Crypto Project

Introduction

The Crypto deposit in western Utah is a zinc-copper skarn deposit with exceptionally high levels of indium and recoverable amounts of gold and silver. The project is situated near infrastructure in one of the most mining-favourable and secure jurisdictions in the world. Exploration from the late 1950's through 1993, mainly by Utah International and Cyprus Minerals, resulted in the delineation of a significant historical zinc resource and led Cyprus to complete a pre-feasibility study.

Lithic acquired a 100% interest in the property in 2005, carried out 10,640 metres of core drilling in 2007-2008 and in 2009, completed preliminary metallurgical testwork and a new resource estimate. This work extended the known deposit, confirmed the presence of significant levels of associated copper and revealed exceptional levels of indium, a key component of flat panel displays and thin film solar panels, establishing Crypto as perhaps the most important potential resource of indium in the continental USA.

In 2010, a Preliminary Economic Assessment (PEA) of the Crypto project was completed by an independent team of highly experienced engineers. The results indicate that the most likely development scenario at Crypto would be that of a completely conventional 3,500 tpd underground mine and mill complex. Capital costs were estimated at $187 million initially with a life-of-mine total of $306 million assuming an 11 year operation. Although the project has not yet reached the economic threshold, a significant proportion of the minimum grade and tonnage required has already been defined. Since the Crypto deposit is open in several directions, there is good potential to expand existing resources and very good potential for the discovery of new zones beyond these extensions. A US$3.6 million program of continued drilling to expand the higher grade portions of both the sulphide and oxide zinc deposits is planned. The project is fully permitted and bonded.

Other intriguing opportunities for further discovery on the property include structurally controlled, high grade silver-zinc-lead mineralization in several areas, one of which was mined historically, and the possibility of a deep, underlying porphyry molybdenum deposit.