 1,300 Level
Rehab WC Shaft to 670 Level
Install headframe & hoist at 565 Level
Rehab WC Shaft to 800 Level
Rehab WC Shaft to 910 Level
Rehab WC Shaft to 1,300 Level
Contractor supervision, overhead & profit $5,000 $5,000 $10,000 $10,000
Subtotal - Mine Contractor $105,400 $27,000 $32,000 $32,000
OTHER CONTRACT WORK
Underground sampling (140 days @$400/d) $4,000 $4,000 $2,000 $2,000
Assays (140 days x 20/d x $15) $3,000 $3,000 $1,500 $1,500
ENGINEERING & CONSULTING $15,000
WORKING CAPITAL $50,000 $50,000 $50,000
CONTIGENCY @ 10% EXCL. WORKING CAPITAL $12,740 $3,400 $3,550 $3,550
----------------------------------------------------
TOTAL CAPITAL REQUIRED $190,140 $87,400 $89,050 $39,050
===================================================================================================================
PRODUCTION
Area/block CM/1 CM/1 CM/1 CM/1
WC49/2
Ore Production-tons/mo 800 800 1,600 1,600
Diluted Head Grade - Troy Oz/ton (Au) 0.20 0.20 0.20 0.30
Ounces of gold mined 160.00 160.00 320.00 480.00
Tons of ore milled 0 0 0 0
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.00 0.00 0.00 0.00
Ounces of gold milled (1) 0.00 0.00 0.00 0.00
Recovery (81%) 0.81 0.81 0.81 0.81
----------------------------------------------------
Gold Production - Troy Oz. 0 0 0 0
Average Gold Sales Price $/Troy Oz $0 $0 $0 $0
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2
----------------------------------------------------
NET SMELTER RECEIPTS $0 $0 $0 $0
ROYALTY ( % of NSR) 0.00% $0 $0 $0 $0
----------------------------------------------------
INCOME AFTER ROYALTY $0 $0 $0 $0
====================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1
Processing & tailings $0 $0 $0 $0
G & A @ 10% $4 $4 $4 $4
----------------------------------------------------
Total Cost $/Ton $48 $48 $48 $48
OPERATING COSTS $36,960 $36,960 $73,920 $73,920
====================================================
DEDUCTIBLE EXPENSES Depreciation base $211,400 $211,400 $211,400 $211,400
*Depreciation $7,558 $7,558 $7,558 $7,558
Deductible Exploration $4,900 $4,900 $2,450 $2,450
Amort. Non-deduct. Exp. & Dev. $1,050 $1,050 $525 $525
Local taxes 1% $0 $0 $0 $0
----------------------------------------------------
Deductible Expenses Before Depletion $13,508 $13,508 $10,533 $10,533
====================================================
Taxable Income Before Depletion ($50,468) ($50,468) ($84,453) ($84,453)
Maximum allowed depletion - 50% rule $0 $0 $0 $0
Depletion at 15% $0 $0 $0 $0
Depletion allowed $0 $0 $0 $0
*Includes all mine development costs
====================================================
TAXES
Taxable Income After Depletion ($50,468) ($50,468) ($84,453) ($84,453)
Loss Carried Forward Credit $50,468 $50,468 $84,453 $84,453
Loss Carried Forward Credit Applied $0 $0 $0 $0
Federal Income Tax (2) 0.34 $0 $0 $0 $0
State Income Tax (2) 0.05 $0 $0 $0 $0
----------------------------------------------------
Net Income After Tax ($50,468) ($50,468) ($84,453) ($84,453)
Loss Carried Foreward $0 $0 $0 $0
Dep.,Depl.,& Amort. $8,608 $8,608 $8,083 $8,083
Deductible Exploration $4,900 $4,900 $2,450 $2,450
Capital expenditures ($190,140) ($87,400) ($89,050) ($39,050)
Reclamation $0 $0 $0 $0
Salvage $0 $0 $0 $0
----------------------------------------------------
NET CASH FLOW ($227,100) ($124,360) ($162,970) ($112,970)
CUMULATIVE CASH FLOW ($227,100) ($351,460) ($514,430) ($627,400)
=================================================================
Total Net Cash Flow of The Project $92,804
Net Present Value of the Project @ 15% ($145,359)
Net Present Value of the Project @ 10% ($78,637)
5 6 7 8 9
===================================================================================================================
CAPITAL COSTS
MINE CONTRACTOR
Mobilization/Demobilization
Clean-up, resupport Decline
Slash entrance to Consolidated Manhattan
Drive drift for access to WC49 300 Level
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level)
(10' x 12" Decline, 400 LF @220/ft)
Clean up/ slash corners in Consolidated Manhattan
Access to 1,300 Level
Rehab WC Shaft to 670 Level $9,000 $9,000 $9,000 $9,000 $9,000
Install headframe & hoist at 565 Level $25,000 $25,000 $25,000 $25,000 $25,000
Rehab WC Shaft to 800 Level
Rehab WC Shaft to 910 Level
Rehab WC Shaft to 1,300 Level
Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $10,000 $10,000
Subtotal - Mine Contractor $44,000 $44,000 $44,000 $44,000 $44,000
OTHER CONTRACT WORK
Underground sampling (140 days @$400/d) $2,000 $2,000 $2,000 $2,000 $2,000
Assays (140 days x 20/d x $15) $1,500 $1,500 $1,500 $1,500 $1,500
ENGINEERING & CONSULTING
WORKING CAPITAL
CONTIGENCY @ 10% EXCL. WORKING CAPITAL $4,750 $4,750 $4,750 $4,750 $4,750
-----------------------------------------------------------------
TOTAL CAPITAL REQUIRED $52,250 $52,250 $52,250 $52,250 $52,250
===================================================================================================================
PRODUCTION
Area/block WC49/2 WC49/2 WC49/2 WC565/3 WC565/3
WC565/3
Ore Production-tons/mo 1,600 1,600 1,600 1,600 1,600
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 0.40
Ounces of gold mined 640.00 640.00 640.00 640.00 640.00
Tons of ore milled 400 400 1000 1600 1600
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.20 0.20 0.20 0.30 0.30
Ounces of gold milled (1) 80.00 80.00 200.00 480.00 480.00
Recovery (81%) 0.81 0.81 0.81 0.81 0.81
-----------------------------------------------------------------
Gold Production - Troy Oz. 65 65 162 389 389
Average Gold Sales Price $/Troy Oz $390 $390 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 $2
-----------------------------------------------------------------
NET SMELTER RECEIPTS $25,142 $25,142 $62,856 $150,854 $150,854
ROYALTY ( % of NSR) $0 $0 $0 $0 $0
-----------------------------------------------------------------
INCOME AFTER ROYALTY $25,142 $25,142 $62,856 $150,854 $150,854
=================================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1 $1
Processing & tailings $20 $20 $15 $15 $15
G & A @ 10% $6 $6 $6 $6 $6
-----------------------------------------------------------------
Total Cost $/Ton $70 $70 $65 $65 $65
OPERATING COSTS $84,800 $84,800 $93,070 $103,840 $103,840
=================================================================
DEDUCTIBLE EXPENSES Depreciation base $720,900 $720,900 $720,900 $720,900 $720,900
*Depreciation $8,591 $8,591 $8,591 $8,591 $8,591
Deductible Exploration $2,450 $2,450 $2,450 $2,450 $2,450
Amort. Non-deduct. Exp. & Dev. $525 $525 $525 $525 $525
Local taxes $251 $251 $629 $1,509 $1,509
-----------------------------------------------------------------
Deductible Expenses Before Depletion $11,817 $11,817 $12,194 $13,074 $13,074
=================================================================
Taxable Income Before Depletion ($71,475) ($71,475) ($42,408) $33,940 $33,940
Maximum allowed depletion - 50% rule $0 $0 $0 $16,970 $16,970
Depletion at 15% $0 $0 $0 $22,628 $22,628
Depletion allowed $0 $0 $0 $16,970 $16,970
*Includes all mine development costs
=================================================================
TAXES
Taxable Income After Depletion ($71,475) ($71,475) ($42,408) $16,970 $16,970
Loss Carried Forward Credit $71,475 $71,475 $42,408 $0 $0
Loss Carried Forward Credit Applied $0 $0 $0 ($16,970) ($16,970)
Federal Income Tax (2) $0 $0 $0 $0 $0
State Income Tax (2) $0 $0 $0 $849 $849
-----------------------------------------------------------------
Net Income After Tax ($71,475) ($71,475) ($42,408) $16,122 $16,122
Loss Carried Foreward $0 $0 $0 $16,970 $16,970
Dep.,Depl.,& Amort. $9,116 $9,116 $9,116 $26,086 $26,086
Deductible Exploration $2,450 $2,450 $2,450 $2,450 $2,450
Capital expenditures ($52,250) ($52,250) ($52,250) ($52,250) ($52,250)
Reclamation $0 $0 $0 $0 $0
Salvage $0 $0 $0 $0 $0
-----------------------------------------------------------------
NET CASH FLOW ($112,159) ($112,159) ($83,093) $9,377 $9,377
CUMULATIVE CASH FLOW ($739,559) ($851,718) ($934,811) ($925,433) ($916,056)
=================================================================
10 11 12 13 14
===================================================================================================================
CAPITAL COSTS
MINE CONTRACTOR
Mobilization/Demobilization
Clean-up, resupport Decline
Slash entrance to Consolidated Manhattan
Drive drift for access to WC49 300 Level
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level)
(10' x 12" Decline, 400 LF @220/ft)
Clean up/ slash corners in Consolidated Manhattan
Access to 1,300 Level
Rehab WC Shaft to 670 Level $9,000 $9,000 $10,500
Install headframe & hoist at 565 Level $25,000 $25,000 $25,000
Rehab WC Shaft to 800 Level $29,000 $31,000
Rehab WC Shaft to 910 Level
Rehab WC Shaft to 1,300 Level
Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $10,000 $10,000
Subtotal - Mine Contractor $44,000 $44,000 $45,500 $39,000 $41,000
OTHER CONTRACT WORK
Underground sampling (140 days @$400/d) $2,000 $2,000 $2,000 $4,000 $2,000
Assays (140 days x 20/d x $15) $1,500 $1,500 $1,500 $3,000 $1,500
ENGINEERING & CONSULTING
WORKING CAPITAL
CONTIGENCY @ 10% EXCL. WORKING CAPITAL $4,750 $4,750 $4,900 $4,600 $4,450
-----------------------------------------------------------------
TOTAL CAPITAL REQUIRED $52,250 $52,250 $53,900 $50,600 $48,950
===================================================================================================================
PRODUCTION
Area/block WC565/3 WC565/3 WC565/3 WC670/4 WC670/4
WC670/4 WC800/5
Ore Production-tons/mo 1,600 1,600 1,600 1,600 1,600
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 0.40
Ounces of gold mined 640.00 640.00 640.00 640.00 640.00
Tons of ore milled 1600 1600 1600 1600 1600
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 0.40
Ounces of gold milled (1) 640.00 640.00 640.00 640.00 640.00
Recovery (81%) 0.81 0.81 0.81 0.81 0.81
-----------------------------------------------------------------
Gold Production - Troy Oz. 518 518 518 518 518
Average Gold Sales Price $/Troy Oz $390 $390 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 $2
-----------------------------------------------------------------
NET SMELTER RECEIPTS $201,139 $201,139 $201,139 $201,139 $201,139
ROYALTY ( % of NSR) $0 $0 $0 $0 $0
-----------------------------------------------------------------
INCOME AFTER ROYALTY $201,139 $201,139 $201,139 $201,139 $201,139
=================================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1 $1
Processing & tailings $15 $15 $15 $15 $15
G & A @ 10% $6 $6 $6 $6 $6
-----------------------------------------------------------------
Total Cost $/Ton $65 $65 $65 $65 $65
OPERATING COSTS $104,000 $104,000 $104,000 $104,000 $104,000
=================================================================
DEDUCTIBLE EXPENSES Depreciation base $720,900 $720,900 $720,900 $720,900 $720,900
*Depreciation $8,591 $8,591 $8,591 $8,591 $8,591
Deductible Exploration $2,450 $2,450 $2,450 $4,900 $2,450
Amort. Non-deduct. Exp. & Dev. $525 $525 $525 $1,050 $525
Local taxes $2,011 $2,011 $2,011 $2,011 $2,011
-----------------------------------------------------------------
Deductible Expenses Before Depletion $13,577 $13,577 $13,577 $16,552 $13,577
=================================================================
Taxable Income Before Depletion $83,562 $83,562 $83,562 $80,587 $83,562
Maximum allowed depletion - 50% rule $41,781 $41,781 $41,781 $40,294 $41,781
Depletion at 15% $30,171 $30,171 $30,171 $30,171 $30,171
Depletion allowed $30,171 $30,171 $30,171 $30,171 $30,171
*Includes all mine development costs
=================================================================
TAXES
Taxable Income After Depletion $53,391 $53,391 $53,391 $50,416 $53,391
Loss Carried Forward Credit $0 $0 $0 $0 $0
Loss Carried Forward Credit Applied ($53,391) ($53,391) ($53,391) ($50,416) ($53,391)
Federal Income Tax (2) $0 $0 $0 $0 $0
State Income Tax (2) $2,670 $2,670 $2,670 $2,521 $2,670
-----------------------------------------------------------------
Net Income After Tax $50,722 $50,722 $50,722 $47,895 $50,722
Loss Carried Foreward $53,391 $53,391 $53,391 $50,416 $53,391
Dep.,Depl.,& Amort. $39,287 $39,287 $39,287 $39,812 $39,287
Deductible Exploration $2,450 $2,450 $2,450 $4,900 $2,450
Capital expenditures ($52,250) ($52,250) ($53,900) ($50,600) ($48,950)
Reclamation $0 $0 $0 $0 $0
Salvage $0 $0 $0 $0 $0
-----------------------------------------------------------------
NET CASH FLOW $93,599 $93,599 $91,949 $92,423 $96,899
CUMULATIVE CASH FLOW ($822,456) ($728,857) ($636,907) ($544,484) ($447,585)
=================================================================
21
NEVADA MANHATTAN MINING COMPANY,INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
SCHEDULE 4D - CASH FLOW ANALYSIS - MINE ALL ESTIMATED ORE BLOCKS -
COMPLETE REHAB OF WC SHAFT (Continued)
15 16 17 18
=======================================================================================================
CAPITAL COSTS
MINE CONTRACTOR
Mobilization/Demobilization
Clean-up, resupport Decline
Slash entrance to Consolidated Manhattan
Drive drift for access to WC49 300 Level
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level)
(10' x 12" Decline, 400 LF @220/ft)
Clean up/ slash corners in Consolidated Manhattan
Access to 1,300 Level
Rehab WC Shaft to 670 Level
Install headframe & hoist at 565 Level
Rehab WC Shaft to 800 Level $31,000
Rehab WC Shaft to 910 Level $25,000 $25,000 $27,000
Rehab WC Shaft to 1,300 Level
Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $10,000
Subtotal - Mine Contractor $41,000 $35,000 $35,000 $37,000
OTHER CONTRACT WORK
Underground sampling (140 days @$400/d) $2,000 $4,000 $2,000 $2,000
Assays (140 days x 20/d x $15) $1,500 $3,000 $1,500 $1,500
ENGINEERING & CONSULTING
WORKING CAPITAL
CONTIGENCY @ 10% EXCL. WORKING CAPITAL $4,450 $4,200 $3,850 $4,050
----------------------------------------------------
TOTAL CAPITAL REQUIRED $48,950 $46,200 $42,350 $44,550
======================================================================================================
PRODUCTION
Area/block WC800/5 WC910/6 WC1,120/7 WC1,200/8
WC910/6 WC1,120/7 WC1,200/8 WC1,300/9
Ore Production-tons/mo 1,600 1,600 1,600 887
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.44
Ounces of gold mined 640.00 640.00 640.00 390.28
Tons of ore milled 1600 1600 1600 1600
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40
Ounces of gold milled (1) 640.00 640.00 640.00 640.00
Recovery (81%) 0.81 0.81 0.81 0.81
----------------------------------------------------
Gold Production - Troy Oz. 518 518 518 518
Average Gold Sales Price $/Troy Oz $390 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2
----------------------------------------------------
NET SMELTER RECEIPTS $201,139 $201,139 $201,139 $201,139
ROYALTY ( % of NSR) $0 $0 $0 $0
----------------------------------------------------
INCOME AFTER ROYALTY $201,139 $201,139 $201,139 $201,139
====================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1
Processing & tailings $15 $15 $15 $15
G & A @ 10% $6 $6 $6 $6
----------------------------------------------------
Total Cost $/Ton $65 $65 $65 $65
OPERATING COSTS $104,000 $104,000 $104,000 $70,489
====================================================
DEDUCTIBLE EXPENSES Depreciation base $720,900 $720,900 $1,095,900 $1,095,900
*Depreciation $8,591 $8,591 $19,589 $19,589
Deductible Exploration $2,450 $4,900 $2,450 $2,450
Amort. Non-deduct. Exp. & Dev. $525 $1,050 $525 $525
Local taxes $2,011 $2,011 $2,011 $2,011
----------------------------------------------------
Deductible Expenses Before Depletion $13,577 $16,552 $24,576 $24,576
====================================================
Taxable Income Before Depletion $83,562 $80,587 $72,564 $106,075
Maximum allowed depletion - 50% rule $41,781 $40,294 $36,282 $53,037
Depletion at 15% $30,171 $30,171 $30,171 $30,171
Depletion allowed $30,171 $30,171 $30,171 $30,171
*Includes all mine development costs
====================================================
TAXES
Taxable Income After Depletion $53,391 $50,416 $42,393 $75,904
Loss Carried Forward Credit $0 $0 $0 $0
Loss Carried Forward Credit Applied ($53,391) ($50,416) ($42,393) ($11,077)
Federal Income Tax (2) $0 $0 $0 $22,041
State Income Tax (2) $2,670 $2,521 $2,120 $3,795
----------------------------------------------------
Net Income After Tax $50,722 $47,895 $40,273 $50,067
Loss Carried Foreward $53,391 $50,416 $42,393 $11,077
Dep.,Depl.,& Amort. $39,287 $39,812 $50,285 $50,285
Deductible Exploration $2,450 $4,900 $2,450 $2,450
Capital expenditures ($48,950) ($46,200) ($42,350) ($44,550)
Reclamation $0 $0 $0 $0
Salvage $0 $0 $0 $0
----------------------------------------------------
NET CASH FLOW $96,899 $96,823 $93,051 $69,330
CUMULATIVE CASH FLOW ($350,685) ($253,862) ($160,811) ($91,482)
====================================================
19 20 21 22
======================================================================================================
CAPITAL COSTS
MINE CONTRACTOR
Mobilization/Demobilization
Clean-up, resupport Decline
Slash entrance to Consolidated Manhattan
Drive drift for access to WC49 300 Level
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level)
(10' x 12" Decline, 400 LF @220/ft)
Clean up/ slash corners in Consolidated Manhattan
Access to 1,300 Level
Rehab WC Shaft to 670 Level
Install headframe & hoist at 565 Level
Rehab WC Shaft to 800 Level
Rehab WC Shaft to 910 Level
Rehab WC Shaft to 1,300 Level $53,000 $55,000 $55,000 $55,000
Contractor supervision, overhead & profit $5,000 $5,000 $5,000 $5,000
Subtotal - Mine Contractor $58,000 $60,000 $60,000 $60,000
OTHER CONTRACT WORK
Underground sampling (140 days @$400/d) $2,000 $2,000 $2,000 $2,000
Assays (140 days x 20/d x $15) $1,500 $1,500 $1,500 $1,500
ENGINEERING & CONSULTING
WORKING CAPITAL
CONTIGENCY @ 10% EXCL. WORKING CAPITAL $6,150 $6,350 $6,350 $6,350
----------------------------------------------------
TOTAL CAPITAL REQUIRED $67,650 $69,850 $69,850 $69,850
======================================================================================================
PRODUCTION
Area/block
Ore Production-tons/mo
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40
Ounces of gold mined 0.00 0.00 0.00 0.00
Tons of ore milled 1600 1600 1600 1600
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40
Ounces of gold milled (1) 640.00 640.00 640.00 640.00
Recovery (81%) 0.81 0.81 0.81 0.81
----------------------------------------------------
Gold Production - Troy Oz. 518 518 518 518
Average Gold Sales Price $/Troy Oz $390 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2
----------------------------------------------------
NET SMELTER RECEIPTS $201,139 $201,139 $201,139 $201,139
ROYALTY ( % of NSR) $0 $0 $0 $0
----------------------------------------------------
INCOME AFTER ROYALTY $201,139 $201,139 $201,139 $201,139
====================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1
Processing & tailings $15 $15 $15 $15
G & A @ 10% $6 $6 $6 $6
----------------------------------------------------
Total Cost $/Ton $65 $65 $65 $65
OPERATING COSTS $28,800 $28,800 $28,800 $28,800
====================================================
DEDUCTIBLE EXPENSES Depreciation base $1,095,900 $1,095,900 $1,095,900 $1,095,900
*Depreciation $19,589 $19,589 $19,589 $19,589
Deductible Exploration $2,450 $2,450 $2,450 $2,450
Amort. Non-deduct. Exp. & Dev. $525 $525 $525 $525
Local taxes $2,011 $2,011 $2,011 $2,011
----------------------------------------------------
Deductible Expenses Before Depletion $24,576 $24,576 $24,576 $24,576
====================================================
Taxable Income Before Depletion $147,764 $147,764 $147,764 $147,764
Maximum allowed depletion - 50% rule $73,882 $73,882 $73,882 $73,882
Depletion at 15% $30,171 $30,171 $30,171 $30,171
Depletion allowed $30,171 $30,171 $30,171 $30,171
*Includes all mine development costs
====================================================
TAXES
Taxable Income After Depletion $117,593 $117,593 $117,593 $117,593
Loss Carried Forward Credit $0 $0 $0 $0
Loss Carried Forward Credit Applied $0 $0 $0 $0
Federal Income Tax (2) $39,982 $39,982 $39,982 $39,982
State Income Tax (2) $5,880 $5,880 $5,880 $5,880
----------------------------------------------------
Net Income After Tax $71,732 $71,732 $71,732 $71,732
Loss Carried Foreward $0 $0 $0 $0
Dep.,Depl.,& Amort. $50,285 $50,285 $50,285 $50,285
Deductible Exploration $2,450 $2,450 $2,450 $2,450
Capital expenditures ($67,650) ($69,850) ($69,850) ($69,850)
Reclamation $0 $0 $0 $0
Salvage $0 $0 $0 $0
----------------------------------------------------
NET CASH FLOW $56,817 $54,617 $54,617 $54,617
CUMULATIVE CASH FLOW ($34,665) $19,952 $74,568 $129,185
====================================================
23 24 TOTAL
=========================================================================================
CAPITAL COSTS
MINE CONTRACTOR
Mobilization/Demobilization $30,000
Clean-up, resupport Decline $16,400
Slash entrance to Consolidated Manhattan $2,200
Drive drift for access to WC49 300 Level $9,600
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level) $88,000
(10' x 12" Decline, 400 LF @220/ft)
Clean up/ slash corners in Consolidated Manhattan $20,200
Access to 1,300 Level
Rehab WC Shaft to 670 Level $73,500
Install headframe & hoist at 565 Level $200,000
Rehab WC Shaft to 800 Level $91,000
Rehab WC Shaft to 910 Level $77,000
Rehab WC Shaft to 1,300 Level $55,000 $273,000
Contractor supervision, overhead & profit $5,000 $5,000 $200,000
Subtotal - Mine Contractor $60,000 $5,000 $1,080,900
OTHER CONTRACT WORK
Underground sampling (140 days @$400/d) $2,000 $2,000 $56,000
Assays (140 days x 20/d x $15) $1,500 $1,500 $42,000
ENGINEERING & CONSULTING $15,000
WORKING CAPITAL $150,000
CONTIGENCY @ 10% EXCL. WORKING CAPITAL $6,350 $850 $119,390
---------------------------------------
TOTAL CAPITAL REQUIRED $69,850 $9,350 $1,463,290
=========================================================================================
PRODUCTION
Area/block
Ore Production-tons/mo 26,487
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.00
Ounces of gold mined 0.00 0.00 9,830
Tons of ore milled 550 0 26,350
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.34 0.00
Ounces of gold milled (1) 187.00 0.00 9,827
Recovery (81%) 0.81 0.81
---------------------------------------
Gold Production - Troy Oz. 151 0 7,960
Average Gold Sales Price $/Troy Oz $390 $390
Ref. Chgs $/Troy Oz Au $2 $2
---------------------------------------
NET SMELTER RECEIPTS $58,770 $0 $3,088,430
ROYALTY ( % of NSR) $0 $0 $0
---------------------------------------
INCOME AFTER ROYALTY $58,770 $0 $3,088,430
=======================================
OPERATING COSTS - $/TON
Mining $43 $43
Mine water treatment & pumping $1 $1
Processing & tailings $15 $15
G & A @ 10% $6 $6
---------------------------------------
Total Cost $/Ton $65 $65
OPERATING COSTS $9,900 $0 $1,719,699
=======================================
DEDUCTIBLE EXPENSES Depreciation base $1,095,900 $1,095,900
*Depreciation $19,589 $19,589 $290,033
Deductible Exploration $2,450 $2,450 $68,600
Amort. Non-deduct. Exp. & Dev. $525 $525 $14,700
Local taxes $588 $0 $30,884
---------------------------------------
Deductible Expenses Before Depletion $23,152 $22,564 $404,217
=======================================
Taxable Income Before Depletion $25,718 ($22,564) $964,514
Maximum allowed depletion - 50% rule $12,859 $0 $721,138
Depletion at 15% $8,816 $0 $446,293
Depletion allowed $8,816 $0 $434,977
*Includes all mine development costs
=======================================
TAXES
Taxable Income After Depletion $16,903 ($22,564) $529,537
Loss Carried Forward Credit $0 $0 $455,198
Loss Carried Forward Credit Applied $0 $0 $455,198
Federal Income Tax (2) $5,747 $0 $187,714
State Income Tax (2) $845 ($1,128) $49,237
---------------------------------------
Net Income After Tax $10,311 ($21,436) $292,586
Loss Carried Foreward $0 $0 $455,198
Dep., Depl.,& Amort. $28,930 $20,114 $739,710
Deductible Exploration $2,450 $2,450 $68,600
Capital Expenditures ($69,850) ($9,350) ($1,463,290)
Reclamation $0 $0 $0
Salvage $0 $0 $0
---------------------------------------
NET CASH FLOW ($28,159) ($8,222) $92,804
CUMULATIVE CASH FLOW $101,025 $92,804
=======================================
(1) Milled ounces vary slightly from Schedule 2 due to rounding.
(2) Taxes are calculated using existing federal tax credits. Tax credit base
is 7% of $9.0 million or $630,000.
22
NEVADA MANHATTAN MINING, INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
SCHEDULE 5 - CASH FLOW ANALYSIS -
MINE ESTIMATED ORE BLOCKS
DOWN TO AND INCLUDING 565 LEVEL
$390/oz Gold
MONTH 1 2 3 4
===================================================================================================================
CAPITAL COSTS
Mine Contractor
Mobilization/Demobilization $30,000
Clean-up, resupport Decline $16,400
Slash entrance to Consolidated Manhattan $2,200
Drive drift for access to WC49 300 Level $9,600
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level) $22,000 $22,000 $22,000 $22,000
(10' x 12" Decline, 400 LF @220/ft)
Clean up/slash corners in Consolidated Manhattan $20,200
Provide add. ventilation for White Caps levels
Contractor supervision, overhead & profit $5,000 $5,000 $10,000 $10,000
Subtotal - Mine Contractor $105,400 $27,000 $32,000 $32,000
Other contract work
Underground sampling (140 days @$400/d) $4,000 $4,000 $4,000 $2,000
Assays (140 days x 20/d x $15) $3,000 $3,000 $3,000 $1,500
Engineering & Consulting $15,000
Working Capital $50,000 $50,000 $50,000
Contigency @ 10% Excl. Working Capital $12,740 $3,400 $3,900 $3,550
----------------------------------------------------
TOTAL CAPITAL REQUIRED $190,140 $87,400 $92,900 $39,050
===================================================================================================================
PRODUCTION
Area/block CM/1 CM/1 CM/1 CM/1
WC49/2
Ore Production-tons/mo 800 800 1,600 1,600
Diluted Head Grade - Troy Oz/ton (Au) 0.20 0.20 0.20 0.30
Ounces of gold mined 160.00 160.00 320.00 480.00
Tons of ore milled 0 0 0 0
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.00 0.00 0.00 0.00
Ounces of gold milled (1) 0.00 0.00 0.00 0.00
Recovery (81%) 0.81 0.81 0.81 0.81
----------------------------------------------------
Gold Production - Troy Oz 0 0 0 0
Average Gold Sales Price $/Troy Oz $390 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2
----------------------------------------------------
NET SMELTER RECEIPTS $0 $0 $0 $0
ROYALTY (% of NSR) 0.00% $0 $0 $0 $0
----------------------------------------------------
INCOME AFTER ROYALTY $0 $0 $0 $0
====================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1
Processing & tailings $0 $0 $0 $0
G & A @ 10% $4 $4 $4 $4
----------------------------------------------------
Total Cost $/Ton $48 $48 $48 $48
ANNUAL OPERATING COSTS $36,960 $36,960 $73,920 $73,920
====================================================
DEDUCTIBLE EXPENSES Depreciation Base $211,400 $211,400 $211,400 $211,400
*Depreciation $7,558 $7,558 $7,558 $7,558
Deductible Exploration $4,900 $4,900 $4,900 $2,450
Amort. Non-deduct. Exp. & Dev. $1,050 $1,050 $1,050 $525
Local taxes 1% $0 $0 $0 $0
----------------------------------------------------
Deductible Expenses Before Depletion $13,508 $13,508 $13,508 $10,533
====================================================
Taxable Income Before Depletion ($50,468) ($50,468) ($87,428) ($84,453)
Maximum allowed depletion - percentage $0 $0 $0 $0
Depletion at 15% $0 $0 $0 $0
Depletion allowed $0 $0 $0 $0
*Includes all mine development costs
====================================================
TAXES
Taxable Income After Depletion ($50,468) ($50,468) ($87,428) ($84,453)
Loss Carried Forward Credit $50,468 $50,468 $87,428 $84,453
Loss Carried Forward Credit Applied $0 $0 $0 $0
Federal Income Tax (2) 0.34 $0 $0 $0 $0
State Income Tax (2) 0.05 $0 $0 $0 $0
----------------------------------------------------
Net Income After Tax ($50,468) ($50,468) ($87,428) ($84,453)
Loss Carried Forward $0 $0 $0 $0
Dep., Depl., & Amort. $8,608 $8,608 $8,608 $8,083
Deductible Exploration $4,900 $4,900 $4,900 $2,450
Capital expenditures ($190,140) ($87,400) ($92,900) ($39,050)
Reclamation $0 $0 $0 $0
Salvage $0 $0 $0 $0
----------------------------------------------------
NET CASH FLOW ($227,100) ($124,360) ($166,820) ($112,970)
CUMULATIVE CASH FLOW ($227,100) ($351,460) ($518,280) ($631,250)
=================================================================
Total Net Cash Flow of The Project $425,326
Net Present Value of The Project @ 15% $299,526
Net Present Value of The Project @ 10% $339,152
NEVADA MANHATTAN MINING, INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
SCHEDULE 5 - CASH FLOW ANALYSIS -
MINE ESTIMATED ORE BLOCKS
DOWN TO AND INCLUDING 565 LEVEL
5 6 7 8 9
===================================================================================================================
CAPITAL COSTS
Mine Contractor
Mobilization/Demobilization
Clean-up, resupport Decline
Slash entrance to Consolidated Manhattan
Drive drift for access to WC49 300 Level
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level)
(10' x 12" Decline, 400 LF @220/ft)
Clean up/slash corners in Consolidated Manhattan
Provide add. ventilation for White Caps levels $25,000
Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $10,000 $10,000
Subtotal - Mine Contractor $35,000 $10,000 $10,000 $10,000 $10,000
Other contract work
Underground sampling (140 days @$400/d) $2,000 $6,000 $6,000 $6,000 $6,000
Assays (140 days x 20/d x $15) $1,500 $4,500 $4,500 $4,500 $4,500
Engineering & Consulting
Working Capital
Contigency @ 10% Excl. Working Capital $3,850 $2,050 $2,050 $2,050 $2,050
-----------------------------------------------------------------
TOTAL CAPITAL REQUIRED $42,350 $22,550 $22,550 $22,550 $22,550
===================================================================================================================
PRODUCTION
Area/block WC49/2 WC49/2 WC49/2 WC565/3 WC565/3
WC565/3
Ore Production-tons/mo 1,600 1,600 1,600 1,600 1,600
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40 0.40 0.40
Ounces of gold mined 640.00 640.00 640.00 640.00 640.00
Tons of ore milled 400 400 1000 1600 2400
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.20 0.20 0.20 0.30 0.30
Ounces of gold milled (1) 80.00 80.00 200.00 480.00 720.00
Recovery (81%) 0.81 0.81 0.81 0.81 0.81
-----------------------------------------------------------------
Gold Production - Troy Oz 65 65 162 389 583
Average Gold Sales Price $/Troy Oz $390 $390 $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2 $2 $2
-----------------------------------------------------------------
NET SMELTER RECEIPTS $25,142 $25,142 $62,856 $150,854 $226,282
ROYALTY (% of NSR) $0 $0 $0 $0 $0
-----------------------------------------------------------------
INCOME AFTER ROYALTY $25,142 $25,142 $62,856 $150,854 $226,282
=================================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43 $43 $43
Mine water treatment & pumping $1 $1 $1 $1 $1
Processing & tailings $20 $20 $15 $15 $15
G & A @ 10% $6 $6 $6 $6 $6
-----------------------------------------------------------------
Total Cost $/Ton $70 $70 $65 $65 $65
ANNUAL OPERATING COSTS $84,800 $84,800 $93,070 $103,840 $118,200
=================================================================
DEDUCTIBLE EXPENSES Depreciation Base $316,400 $316,400 $316,400 $316,400 $316,400
*Depreciation $5,656 $5,656 $5,656 $5,656 $5,656
Deductible Exploration $2,450 $7,350 $7,350 $7,350 $7,350
Amort. Non-deduct. Exp. & Dev. $525 $1,575 $1,575 $1,575 $1,575
Local taxes $251 $251 $629 $1,509 $2,263
-----------------------------------------------------------------
Deductible Expenses Before Depletion $8,882 $14,832 $15,209 $16,089 $16,843
=================================================================
Taxable Income Before Depletion ($68,540) ($74,490) ($45,423) $30,925 $91,238
Maximum allowed depletion - percentage $0 $0 $0 $15,463 $45,619
Depletion at 15% $0 $0 $0 $22,628 $33,942
Depletion allowed $0 $0 $0 $15,463 $45,619
*Includes all mine development costs
=================================================================
TAXES
Taxable Income After Depletion ($68,540) ($74,490) ($45,423) $15,463 $45,619
Loss Carried Forward Credit $68,540 $74,490 $45,324 $0 $0
Loss Carried Forward Credit Applied $0 $0 $0 ($15,463) ($45,619)
Federal Income Tax (2) $0 $0 $0 $0 $0
State Income Tax (2) $0 $0 $0 $773 $2,281
-----------------------------------------------------------------
Net Income After Tax ($68,540) ($74,490) ($45,423) $14,689 $43,338
Loss Carried Forward $0 $0 $0 $15,463 $45,619
Dep., Depl., & Amort. $6,181 $7,231 $7,231 $22,693 $52,850
Deductible Exploration $2,450 $7,350 $7,350 $7,350 $7,350
Capital expenditures ($42,350) ($22,550) ($22,550) ($22,550) ($22,550)
Reclamation $0 $0 $0 $0 $0
Salvage $0 $0 $0 $0 $0
-----------------------------------------------------------------
NET CASH FLOW ($102,259) ($82,459) ($53,393) $37,645 $126,607
CUMULATIVE CASH FLOW ($733,509) ($815,968) ($869,361) ($831,715) ($705,108)
=================================================================
NEVADA MANHATTAN MINING, INC.
PROJECT REVIEW & BUSINESS PLAN
APPENDIX B
SCHEDULE 5 - CASH FLOW ANALYSIS -
MINE ESTIMATED ORE BLOCKS
DOWN TO AND INCLUDING 565 LEVEL
10 11 12 TOTAL
======================================================================================================
CAPITAL COSTS
Mine Contractor
Mobilization/Demobilization $30,000
Clean-up, resupport Decline $16,400
Slash entrance to Consolidated Manhattan $2,200
Drive drift for access to WC49 300 Level $9,600
(10' x 10" drift, 60 LF @!60/ft)
Drive drift for to White Caps shaft (565 Level) $88,000
(10' x 12" Decline, 400 LF @220/ft)
Clean up/slash corners in Consolidated Manhattan $20,200
Provide add. ventilation for White Caps levels $25,000
Contractor supervision, overhead & profit $10,000 $10,000 $10,000 $110,000
Subtotal - Mine Contractor $10,000 $10,000 $10,000 $301,400
Other contract work
Underground sampling (140 days @$400/d) $6,000 $6,000 $4,000 $56,000
Assays (140 days x 20/d x $15) $4,500 $4,500 $3,000 $42,000
Engineering & Consulting $15,000
Working Capital $150,000
Contigency @ 10% Excl. Working Capital $2,050 $2,050 $1,700 $41,440
----------------------------------------------------
TOTAL CAPITAL REQUIRED $22,550 $22,550 $18,700 $605,840
======================================================================================================
PRODUCTION
Area/block WC565/3 WC565/3 WC565/3
Ore Production-tons/mo 1,600 1,600 119 16,119
Diluted Head Grade - Troy Oz/ton (Au) 0.40 0.40 0.40
Ounces of gold mined 640.00 640.00 47.60 5,648
Tons of ore milled 3000 3600 3600 16,000
Diluted Head Grade to Mill - Troy Oz/ton (Au) 0.40 0.40 0.40
Ounces of gold milled (1) 1200.00 1440.00 1440.00 5,640
Recovery (81%) 0.81 0.81 0.81
----------------------------------------------------
Gold Production - Troy Oz 972 1,166 1,166 4,568
Average Gold Sales Price $/Troy Oz $390 $390 $390
Ref. Chgs $/Troy Oz Au $2 $2 $2
----------------------------------------------------
NET SMELTER RECEIPTS $377,136 $452,563 $452,563 $1,772,539
ROYALTY (% of NSR) $0 $0 $0 $0
----------------------------------------------------
INCOME AFTER ROYALTY $377,136 $452,563 $452,563 $1,772,539
====================================================
OPERATING COSTS - $/TON
Mining $43 $43 $43
Mine water treatment & pumping $1 $1 $1
Processing & tailings $15 $15 $15
G & A @ 10% $6 $6 $6
----------------------------------------------------
Total Cost $/Ton $65 $65 $65
ANNUAL OPERATING COSTS $129,200 $140,000 $70,393 $1,046,063
====================================================
DEDUCTIBLE EXPENSES Depreciation Base $316,400 $316,400 $316,400
*Depreciation $5,656 $5,656 $5,656 $75,475
Deductible Exploration $7,350 $7,350 $4,900 $41,650
Amort. Non-deduct. Exp. & Dev. $1,575 $1,575 $1,050 $8,925
Local taxes $3,771 $4,526 $4,526 $17,725
----------------------------------------------------
Deductible Expenses Before Depletion $18,352 $19,106 $16,131 $176,501
====================================================
Taxable Income Before Depletion $229,584 $293,457 $366,039 $549,975
Maximum allowed depletion - percentage $114,792 $146,728 $183,019 $505,622
Depletion at 15% $56,570 $67,884 $67,884 $248,910
Depletion allowed $56,570 $67,884 $67,884 $253,421
*Includes all mine development costs
====================================================
TAXES
Taxable Income After Depletion $173,014 $225,572 $298,154 $296,554
Loss Carried Forward Credit $0 $0 $0 $461,169
Loss Carried Forward Credit Applied ($173,014) ($225,572) ($1,501) $461,169
Federal Income Tax (2) $0 $0 $100,862 $100,862
State Income Tax (2) $8,651 $11,279 $14,908 $37,891
----------------------------------------------------
Net Income After Tax $164,363 $214,294 $182,385 $157,801
Loss Carried Forward $173,014 $225,572 $1,501 $461,169
Dep., Depl., & Amort. $63,801 $75,115 $74,590 $343,596
Deductible Exploration $7,350 $7,350 $4,900 $68,600
Capital expenditures ($22,550) ($22,550) ($18,700) ($605,840)
Reclamation $0 $0 $0 $0
Salvage $0 $0 $0 $0
----------------------------------------------------
NET CASH FLOW $385,978 $499,781 $244,676 $425,326
CUMULATIVE CASH FLOW ($319,131) $180,651 $425,326
====================================================
(1) Milled ounces vary slightly from Schedule 2 due to rounding.
(2) Taxes are calculated using existing federal tax credits. Tax credit base
is 7% of $9.0 million or $630,000.
23
APPENDIX C
MILL INFORMATION
June 21, 1995 letter from Dale Moore to Mr. Wilson regarding the proposed flow
sheet for the New Concept Mining, Inc. mill.
Undated equipment list for the New Concept Mining, Inc. mill.
13
24
June 21, 1995
Dear Mr. Wilson
The Primary Crushing will be done at the mine site with a Portable
Crusher, which consists of a 18"x 34" Jaw Crusher and a 24" Roll Crusher. The
secondary crushing will be done at the Mill with a 3' short head Crusher.
The Grinding Circuit will consist of 2 Ball Mills, one a 7'x9' Marcy
for the Primary grind and a 4'x8' Marcy for the Regrind Mill. The underflow
from the 8" Cyclones will go to a 2'x4' 2 cell Jig. The overflow will go to a
30' thickner. The Slurry will be thickened to 45 to 50% solids before it is
pumped to the leach tanks. The first leach tank will be a Pachuca Tank. The
Mids from the Jig will go to the tables (5-5'x7' Diester) product from the
tables will go to the refinery.
Tails from the leach circuit will go to the Floatation Cells (8 48"
Denvers) product from the floats will go to a 12' thickner, then to a 2 Leaf
Filter.
It is impossible to design a balanced flow sheet when the equipment has
not been purchased and the "Wheels" keep changing their minds as to what they
want. The equipment list that I am sending to you is a bare minimum that will
be needed and what I recommended that be purchased.
The Strip Circuit and EW Cells are in storage in Las Vegas. All S.S.
Steel and Custom made.
I inspected this Circuit on June 16, 1995 and it is in very good
condition and it is complete with EW Cells and Rectifiers.
The water well will produce 50 gpm Fresh water usage in the Mill, will
be approx. 20 gpm.
The information that I am sending you is not exactly what you
requested, but it is all that I have at this time and I hope it will be of some
use to you.
Sincerely,
/s/ DALE MOORE
------------------------------------
Dale Moore
25
EQUIPMENT
1. PORTABLE CRUSHING PLANT (AT THE MINE SITE)
18" X 34" JAW CRUSHER
24" ROLL CRUSHER
CONVEYORS
(MILL SITE)
1. 3 FOOT SHORT HEAD
KUE-KEN 100 H.P.
2. 100 TON FINE ORE STORAGE BIN
3. 18" X 6' BELT FEEDER
4. 24" X 34' FINE ORE CONVEYOR
5. BELT SCALES
6. 7' X 9' MARCY BALL MILL (INSTALLED IN MILL) ALREADY
7. 4" X 3" SLURRY PUMP & SUMP BOX
8. 4-8" CYCLONES & BOXES
9. 2' X 4' DECO JIG
10. 2" X 3" SLURRY PUMP
11. 30' THICKNER TANK
12. 6" O.D.s PUMP
13. 4- 12' X 18' LEACH TANKS WITH ADAPTER MECH ALREADY INSTALLED
14. 4' X 8' MARCY REGRIND MILL W/100 H.P. MOTOR & GEAR BOX
15. 5- 5' X 7' DIESTER TABLES
16. 2 X 3 SLURRY PUMP
17. AIR COMPRESSOR
18. NACN MIXING TANK (12,000 GAL)
19. LIME MIXING TANK (3,000 GAL)
20. LIME SLAKING MILL (2' X 2' BALL MILL) ?
21. NACN PUMP (POSITIVE DISPLACENT) 1" X 1 1/2"
22. REFINERY FURNACE (125 CRUCIBLE)
23. 2- RECTIFIERS (50 AMP) 110-220
24. STRIPPING PLANT SS STEEL, STRIP TANK, EW CELL
CUSTOM MADE IN LAS VEGAS (USED) AVAILABLE
25. PUMPS FOR STRIPPING PLANT
1.5" X 1" SOLUTION PUMP
1" X 1" SOLUTION PUMP FEED TO E.W. CELLS
26. SECURITY SYSTEM FOR REFINERY
27. MISC. PIPING & PUMPS
28. PULP DENSITY SCALES
29. 25' CLARIFIER FOR ATG WASTE WATER TREATMENT SYSTEM
30. A.T.G. WASTE WATER SYSTEM
31. 3" GALIGER SUMP PUMP
32. 12 DENVER FLOAT CELLS (48")
33. 15' THICKNER TANK W/MECH
34. 2' LEAF FILTER W/BLOWER
26
LAB EQUIPMENT
1. RO-TAP AND SCREENS
2. CHIPMUNK LAB CRUSHER 3" X 6"
3. ROLL CRUSHER (6" X 8")
4. PULVERIZER
5. METTLER BALANCE
6. CAHN MICRO-BALANCE
7. HOT PLATES
8. LAB TABLES
9. VENT HOODS
10. CUPPLING FURNACE
11. CRUCIBLE FURNACE
12. MISC GLASS WARE