Lovelock Cobalt Mine & Treasure Box Copper Projects

The Lovelock Cobalt Mine (the “Lovelock Mine”) is located approximately 100 miles (150 kilometres) east of Reno, Nevada. The Lovelock Mine property area consists of 70 unpatented claims in the Cottonwood Canyon area of the Stillwater Range totaling approximately 1,400 acres (567 hectares).

George Lovelock and Charles Bell discovered the Lovelock project, about 1880. According to U.S. Government annual reports, the Lovelock Mine saw limited production of nickel, copper and cobalt beginning in 1883. The primary cobalt mineral was identified as “cobaltite”, a compound of cobalt, nickel and arsenic. Records of a geochemical analysis from that era indicate that the average composition of the cobaltite contained 17.30% cobalt and 13.62% nickel. The mine operated from 1883 to 1890 to the 100-foot level, reporting 500 tons of cobalt and nickel mineralized material shipped to England for processing. After intermittent production, an English company attempted smelting on site in 1898 but little or no production was made (Source: “Mineral Resources of the United States for 1885”, 1886). No further production from the Lovelock Mine is known for well over a century.

Terms of the Definitive Agreement

On December 22, 2017, the Company signed a definitive option agreement to acquire a 100% interest in the Lovelock Mine Cobalt Project (the “Lovelock Mine”) located in Churchill County, Nevada.  In 2019, the Company signed an agreement with Global Energy Metals Corp. (TSXV: GEMC) (“GEMC”) whereby GEMC had the right to purchase up to an 85% interest in the Lovelock Mine, and the nearby Treasure Box Copper Project (the “Treasure Box”). The transaction completed in 2020 and currently the Company holds a 15% interest in both the Lovelock Mine and the Treasure Box properties. 

To earn the 100% interest in the initial option agreement, the Company was required to pay cash payments and common share payments to the vendor payable over three years from the date of signing of the definitive agreement, subject to a 2% net smelter returns royalty (“NSR”) as follows:

• US$15,000 (paid) and 200,000 common shares (issued at a fair value of $31,000);
• March 22, 2019: US$20,000 (paid by GEMC) and 200,000 common shares (issued at a fair value of $19,000 and repaid to the Company by way of GEMC shares);
• December 22, 2019: US$25,000 (GEMC paid US$5,000 to extend the due date by 90 days) and 250,000 common shares (issued at a fair value of $11,250 and repaid to the Company by way of GEMC shares);
• December 22, 2020: $30,000 (paid by GEMC) and 300,000 common shares (equivalent shares issued by GEMC with GEMC shares as per the April 3, 2020 Amended Agreement below).

The Company had the right to accelerate the timing of cash payments to the vendor at its discretion.  On or before the 10th anniversary of the execution of the agreement, the Company had the right to purchase 50% of the NSR for US$1,500,000.

On April 3, 2020, the above agreement was replaced by a new purchase agreement between the Company, GEMC and the vendor of the Lovelock Cobalt Mine.

Geochemical Survey

On January 18, 2018, Nevada Sunrise announced the results of a geochemical rock sampling program and a reconnaissance geophysical survey carried out by the Company at the Lovelock Mine.

Two site visits were made to the Lovelock Mine in November and December 2017 where representative grab rock samples of historical mine waste were collected, and various bedrock samples from areas of other nearby historical adits. The analytical results of several of the rock samples show strong enrichment in cobalt, nickel and copper, and other metals, as shown in the highlights below:

Note: Samples shown in the above tables are hand-selected, high-grade samples that are not indicative of the nature and grade of mineralization over a wide area.

Geophysical Survey

In December 2017, an initial 4.2 kilometre (2.6 miles) reconnaissance DC resistivity/induced polarization (“DC-IP”) survey by SJ Geophysics of Delta, BC, consisting of stations spaced 25 to 50 metres (80-160 feet) apart on five lines was completed across the Lovelock Mine area. This DC-IP survey is projected to have a depth of investigation deeper than the mining to the 100-foot level reported in the 1880s.

The results of the 2017 survey not only detected the historic, near-surface mine workings and interpreted alteration (red areas on figure), but also show chargeability features (green areas on figure) related to structure and possible mineralization to a depth from surface of approximately 200 metres (656 feet).

Nevada Sunrise subsequently applied to the U.S. Bureau of Land Management for an exploration permit, which was granted in 2018 and currently remains in place.

Entrance to Main Shaft
 

The Lovelock Mine operated from 1883 to 1890 to the 100-foot level, and reported that 500 tons of cobalt and nickel mineralized material was shipped directly to Great Britain for processing. After intermittent production, an English company attempted smelting on site in 1898 but little or no production was made (Source: “Mineral Resources of the United States for 1885”, 1886). No further production from the Lovelock Mine is known for well over a century.

Lovelock Mine – Hand-Dug Tunnel

“Mineral Resources of the United States for 1885” – Cobalt

Lovelock Cobalt Mine - Looking South

On March 22, 2018, Nevada Sunrise announced the results of additional sampling carried out in February 2018 at the Lovelock Mine during a staking program. Grab samples were taken from historical mine waste and bedrock occurrences, and showed strong enrichment in cobalt, nickel, copper and silver in certain samples. Three of the eight Lovelock Mine samples exceeded 1,500 parts per million cobalt.

Treasure Box Copper Project

The Treasure Box consists of 76 unpatented claims totaling approximately 1,520 acres (615 hectares) and hosts mine workings from limited copper production that occurred from the late 1800s until early into the 20th century. A historical diamond drill hole (c. 1910) drilled at the Treasure Box by the Boyer-Nevada Copper Company reportedly intersected 1.52% copper over 85 feet (25.9 metres) with mineralization beginning at surface.  A reverse circulation hole drilled on the Treasure Box by Utah International in 1976 returned 1.55% copper over 40 feet (12.2 metres) from a depth of 85 to 125 feet (25.9 to 38.1 metres), and the hole was stopped in chalcopyrite mineralization. The core Treasure Box claims were held continuously for over 20 years by a private company but were relinquished in September 2017, leading to their acquisition by Nevada Sunrise.

2017 Geochemical Sampling near the Lovelock Mine and the Treasure Box

While conducting due diligence in 2017, Nevada Sunrise collected grab rock samples southwest of the Lovelock Mine and from the Treasure Box. The results of several of the rock samples taken from historical mine waste and other bedrock occurrences show strong enrichment in copper and anomalous values of gold and silver in certain samples, as shown in the analytical highlights below:

On March 22, 2018, Nevada Sunrise announced the results of additional sampling carried out in February 2018 at the Treasure Box during a staking program. Treasure Box grab samples were collected at locations along a mineralized trend that extends 1.6 miles (2.6 kilometres) across the central part of the claims block.  Results confirm the existence of widespread enriched copper-silver mineralization as previously reported by DeMatties (2017). Ten of the thirteen Treasure Box samples exceeded 1.0% copper, and six samples returned values that exceeded 2.)% copper. Analytical highlights are shown below:

Treasure Box, February 2018 Sampling

On May 26, 2021, a drilling permit application was submitted to the BLM for the Treasure Box property, which was granted in October 2021.

Lovelock Mine and Treasure Box Option Agreement with Global Energy Metals Corp.

On January 15, 2019, the Company signed an option agreement with GEMC which granted GEMC the option to acquire an 85% interest in the Lovelock Mine and the Treasure Box.  The agreement allows for GEMC to acquire the interest subject to the Company first acquiring the interest pursuant to the underlying agreement with the vendor.

In order to exercise the 2019 option agreement, GEMC was required to complete the following: 

(1) Issue to the Company of such number of common shares in the capital of GEMC as is equal to US$200,000 at a deemed price per share equal to the greater of: (a) $0.15; and (b) the volume weighted average of the closing price of GEMC’s shares for the 20 trading days immediately prior to the execution of the agreement.  GEMC issued the Company 1,728,133 common shares with a fair value of $86,407.

(2) Assume all future cash payments to the vendor as scheduled below:

• December 22, 2019: US$25,000 (GEMC paid US$5,000 to extend this date by 90 days);
• December 22, 2020: US$30,000 (paid by GEMC).

Reimburse the Company for the issue by the Company of its common shares to the vendor with common shares of GEMC, payable as scheduled below:  

• March 22, 2019: such number of GEMC shares as is equal in value to 200,000 shares of the Company on the day prior to their issuance (issued);
• March 22, 2019: such number of GEMC shares as is equal in value to US$5,000 to reimburse the Company for the extension payment made by the Company to the vendor on December 22, 2018 (issued). 
• December 22, 2019: such number of GEMC shares as is equal in value to 250,000 shares of the Company on the day prior to their issuance (issued); and 
• December 22, 2020: such number of GEMC shares as is equal in value to 300,000 shares of the Company on the day prior to their issuance (issued by GEMC with GEMC shares). 

(3) GEMC must also incur exploration expenditures totaling US$1,000,000 by the third anniversary of the agreement. 

Amended Terms of the Option Agreement and the Definitive Agreement

On April 3, 2020, the Company, GEMC and the vendor of the Lovelock Mine and the Treasure Box amended the terms of the GEMC option agreement on the two properties and the underlying definitive agreement on the Lovelock Mine (the “Amended Agreement”).  

The Amended Agreement provides that GEMC can purchase an 85% interest in the Lovelock and Treasure Box properties, with Nevada Sunrise retaining a 15% interest, subject to a 2% NSR in favour of the vendor as provided for in the underlying definitive agreement between the vendor and Nevada Sunrise.  The Amended Agreement superseded the option agreement dated January 15, 2019. A joint venture between GEMC and Nevada Sunrise will be formed to further explore and develop the Lovelock Mine and Treasure Box properties.

In consideration for the Amended Agreement, GEMC agreed to the following terms:

• Pay to the vendor the sum of US$35,000;
• Issue to the vendor 1,000,000 common shares of GEMC (after giving effect to the 1 for 10 share consolidation announced by GEMC on March 10, 2020);
• Issue to Nevada Sunrise 750,000 common shares of GEMC (after giving effect to the 1 for 10 share consolidation announced by GEMC on March 10, 2020, issued).

GEMC was not required to incur the US$1,000,000 of exploration expenditures contemplated in the original option agreement.

The GEMC shares issued under the Amended Agreement were subject to voluntary escrow provisions in addition to applicable statutory and regulatory hold periods.

The vendor will maintain its current 2% NSR on the projects with GEMC having the right, exercisable at any time, to purchase up to 50% of the NSR by payment to the vendor of CAD$1,500,000 subject to a protection hedge against inflation of the US dollar, using an agreed-upon price of US$3.25 per pound copper. Upon payment of CAD$1,500,000 or the cash value of 462,000 pounds of copper, whichever value is greater at the time of the purchase of half of the royalty, the royalty shall be reduced to a 1% NSR. 

On October 6, 2020, the Amended Agreement transaction closed and GEMC made the $35,000 cash payment and issued 1,000,000 of its common shares to the vendor, and issued 750,000 of its common shares to the Company.

2020-2021 Exploration Programs

In November 2020, GEMC reported the results of a detailed data compilation and interpretation study on the Lovelock Mine. A reinterpretation of the 2019 airborne magnetic and orthophoto surveys suggest that the Lovelock Mine is located within a corridor of strong structural control with several subparallel structures indicating the potential for multiple mineralized zones related to these structures. 

Highlights of the 2020 study include:

• Reinterpretation has significant implications for further exploration at the project including greatly enhancing the ability to successfully target and drill newly-defined anomalies;
• The magnetic data imply the basalts and sedimentary rocks that host the known Lovelock deposits extend another 2.5 kilometres to the northwest of the Lovelock Mine;
• Inversion modelling suggests a cluster of chargeability anomalies mapped to the west of the Lovelock Mine could be centred by a subtle, low-susceptibility pipe or cone structure. This could be an indication of an intrusion or possible feeder zone to a hydrothermal system;
• There are a total of 18 magnetic high anomalies mapped across the survey that could be reflecting alteration with a possible response of reflecting an accumulation of magnetite, one of the accessory minerals reported with both the nickel and Lovelock deposits;
• All of these magnetic anomalies model as small lenses, extending from surface to an approximate 150 metre depth;
• Many of these localized magnetic targets cluster together, forming a ring surrounding a localized magnetic low. Four of these ring-type structures are mapped within the UAV-MAG survey area. These responses can be interpreted as mapping an alteration zone surrounding a low-susceptibility intrusive plug; and
• Chargeability anomalies have been targeted with eight proposed drill holes.

In January 2021, GEMC reported that its technical team was in the process of generating an exploration strategy for the Lovelock Mine and Treasure Box projects, including the undertaking of additional induced polarization surveying, geological prospecting and mapping of the current chargeability targets, with the goal of a rilling program to assess the potential for high-grade mineralization similar to that historically mined at the projects.

On March 23, 2021, GEMC announced its intention to carry out a first-pass drilling program to confirm intersections of cobalt-nickel-copper-bearing structures within historical workings at the Lovelock Mine. 

The Lovelock Mine project drilling program began in early November 2021 and on November 29, 2021, GEMC provided an update on Phase 1 drilling at the project.

Highlights of the Phase 1 drilling were reported by GEMC as:

• Over 800 metres in seven reverse circulation drill holes completed, with more holes planned.
• Drilling intersected possible mineralization, alteration and primary structures, targeted through the reinterpretation of historical geological and geophysical data.
• A number of drilled sections have visual characteristics similar to rocks observed on the waste dump of the Lovelock mine that, when analyzed with a portable X-ray fluorescence device, howed elevated cobalt, nickel and copper values.
• Drill cuttings were being logged, and sampling of the Phase 1 drilling was underway.

Lovelock Cobalt Mine – 2021 Drilling Program

GEMC intersected nickel, copper and cobalt mineralization during its Phase 1 drilling at the Lovelock Mine cobalt-nickel-copper project, targeting geophysical anomalies detected in 2017

Table 2. Lovelock Cobalt Project: 2021 Drillhole Sample Highlights