Preliminary Economic Assessment

Summary

The study shows that the most likely development scenario at Crypto would be that of a completely conventional underground mine and mill complex producing clean, high value zinc-indium and copper-gold-silver concentrates. Approximately 55-60% of the tonnage at the grade required to support the most likely development scenario of a 3,500 tonne per day underground mine has been outlined to date. The deposit is open-ended and a US$3.6 million program of continued drilling is recommended to locate additional higher grade mineralization that could increase the overall grade of the mineable resource and which might also be available for early mine scheduling. Existing lower grade resources could be used to extend mine life following payback of development capital.

Technical

Both Indicated and Inferred resources were considered in the study. A conceptual mine plan was developed for underground extraction of the sulphide resource only, the oxide resource representing a potential future open pit opportunity. Access to the underground would be via a double ramp system. Longitudinal retreat stoping with uncemented rock fill was chosen as the primary mining method. Allowing for full mine dilution, extraction and recovery factors, a total of 12.1 million tonnes with an average grade of 5.18% zinc, 0.38% copper and 35 g/t indium was scheduled over a period of 11 years for a mill throughput of 3,500 tonnes per day. A flotation process plant built on site would produce separate zinc-indium and copper-gold-silver concentrates.

Cost and production parameters for this development scenario are summarized in the following table:

In order to maximize economies of scale and achieve a maximum possible processing rate of 3,500 tonnes per day, the model considered all sulphide resources, including lower grade mineralization, and used a zinc price of $1.10 per pound to outline enough tonnage above a cutoff grade of 4% zinc equivalent to support a minimum ten year mine life. The inclusion of lower grade mineralization lowered overall head grades and led to a subeconomic conclusion for the deposit to the extent that it has been outlined to date and using conservative metals price assumptions from a few years ago.

The study noted that there are higher grade zones within the resource and that in aggregate, these represent 55-60% of the minimum grade and tonnage required for an economic outcome. With the higher metals price assumptions currently being used in deposit modelling, the percentage of minimum tonnes and grade already in place would be higher. Since the deposit is open in several directions, there is good potential to expand existing sulphide and oxide resources and very good potential for the discovery of new zones beyond these extensions. The PEA recommends a US$3.6 million program of continued drilling aimed at building the higher grade resource inventory and identifying additional higher grade mineralization in outlying zones.

Preliminary Economic Assessment
of the Crypto Zinc-Copper-Indium
Project Juab County, Utah

A Preliminary Economic Assessment is a conceptual analysis of a mine development scenario and is based on a number of economic and technical assumptions. It includes Inferred Resources which are considered too geologically speculative to be classified as Mineral Reserves. Investors are cautioned that mineral resources that are not mineral reserves do not have demonstrated economic viability.