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MIGUEL AUZA PROJECT

History

 

Mining was first recorded in the Miguel Auza area of Mexico in the 1560s during the Spanish Conquest. The town of
Miguel Auza was founded over 450 years ago, on rich silver-bearing veins, and mining thrived, as evidenced by remains
of extensive infrastructure. The native people undoubtedly exploited the precious metals before the arrival of the Spanish, and it was their knowledge that enabled the Spanish to locate and exploit the rich gold (Au), silver (Ag), lead (Pb) and
zinc (Zn) deposits.

Documentation of early development is scarce, the earliest account being a report by R. R. Foster in 1921, recording
mining activities from 1892 to 1910. The veins were accessed by at least twelve vertical shafts ranging in depth from
49 m to 114 m. Hoisting was by horse-powered winders. Many of the headframes still exist today.

The Santa Ana Shaft was the deepest shaft at 114 m. Foster reported that it was intended to be the main working shaft
to access the silver-rich northern veins at depth. The Santa Ana Shaft was actively being sunk when mining in Miguel Auza ceased, due mostly to problems with managing the high volume of water inflow. When the mine closed, an additional
135 m of sinking was required to cut the downward extension of the northern veins.

A total of five major vein systems were exploited between 1892-1910: the San Ramon, Escondida, Esperanza, Union, and Calvario systems, as well as numerous minor veins.

The San Ramon Vein was mined for 240 m along strike on the 91 m level and developed for 170 m along strike on the
140 m level. Foster reports that the last lot of ore taken from the lowest workings, before they were flooded, graded
3.4 g/t Au, 2,363 g/t Ag, 2% Pb, 6% manganese (Mn), 14% iron (Fe), 21% Silica, 8.6% sulphur (S), and 5% arsenic (As).

The Esperanza Vein lies south of the San Ramon Vein; it is 240 m long on the 91 m level but little work was done below.

The Escondida Vein lies south of the San Ramon and Esperanza Veins. Some development was carried out but there was no stoping as this vein was found shortly before the mine was flooded. Foster reports 8,000 t, averaging 3,500 g/t Ag developed and ready to stope between the 60 and 100 metre levels.

The Union Vein dips 45º northwest and is about 50 cm thick. It was mined for approximately 250 m along strike on the 91 m level.

Foster reports that the Calvario Vein dips steeply southwest and is 0.9-1.2 m wide. He also reported a continuous open cut, 0.62.4 m wide, extended southwest for 450 m and sporadically for an additional 450 m. The open cuts have subsequently been backfilled and are not available for inspection. The Calvario Vein was developed, by drifting, for approximately 250 m on the 91 m level. This vein and nine other smaller, parallel, or sub-parallel veins, were worked extensively by the Spanish.

The only production records from this period are in the form of analyses at the smelter. However, material mined at Miguel Auza was likely hand sorted prior to shipping to the smelter and therefore back calculating to a mined grade is not practical.

The pumping technology prior to 1900 made managing the high volumes of water (reportedly 850 gpm) encountered below the water table problematic. The mineralization exploited above the water table was oxidized material, whereas below that elevation, some of the silver was associated with sulphide minerals and was untreatable given the processing technology available at that time.

Mining ceased and the workings were allowed to flood around 1910. Due to due the outbreak of the Mexican Revolution (19101920), fragmented ownership, and lack of capital as a result of legislation regarding foreign ownership, there was no serious attempt to re-open the mines until 1966. Howver, flotation technology developed in the 1920s and advances in pumping capability made possible management of the water volume.

From 1966 to 1972, Alejandro Gaitan produced approximately 16,000 tonnes of material, grading 0.8 g/t Au, 583 g/t Ag,
9% Pb, and 9% Zn from the Calvario Vein via the Calvario Shaft (Lammle, 2003). Crude or hand-sorted mineralization was shipped to the Asarco Smelter in Chihuahua and the Peñoles Smelter in Torreon. Smelter terms are unknown.

From 1984 to 1987, available records from the Peñoles Smelter indicate that Javier Martinez Lomas (Martinez), shipped
867 tonnes, grading 1.3 g/t Au, 2,249 g/t Ag, and 6.6% Pb, and 4.8% Zn from the Antigua Vein via the Martinez Shaft.
The actual production was greater than 867 t, though accurate records are not available. The production comprised hand-cobbed mineralization as well as some concentrate. Smelter terms are unknown. Martinez constructed a processing plant in the 1980s that included a ball mill, coarse and fine ore bins and one set of float cells. It is believed the capacity was
50100 tpd, but never operated efficiently. Martinez contends that he mined several thousands of tonnes high grade material over a ten year period.

In 1987, while the Martinez Shaft was reopened by Martinez for mining, the Consejo de Recursos Minerales (CDRM), i.e. the Mexican Mineral Resources Department, conducted a sampling program, consisting of 33 underground channel samples, from the backs of accessible sections of the Ramal 1, Ramal 2, and Antigua Veins.

In 2003, A.J. Resources commissioned Lammle to prepare a technical report on the Property. Based on the Gaitan and Martinez smelter returns and the CDRM underground sampling, Lammle estimated an inferred resource of 269,000 t grading 0.50 g/t Au, 680 g/t Ag, 6.0% Pb, and 5.5% Zn. The resource estimate is historical in nature and is reported here for interest only. Mr. Wayne Valliant considers the estimate relevant in that it delineates mineralization of probable economic grades with possible downward extension. It is not, however, considered CIM compliant as it is based on assumptions of mining width and depth projections and data verification was not possible.

A.J. Resources acquired control of the Property in December, 2003 and subsequently conducted exploration and diamond drilling programs as summarized in Sections 10 and 11 of the NI 43-101 report by Mr. Valliant, dated April 2006. In December 2005, A.J. Resources officially changed the company name to Silver Eagle Mines Inc.

 

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