Patented Mining Claims for Sale - Santiago Mine

Patented Mining Claims for Sale - Santiago Mine

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Santiago Ore Shoot only: 2016000 oz. gold; 4,320,000 oz. silver... Proven: 60,000 tons... Probable: 240,000 tons

Precious Metals

Precious metals
Average 0.94 opt Gold, 20.7 opt Silver, 7.6% Lead and 4.1% Copper


160 Acres (Patented Mining Claims, BLM Bonded)

Asking Price

Asking price
$33 Million

Mineable Assets: $1.8 Billion . 160 Acres of Patented, BLM, bonded properties. These Gold and Silver Mine Claims in Colorado are for Sale or JV



PURCHASE PRICE: $33,000,000 for 100% ownership 

LOCATION: 160 Acres of Patented Mining Claims


Price Potentially Offered: To sell 100%: $33,000,000

Will joint venture? Yes, from $1,900,000 to $6,000,000. An investment of $7,900,000 may return $79,000,000, or ten times at 43% net-profit share. When the investor has received a net return of $79,000,000, he will receive a 15% net-profit share for the mine life.

General geographical area: Colorado

Primary mineral? Gold and Silver

Lode or Placer? Hardrock

Property status (e.g., patented)? Some patented, some CMC (mineral rights, not surface rights)

Currently producing? No

How much gold has been removed from the mine? 20,000 oz. + based on incomplete historical records

Is there a 43-101? No. Geologist report? Yes In lieu of NI43-101, because of extensive records of tunnel-stope maps, shipping, milling and smelters of Santiago properties and seven other adjacent, proven-mine properties along with hundreds of assays, historical records from personal files, Colorado School of Mines, Bureau of Mines, Bureau of Land Management, historical files of Clear Creek County, geological records from a geological engineer, Mosch; beneficiation study of proven reserves; engineering reports from McFadden, and many others, gives Santiago Mining Company a fair head start for completion of an NI43-101 study to be completed in year three, as mentioned in the Executive Summary. Through review of company archives by a qualified geological engineer, it will be clear regarding Company mining concepts for Santiago Mines on Mt. McCLellan.

How much gold is estimated to remain in mine: Santiago Ore Shoot only: 2016000 oz. gold; 4,320,000 oz. silver Proven: 60,000 tons Probable: 240,000 tons

What other metals are produced and how much? Copper 3.31%; lead 6.06%

What mining equipment/permits are included with the purchase price? Permits NOI and 110-2; jumbos, haulage, milling equipment

Acreage: 160 acres (120 acres plus 40 acres pending filing for CNC members)

Grade % (grams/tons) .84 oz./ton gold; 20.7 oz./ton silver

Production: None

Revenue 2013: None


The Santiago Mine is in Colorado’s East Argentine Mining District that straddles the Continental Divide and is known for its high grade gold and silver ores. The Santiago properties are located on three major fracture zones within the high confines of a glacial cirque and the interior of Mount McClellan. 

The Santiago ore body is on the Southern portion of the Santiago-Commonwealth-Centennial-Rosalie vein, productive for over a mile, and is traceable for 15 miles. The Santiago has been opened for a distance of 1400 feet and a depth of 700 feet on a vein width of 2 feet – 10 fee with an average width of 3.5 – 4 feet.

It has become known as the Mother Lode of the district because of the uniform tenor of ore with gold increasing at depth until the Government closing of the mine via Law 208 during WWII.

Last reported values in 1941 from Leadville, Colorado smelting records were 17.32 oz. gold, 33.5 oz. silver, and 45% lead per ton! There were 11 Santiago original claims, #3, #5, and #6 are very large, paralleling veins showing ore on the surface, never explored.

Conservative, professional, geological engineering estimates of the Santiago ore shoot only are $366,000,000 of recoverable ores. Historical Colorado archives are available for serious investor review.

The Santiago Blue3 is in the second zone showing its face on the sheer eastern flank of Mt. McClellan (see photo). It is the continuation of the Independence vein, the first silver strike in Colorado. In 1906 Independence values reported were 17,000 oz. silver and 259 oz. gold, and this was known by miners as “smuggling" grade. All mining at this time was done by hand. The entire quartz lode ran $600 - $700 per ton at $19/oz. gold and $0.47/oz. silver!

In 1911, the Santiago II Group consisted of 4 known veins. A 160 foot prospect drift was driven on the additional #II vein some 400 feet above the basin floor. The Santiago II Tunnel was driven 1100 feet from the basin floor in an attempt to cut the Santiago II that outcropped as a 3 foot sheeted zone. Only the #3 and #4 veins were cut. The #3 vein was $50 per ton with gold predominant and the #4 vein assayed 5.28 oz./ton gold and 180 oz. silver. Stoping was scheduled in 1913 until the mining era ended for the Santiago II and the Group of the #3 fracture zone. The II dump assayed in 2009 at 40 oz. silver and .574 oz. gold. The Santiago II is the southern continuation of the Wheeling vein, opened for 1000 feet with a 5 foot width, containing 70% smelting grade and 30% shipping grade ore. 1891 reports show assays of gold at .33 oz. and silver at 246 oz. per ton. The Santiago Blue and II Group are estimated from historical documents by owners @ $600,000,000 in recoverable smelting grade ores.

In 1913, massive caving of talus in the Santiago II drift and the stripping of the East Argentine railroad tracks in 1918 for the WWI effort prevented the economical transport of ores from the district. However, the Santiago Mother Lode continued production until 1927 with horse and wagon and some intermittent production through 1941 with final closure during WWII. Smelter receipts available for 1939 – 1941 showing average mill recover grade @ .81 Au.


Location and Climate

The Santiago Mine is a historic producer of silver, gold, lead, and copper that was mined from the late 1800s to as recently as 1941. It is located about 60 miles west of Denver and 9 miles by road south of Georgetown, Colorado in the Rocky Mountains. Denver, Georgetown, and surrounding communities offer plentiful access to labor, contractors, and supplies.

The mine is located on the flank of Mt. McClellan, with existing historic portals ranging from 12,000 to 12,600 feet. The climate is that of high alpine, with cold snowy winters (annual snowfall ranging from 100 to 400 inches annually) and cool dry summers. Snowmelt allowing access to the property typically occurs in mid-late April and snow closure typically ranges from October to December. A typical year would allow for six working months at the site unless significant snow plowing was undertaken.

Appendix 02 includes a property map, BLM LR2000 output for unpatented claims, tax records for patented claims, and an ownership table for surrounding claims.

1.2 Geology

The Santiago Mine is located in the Colorado Mineral Belt and is part of the Montezuma Shear Zone, which runs roughly from Keystone at southwest, to Silverplume and Georgetown to the northeast.

The deposits are characterized as mesothermal veins occupying faults and fissures, striking mostly northeast. The deposits are hosted in the Pre-Cambrian Silverplume Granite and Idaho Springs formation gneiss. Veins formed at moderate depth, pressure, and temperature. The majority of the productive veins strike North 15® to 35® East and dip steeply northwest. Lead-zinc-silver veins consist mainly of galena, sphalerite, pyrite, and quartz, but also contain notable amounts of chalcopyrite, barite, and fluorite. Please refer to the report in Appendix 6 for a complete description of the geology of the district.

1.2.1 Sampling

Sampling has been carried out at various stages in the early 1980’s and late 2000’s. Samples have been grab samples ranging from single samples to 5-pound bags, to 5-gallon buckets full used for metallurgical testing. Appendix 03 includes a summary of the assays collected, a map showing assay locations, and the individual assay reports.

Grab samples were taken, marked at the location and on the samples, and sent to the lab. The Colorado Assaying Company was used for assaying in the late 1980’s and Hazen Research was used more recently. Fire assay was used for gold and silver and AA for other minerals. Duplicates and check assays have not been performed historically, but duplicate samples have been cut for many samples and are available for testing.

1.2.2 Metallurgy

Metallurgical test work of samples of dump material was undertaken in 2012. A full report is available in Appendix 13. Samples ranged from 0.33 to 1.96 opt gold, 4.7 to 62.7 opt silver, 14.4% to 17.4% lead, 0.94% to 3.61% copper, and 2.23% to 2.12% zinc. Recoveries were 88% for gold, 82% for silver, 95% for lead, and 84% for copper. The concentrate was 66% of the original sample weight and no zinc recovery was reported, so additional work is required to optimize the process.

1.3 Logistics

Access is via Interstate 70, Guanella Pass Road from Georgetown (mostly paved), and approximately six miles of single-lane dirt road that is intermittently very rough.

Power is currently planned to be via diesel generator for the first phase of the project (exploration and initial development). Electrical power is available via the Cabin Creek Substation along the Guanella Pass Road. Power poles exist along much of the single lane road that could be used to string power line to the site. A trade-off study will be undertaken to determine the economics and potential for running a power line to the site and obtaining line electrical power.

Water exists below No. 5 in level in the Santiago Mine, which may be able to be used for mining and activities underground as long as it is re-circulated, but could not be used for surface uses (offices, dry, etc.). The Clear Creek watershed is currently over-allocated with respect to water rights. One abandoned right was found in the basin for the Waldorf Pipeline, which at one time served the town of Waldorf, below the Santiago Mine. The status and availability of this right is unknown and water for personnel use for washing will need to be obtained. The most likely pathway for this is via a commercial-exempt well which may be permitted through the State Engineer. Discharge of wash water from dry and office use would most likely be through a leach field on site.

Manpower, contractors, and supplies are readily available in Georgetown, Denver, and surrounding communities.

Ore is currently planned to be shipped raw (no on-site milling or tailings) to a custom mill. Budgeting has included a mill in Virginia City, MT with an associated smelter in Bellevue, WA. Further studies will be conducted into additional milling options.

1.3 Permitting

Two “Notice of Intent" applications have been filed and basically approved with the exception of posting of reclamation bonds. Additional permitting will be needed as the project advances.

NOI P-2009-005 was for up to two surface exploration drill holes and rehabilitation of some existing drifts. The NOI was approved with the exception of posting of a $14,009 bond. The NOI would need to be refiled and bond posted to perform this work.

NOI P-2012-012 was for testing of surface dumps and a road extension. Discussion and exchange were ongoing with the Colorado Division of Mines through 2012. This NOI will need to be re-written and resubmitted, and a bond posted, to support an underground exploration plan.

Before extraction of ore for production, a Colorado Division of Reclamation 110(2) Reclamation permit will be required.

Other permits that will likely be needed include:

Stormwater Permit

Discharge Permit

Construction Air Permit (may or may not need an Operating Air Permit [APEN])

BATF Explosives Permit

Water well Permit

Clear Creek County building permit(s)

1.4 Project Plan

The Santiago vein hosts a known structure that likely holds additional resources. In addition, the Santiago Blue Vein, the Vesper vein, Santiago #8 and #9 veins, and other potential veins lie within or near the property held by the Santiago Mining Company. The plan is to drill 1-2 exploration holes in the first year from surface to confirm depth to bedrock, geotechnical properties, and location of veins. This will help target an exploration drift. This exploration drift will be started in Year 1. The drift is intended to follow the Santiago Blue vein, then turn and intercept the Santiago Mine near the back (south) end near the 4½ or 5 Level. The total length of the drift is approximately 2,600 feet, and it would ultimately serve as a haulage path from producing areas to surface. Two exploration drift options, the proposed portal locations, and estimated vein locations are shown on Figure 1-2

1.5 Potential Economics

Two economic cases were run. The resources used in the economic evaluation were assumed to average 0.94 opt Gold, 20.7 opt Silver, 7.6% Lead and 4.1% Copper (average historical values from the Santiago Mine, using assumed recoveries). Note that any resources referred to here-in are either historical or hypothetical and do not meet the criteria for NI43-101 or any national code at this point in time.

The first case assumed that 75,000 tons of resource was minable (and approximates the 1985 probably resource estimated by Mosch). This case assumed that only the first five levels of the Santiago were mined (this resource lies above a potential water level that may or may not need to be dealt with if mining below the 5th level). The mineable tons were determined by measuring the remaining length of the vein south of existing workings either to the surface or to claim boundaries, then assuming 50% recovery of the assumed vein length. A 4.5-foot mining width was taken with a 3.5-foot assumed vein width. Table 1-2 shows the estimated resource potential above 5th level in the Santiago that was calculated using this evaluation.

The case results in the following economics:

Pretax IRR of 23%

NPV 5% of $10.1 million

Payback of 5 years (from Year 1, start of the project)

The second case assumed that 200,000 tons of resource was minable (and approximates the probable plus possible 1985 resource estimated by Mosch). Given that (1) vein widths have been reported to average 3-4 feet with widths of up to 10 feet, (2) the Santiago was reported by Mosch to show probable resources well below 5th level, and (3) the significant potential for additional veins, there is likelihood of expanding resources to fulfill a 10+ year mine life, if not more. This case results in the following economics:

Pretax IRR of 36%

NPV 5% of $41.5 million

Payback of 5 years (from Year 1, start of project)

First year activities consist of permitting and confirming the resource. Specifically they include:

Surface geologic mapping.

Surface surveying including an aerial flyover to use in mine and infrastructure design.

Reestablish Notices of intent, and posting of bond.

Additional mine permitting.

Acquisition of key surrounding claims (outright property acquisition or rights to mine). (Note – property purchase is not currently included in the project budget).

Surface drilling of 1-2 exploration holes.

The assumption behind the economics for both these cases were conservative due to the uncertainty of the resource. The following assumptions were included that added to the conservatism and will need to be addressed as the project moves forward:

20% contingency was applied to both the CAPEX and OPEX costs.

Processing of surface dumps was not included in the financial model. A potential resource exists on surface which could be reclaimed and processing, providing early cash flow to fund operations.

Mining methods were not optimized (as the orebody has not been drilled and modeled) so an expensive method was utilized and significant dilution was applied to resource tons and grade (reducing extracted gold grade to less than 0.6 opt and extracted silver grade to less than 13.5 opt).

An in-ore ramp option with controlled long-hole blasting could be considered which would minimize dilution and reduce exposure to open stopes.

The second case was briefly evaluated using this option by assuming an additional $1 million in capital for longhole drill(s) and reducing planned dilution from 22% to 10%. Operating costs were not adjusted at all.

IRR was increased from 6% to 47%.

NPC5% increased from $19 million to $67 million.

Payback was decreased from 5 years to 4.5 years.

This ore body is highly sensitive to dilution, and the design and mining method will need to be optimized.

Other lower-cost options such as shrinkage stoping should also be evaluated.

Diesel generation was assumed in the cost structure, which adds to operating costs.

A trade-off study will be performed once a resource is determined to determine the economics behind the capital necessary to install and connect a power line from the Cabin Creek Substation to the mine site.

No mill was considered on site in these cases due to the mountainous, alpine location. Contract milling costs $200 per ton of ore, and the associated refine/smelter adds a flat 10% take off from top line revenue. Shipping of raw ore to the custom mill was quoted at $65-80 per ton.

A more thorough metallurgical study will need to be performed on ore from vein material, rather than dump material that was previously tested, to determine the best mill to use in terms of process, metal recover, and metal payout.

A study of other mills that can handle the ore type(s) will need to be performed, along with their TC/RC terms and byproduct arrangements to optimize for milling and shipping costs as well as overall payout for metal.

In addition, and underground mill such as the Python system from Gekkos should be studied to reduce the volume that needs to be shipped. This may include only a partial circuit such as a gravity circuit to reduce the capital necessary but get some volume reduction benefit.

This option would provide for backfill material, which may be preferable with some mining methods to be studied.

Purchase equipment, establish a portal, and begin mining of an underground exploration drift to establish an underground drilling location from which to target veins in multiple directions.

Perform phase 1 of an underground drilling program.

A five year budget is presented in Table 1-1. First stope in production is estimated in year three with ramp-up to full production by year 5. Key assumptions in the development of the budget include:

In-situ average grades: 0.84 opt Gold, 20.7 opt Silver, 6% Lead, 3% Copper.

Mill recoveries: 88% Gold, 82% Silver, 95% Lead, 84% Copper (from Hazen – Appendix 13).

Metal prices: $1, 350/oz. Gold, $22/oz. Silver, $0.85/pound Lead, $2.50/pound Copper.

Blind pen stoping assumed as mining method for this budget.

3.5 foot average vein width.

Exploration drift: 10’X10’ – in ore, 50% planned dilution of vein.

Mining cuts: 4.5’ X 8’ – 33% planned dilution.

For capital development, assumed 50% of vein was recoverable or above cut-off grade.

20% contingency was included in both OPEX and CAPEX costs.

NSR of 3% was included.

10% metal takeoff was included as a smelter charge (this was a quoted value by a refiner/smelter).

Assay reports on the Santiago Mine:

Beneficiation Study of the Santiago Mine Stockpile Ore, Santiago Mine, Colorado Hazen Project

In March 2012, the Santiago Mining Company requested that Hazen Research, Inc. conduct a beneficiation study of the Santiago Mine stockpile ore composite. The work consisted of gravity separation and flotation to make a bulk sulfide, gold, and silver concentrate of acceptable grade and recovery.

A combined concentrate from table testing and flotation of the fine fraction assayed 55 g/t Au, 1,500 g/t Ag, 3% Cu, and 22% Pb and recovered 88% of the gold, 82% of the silver, 84% of the copper, and 95% of the lead in 66% of the weight. 

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