TECHNICAL REPORT FOR THE JERSEY-EMERALD PROPERTY, SALMO… · property located near Salmo, BC. Mr. Giroux and Mr. Grunenberg are qualified persons as defined in National Instrument

TECHNICAL REPORT

FOR THE

JERSEY-EMERALD PROPERTY,

SALMO, BC

Nelson Mining Division, British Columbia Mapsheets: 82F.004, 82F.005, 82F.014, 82F.015

Latitude 49.11°N, Longitude 117.22°E UTM NAD83 Zone 11: 5439500 N, 484000 E

For

Margaux Resources Ltd. 1600-510 5th Street

Calgary, Alberta T2P 3S2

By

Gary Giroux, P.Eng., MASc.

Giroux Consultants Ltd. Consulting Engineer

Perry Grunenberg, P.Geo.

Consulting Geologist

Report Date: March 15, 2014 Revised Date: March 28, 2014

Effective Date: February 28, 2014

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TABLE OF CONTENTS

1 Summary .............................................................................................................................................. 1 1.1 Introduction .................................................................................................................................. 1 1.2 Project Background ....................................................................................................................... 1 1.3 Geology and Mineralization .......................................................................................................... 1 1.4 Mineral Resource Estimates ......................................................................................................... 2

1.4.1 2006 Tungsten and Molybdenum ......................................................................................... 2 1.4.2 2008 Tungsten ....................................................................................................................... 2 1.4.3 2010 Lead and Zinc ............................................................................................................... 3 1.4.4 Summary ............................................................................................................................... 3

1.5 Recommendations ........................................................................................................................ 4 1.5.1 Exploration ............................................................................................................................ 4 1.5.2 Preliminary Economic Assessment ....................................................................................... 4 1.5.3 Data ....................................................................................................................................... 4

2 Introduction and Terms of Reference .................................................................................................. 5 3 Reliance on Other Experts .................................................................................................................... 6 4 Property Description and Location ...................................................................................................... 7 5 Accessibility, Climate, Local Resources, Infrastructure and Physiography ........................................ 15 6 History ................................................................................................................................................ 16

6.1 Early Exploration and development ............................................................................................ 16 6.2 Canadian Exploration Ltd. (Placer Dome Ltd.) ............................................................................ 16 6.3 Mentor Exploration Ltd. .............................................................................................................. 16 6.4 Nu-Dawn Resources Inc., LLoyd Addie, and Bob Bourdon ......................................................... 17 6.5 Sultan Minerals Inc...................................................................................................................... 17

7 Geological Setting and Mineralization ............................................................................................... 18 7.1 Regional Geology ........................................................................................................................ 18 7.2 Local and Property Geology ........................................................................................................ 18 7.3 Mineralization ............................................................................................................................. 21

7.3.1 Lead and Zinc Zones ............................................................................................................ 21 7.3.2 Gold Zones .......................................................................................................................... 21 7.3.3 Tungsten Zones ................................................................................................................... 23 7.3.4 Molybdenum Zones ............................................................................................................ 25

8 Deposit Types ..................................................................................................................................... 26 8.1 Lead and Zinc Deposits ............................................................................................................... 26 8.2 Tungsten Deposits ....................................................................................................................... 26 8.3 Gold Deposition .......................................................................................................................... 26 8.4 Molybdenum Porphyry ............................................................................................................... 27

9 Exploration ......................................................................................................................................... 28 9.1 Surface Geochemistry ................................................................................................................. 28 9.2 Airborne Geophysics ................................................................................................................... 28

10 Drilling ................................................................................................................................................ 36 10.1 Lead and Zinc Exploration ........................................................................................................... 36 10.2 Molybdenum Exploration ........................................................................................................... 36 10.3 Tungsten Exploration .................................................................................................................. 37 10.4 Protocols ..................................................................................................................................... 37

10.4.1 Downhole Survey Methodology ......................................................................................... 37

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10.4.2 Drill Core Protocols ............................................................................................................. 39 11 Sample Preparation, Analyses and Security ....................................................................................... 40

11.1 Sample Collection ....................................................................................................................... 40 11.1.1 Core Samples ....................................................................................................................... 40

11.2 Preparation and Analyses ........................................................................................................... 40 11.2.1 Quality Assurance Protocols and Discussion ...................................................................... 41

11.3 Security ....................................................................................................................................... 44 11.4 Conclusions ................................................................................................................................. 45

12 Data Verification................................................................................................................................. 46 12.1 Field Procedures.......................................................................................................................... 46 12.2 Drillhole Collar Locations ............................................................................................................ 46 12.3 Downhole Surveys....................................................................................................................... 47

13 Mineral Processing and Metallurgical Testing ................................................................................... 48 13.1 Molybdenum, Gold, and Silver ................................................................................................... 48 13.1 Tungsten...................................................................................................................................... 48 13.2 Lead and Zinc .............................................................................................................................. 49

14 Mineral Resource Estimate ................................................................................................................ 50 14.1 Mineral Resource Summary ........................................................................................................ 50 14.1 Molybdenum Resource summary ............................................................................................... 50

14.1.1 Statistics and grade capping ............................................................................................... 50 14.1.2 Geologic Model ................................................................................................................... 54 14.1.3 Compositing ........................................................................................................................ 55 14.1.4 Variography ......................................................................................................................... 55 14.1.5 Block Model ........................................................................................................................ 55 14.1.6 Grade Interpolation ............................................................................................................ 56 14.1.7 Specific Gravity .................................................................................................................... 56

14.2 Tungsten Resource ...................................................................................................................... 57 14.2.1 Statistics and Grade Capping .............................................................................................. 57 14.2.2 Geologic Model ................................................................................................................... 58 14.2.3 Compositing ........................................................................................................................ 60 14.2.4 Variography ......................................................................................................................... 60 14.2.5 Block Model ........................................................................................................................ 61 14.2.6 Grade Interpolation ............................................................................................................ 61 14.2.7 Specific Gravity .................................................................................................................... 62

14.3 Lead and Zinc Resource Summary .............................................................................................. 66 14.3.1 Data Analysis ....................................................................................................................... 66 14.3.2 Composites .......................................................................................................................... 67 14.3.3 Variography ......................................................................................................................... 68 14.3.4 Bulk Density ........................................................................................................................ 68 14.3.5 Block Model ........................................................................................................................ 69 14.3.6 Grade Interpolation ............................................................................................................ 69

14.4 Mineral Resource Classification and Tabulation ......................................................................... 71 14.4.1 Tungsten Zones ................................................................................................................... 71 14.4.2 Dodger 4200 Molybdenum Zone ........................................................................................ 79 14.4.3 Jersey Lead and Zinc Resource ............................................................................................ 80 14.4.4 Summary Of All Resources .................................................................................................. 81

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15 Through 22 are not applicable to this Technical Report .................................................................... 82 23 Adjacent Properties ............................................................................................................................ 83

23.1 HB ................................................................................................................................................ 83 23.2 Molly ........................................................................................................................................... 84 23.3 Summit, Ore Hill, and Bonanza ................................................................................................... 85

24 Other Relevant Data and Information ............................................................................................... 88 24.1 2007 Wardrop Scoping Study – Tungsten ................................................................................... 88

24.1.1 Discussion ............................................................................................................................ 89 25 Interpretation and Conclusions .......................................................................................................... 90

25.1 Tungsten...................................................................................................................................... 90 25.2 Molybdenum ............................................................................................................................... 90 25.3 Lead and Zinc .............................................................................................................................. 91

26 Recommendations ............................................................................................................................. 92 26.1 Exploration .................................................................................................................................. 92

26.1.1 Tungsten .............................................................................................................................. 92 26.1.2 Molybdenum ....................................................................................................................... 93 26.1.3 Lead and Zinc ...................................................................................................................... 93

26.2 Preliminary Economic Assessment ............................................................................................. 93 26.3 Data Mining ................................................................................................................................. 94

27 References .......................................................................................................................................... 95 Signature Page ............................................................................................................................................ 97 Certificate of Qualifications for Gary Giroux .............................................................................................. 98 Certificate of Qualifications for Perry Grunenberg ..................................................................................... 99

LIST OF S Figure 1: Location map ................................................................................................................................. 8

Figure 2: Jersey-Emerald property (Margaux option) ................................................................................... 9 Figure 3: Regional Geology ......................................................................................................................... 19 Figure 4: Local geology ................................................................................................................................ 20 Figure 5: Soil geochemistry - Zinc ............................................................................................................... 29 Figure 6: Soil geochemistry – Tungsten and Zinc ........................................................................................ 30 Figure 7: Soil geochemistry – Silver, Jersey Mine area ............................................................................... 31 Figure 8: Historic Dighem airborne magnetic survey ................................................................................. 32 Figure 9: Heligeotem magnetic survey ....................................................................................................... 33 Figure 10: Heligeotem EM survey contours ................................................................................................ 34 Figure 11: Heligeotem EM survey with Historic Dighem survey contours ................................................. 35 Figure 12: Drillhole location map – Jersey-Emerald property .................................................................... 38 Figure 13: Control chart for Standard DS7 - Pb .......................................................................................... 41 Figure 14: Control chart for Standard DS7 - Zn ........................................................................................... 42 Figure 15: Control chart for Standard DST6 - Pb ......................................................................................... 42 Figure 16: Control chart for Standard DST6 - Zn ......................................................................................... 43 Figure 17: 2007 Lab check scatter plot for Becquerel versus Acme - Tungsten ......................................... 44 Figure 18: General locations of resources discussed in this report ............................................................ 51 Figure 19: Drill hole location plan for Mo - Dodger 4200 Zone .................................................................. 52 Figure 20: Lognormal cumulative probability plot for Mo with five populations (shown by open circles - numbered 1 to 5 from top to bottom)........................................................................................................ 53

FIGURE

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Figure 21: Schematic showing 3D wireframes for Dodger 4200 Zone ....................................................... 54 Figure 22: Isometric drawing of mineralized domains: Emerald in yellow, East Emerald in blue, Lower East Emerald in green, and underground workings shown in magenta. Drillhole composites are shown in red. .............................................................................................................................................................. 59 Figure 23: Histogram of assay sample lengths ........................................................................................... 67 Figure 24: Location of historic tungsten mines on the Jersey-Emerald property ....................................... 72 Figure 25: Cross section looking west showing estimated blocks with underground working ..... superimposed ............................................................................................................................................. 73 Figure 26: Isometric drawing showing blocks above the 3950 level and north of 6750 N (in yellow) that were removed from the resource in the open pit area. ............................................................................. 77 Figure 27: Minfile occurrences in property area ........................................................................................ 87

LIST OF TABLES Table 1: Summary of resources for the Jersey-Emerald property (WO3, Mo, and Pb-Zn) ........................... 3 Table 2: List of mineral claims for the Jersey-Emerald property ................................................................ 10 Table 3: List of Crown-granted claims for the Jersey-Emerald property .................................................... 12 Table 4: Calculated head grade results for metallurgical composite ......................................................... 48 Table 5: Statistics for Mo grades - Dodger 4200 Zone ................................................................................ 50 Table 6: Individual overlapping populations for Mo - Dodger 4200 Zone .................................................. 53 Table 7: Statistics for capped Mo grades - Dodger 4200 Zone ................................................................... 54 Table 8: Statistics for 10 ft Mo composites - Dodger 4200 Zone ................................................................ 55 Table 9: Semivariogram parameters for Mo ............................................................................................... 55 Table 10: Kriging search strategy for Mo - Dodger 4200 Zone ................................................................... 56 Table 11: Summary of specific gravity determinations - Dodger 4200 ...................................................... 56 Table 12: Statistics for WO3 grades ............................................................................................................. 57 Table 13: Individual overlapping populations for WO3 in the Emerald Mine zone .................................... 58 Table 14: Statistics for capped WO3 grades ................................................................................................ 58 Table 15: Statistics for 10 ft WO3 Composites ............................................................................................ 60 Table 16: Semivariogram parameters for WO3 ........................................................................................... 60 Table 17: Kriging search strategy ................................................................................................................ 61 Table 18: Summary of specific gravity determinations in the Emerald Tungsten zone ............................. 62 Table 19: Sample statistics for lead and zinc .............................................................................................. 66 Table 20: Capped sample statistics for lead and zinc ................................................................................. 66 Table 21: 5 ft Composite statistics for lead and zinc .................................................................................. 67 Table 22: Semivariogram parameters of lead and zinc .............................................................................. 68 Table 23: Specific gravity determinations .................................................................................................. 69 Table 24: Parameters used in Kriging ......................................................................................................... 70 Table 25: Summary of mining history in tungsten zones ............................................................................ 71 Table 26: Total WO3 resource for Dodger and Invincible zones ................................................................. 74 Table 27: Dodger resource .......................................................................................................................... 75 Table 28: Invincible resource ...................................................................................................................... 76 Table 29: Emerald and East Emerald - Indicated resource ......................................................................... 78 Table 30: Emerald and East Emerald -Inferred resource ............................................................................ 78 Table 31: Dodger 4200 Mo Zone – Indicated resource .............................................................................. 79 Table 32: Dodger 4200 Mo Zone – Inferred resource ................................................................................ 79 Table 33: Jersey indicated lead-zinc resource ............................................................................................ 80

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Table 34: Jersey inferred lead-zinc resource .............................................................................................. 81 Table 35: Summary of Jersey-Emerald resources for WO3, Mo, and Pb-Zn ............................................... 81

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GLOSSARY

Symbols and Units of Measurement

Centimeters……………………………………………………………………………………………………..………….…………………….…cm Cubic feet…………………………………………………………………………………………………………………………………..…………..ft3 Degrees………………………………………………………………………………………………..…………………………………………...….…° Degrees Celsius……………………………………………………………………..…………………………………………………………….…°C Equal to……………………………………………………………………………………………………………………………………………………= Foot or feet……………………………………………………………………………………………………………………………………..……..ft Gram………………………………………………………………………………………………………………………………………..…………..…g Grams per tonne………………………………………………………………………………………………………………………….…….…g/t Greater than……………………………………………………………………………………………………………………………………..….…> Hectare……………………………………………………………………………………………………………………………………………….…ha Kilograms ………………………………………………………………………………………………………………………………..………….…kg Kilometers………………………………………………………………………………………………………………………………………….…km Less than……………………………………………………………………………………………………………………………………………….…< Meter…………………………………………………………………………………………………………………………………….…………….…m Micron.………………………………………………………………………………………………………………………………………..……….…µ Millimeter.……………………………….…………………………………………………………………………………..………….……….…mm Million years………………………………………………………………………………………………………………………………………...Ma Million tons…………………………………………………………………………………………………………………………………………..Mt Minus…………………………………………………………………………………………………………………………………………………….…- One half …………………………………………………………………………………………………………………..………………………….…½ One quarter …………………………………………………………………………………………………………………….………………….…¼ Ounce………………………………………………………………………………………………………………………………………………….…oz Parts per billion……………………………………………………………………………………………………….……………………….…ppb Parts per million……………………………………………………………………………………………………..……………………….…ppm Percent………………………………………………………………………………………………………………………………….…………….…% Plus ……………………………………………………………………………………………………………………………………….….………….…+ Plus or minus………………………………………………………………………………………………………….…………………………….…± Square kilometers ……………………………………………………………………………………………………………………..…….…km² Tons……………………………………………………………………………………………………………………………………………………….…t

Abbreviations and Acronyms

Acme Analytical Laboratories Ltd. ……………………………………………………………………………………………………Acme Agitated cyanidation leach testing …………………………………………………………………….………………….…bottle roll Ammonium Paratungstate…………………………………………………………………………………………………………………APT American Datum of 1983 …………………………………………………………………………………………………………….…NAD83 Arsenic………………………………………………………………………………………………………………………………………………….As Arsenopyrite……………………………………………………………………………………………………………………………………….Asp Assessment Reporting Indexing System…………………………………………………………………………………………….ARIS Atomic absorption………………………………………………………………………………………………………………….………….…AA Bacquerel Laboratory Inc………………………………………………………………………………………………..…………Bacquerel Barium…………………………………………………………………………………………………………………………………………………..Ba Bismuth………………………………………………………………………………………………………………………………………………….Bi British Columbia ………………………………………………………………………………………………………………….…………….…BC British Columbia Geological Survey……………………………………………………………………………………………………BCGS

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Cadmium……………………………………………………………………………………………………………………………………………….Cd Carbon-in-leach ……………………………………………………………………………………………………….…………………...….…CIL Certified reference material …………………….…………………………………………………………………………….…standards Canadian Institute of Mining, Metallurgy and Petroleum……………………………………………………………………CIM Copper…………………………………………………………………………………………………………………………………………………..Cu Correlation coefficient …………………………………….…………………………………………………………………………………..…r Crystalline Belt …………………………………………………….………………………………………………………………………….…OCB East……………………………………………………………………………………………………………………………………………………….…E Fire assay ……………………………………………………………………………………………………………………….………………….…FA

Formation…………………………………………………………………………………………………………………………………………….Fm Galena…………………………………………………………………………………………………………………………………………………..Ga Geological Survey of Canada …………………………………………………………………………………..……………………….…GSC Giroux Consultants Ltd. …………………………………………………………………………………….……..………………….…Giroux Gold……………………………………………………………………………………………………………………………………………..…….…Au Group………………………………………………………………………………..……………………………………………………………….…Gp Highway……………………………………………………………………………………………….………………………………………….…Hwy Incorporated…………………………………………………………………………………..…………………………………………………..Inc. Induced Polarization ………………………………………………………………………………………..………………………………….…IP Inductively coupled plasma mass spectrometry …………………………………………………………………….………ICP-MS Inductively Coupled Plasma Emission Spectrometer………………………………………………………………..……..ICP-ES International Standards Organization …………………………………..…………………………………….…………………….…ISO Iron Mountain Ltd………………………………………………………………………………………………..…………….Iron Mountain Laboratory…………………………………………………………………………………………………………………………………………….lab Lead ……………………………………………………………………………………………………………….………………………………….…Pb Lead-Zinc …………………………………………………………………………………………………………………………………………Pb-Zn Limited………………………………………………………………………………………………………………………..……………..…….…Ltd. Measured plus indicated (M+I) …………………………………………………………………………………………………….…….M+I Mentor Exploration Ltd………………………………………………………………………………………………………………….Mentor Metric Tonne Unit…………………………………..…………………………………………………………………………………………MTU Microsoft Access ………………………………………………………………………………………………………………………….…Access Microsoft Excel ……………………………………………………………………………………………………..……………………….…Excel Margaux Resources Ltd.……………………………………………..………………………………………………….……………Margaux Mississippi Valley Type……………………………………………………………………………………………………………………...MVT Molybdenite…………………………………………………………………………………………………………………………………………Mb Molybdenum…………………………………………………………………………………………………………………………………….…Mo Molybdenum disulphide…………………………………………………………………………………………………………………...MoS2 National Instrument 43-101 ……………………………………………………………………………..…………………….…NI 43-101 Nu-Dawn Resources Inc……………………………………………………………………………………………………………..Nu-Dawn North…………………………………………………………………………..……………………………………………………………………….…N North-Northwest ……………………………………………………………………………………………………………………………….NNE NQ-diameter …………………………………………………………………………………………………………………………………….…NQ Ordovician Active…………………………………………………………………………………………………….…………………………..OA Peter E. Walcott and Associates Ltd. ………………………………………………………………………………………….…Walcott Potassium ……………………………………………………………………………………………………….………………………………..….…K Potassium-Argon…………………………………………………………………………………………………………………………..……K-Ar Potassium feldspar ………………………………………………………………………………………………..……………….…K-feldspar Potassium oxide ……………………………………………………………………………………………………………………………….…K₂O Process Research Associates Ltd……………………………………………………………………………………………………….. PRA Professional Engineer……………………………………………………………………………………………………………..……….P. Eng Professional Geoscientist…………………………………………………………………………………………………………..…..P. Geo

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Preliminary Economic Assessment………………………………………………………………………………………………………PEA Pyrite…………………………………………………………………………………………………………………………………………………..…Py Quality assurance………………………………………………………………………………………………………………………………….QA Quality control ……………………………………………………………………………………………………………………….………….…QC Rock Quality Designation ………………………………………………………………………………………….…………………….…RQD Sphalerite………………………………………………………………………………………………………………………………………………Sp Silver……………………………………………………………………………………………………………………………………………………..Ag South…………………………………………………………………………………………………………………………………………………….…S Specific gravity…………………………………………………………………………………………………………………..……………….…SG Standard deviation………………………………………………………………………………………………………………………………..SD Sultan Minerals Inc.…………………………………………………………………………………………………………..........….…Sultan System for Electronic Document Analysis and Retrieval……………………………………………………………….…SEDAR Terrain Resource Information Management……………………………………………………………………………..……..TRIM Thorium ……………………………………………………………………………………………………….…………………………………….…Th Tungsten………………………………………………………………………………………………………………………………………………..W Tungsten Trioxide (or Tungsten (VI) oxide) .……………………………………………………………………………………….WO3

Universal Transverse Mercator ………………………………………………………………………………..…………………….…UTM Very low frequency electromagnetics ……………………………………………………………………………………….…VLF-EM Wardrop Engineering Inc…………………………………………………………………………………..………………………..Wardrop Wade Critchlow Enterprises Ltd. ………………………………………………………………………….………………….…Critchlow Zinc …………………………………………………………………………………………………………………………………………………….…Zn

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1 SUMMARY

1.1 INTRODUCTION

Gary Giroux, P. Eng, of Giroux Consultants Limited (Giroux), in Vancouver, British Columbia (BC), and

Perry Grunenberg, P. Geo, in Kamloops, BC, were retained by Margaux Resources Limited (Margaux),

headquartered in Calgary, Alberta, to complete a technical report summarizing the Jersey-Emerald

property located near Salmo, BC. Mr. Giroux and Mr. Grunenberg are qualified persons as defined in

National Instrument 43-101 (NI 43-101), and are independent of Margaux.

This report is to comply with disclosure and reporting requirements set forth in NI 43-101, Standards of

Disclosure for Mineral Projects, and in accordance with Form 43-101F1.

In order to accommodate the vast historical data set, all property work, including mineral resource

estimation, is reported using imperial measurements. Monetary values are expressed as Canadian

dollars.

1.2 PROJECT BACKGROUND

The Jersey-Emerald property, located within the Nelson Mining Division is centered at a latitude and

longitude of 49°06’ North (N), 117°13' East (E), within map sheets 82F.004, 82F.005, 82F.014, and

82F.015. The property consists of 104 mineral claims totaling 14995.79 hectares (Ha), and 44 crown

granted claims totaling 660.36 Ha.

Margaux entered into an option agreement with Sultan Mineral s Incorporated (Sultan) in November,

2013. Under the terms of the option agreement, Margaux will have the exclusive option to acquire the

property over a three-year term. Margaux will use its best efforts to incur expenditures of $6,000,000 on

the Property on or prior to the third anniversary of the execution of the option agreement.

Sultan will retain a 1.5% net smelter returns royalty (NSR) on the property.

1.3 GEOLOGY AND MINERALIZATION

The property is underlain by rocks of the Cambrian Laib Formation, a sequence of transitional rocks

comprising mixed carbonates and pelites.

Small plugs, dykes, and sills of Cretaceous granite that intruded the sedimentary sequence created rocks

ranging from marble to garnet-pyroxene skarn.

The main structure on the property is a major north-northeast (NNE) trending anticline known locally as

the Jersey anticline.

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Three small stock-like bodies of Cretaceous biotite granite, elongated parallel to the local foliation,

intrude the Jersey anticline and locally cut the mineralized zones near the former Jersey mine. From

south to north, these are the Jersey, Emerald, and Dodger stocks.

Several zones of significant mineralization exist on the property. Past mining produced lead and zinc (Pb-

Zn) and tungsten (W), and the property hosts areas of high molybdenum (Mo), gold (Au), bismuth (Bi),

arsenic (As), copper (Cu), silver (Ag), cadmium (Cd), and barium (Ba).

1.4 MINERAL RESOURCE ESTIMATES

1.4.1 2006 TUNGSTEN AND MOLYBDENUM

In 2006, Sultan reported the results of preliminary mineral resource estimations for tungsten in the

Invincible and Dodger zones, and for molybdenum in the Dodger 4200 zone of the Jersey-Emerald

property.

Tungsten assay results were capped at 13.2% tungsten trioxide (WO3) in the Invincible-Emerald zone

and 14.2% WO3 in the Dodger Zone. The molybdenum grades were capped at 1.58% Mo.

At a 0.15% WO3 cut-off, the measured plus indicated (M+I) tungsten resource for the Dodger and

Invincible zones is 2.51 million tons (Mt) averaging 0.37% WO3. An additional 1.21 Mt averaging 0.40 %

WO3 is classed as inferred.

The indicated molybdenum resource in the Dodger 4200 zone, at 0.05% Mo cut-off grade, is 28,000 tons

(t) averaging 0.098% Mo. A further 481,000 t averaging 0.103% Mo is classified as inferred.

1.4.2 2008 TUNGSTEN

In 2008, Sultan reported the results of a preliminary mineral resource estimate for the East Emerald and

Emerald Mine Tungsten zones of the Jersey-Emerald property.

There is an indicated tungsten resource of 256,000 t averaging 0.19% WO3 using a 0.15% WO3 cut-off

grade, or 18,000 t averaging of 0.28% WO3 at a 0.24% WO3 cut-off grade. The inferred resource is

1,122,000 t averaging 0.28% WO3 at a 0.15% WO3 cut-off grade, or 430,000 t averaging 0.45% WO3 at a

cut-off grade of 0.24% WO3.

A weighted average of the 2006 and 2008 tungsten resource estimates using a 0.15% WO3 cut-off grade,

yields a total M+I resource of 2.766 Mt averaging 0.36% WO3, and an inferred resource of 2.43 Mt

averaging 0.34% WO3.

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1.4.3 2010 LEAD AND ZINC

In 2010, Sultan reported the results of a lead and zinc mineral resource for the Jersey mine area. The

estimation used historic and more recent data from 5,042 drill holes, and digital wireframes that

represented Pb-Zn mineralization and the underground and surface mine workings.

The Jersey deposit contains an indicated Pb-Zn resource of 5.32 Mt averaging 1.04% Pb and 2.60% Zn

and an inferred resource of 16.93 Mt averaging 1.00% Pb and 2.18% Zn, at a cut-off grade of 1.5%

combined Pb-Zn. Within the larger resource area, and using a 3.5% combined Pb-Zn cut-off grade, there

is an indicated resource of 1.9 Mt averaging 1.96% Pb and 4.10% Zn, and an inferred resource of 4.98 Mt

averaging 1.95% Pb and 3.37% Zn.

1.4.4 SUMMARY

No additional drilling has occurred since the resource estimates were calculated and reported.

Therefore, it is the opinion of the authors that the estimations can be can be considered as current

resources.

A summary of the Jersey-Emerald property resources is presented in Table 1.

Table 1: Summary of resources for the Jersey-Emerald property (WO3, Mo, and Pb-Zn)

Year

Estimated Deposit Classification Cut-off Tons>Cut-off

Average

Grade

Contained

Pounds

2006

Dodger

East Dodger

Invincible

Measured

0.15 %

WO3

1,200,000 0.38 %WO3 9,096,000 WO3

Indicated 1,310,000 0.37 %WO3 9,563,000 WO3

Measured + Indicated 2,510,000 0.37 %WO3 18,674,000

WO3 Inferred 1,210,000 0.40 %WO3 9,607,000 WO3

2008 Emerald

East Emerald

Indicated 256,000 0.19 %WO3 983,000 WO3

Inferred 1,220,000 0.28 %WO3 6,686,000 WO3

2006 + 2008 Combined Measured + Indicated 2,766,000 0.36%WO3 19,657,000

WO3 Inferred 2,430,000 0.34%WO3 16,293,000

WO3 2006

Dodger 4200

Mo

Indicated 0.05 %

Mo

28,000 0.098 % Mo 54,880 Mo

Inferred 481,000 0.103 % Mo 990,860 Mo

2010 Jersey Pb- Zn

Indicated

3.50%

Pb+Zn

1,900,000 1.96 % Pb 74,600,000 Pb

Inferred 4,980,000 1.95 % Pb 194,500,000 Pb

Indicated 1,900,000 4.10 % Zn 155,900,000 Zn

Inferred 4,980,000 3.37 % Zn 335,600,000 Zn

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1.5 RECOMMENDATIONS

1.5.1 EXPLORATION

The completion of 16,000 metres (m) of surface and underground drilling, trenching, and support for

tungsten mineralization on the property is estimated at a cost of $2,450,000. Dewatering of the

Invincible Mine workings and access rehabilitation/stabilization is estimated to cost $100,000.

A total of 3,000 m of core drilling in 15 holes, recommended for molybdenum testing, is estimated to

cost $500,000.

A program of 10 to 20 short drill holes (up to 35 m each), in two or three different areas of the historic

lead-zinc mine, will provide initial feedback of the remnant resource potential. Continued exploration of

the workings will address the accuracy of the underground workings model. This program of surveying

and drilling is estimated to cost $300,000.

1.5.2 PRELIMINARY ECONOMIC ASSESSMENT

A preliminary economic assessment (PEA) for all resources on the property should be completed. Based

on review of similar studies, the cost will range between $150,000 and $300,000. Work by Wardrop

Engineering Inc. (Wardrop) in 2007 may provide a base for a new combined-resource economic

assessment.

1.5.3 DATA

Much of the historic data for the Jersey-Emerald project, such as sample locations and assay results,

exists only as paper copies at Sultan’s offices. These physical data should be captured digitally, to ensure

a robust, complete, and portable dataset for the property. An estimated cost for this work is $35,000.

The total cost to complete all recommended programs is $3.6 million.

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2 INTRODUCTION AND TERMS OF REFERENCE

Margaux Resources Limited (Ltd.), of Calgary, Alberta, retained Gary Giroux, P. Eng, of Giroux

Consultants Ltd. in Vancouver, BC, and Perry Grunenberg, P. Geo, in Kamloops, BC. to complete a

technical report summarizing the Jersey-Emerald property, located near Salmo, BC. Mr. Giroux and Mr.

Grunenberg are qualified persons as defined in National Instrument 43-101 (NI 43-101), and are

independent of Margaux.

This report is to comply with disclosure and reporting requirements set forth in NI 43-101, Standards of

Disclosure for Mineral Projects, and in accordance with Form 43-101F1.

The property contains several styles of mineralization with differing commodities, including tungsten,

molybdenum, and lead and zinc. The authors Giroux and Grunenberg have written the following

technical reports supporting mineral resource estimations: 1) Summary Report and Preliminary

Resource Calculation on the Dodger 4200 Molybdenum Zone, and Tungsten Zones, Jersey-Emerald

Property (2006), 2) Summary Report and Preliminary Resource Calculation on the East Emerald and

Emerald Mine Tungsten Zones, Jersey-Emerald Property (2008), and 3) Resource Estimate for the Jersey

Lead Zinc Deposit, Jersey-Emerald Property (2010).

There has been no significant work conducted on the property since 2010.

Mr. Giroux calculated the mineral resources; he is responsible for Chapter 14, Mineral Resource

Estimate. Mr. Grunenberg conducted data verification, and prepared and edited all other sections of the

technical report.

Mr. Grunenberg managed exploration programs on the property on behalf of Sultan from 1994 to 2010.

Mr. Giroux completed a site visit to examine drill core and underground workings on February 19 and

February 20, 2009. Mr. Giroux and Mr. Grunenberg are qualified persons as defined in NI 43-101, and

are independent of Margaux and Sultan.

The review of the Jersey-Emerald property was based on historic and current data compilations and

observations made during the exploration programs at the site, together with professional opinions, and

unpublished material provided by Sultan. Additional information was derived from public sources such

as public company websites, the Assessment Report Indexing System (ARIS), and the System for

Electronic Document Analysis and Retrieval (SEDAR).

In order to accommodate the vast historical data set, all property work, including mineral resource

estimation, is reported using imperial measurements. Monetary values are expressed as Canadian

dollars.

6

3 RELIANCE ON OTHER EXPERTS

The authors have reviewed and analyzed data provided by Sultan Minerals Inc., its consultants, and

previous operators of the property, and have drawn their own conclusions, augmented by direct field

examination.

While exercising all reasonable diligence in checking, confirming, and testing, the authors have relied on

Sultan’s presentation of the data for the Jersey-Emerald project in formulating its opinion and estimates.

For information pertaining to legalities around ownership of claims on the property, and the option

agreement between Sultan and Margaux, the authors have relied on information provided by Sultan and

Margaux.

The descriptions of geology, mineralization, and exploration methodology are based on direct field

examination, and on information obtained from published and unpublished reports supplied by Sultan.

With regard to the metallurgical test work, the authors have not reviewed the original reports; however,

they have no reason to dispute the conclusions presented.

Many of the maps and tables for this report were reproduced or derived from reports written about the

property that were supplied to the authors by Sultan.

7

4 PROPERTY DESCRIPTION AND LOCATION

The Jersey-Emerald property, located within the Nelson Mining Division, is centered at a latitude and

longitude of 49°06’ N, 117°13' E, within map sheets 82F.004, 82F.005, 82F.014, and 82F.015 (Figure 1).

The property consists of 104 mineral claims totaling 14995.79 hectares (Ha), and 44 Crown-granted

claims totaling 660.36 Ha (Tables 1 and 2, Figure 2).

Most of the claims have been common-dated to an anniversary of December 27, and are good standing

until 2016 or later. However, several claims have due dates in 2014, which will require application of

assessment work in order to retain the mineral rights. Crown-granted claims require annual tax

payments to keep in good standing.

Margaux entered into an option agreement with Sultan in November 2013. Under the terms of the

option agreement, Margaux will have the exclusive option to acquire the property by:

1. making payments to Sultan of an aggregate $4.0 million, paid in several installments on or before November 8, 2016 as follows:

2. an initial deposit of $50,000 paid previously; 3. within ten business days of execution of the option agreement, a cash payment of $450,000 4. on or before the first anniversary of the execution of the option agreement, a cash payment of

$750,000; 5. on or before the second anniversary of the execution of the option agreement, a cash payment

of $1,250,000; and 6. on or before the third anniversary of the execution of the option agreement, a cash payment of

$1,500,000; and 7. incurring not less than $2,000,000 in expenditures on the property on or before the third

anniversary of the execution of the option agreement.

Margaux will use its best efforts to incur expenditures of $6,000,000 on the property on or prior to the

third anniversary of the execution of the option agreement.

Sultan will retain a 1.5% net smelter return on the property. For a period of 60 days following the earlier

of (a) the commencement of commercial production on the property, or (b) the completion of a

feasibility study on the property, Margaux may purchase 50% of the NSR (a 0.75% NSR) from Sultan for a

payment to Sultan of $5.0 million.

Pursuant to the option agreement, Margaux will assume all existing royalties on the property.

Margaux will manage and direct the exploration programs during the term of the option agreement.

To the best of the authors’ knowledge, there are no significant factors that would affect access, title, or

the right or ability to perform work on the property.

There have never been problems with obtaining permits to do year-round work on the property. The

work conducted by Sultan was fully permitted.

8

Figure 1: Location map

JERSEYPROPERTY

BRITISH COLUMBIA

YUKON

Dawson City

Whitehorse

Watson Lake

Skagway

Dease Lake

PrinceRupert

Prince George

Quesnel

Kamloops

VancouverHope

Trail

100 200 300 400 5000

KILOMETERS

SULTAN MINERALS INC.

JERSEY PROPERTYNelson Mining Division B.C. NTS: 82F/3E

Figure 1

9

Figure 2: Jersey-Emerald property (Margaux option)

10

Table 2: List of mineral claims for the Jersey-Emerald property

Type* Claim Name Tenure No. Area (Ha) Expiry

MC2 SUMIT 233462 25 27-Dec-16

RCG UDIVILLE (L15851) 233677 25 27-Dec-16

RCG VICTORY (L 15842) 233693 25 27-Dec-16

RCG VICTORY FR, (L 15843)* 233694 25 27-Dec-16

RCG LAST CHANCE (L 15844) 233695 25 27-Dec-16

RCG LUCKY JIM FR (L 15845) 233696 25 27-Dec-16

RCG LUCKY JIM (L 15846) 233697 25 27-Dec-16

RCG INVINCIBLE 234582 25 15-mar-20

MC4 JERSEY 4 318816 500 27-Dec-16

MC4 JERSEY 2 318817 500 27-Dec-16

MC4 JERSEY 1 319025 500 27-Dec-16

MC4 JERSEY 3 319026 500 27-Dec-16

MC2 BLUE JAY 1 322324 25 27-Dec-16

MC2 BLUE JAY 2 322325 25 27-Dec-16

MC2 BLUE JAY 3 322326 25 27-Dec-16

MC2 BLUE JAY 4 322327 25 27-Dec-16

MC2 BLUE JAY 5 322328 25 27-Dec-16

MC2 BLUE JAY 6 322329 25 27-Dec-16

MC2 LEROY 5 322859 25 27-Dec-16

MC2 LEROY 6 322860 25 27-Dec-16

MC2 LEROY 7 322861 25 27-Dec-16

MC2 LEROY 8 322862 25 27-Dec-16

MC4 LOST GOLD 324439 225 27-Dec-16

MC2 MV 1 325259 25 27-Dec-16

MC2 MV 2 325260 25 27-Dec-16

MC2 MV 3 325261 25 27-Dec-16

MC2 MV 4 325262 25 27-Dec-16

MC4 JERSEY 5 325269 500 27-Dec-16

MC4 JERSEY 6 325270 300 27-Dec-16

MC4 POSIE 1 329070 500 27-Dec-16

MC2 LEROY 9 330364 25 27-Dec-16

MC2 LEROY 10 330365 25 27-Dec-17

MC2 LEROY NORTH 1 330366 25 27-Dec-16



11







MC2 HANGOVER 331985 25 27-Dec-16

MC2 GULLY 331986 25 27-Dec-16

MC4 JERSEY 7 342202 500 27-Dec-16

MC4 JERSEY 8 342203 400 27-Dec-16

MC2 SUMIT 1 347849 25 27-Dec-16

MC2 SUMIT 2 347850 25 27-Dec-16

MC2 SUMIT 3 347851 25 27-Dec-16

MC2 SUMIT 4 347852 25 27-Dec-16

MC2 J 1 348168 25 27-Dec-16

MC2 J 2 348169 25 27-Dec-16

MC2 J 3 348170 25 27-Dec-16

MC2 J 4 348171 25 27-Dec-16

MC2 J 5 348172 25 27-Dec-16

MC2 J 6 348173 25 27-Dec-16

MC2 J 7 348174 25 27-Dec-16

MC2 J 8 348175 25 27-Dec-16

MC2 J 9 348176 25 27-Dec-16

MC2 J 10 348177 25 27-Dec-16

MC2 J 11 348178 25 27-Dec-16

MC2 J 12 348179 25 27-Dec-16

MC4 JERSEY 9 348180 400 27-Dec-16

MC4 JERSEY 10 348181 500 27-Dec-16

MC4 JERSEY 11 348182 500 27-Dec-16

MC4 JERSEY 12 348183 450 27-Dec-16

MC2 J 13 349449 25 27-Dec-16

MC2 J 14 349450 25 27-Dec-16

MC2 J 15 349451 25 27-Dec-16

MC2 J 16 349452 25 27-Dec-16

MC2 J 17 349453 25 27-Dec-16

MC4 JERSEY 13 349901 450 27-Dec-16

MC4 JERSEY 14 349902 450 27-Dec-16

MC2 J 18 349903 25 27-Dec-16

MC2 J 19 349904 25 27-Dec-16

MC2 J 20 349905 25 27-Dec-16

MC2 J 21 349906 25 27-Dec-16

MC2 J 22 349907 25 27-Dec-16

12


MC2 J 23 349908 25 27-Dec-16

MCX ART 1 518176 84.542 27-Dec-16

MCX ASP 548440 42.22 31-Dec-16

MCX ASP 548464 253.41 31-Dec-16

MCX ASPEN 2 548465 21.11 31-Dec-16

MCX ASP 548466 21.11 31-Dec-16

MCX ASPEN 3 548467 105.54 31-Dec-16

MCX SULTAN 550768 528.703 27-Dec-16

MCX SULTAN 2 550769 296.168 27-Dec-16

MCX SPURLIN 1 602733 381.33 27-Dec-14

MCX SPURLIN 2 603544 296.56 27-Dec-14

MCX 1-May 603742 296.3 27-Dec-16

MCX JASON 1 604337 232.92 27-Dec-14

MCX JASON 4 604347 402.25 27-Dec-14

MCX JASON 10 604358 423.77 27-Dec-14

MCX JASON 11 604359 339.04 27-Dec-14

MCX JASON 12 604385 84.73 27-Dec-14

MCX FAYE 1 604676 337.64 27-Dec-14

MCX FAYE 2 604677 421.98 27-Dec-14

MCX FAYE 3 604678 464.2 27-Dec-14

MCX HIDDEN ASPEN 604689 189.94 31-Dec-16

MCX ASPEN 4 665745 42.24 6-Nov-16

MCX POSIE 2 704936 211.71 28-Jan-16

MCX

704937 338.81 28-Jan-16

MCX ZINC-1 1021665 43.576 14-Aug-14

MCX ZINC-2 1021666 152.547 14-Aug-14

MCX ZINC-3 1021667 130.812 14-Aug-14

MCX ZINC-4 1021668 152.629 14-Aug-14

Total Ha 14995.79

*MC1 =One Post Claim, MC2 =Two Post Claim, MC4 =Four Post Claim, MCF =Fractional Claim, CG =Crown Grant, RCG =Reverted

Crown Granted Claim, MCX =Mineral Cell Title Submission

Table 3: List of Crown-granted claims for the Jersey-Emerald property

TYPE CLAIM NAME TENURE AREA (ha)

CG BIG DICK L 14882 18.790

CG BRUCE FRACTION L 14890 1.620

CG CALCITE L 14763 9.430

CG COMET L 14761 14.420

CG CONTACT L 14762 14.860

CG COPPERFIELD L 14904 16.610

CG DODGER L 12083 19.540

13

TYPE CLAIM NAME TENURE AREA (ha)

CG EMERAL L 9073 20.900

CG EMERALD FRACTIONAL L 9074 16.890

CG GOLD STANDARD L 9071 20.900

CG HAL NO. 1 L 15020 20.510

CG HAL NO. 2 L 15021 20.520

CG HILLSIDE L 14881 14.040

CG JERSEY L 9070 17.820

CG KING ALFRED L 3368 19.270

CG KING SOLOMAN L 3369 8.480

CG LAST CHANCE L 12116 20.020

CG MARK TAPLEY L 12117 18.730

CG MORNING L 9075 8.940

CG PICKWICK L 12087 18.490

CG REX FRACTION L 14889 4.160

CG ROYAL CANADIAN L 12115 15.970

CG SCOTT FRACTION L 14765 16.490

CG STAN FRACTION L 14764 1.450

CG STANDARD FRACTIONL L 9072 5.360

CG SUNSHINE L 9076 18.790

CG SUNSHINE NO. 2 L 15033 13.970

CG VICTOR FRACTION L 14888 15.480

CG BONCHER L 12686 20.900

CG JUMBO 2 L 12688 18.320

CG ALFIE L 15091 20.900

CG DEN #1 FR L 15041 20.890

CG DEN FR L 15040 13.740

CG MASTADON L 1070 20.900

CG NELLIE J L 1071 20.900

CG TUNGSTEN KING L 15092 15.870

CG TUNGSTEN KING #1 L 15094 17.180

CG TUNGSTEN KING #1FR L 14766 18.280






CG TUNGSTEN KING #8FR L 15099 6.750

Total Ha 660.360

Most claims occur on Crown lands. The option agreement does include title to four parcels of land,

totaling 450 Ha: PID 011-773-022, PID 011-773-103, PID 011-773-090, and PID 008-404-453. Several

property owners have surface rights.

14

The areas on the property where significant historic work has occurred, such as the central claims

around the Jersey-Emerald mines, are considered as brownfields, and contain open mining cuts,

underground mine access portals, waste dumps , and tailings impoundments. The newly acquired HB

and Garnet claims also encompass historic mine workings. Sultan maintains the portals and other

potentially dangerous workings with signs and locked gates to restrict public access.

Sultan Minerals had generally performed reclamation of newly constructed access roads and drill pads

immediately upon completion of work programs. Currently, the access road utilized to complete

diamond drilling on the Victory Tungsten area of the property has been temporarily decommissioned by

cross ditching and side-cast pullback. This road, accessed from Sheep Creek, requires final reclamation.

All other new access roads have been reclaimed where appropriate and where no immediate further

use was planned.

There are significant areas of historic disturbance dating back to mining operations that took place in the

1940’s to the 1970’s. These include waste piles, mill tailings, and other materials. The mine was

considered to have been properly decommissioned by Placer Dome prior to the crown grants being

liquidated. The historic Jersey town and Emerald town site buildings were sold and the foundations

were leveled. Sultan concluded that all of the portals to the historic workings would eventually need to

be permanently closed by pulling up waste rock from the dumps and repositioning rock to cover the

portal entrances.

The only other remaining structure on the property that might need to be reclaimed is the community

swimming pool of the historic town site, which was left intact. For reasons of historic preservation,

locals in the community of Salmo would like to have it remain.

The author understands that due to the historic nature of the more prevalent mine working surface

materials, as long as no work is to take place that might affect the current placement of these materials,

Sultan Minerals had been absolved of any environmental liability that might be connected to these

disturbances. That should also be the case for Margaux.

15

5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND

PHYSIOGRAPHY

Access to the Jersey-Emerald property is from Highway 6, which runs along the western edge of the

property, from a location between Salmo and the Highway 3 junction to Creston. A network of good

quality gravel roads provides excellent all-season access to the centre of the property.

The property enjoys a pleasant summer climate with August temperatures averaging 25 degrees Celsius

(oC) with moderate precipitation. Winter temperatures average -10oC in January with moderate

snowfall. Total annual precipitation is about 750 millimetres (mm) of moisture, with much of this falling

during the rainy season from April to June. The property is not in a heavy snow belt but up to four feet

(ft) of snow may fall during the winter months. Snow-free conditions at higher elevations arrive from

late April to early November.

The property is situated in the rugged mountainous physiographic division known as the Selkirk

Mountains. Near the claims, relief is about 1200 m (4000 ft) between Salmo Creek in the valley bottom

at 600 m (2000 ft) and the crest of Nevada Mountain at 1860 m (6100 ft). Slopes vary from rolling within

the centre of the claims to moderately steep along the east and west margins. The topography provides

numerous areas for development of infrastructure required for mining and milling within the claims.

Much of the area has been logged or previously burned, resulting in vegetation consisting of small

diameter stands of larch, balsam, fir, jackpine, and mountain alder. In many areas, second growth

vegetation is extremely dense, making movement through the forest difficult.

Several areas of extensive outcroppings occur over and immediately north of the Jersey mine site, but a

veneer of glacial till covers much of the property. The till cover varies in thickness, from less than 1 m on

the slopes to more than 20 m in valley bottoms.

The Highway 6 corridor carries a power line and a decommissioned rail bed. Teck Resources Ltd.’s (Teck)

Trail Operations facility, which includes a lead and zinc smelter and refinery, and the Waneta power

dam, is located about 45 minutes drive to southwest of the property.

Crew lodgings are readily available in Nelson or Salmo. A skilled labour force for mining and exploration

is available in Nelson, Salmo, Trail, and Castlegar. Trail, Nelson and Castlegar are major supply and

service centers for resource industries.

Most areas of the property are accessible for surface exploration at all times of the year. This is

especially true for the main area of interest around the historic lead-zinc and tungsten mines where

there is good road access. Significant snowfall (to 1.5m) can occur during the winter in higher sections,

requiring continued removal if a winter drilling or other surface work is planned.

16

6 HISTORY

6.1 EARLY EXPLORATION AND DEVELOPMENT

The earliest record of exploration in the area dates to 1895 when gossanous outcrops on the south side

of Iron Mountain attracted the attention of prospectors. Initially, the area was explored for gold, and

the 1896 Minister of Mines Report states that assay results as high as $70.00 per ton in gold (about 3.5

ounces per ton (oz/t) or 100 grams per tonne (g/t)) were obtained from the area.

In 1906, continued prospecting discovered lead mineralization on the Emerald claims. Several small,

high-grade ore shipments were made. In 1910, Iron Mountain Ltd. (Iron Mountain) was formed by

Pacific Coast Steel of San Francisco in order to develop the property. A 25 t mill, erected in 1919,

operated until 1926 when low metal prices forced closure. In 1934, a major forest fire destroyed the

mill.

In 1938, tungsten and molybdenite mineralization was discovered in skarn bands at the site of the long

abandoned gold workings on the Emaral, Emerald Fraction, and Gold Standard claims. In 1942, Wartime

Metals Corporation (Corp.), a federal government agency, put the Emerald Tungsten Mine into

production for the war effort. In 1943, the war demand for tungsten eased and operations were

suspended.

6.2 CANADIAN EXPLORATION LTD. (PLACER DOME LTD.)

The property remained inactive until 1947 when Canadian Exploration Ltd. (later Placer Dome Ltd.

(Placer Dome)) purchased the properties of Iron Mountain. In 1952, Placer Dome purchased the

government-held tungsten reserves and tungsten mill.

Tungsten production recommenced in 1947. Tungsten concentrate was produced from four zones: the

Emerald, Feeney, Invincible, and Dodger deposits. Production continued until September 1973 when the

mine was closed due to low metal prices and depleted Pb, Zn and W reserves. Over the mine life,

7,968,080 t of Pb-Zn ore grading 1.95% Pb and 3.83% Zn, and 1,597,802 tons of W ore grading 0.76%

WO3, were mined and milled.

Lead-zinc production began in 1949, with concentrate produced from two zones: the Jersey, and the

Emerald deposits.

6.3 MENTOR EXPLORATION LTD.

In 1979, Mentor Exploration Ltd. (Mentor) performed a drilling program to explore the south extension

of the Emerald Shaft tungsten zone. This work encountered favourable geology but the target was too

deep and too narrow to be adequately tested by surface drilling.

17

In 1981, Mentor drilled five holes, for 1,070 m, to test for molybdenum mineralization in the Emerald

stock area. This work, which was the deepest testing to date, provided valuable information on the

nature of the ; however, no economic zones of molybdenite were encountered.

6.4 NU-DAWN RESOURCES INC., LLOYD ADDIE, AND BOB BOURDON

In 1990, the property was sold to Nu-Dawn Resources Inc. (Nu Dawn). In 1993, Lloyd Addie and Bob

Bourdon, both of Nelson, BC, acquired the property, and discovered that fine particles of free gold could

be panned from the tungsten tailings. A prospecting and rock sampling program conducted over the

known tungsten zones led to the discovery of significant bedrock gold values near the Jersey and

Emerald zones.

6.5 SULTAN MINERALS INC.

In October of 1993, the property was optioned by Sultan Minerals Inc., which undertook an exploration

program of ground and airborne geophysical surveys, prospecting, and rock chip sampling that led to

the identification of several targets with the potential for gold mineralization.

During the winter of 1994-1995, Sultan followed up on the results from earlier work by completing

1,324 m of core drilling in 11 holes, which resulted in the discovery of several gold-bearing zones near

both the Jersey Pb-Zn deposit and the Emerald W deposit. The drilling also intersected a Pb-Zn zone 55

m below the former Jersey Pb-Zn deposit.

In 1996, the exploration program included soil and silt sampling, geological mapping, prospecting, rock

sampling, and core drilling designed to better delineate the mineralized areas identified by Sultan. Three

underground and 13 surface drill holes, for a total of 1,707 m, intended to test the gold potential of the

Bismuth-Gold zone, the Emerald Gold zone, the Leroy Gold zone, and the lower Pb-Zn horizon Were

completed. The East Ridge zone, a multi-element anomaly to the east of the mine working, identified

through surface geochemical sampling, was tested with three drill holes.

Exploration on the claims was inactive until 2005 when market values for molybdenum increased

dramatically, which prompted Sultan to explore in the Dodger Mine area where historic mine records

indicated the presence of molybdenite (Mb). Additionally, an assessment of the potential tungsten

resources was undertaken which led to the identification of target areas surrounding the historic

Dodger, Emerald, and Invincible tungsten mines.

From 2006 to 2009 exploration on the property continued in an effort to expand the molybdenum

mineralization in the Dodger mine area, to expand the tungsten mineralization in the Invincible and

Emerald mine areas, and to continue to test for lead-zinc resources through trenching and drilling.

18

7 GEOLOGICAL SETTING AND MINERALIZATION

7.1 REGIONAL GEOLOGY

The Jersey-Emerald property lies near the south end of the Kootenay Arc, and is underlain by rocks of

the Cambrian Laib Formation (Fm) and the Ordovician Active (OA) Fm. The Laib Fm comprises mixed

carbonates and pelites, subdivided into Truman Member brown argillite, Emerald Member black

argillite, and Reeves Member limestone.

The eastern part of the property was mapped as the younger OA Fm argillite; however, work by Sultan

indicates that the contact may be conformable, and that the OA Formation appears to be geochemically

identical to the Emerald Member of the Laib Fm.

Granitic dykes, sills, and igneous bodies of Cretaceous age intrude the sedimentary units (Hoy and

Dunne, 1997).

7.2 LOCAL AND PROPERTY GEOLOGY

The property (Figures 3 and 4) consists of rocks of the Laib Fm, a sequence of transitional rocks

comprising mixed carbonates and pelites (Little, 1960). Near the property, the Truman Member of the

Laib Fm comprises interbedded, thin, grey and white, locally dolomitic limestone and the Emerald

Member is a black argillite unit. The Upper Laib Fm comprises green phyllite and micaceous quartzite.

Small plugs, dykes, and sills of Cretaceous granite intrude the sedimentary rocks, resulting in re-

crystallized coarse-grained marble to garnet-pyroxene skarn near the contacts, within the sedimentary

rocks.

The Laib Fm has been deformed by three phases of folding, each of local significance. The dominant

structure within the property is a major NNE- trending anticline known locally as the Jersey anticline.

Three small stock-like bodies of Cretaceous biotite granite, elongated parallel to the local foliation,

intrude the Jersey anticline and locally cut the mineralized zones near the former Jersey mine. From

south to north, these are the Jersey, Emerald, and Dodger stocks. Potassium-argon (K-Ar) age dates

obtained from biotite from the Late Jurassic Dodger stock give a date of 100.0 ± 3.0 million years (Ma).

One kilometre west of the Jersey mine, the Laib sediments are intruded by the Salmo River stock, a small

circular body of Tertiary augite monzonite. Biotite from this stock gave a K-Ar age of 50.6 ± 1.5 Ma.

19

Figure 3: Regional Geology

MARGAUX RESOURCE INC

20

Figure 4: Local geology

21

7.3 MINERALIZATION

Mineralization on the Jersey-Emerald property is associated with the east limb of a complex major

anticlinal structure, locally known as the Jersey anticline, and regionally as the Salmo River anticline. The

HB Pb-Zn mine 4 km to the north, and the Reeves MacDonald Pb-Zn mine 10 km to the south, are also

associated with this major structure.

Several zones of significant mineralization exist on the property. Past mining produced lead and zinc,

and tungsten. The property hosts areas of high molybdenum, gold, bismuth, arsenic, copper, silver,

cadmium, and barium.

7.3.1 LEAD AND ZINC ZONES

Jersey Lead-Zinc Deposit

The Jersey Pb-Zn deposit occurs in dolomite near the base of the Reeves Member limestone. Five ore

bands, ranging in thickness from 0.3 to 9.0 m, were mined. These bands in order of stratigraphic

sequence are: 1) upper Pb band, 2) upper Zn band, 3) middle Zn band, 4) lower Zn band, and 5) lower

Pb band. These bands are locally very close together, and were mined as a unit up to 24 m thick in the A

Zone. Ore mineralization consists of fine-grained sphalerite (Sp) and galena (Ga) with pyrite (Py),

pyrrhotite (Po), and minor arsenopyrite (Asp). Cadmium is associated with Sp and Ag with Ga. Iron

content of the sphalerite is low - about 6%. The overall grade for the 7,968,080 t milled averaged 3.83%

Zn and 1.95% Pb. Mining ceased in 1970, leaving un-mined reserves of 106,000 t grading 3.10% Zn and

0.80% Pb.

Emerald Lead-Zinc Deposit

The Emerald Pb-Zn deposit is located immediately to the north of the Jersey Pb-Zn deposit, along the

same structure. Mineralization in the Emerald Pb-Zn mine consists of stratabound Pb and Zn bands

within banded limestone and dolomite of the Reeves Member.

7.3.2 GOLD ZONES

Bismuth-Gold Zone

The Bismuth-Gold zone, known in the underground workings as part of the F zone, is located along the

east side of the Jersey Pb-Zn deposit at the contact between the limestone and the underlying dolomite

of the Reeves Member. The gold mineralization, believed to be skarn-related, occurs in a silicified

horizon with Py, Po, Asp, stibnite (Sb), and native Bi. Underground samples have returned assay results

up to 0.28 ounces per ton (oz/t) (8 grams per tonne (g/t)) Au across widths of 0.96 m. Descriptions in

Placer Dome’s drill logs suggest that this siliceous zone, intersected in four surface drill holes along a

strike length of 300 m, may be 20 m or more in thickness.

22

#1 Zone

The #1 zone, represented by a 300 m long series of trenches and small to large pits, is located along the

contact of the Reeves limestone and the Emerald argillite where they trend south from the Emerald

Tungsten open pit mine. In the workings, rusty-banded sulphide mineralization occurs with iron oxides

(limonite and goethite) and coarsely recrystallized limestone. Sulphide mineralization occurs as massive

Po bands, which return high values for As, Cu, and Zn, with minor Au, Ag, and Mb.

Emerald Gold Zone

The Emerald Gold zone, first recognized in 1895, may be coincident with the Emerald Tungsten zone. It

was prospected for gold from 1895 to 1906, returning assay results of up to 3.5 oz/t (100 g/t); however,

little work was done after the discovery of Pb-Zn mineralization elsewhere on the property. In 1993,

Sultan found that free gold could be panned from the tungsten tailings. Gold mineralization is associated

with the quartz- and pyrrhotite-rich sections of the skarn and sulphide-type tungsten zones.

The Emerald Gold zone occurs along the contact with the Reeves limestone and Emerald argillite, and

trends from the Emerald Tungsten deposit towards the #1 zone. These three areas may actually

represent mineral zonation, grading away from the Emerald stock.

Leroy Gold Zone

The Leroy Gold zone is located approximately 1 km north of the Emerald gold and tungsten zones. Gold

mineralization was discovered in the late 1890, and the zone was explored with a series of pits, adits,

and hand trenches along an 800 m strike length. Gold exploration ceased with the discovery of Pb-Zn in

1906.

Mineralization in the Leroy Gold zone is associated with Po, Py, and native Bi in a silicified horizon at the

contact between the Reeves limestone and the Emerald argillite. Recent sampling of this zone gave gold

grades up to 0.898 oz/t (25.5 g/t) from grab samples and up to 0.174 oz /t (4.8 g /t) across a true width

of 3.0 m for chip samples.

ABC Zone

The ABC zone occurs just to the east of the Jersey and Dodger underground workings along the Iron

Mountain Fault, a major structure that represents the contact of the OA argillites with the Reeves

limestones.

Samples that returned anomalous values were collected from slices of pyritic garnet-diopside skarn

bands entirely within OA argillite, but adjacent to the Reeves limestone. Rusty, limonitic, decomposed

argillite with minor quartz stockworking occurs on the west side of the skarn banding. Sulphide

mineralization consists of pyrite within the skarn bands, with limonite occurring adjacent. Assays

indicate elevated As values, along with minor Au, Mb, and Pb values.

23

7.3.3 TUNGSTEN ZONES

Skarn-type tungsten mineralization occurs where the Cretaceous intrusions are in contact with either of

the calcareous Truman or Reeves members. Tungsten was mined from two distinct areas on the

property: 1) the Dodger zone, located along the east side of the Jersey Pb-Zn deposit, and 2) the

Emerald zone comprising the Emerald, Feeney, and Invincible deposits, located along the west side of

the Jersey Pb-Zn deposit.

Dodger Tungsten Deposit

The Dodger Tungsten skarn deposit comprises three zones with finely disseminated scheelite grains in

light brown to green garnet-diopside skarn. The conformable deposit occurs in a skarnified limestone

unit near the top of the Truman Member. A tongue of granite, an appendage of the Dodger stock,

separates the mineralized zones.

Scheelite is accompanied by pyrrhotite, biotite, quartz, molybdenite, and minor powellite. The ore zones

range from 2.0 to 9.0 m in width and average 3.0 m.

The Dodger tungsten zone was mined intermittently from 1951 to 1973 and averaged 0.56% WO3 for

521,023 tons of production. Production ceased in 1973 leaving unmined reserves of 42,500 tons grading

0.45% WO3. During the final year of operation extensive reserves of low grade ore were found to the

north and south of the East Dodger deposit. These reserves were not developed due to low tungsten

prices.

East Emerald Tungsten or Dodger “D” Zone

The Dodger "D", or East Emerald Tungsten zone, located about 300 m southwest of the Dodger 4400

adit, is represented by a series of pits and trenches located along the contact of the Dodger stock and

within skarnified Truman argillites, each of which is about 10 m thick.

Forty historic drill holes intersected tungsten-skarn mineralization adjacent to and distant from the

granitic contact, similar to that historically mined from the Dodger Tungsten deposit to the east.

In 2006, Sultan drilled four holes in order to verify the reported tungsten grades and the widths of

mineralization. Historical drilling and surface sampling have showed that these tungsten-bearing

horizons may be more than 1,100 m long, and may extend up to 300 m down dip. Drill logs show that

the zone ranges from 4.0 ft (1.2 m) to more than 60.0 feet (20.0 m) in thickness with tungsten assay

results varying from less than 0.10% WO3 to greater than 0.28% WO3.

Near the workings, the Dodger stock is pegmatitic, consisting entirely of white quartz and feldspar

phenocrysts up to 15 cm in diameter. The workings are located within very rusty, skarn banded Truman

sediments. Visible mineralization consists of massive to disseminated and banded pyrrhotite, pyrite,

bismuth, molybdenite, and chalcopyrite, with assays also indicating the presence of gold, zinc, and

tungsten.

24

Emerald Tungsten Deposit

The Emerald tungsten deposit occurs along the contact between the Reeves limestone and the Emerald

argillite, along the west side of the Emerald stock. Four distinct types of mineralization occur: skarn,

sulphide, greisen, and quartz. Skarn-type mineralization occurs mainly along or near the limestone

argillite contact. It consists of garnet, diopside, calcite and quartz with lesser amounts of pyrrhotite,

pyrite, scheelite, and molybdenite. Sulphide-type of mineralization, consisting of pyrrhotite, calcite,

biotite and scheelite, is often spatially associated with skarn mineralization and consists of irregularly

shaped replacement bodies in limestone and dolomite. Locally quartz, pyrite, molybdenite and

chalcopyrite may be present. Greisen-type mineralization occurs in altered granite and extends up to 12

m into the granite from the limestone contact. It ore consists of potassium feldspar - in some places

completely kaolinized, abundant quartz, sericite, pyrite, tourmaline, and scheelite. Locally, calcite,

ankerite, apatite, pyrrhotite, or molybdenite may be present. In many places, quartz-type mineralization

grades into greisen. It consists of silicified limestone cut by numerous veins of quartz with ankerite,

scheelite, minor molybdenite, and apatite. The veins are enveloped by disseminated scheelite, pyrite,

pyrrhotite, and tremolite.

Scheelite is the main tungsten mineral, but minor powellite and wolframite was also recovered. Most of

the scheelite was recovered from lenticular skarn zones developed along the contact between the

Emerald argillite and the Reeves limestone.

The Emerald tungsten zone was mined intermittently from 1943 to 1973. Grades ranged from 0.5 to

1.5% WO3 and averaged 0.86% WO3 for the entire 1,076,799 t of production. Mining ceased in 1973 due

to low tungsten prices, leaving recoverable reserves of 34,800 t grading 0.73% WO3. Potential for

additional resources exists north of the Invincible and south of the Emerald deposits, but due to low

tungsten prices, there was no incentive to continue to explore and develop.

Invincible Tungsten Deposit

The Invincible Tungsten deposit is adjacent to the western margin of the Dodger stock where it transects

flat-lying beds of the Reeves limestone. The deposit lies 1,500 m northeast and along strike from the

Emerald tungsten deposit, on the east side of the Emerald granite stock.

The deposit is bounded above and below by skarn and Truman and Emerald limestone members. Most

of the scheelite occurs in lenticular zones that extend at a high angle from the granitic stock,

approximately conformable with layering of the host rocks. The scheelite occurs as fine, disseminated

grains within garnet-diopside skarn and is accompanied by pyrite, pyrrhotite, minor powellite, and

traces of molybdenite and wolframite. Quartz is common in zones of mineralized granite.

The mineralized zone extends up to 24 m from the stock, and may be more than 3 m thick in places. The

zone lies about 260 m below surface and produced 256,480 t of 0.65% WO3 from 1970 to 1973 (Geology,

25

Exploration and Mining in British Columbia, 1973). The northern extension of the Invincible mine

remains untested.

Feeney Tungsten Deposit

The Feeney Tungsten deposit is located on the east side of the Emerald granitic stock along strike to the

north of the Emerald mine, and south of the Invincible mine. It forms a relatively shallow mineralized

body within the Laib Fm along the granite-limestone contact between the Reeves limestone and

Emerald argillite.

The mineralization consists of scheelite with minor powellite, rare wolframite, and traces of

molybdenite in a green and brown garnet-diopside skarn containing augite, actinolite, epidote,

pyrrhotite, and quartz. Most of the scheelite occurs as fine, disseminated grains in lenticular skarn zones

that extend from the granite contact out into the limestone-argillite country rock conformable with

bedding. The skarn zones are up to 6 m long and average about 2 m in width. Grades are about 0.5 to

1.5% WO3. The Feeney mine, which operated between 1951 and 1955, produced about 54,000 t of ore

averaging 0.92% WO3 (Bulletin 41, page 119).

7.3.4 MOLYBDENUM ZONES

Molybdenum mineralization was noted in several areas within the historic Jersey, Dodger, Invincible,

Emerald, and Feeney mine workings. Follow-up work during the 2000 to 2005 field seasons indicated

that the most readily accessible area for molybdenum exploration is within the 4200 level of the Dodger

mine workings, which were in good condition where access drifts were completed during the historic

tungsten mining. Mapping of the drifts indicated that the granitic rock that underlies the Dodger-type

skarn tungsten mineralization contains porphyry-style quartz veining with molybdenite mineralization.

Exploration of the porphyry system, along the margin of the historic Dodger East Tungsten zone,

revealed a stockwork of quartz veining and fractures with molybdenite. The cross-cutting fractures and

quartz veins are oriented north-south and east-west, with steep dips. Several high-grade molybdenite

zones were intersected, including 1% to 3% Mo over short widths of 3 to 5 ft (0.9 to 1.5 m). Twenty

holes drilled during 2005 indicated the potential for larger volumes of lower-grade molybdenum that

includes short sections of higher-grade material.

26

8 DEPOSIT TYPES

8.1 LEAD AND ZINC DEPOSITS

Simandl and Paradis (Paper 2009-1) describe the lead-zinc deposits on the property as hosted by fine-

grained, poorly layered to massive dolomite of the Reeves Member. The Pb-Zn mineralization occurs

near to the base of the Reeves Member and varies in thickness from 8 to 30 m.

The Truman Member of the Laib Formation forms the footwall rocks. It consists of dense, reddish green

skarns, and a brown argillite that hosts tungsten and molybdenum mineralization. Five Pb-Zn dolomite-

hosted bands, ranging in thickness from 0.3 to 9 m occur within the mine. Sulphide mineralization

consists of fine-grained sphalerite and galena, with pyrite, pyrrhotite, and minor arsenopyrite. The

galena-sphalerite-pyrite-pyrrhotite occurs as bands similar to those from the HB deposits, except that

lead dominates.

The dolomites are texturally distinct from the medium-grained well-banded grey and white Reeves

limestone. The deposits, their dolomitic envelopes, and the limestone host rock generally lie within

secondary isoclinal folds along the limbs of regional anticlinal structures. They form stratiform, tabular

and lens-shaped concentrations of pyrite, sphalerite, and galena in dolomitized zones. Brecciated zones

are common within the more massive sulphide mineralization. The deposits in the Kootenay Arc are

currently under study. Recent age dating indicates that the Pb-Zn deposition is of Ordovician to

Devonian age, which suggests that the deposits may be classified as Mississippi Valley Type (MVT),

emplaced during rifting along the continental margin with increased igneous activity along the

deposition belt.

8.2 TUNGSTEN DEPOSITS

Tungsten mineralization occurs in two distinct environments: 1) skarn-style mineralization at granite

limestone contacts, and 2) stratabound disseminated mineralization in favourable zones within the

Truman Member.

8.3 GOLD DEPOSITION

Gold occurs in areas that were historically mined for tungsten. Work by Sultan indicated that the gold is

skarn-related, occurring in silicified horizons with pyrite, pyrrhotite, arsenopyrite, stibnite, and native

bismuth.

27

8.4 MOLYBDENUM PORPHYRY

At different periods during the exploration and development of lead-zinc and tungsten deposits on the

property, quartz stockwork veining and alteration zones have suggested the potential for gold

mineralization within the granites underlying the previously mined areas.

Mapping of underground headings, and sampling of drill core during mining operations, indicated the

presence of molybdenite within these porphyry-style veined zones. Based on these positive indicators,

between 2005 and 2007, work focused on exploring for molybdenum, and included drilling of the

Dodger zone.

28

9 EXPLORATION

Since 1994, Sultan Minerals Inc. has undertaken a number of exploration programs on the Jersey-

Emerald property. Work has included ground and airborne geophysical surveys, soil sampling, mapping

and prospecting, and core drilling. Drilling is discussed in Chapter 10, Drilling.

Historic surface work has not been compiled into digital form. Sultan has retained paper versions

showing the results of geochemical and geophysical surveys, and detailed areas of geological mapping.

Much of this work was not compiled into summary reports. The various paper maps were not reviewed

for the purpose of this report.

Margaux has not completed any exploration work on the property.

Exploration work on the project was conducted using local grid coordinates in keeping with historic

exploration and development that occurred on the property prior to Sultan obtaining the claims. The

locations have been converted to Universal Transverse Mercator (UTM) North American Datum of 1983

(NAD83), Zone 11.

9.1 SURFACE GEOCHEMISTRY

In March 2010, Sultan compiled surface soil sampling results onto single maps (Figures 5, 6, and 7). The

figures below show the results for zinc, tungsten, and silver from several compilations. Original data and

paper maps produced for exploration purposes were not available to the authors for the purposes of

this report.

9.2 AIRBORNE GEOPHYSICS

During 2008-2009, Fugro Airborne Surveys flew heliborne magnetic and time-domain electromagnetic

(EM) surveys over the Jersey-Emerald property. A Dighem EM survey was flown in 1993. These surveys

were summarized in a Peter E. Walcott and Associates Ltd. (Walcott) report titled “An Assessment

Report on Heliborne Magnetic and Electromagnetic Surveying, April 2009”.

The 1993 EM data showed that Ordovician Active Formation black argillite extends to the eastern

portion of the property through Lost Creek. Numerous individual conductors were identified. The Fugro

survey was flawed, as there were inconsistencies in instrument height. Therefore, the survey failed to

provide additional useful information. Figures 8,9,10 and 11 summarize the Fugro and Dighem surveys.

29

Figure 5: Soil geochemistry - Zinc

30

Figure 6: Soil geochemistry – Tungsten and Zinc

31

Figure 7: Soil geochemistry – Silver, Jersey Mine area

32

Figure 8: Historic Dighem airborne magnetic survey

33

Figure 9: Heligeotem magnetic survey

34

Figure 10: Heligeotem EM survey contours

35

Figure 11: Heligeotem EM survey with Historic Dighem survey contours

36

10 DRILLING

Margaux has not undertaken any drill programs on the property.

Sultan has completed several drilling campaigns in the exploration for gold, tungsten, and lead-zinc.

Before 2005, Sultan drilled 3,031 m of core on the property.

From 2005 through 2008, Sultan directed exploration toward the molybdenum and tungsten potential

of the property, with lesser exploration for lead and zinc. This work was conducted over a large area of

the property, within and adjacent to the historic workings, within an approximate area of 2.5 square

kilometres.

Since 1994, Sultan has drilled 176 core holes totaling 85,193.6 ft (25,997.5 m).

10.1 LEAD AND ZINC EXPLORATION

The historic drilling conducted prior to Sultan’s involvement was directed toward the exploration and

development of Pb-Zn resources, and included over 3,500 underground drill holes. Sultan directed only a

few drill holes toward Pb-Zn targets; however, many of their drill holes intersected significant grades

and widths of Pb-Zn mineralization.

Of the 176 drill holes completed by Sultan within and adjacent to the historic mine areas, 475 samples

from 91 drill holes returned assays results equal or better than 1,000 parts per million (ppm) Zn, and 152

samples from 56 drill holes returned assay results equal or better than 10,000 ppm Zn. These results

occur in holes that were drilled through all areas of exploration, regardless of the commodity targeted.

10.2 MOLYBDENUM EXPLORATION

Sultan drilled 51 core holes, totaling 30,501 ft (9,297 m), in the East Dodger Molybdenum zone.

Molybdenum mineralization was intersected in many of the historic underground drill holes. It

comprises a network of high-grade molybdenite-bearing quartz veins hosted within a granite intrusive

body. The grade is variable over the 1,000 ft (300 m) long zone, and is highest in areas where there are a

greater number of veins. Drill hole JM05-02 returned 0.13% Mo over its entire 192 ft (58.5 m) length,

and Hole 3 averaged 0.068% molybdenum disulphide (MoS2) over 495 ft (150.9 m). Results as high as 3%

Mo, over 1 m lengths, were also encountered. Due to the stockwork nature of the molybdenum

mineralization, within cross cutting veins and fractures, true widths of mineralized sections are

considered to closely match the compiled intercept thickness of drill hole intercepts. Single drill hole

intercepts over short sections that contain higher grade are related to single veins or fractures that cross

drill holes at various angles, and therefore reported thickness is greater than true thickness.

37

Continued drilling within the underground Dodger 4200 zone, designed to more fully assess the

molybdenum potential within the zone, indicates the potential for large volumes of lower-grade

molybdenum mineralization (0.05 to 0.1% Mo), containing more limited zones of high-grade

mineralization (0.5 to 1% Mo).

10.3 TUNGSTEN EXPLORATION

Sultan drilled 24 core holes, totaling 12,102 ft (3,689 m), in the Emerald East Tungsten target area. The

drilling was designed to intersect a tungsten-bearing skarn band that was exposed and sampled in

trenches, and intersected in historic drilling between the 1940s and 1970s. Sultan’s drill holes

intersected scheelite, which is associated with a skarn band that is located marginal to, and extends

northward from, the Emerald Tungsten mine workings.

The majority of drilling completed by Sultan was performed by Wade Critchlow Enterprises Ltd.

(Critchlow), from Salmo, BC, using a combination of a JKS Boyles A5 B2 skid-mounted rig and a smaller,

more mobile Discovery 1 skid mounted drill. NQ2 and BQTW diameter core was produced. The core was

not oriented.

The average recovery of good quality core was high with only marginal differences when compared by

the various zones.

Critchlow uses imperial measurements when drilling.

10.4 PROTOCOLS

The following protocols refer in general to all drilling completed by Sultan; however, there have been

few changes in methodology throughout all phases of work at the property.

10.4.1 DOWNHOLE SURVEY METHODOLOGY

Early drilling by Sultan did not utilize downhole survey instrumentation. Dip tests alone were completed

by simple “acid in test tube” methodology. Later drilling utilized downhole surveys performed by the

driller using a Fordia VisionR survey tool. With this instrument, readings are taken at the top, middle,

and bottom of each drillhole, during the drilling process. The driller records the readings onto paper slips

or the drilling timesheets, which are provided to the geologist periodically. The geologist enters the data

into Excel, and then converts the depth from imperial to metric units, and converts the azimuth from

magnetic to true north. The original paper slips are retained.

38

Figure 12: Drillhole location map – Jersey-Emerald property

39

Once the hole has been drilled, the hole is permanently marked with a flagged wooden post that bears a

metal tag with drillhole information. The final location of the drillhole is collected using handheld GPS.

10.4.2 DRILL CORE PROTOCOLS

Drill core is placed into 4-foot or 5-foot, four row wooden boxes by the driller’s helper. The boxes are

marked with the drillhole number, and the box number. Sealed boxes are trucked from the drill to the

core facility in Salmo, or in later years on the property, at least once per day.

The boxes are placed on tables, in order, and the core is washed to remove drilling products. A

geotechnician reviews the core to ensure that distance markers and core are correctly placed, and

makes corrections as necessary. The distances are converted to metric from imperial units, and the new

value is written on the reverse side of the distance marker. Each box is labeled with start and end

distances, as measured from the nearest distance marker. A metal tag, inscribed with the drillhole

number, box number, and start and end distances is stapled to the side of each box.

A geotechnician creates a simple geotechnical log that includes measurements of core recovery and rock

quality designation (RQD), and a count of fractures. Information is collected onto sheets of paper,

transcribed into a Microsoft Excel (Excel) spreadsheet, and the paper is discarded.

A geologist creates a simple geological log than includes a rock code, a brief description of lithology, a

few point measurements of structure, categorically logged alteration types, and an absolute estimation

of sulphide mineralization. Data is typed directly into Excel into a worksheet that is formatted for

printing.

Major breaks for general sampling are marked by the geologist during logging. The geotechnician marks

the individual samples on the box, affixes sample tags to the box, and then cuts and bags the core.

40

11 SAMPLE PREPARATION, ANALYSES AND SECURITY

11.1 SAMPLE COLLECTION

The sample collection procedures employed by Sultan meet or exceed industry best practice guidelines.

11.1.1 CORE SAMPLES

Core is split using a standard manual core splitter, or for some intervals, using a rock saw. One half of

the core is placed into a labeled sample bag, along with a sample tag. The other half of the core is neatly

returned to the core box, where sample intervals are marked with a sample tag that matches that in the

sample.

On the Jersey-Emerald property, core is typically sampled from top to bottom along 2-m intervals.

Samples honour lithological, alteration and mineralization boundaries.

11.2 PREPARATION AND ANALYSES

The majority of samples were analyzed at Acme Analytical Laboratories Ltd. (AcmeLabs) in Vancouver,

BC, an independent laboratory with no affiliation to Sultan or Margaux.

AcmeLabs implements a quality system compliant with the International Standards Organization (ISO)

9001 Model for Quality Assurance and ISO/IEC 17025 General Requirements for the competence of

testing and calibration laboratories. On November 13, 1996, AcmeLabs became accredited under ISO

9001 for competency in geochemical analysis and assaying. The laboratory has maintained its

registration in good standing since then.

All samples are prepared for analysis at the receiving laboratory. In order to eliminate contamination,

AcmeLabs processes different sample types in different areas.

Rock and core samples are initially jaw-crushed and split. A one kg sample is crushed - 10 mesh (2 mm),

split to 250 g, and then pulverized to -200 mesh (74 µ). A 15 g split undergoes aqua regia digestion

followed by ICP-MS analysis.

Samples with ICP-MS results containing elevated gold were re-analyzed using a 30 g fire assay (FA) with

an atomic absorption (AA) finish. Samples containing molybdenum, tungsten, lead or zinc values over

the upper detection limit were analyzed by more complete leaching and analysis by Inductively Coupled

Plasma Emission Spectrometer (ICP-ES).

41

11.2.1 QUALITY ASSURANCE PROTOCOLS AND DISCUSSION

Sultan’s quality assurance program included an analysis of the control samples, such as certified

reference material (standards) and duplicates, which were inserted into the sample stream by the

primary laboratory. A check program consisted of Sultan submitting a subset of samples to a referee

laboratory for duplicate analysis.

Standards – Lead and Zinc

In 2007 and 2008, Sultan’s drilling near the Jersey Pb-Zn mine, which was focused on tungsten and

molybdenum targets, intercepted intervals containing significant lead and zinc values.

Sultan performed a review of the laboratory control samples as a cursory check for the accuracy for lead

and zinc analysis of standards DS7 (Figures 13 and 14) and DST6 (Figures 15 and 16).

The results for both lead and zinc for standard DS7 show good accuracy with good scatter around the

mean, and with rare exception, all samples fall well within the acceptable limits. The results for lead for

standard DST6 show good accuracy with tight scatter around the mean. The values for zinc were more

erratic, showing a strong positive trend, with some samples out of bounds.

Based on these results, the analytical results for lead and zinc are acceptable for resource estimation

work.

Figure 13: Control chart for Standard DS7 - Pb

42

Figure 14: Control chart for Standard DS7 - Zn

Figure 15: Control chart for Standard DST6 - Pb

43

Figure 16: Control chart for Standard DST6 - Zn

Assay Checks with a Second Laboratory - Tungsten

A selection of replicate samples, prepared by Acme, were selected by Sultan and submitted to a referee

laboratory (lab) for analysis for tungsten.

In 2006 and 2007, Becquerel Laboratories Inc. (Becquerel), in Ontario, performed check analysis for

tungsten using neutron activation procedures. The inter lab precision was 12.3%.

In 2006, the Becquerel results were 8.52% higher than those reported by Acme. This result is expected,

as the neuron activation technique employed by Becquerel determine total tungsten, whereas the acid

digestion technique used by Acme does not determine encapsulated tungsten.

In 2007, Becquerel analyzed an additional 17 samples. There is excellent agreement between the results

from the two laboratories, with a correlation coefficient of r=0.9999. The XY scatter plot (Figure 17)

shows a slight a positive bias in favour of Acme. The sampling precision between the two labs is 4.3%.

44

Figure 17: 2007 Lab check scatter plot for Becquerel versus Acme - Tungsten

Blanks and Field Duplicates

Field blanks or field duplicates were not employed by Sultan.

11.3 SECURITY

Core logging, splitting, and sampling was conducted within a secure third-party core facility situated on

private property in Salmo, BC, and within a fenced compound located on the exploration property.

Access to these facilities was limited to Sultan personnel and the owner of the facility.

All soil, rock, trench, or core samples were prepared for shipment within the secure facility. The sealed

rice bags that contained samples were held within a locked area until a commercial trucking company

retrieved them every few days for delivery to the laboratory.

The laboratory did not report any incidences of tampering or damage to the samples. The laboratory

employs their high-quality preparation, quality assurance, and security protocols after the samples are

in their possession.

45

11.4 CONCLUSIONS

Numerous checks of the digital database through basic software validation techniques identified a few

data entry errors that were corrected after consulting the original drill logs and assay sheets.

It is the opinion of the authors that the sampling protocols, analytical and quality assurance procedures,

and security measures used by Sultan at the Jersey-Emerald project meet the currently accepted

industry best practice guidelines.

46

12 DATA VERIFICATION

Data used in the preparation of this report were predominantly generated by Sultan during past

exploration programs. All data is stored in Sultan’s offices in Vancouver and Salmo. Mr. Grunenberg

managed or otherwise participated in most of the previous exploration. There is no reason to doubt the

accuracy or veracity of the geological exploration data that is presented as written material and as

illustrations on maps, sections, or diagrams.

Verification activities conducted during the exploration programs included:

Confirmation of drillhole collar locations

Observation and review of core storage, core splitting, core sampling, and sample shipping

Observation and review of geological logging, geotechnical logging, and density measurement

procedures

Verification activities subsequent to the site visit:

Verification of downhole survey records

Comparison of assay results from the laboratory to values stored in the resource estimation

database

Evaluation of quality assurance program

The data verification for the purposes of this report has been focused on the work completed by Sultan

during their work programs. The discrepancies and errors that were encountered during these processes

were referred to Sultan for clarification or correction.

Overall, it is the opinion of the author that Sultan has applied industry-standard practices, and that the

information used for resource estimation meets or exceeds CIM best practice guidelines.

12.1 FIELD PROCEDURES

Sultan utilized standard procedures for core handling and storage, logging and sampling, and sample

shipments. There were no written procedural guidelines.

It is the opinion of the author that the field methodology meets current best practice guidelines.

12.2 DRILLHOLE COLLAR LOCATIONS

Field Check

Several drillhole collar locations were located in the field and surveyed by the author using a Garmin

handheld GPS. Some permanent collar location markers were easily found and were labeled with the

drillhole name and orientation but others were not located and would require relocation.

47

Most of the historic drill information utilized in these resource calculations utilized local grid coordinate

systems. Collars for some drill holes were locally surveyed using standard transit tools. Calculations were

then performed to provide a local grid coordinate to that drill hole location. Where drill hole collars are

inserted in UTM coordinates, these have been derived using GIS transformation software.

12.3 DOWNHOLE SURVEYS

Downhole information was not verified; however, duplicate and obviously erroneous data was

corrected.

It is the opinion of the author that the drillhole downhole data are adequate for the purposes of

resource estimation.

48

13 MINERAL PROCESSING AND METALLURGICAL TESTING

13.1 MOLYBDENUM, GOLD, AND SILVER

In February 2006, Sultan sent a composite sample of core from drill holes JM05-03, JM05-13, JM05-14,

and JM05-15, located within the molybdenum zone, to Process Research Associates Ltd. (PRA) for an

assessment of the Mo recovery potential using basic processing schemes. The results are presented in a

report from PRA (Tan, 2006) with the summary reproduced below:

“Drill hole samples from the Jersey project were blended into a single mineral composite, which was

tested by flotation for evaluation to recover molybdenum. Table 4 provides a head assay from averaged

results, including back-calculated feed grades from the laboratory studies. The main mineral of interest

was molybdenite. However, many potential by-product recovery options could also be considered.

Table 4: Calculated head grade results for metallurgical composite

Head Grade

Au (g/t Ag (g/t) Mo (%) Fe (%) S (%)

0.055 0.605 0.311 1.508 1.27

Rougher flotation recovered more than 97% Mo, at relatively coarse particle sizes of 80% passing (P80)

170µm. The first rougher stage flotation recovered 98% Mo and 81% Au in 4.3% of the mass. The

majority of the mass was contributed by 61.7% of the Fe (pyrite).

Using lime as pyrite depressant in five stages of cleaning yielded grades of 2.82 g/t Au, 27.0 g/t Ag, 29.2

% Mo and 20.5% Fe, with recoveries exceeding 47% Au and 95% Mo.

It is concluded that the results of exploratory testing are encouraging and that further testing should

focus on improving the molybdenite and pyrite separation to both improve the grade of the Mo

concentrate. Variation to floatation response within the mineralized zones should also be investigated.”

13.1 TUNGSTEN

Sultan or Margaux have not untaken any metallurgical studies for tungsten; however, an indication of

recovery potential might be gathered from the last two years of normal operation at the Invincible and

East Dodger mines during 1971 and 1972. According to Ed Lawrence, P.Eng., the mine manager for

Placer Dome at that time, the total throughput was 370,600 short dry t with a WO3 recovery of 81.5%.

49

13.2 LEAD AND ZINC

Sultan or Margaux have not untaken any metallurgical studies for lead or zinc. However, information can

be gathered from the last 10 years of operation, ending in 1973, at the Jersey Pb-Zn mine, when

4,432,800 t of ore were processed

According to Mr. Lawrence, the mine manager at time of closure, the dolomite rock that hosts the

mineralization provides favourable crushing and grinding characteristics.

Conventional floatation methods were capable of producing lead and zinc concentrates that were

acceptable by the smelters at that time. Lead concentrate grades averaged 75% and reached up to

76.4%. Zinc concentrates averaged 57.6%, with a high of 58.4%. Recoveries were in the 90% range for

both metals.

The lead and zinc concentrates were free of minerals or elements that would cause smelter penalties.;

however, payment was made for 5 oz Ag/t of lead, and 9 lb Cd/t of zinc.

50

14 MINERAL RESOURCE ESTIMATE

14.1 MINERAL RESOURCE SUMMARY

At the request of Margaux Resources Inc., Gary Giroux, P. Eng, of Giroux Consultants Ltd. has prepared a

consolidated mineral resource estimate for the Jersey-Emerald property , which includes molybdenum

in the Dodger 4200 zone, tungsten in the Emerald, East Emerald, Lower East Emerald, Dodger, and East

Dodger zones, and lead-zinc for the extension of the Jersey mine (Figure 18). The effective date is

February 28, 2014.

The resource estimates completed in 2006, 2008, and 2010 are the subject of technical reports written

by Giroux and Grunenberg. There has not been any significant work in the areas of interest since the

estimates and reports were produced; therefore, these mineral resources are considered to be current.

Mineral resources for the Jersey-Emerald property were estimated in accordance with CIM Standards of

Mineral Resources and Reserves.

Sultan created and provided wireframes that represented the extents of mineralization for each of the

areas of interest, and the mine workings.

The topographic surface used for the estimation was from the 1:20,000 topography maps as provided by

the BC Government Terrain Resource Management (TRIM) mapping program.

In order to accommodate the historic data, the estimation was completed using Imperial units of measure.

14.1 MOLYBDENUM RESOURCE SUMMARY

14.1.1 STATISTICS AND GRADE CAPPING

Data for the resource estimate of the Dodger 4200 zone came from 21 core holes (Figure 19). Of the

1,271 assay results for molybdenum (Table 5), 21 were reported as 0.0 ppm, and were assigned a

nominal grade of 0.1 ppm.

Table 5: Statistics for Mo grades - Dodger 4200 Zone

Mo ppm

Number 1,271

Mean 414.8

S.D. 1592.7

Minimum 0.10

Maximum 31,070

Coef. Of Variation 3.84

51

Figure 18: General locations of resources discussed in this report

52

Figure 19: Drill hole location plan for Mo - Dodger 4200 Zone

6500N 6500N

6600N6600N

6700N6700N

6800N6800N

6900N6900N

7000N7000N

7100N7100N

7200N7200N

7300N7300N

7400N7400N

7500N7500N

7600N7600N

7700N7700N

7800N7800N

7900N7900N

8000N8000N

8100N8100N

8200N8200N

8300N8300N

8400N8400N

8500N8500N

8600N8600N

8700N8700N

8800N8800N

8900N8900N

9000N9000N

9100N9100N

9200N9200N

9300N9300N

9400N9400N

9500N9500N

9600N9600N

9700N9700N

9800N9800N

9900N9900N

10000N10000N

10100N10100N

10200N10200N

10300N 10300N

8300E

8300E

8400E

8400E

8500E

8500E

8600E

8600E

8700E

8700E

8800E

8800E

8900E

8900E

9000E

9000E

9100E

9100E

9200E

9200E

9300E

9300E

9400E

9400E

9500E

9500E

9600E

9600E

9700E

9700E

9800E

9800E

9900E

9900E

10000E

10000E

DS05-01

JM05-01

JM05-02

JM05-03

JM05-04

JM05-05

JM05-06

JM05-07

JM05-08

JM05-09

JM05-10

JM05-11

JM05-12

JM05-13 JM05-14

JM05-15 JM05-1

6

JM05-17

JM05-18

JM05-19

JM05-20

DODGER 4200

MOLYBDENUM ZONE

DRILL HOLE

LOCATIONS

N

0 100 200 300 400 ft.

SCALE

53

A lognormal cumulative frequency plot (Figure 20) was produced from all the Mo values. Five

overlapping lognormal Mo populations were partitioned from the total data set.

Table 6: Individual overlapping populations for Mo - Dodger 4200 Zone

Population Mean Mo ppm Proportion of Total Data Set Number of Samples

1 5984.0 1.42 % 18

2 3463.0 3.26 % 41

3 521.7 17.08 % 217

4 21.77 70.08 % 891

5 0.8 8.16 % 104

Populations 1, 2, and 3 probably represent the various veins and stockworks that contain molybdenum

mineralization. Populations 4 and 5 probably represent background Mo values in granites and

sediments. The upper portions of populations 1 and 2 should be considered erratic high grades, and an

effective cap threshold would be two standard deviations (SD) above the mean of population 2, a value

of 15,800 ppm Mo. Two samples were capped at 15,800 ppm Mo.

Figure 20: Lognormal cumulative probability plot for Mo with five populations (shown by open circles -

numbered 1 to 5 from top to bottom)

54

The capping of two samples adjusted the mean grade and coefficient of variation slightly (Table 7).

Table 7: Statistics for capped Mo grades - Dodger 4200 Zone

Mo ppm

Number 1,271

Mean 402.4

S.D. 1404.0

Minimum 0.10

Maximum 15,800

Coef. Of Variation 3.49

14.1.2 GEOLOGIC MODEL

A three-dimensional (3D) solids model was produced for the Dodger 4200 Mo zone (Figure 21). The

mineralized zone was interpreted from cross sections constructed roughly perpendicular to the strike of

the zone. Solids were constrained by the drill holes and shapes of mineralized areas and were

maintained between cross sections. The top of the solids was constrained by geologic contacts to the

surrounding country rocks.

Figure 21: Schematic showing 3D wireframes for Dodger 4200 Zone

55

14.1.3 COMPOSITING

All drill holes were “passed through” the granite solid with the distances where each hole entered and

left the solid determined. For the Dodger 4200 zone, 10 ft (3.05 m) down hole composites were

produced for the segments of drill holes within the granite. Compositing was started at the granite

surface and ended in all cases within granite. Composites less than 5 ft (1.52 m) at the end of holes were

joined with the adjoining samples to produce a uniform support of composites 10 ± 5 ft

Statistics for 10 ft composites are shown in Table 8.

Table 8: Statistics for 10 ft Mo composites - Dodger 4200 Zone

Number of Composites 693

Mean Mo (ppm) 294

Standard Deviation 866

Minimum Value Mo ppm 0.10

Maximum Value Mo ppm 15,800

Coefficient of Variation 2.94

14.1.4 VARIOGRAPHY

Molybdenum 10 ft composites within the granite were examined using pairwise relative

semivariograms. A nested anisotropic spherical model was fit to the four major horizontal directions,

namely; Azimuth (Az) 90, Az 0, Az 45, and Az 135. The longest range of 80 ft (24.4 m) was found in the N-

S direction (Az 0). A vertical semivariogram was produced and showed a range of 20 ft (6.1 m). Models

were run for Az 90, dip -45, and Az 270 Dip -45, but both showed an isotropic range of 25 ft, longer than

the vertical direction. The semivariogram parameters are summarized in Table 9.

Table 9: Semivariogram parameters for Mo

Zone Variable Azimuth Dip Nugget

Effect

Short

Structure

Long

Structure

Short

Range (ft)

Long

Range (ft)

Dodger 4200

Zone Mo

0 0 0.20 0.22 0.50 10 80

90 -45 0.20 0.22 0.50 10 25

270 -45 0.20 0.22 0.50 10 25

14.1.5 BLOCK MODEL

Rotated block models with block dimensions 50 x 50 x 20 ft were placed over both solids with the

proportion of each block below the topographic surface and inside the solid recorded. The block model

parameters are listed below.

Minimum Easting 8000 E blocks 50 ft wide 42 columns

Minimum Northing 6000 N blocks 50 ft long 84 rows

56

Maximum elevation 5000 blocks 20 ft high 70 levels

Model rotated 30 degrees north around Z axis.

14.1.6 GRADE INTERPOLATION

Search ellipses to constrain the ordinary kriging runs had dimensions based on the ranges of the

semivariograms along the three principal directions of anisotropy. The estimate was competed in four

passes with pass 1 using ¼ the semivariogram ranges, pass 2 using ½ the ranges, pass 3 using the full

range and a final pass 4 using twice the semivariogram range (Table 10).

Table 10: Kriging search strategy for Mo - Dodger 4200 Zone

Zone Pass Number

Estimated Direction

Dist.

(ft.) Direction

Dist.

(ft.) Direction

Dist.

(ft.)

Dodger 4200

Mo Zone

1 0 Az 0 Dip 0 20.0 Az 90 Dip -45 6.25 Az 270 Dip -45 6.25




A minimum of four composites and maximum of 16 composites were required to estimate a block. If

more than 16 composites were found within the search ellipse, then the closest 16 were used. If the

minimum four composites were not found, then the block was not estimated during that particular pass.

14.1.7 SPECIFIC GRAVITY

There is no information on historic bulk density (SG) numbers used in molybdenum zones. Some specific

gravity determinations were made from recent drilling in holes JM05-01 to JM05-12 (Table 11). For this

resource estimation, an average SG of 2.68 was used. This converts to a tonnage factor of 11.96 cubic

feet (ft3)/t.

Table 11: Summary of specific gravity determinations - Dodger 4200

HoleID Footage Mass in Air

(oz)

Mass in Air

(g)

Mass in Water

(oz)

Mass in Water

(g)

Volume

(mL) SG

JM05-01 222.0 4.8 136.0 3.0 85.0 51.0 2.67

JM05-12 441.0 5.9 167.0 3.7 105.0 63.0 2.69

JM05-10 17.0 6.5 184.0 4.0 113.0 69.0 2.59

JM05-02 51.0 2.5 71.0 1.6 45.0 24.0 2.73

JM05-03 150.0 4.7 133.0 2.9 82.0 47.0 2.61

JM05-02 177.0 3.3 94.0 2.2 62.0 32.0 2.94

JM05-11 333.0 8.8 249.0 5.5 156.0 92.0 2.68

JM05-10 68.0 2.8 79.0 1.7 48.0 29.0 2.55

Average 2.68

57

14.2 TUNGSTEN RESOURCE

The initial 2006 tungsten resource comprised the Invincible, Emerald, Dodger, and East Dodger zones.

There are significant mined out portions within some of the zones. The mined out areas have been

digitized from underground stope plans and are believed to be reasonably up to date. However, in

historic mines, records for the last stages of mining may not have been accurately kept, and as a result

the actual mined out portion of these mineralized zones might be larger than is shown in these models.

For modeling the Invincible zone, historic data is combined with the Emerald zone; however, the Dodger

and East Dodger are similar zones separated by a barren patch of granite. The procedures for this

estimate are discussed in Giroux and Grunenberg (2006).

The 2008 tungsten resource was made up of the Emerald zone, which was partially mined as it

surrounds old workings, the East Emerald, and the Lower East Emerald zones to the NNE of the Emerald

zone. These resources were in addition to the Invincible, Dodger, and East Dodger zones that were

estimated in 2006.

14.2.1 STATISTICS AND GRADE CAPPING

Data provided for the 2008 tungsten resource estimate came from 633 drill holes, totaling 121,249 ft,

within the Emerald zones area. Of these, 242 drill holes had intersections within the mineralized zones

for a total of 42,303 ft. Missing assays between assayed intervals were replaced with a nominal 0.0001

% WO3, taking the total number of assay results used to 7,732.

Geologic 3D solids were constructed to constrain three mineralized areas: Emerald Mine, East Emerald

Upper, and Lower East Emerald. The assay results were compared to these solids and each result within

each domain was tagged. The statistics for assay results within the Emerald area, and in the two East

Emerald zones, are shown in Table 12.

Table 12: Statistics for WO3 grades

Emerald East Emerald

Assay Value

WO3 %

Assay Value

WO3 % Number 1,132 523

Mean 0.859 0.113

S.D. 1.809 0.182

Minimum 0.0001 0.0001

Maximum 22.35 2.08

Coef. Of Variation 2.11 1.62

Lognormal cumulative frequency plots were produced for WO3 values in both the Emerald Mine and

East Emerald zones.

58

In Emerald Mine zone, five overlapping lognormal populations were partitioned from the total data set

(Table 13).

Table 13: Individual overlapping populations for WO3 in the Emerald Mine zone

Population Mean Proportion of Total Data Set Number of Samples

1 10.53 1.01 % 11

2 2.56 17.05 % 193

3 0.70 22.75 % 258

4 0.16 13.16 % 149

5 0.0001 46.03 % 521

Population 1 appears to be erratic high grade that is widely scattered throughout the zone. A cap level

of two SD above the mean of population 2, a value of 8.0 % WO3, was used to cap 16 values.

In East Emerald zones, six overlapping lognormal populations were partitioned from the total data set. A

similar strategy was used to cap five assay values at 1.1 % WO3.

The effects of capping these samples, within the two zones, adjusted the mean grade and coefficient of

variation slightly downward, as shown in Table 14.

Table 14: Statistics for capped WO3 grades

Emerald

WO3 (%)

East Emerald

WO3 % Number 1,132 523

Mean % WO3 0.813 0.110

S.D. 1.520 0.158

Minimum % WO3 0.0001 0.0001

Maximum % WO3 8.00 1.10

Coef. Of Variation 1.87 1.44

14.2.2 GEOLOGIC MODEL

Based on cross sections and underground workings, Mr. Grunenberg built 3D geologic solids to outline

the tungsten skarn zones (Figure 22). Walcott modeled the underground workings.

59

Figure 22: Isometric drawing of mineralized domains: Emerald in yellow, East Emerald in blue, Lower East Emerald in green, and underground

workings shown in magenta. Drillhole composites are shown in red.

Underground Workings

60

14.2.3 COMPOSITING

All drill holes were “passed through” the geologic tungsten solids with the points each hole entered and

left the solid determined. For all zones, 10 ft (3.05 m) down hole composites were produced for the

segments of drill holes within the solids. Composites less than 5 ft (1.52 m) at the end of holes were

joined with the adjoining samples to produce a uniform support of composites 10 ± 5 ft. For intervals of

holes with missing assays, a nominal value of 0.0001 % WO3 was inserted. Statistics for 10 ft composites

are shown in Table 15. Similar 10 ft composites were also formed for the waste material from parts of

drill holes outside the solids.

Table 15: Statistics for 10 ft WO3 Composites

Emerald

10 ft Composite

WO3 %

East Emerald

10 ft Composite

WO3 %

East Emerald

Lower 10 ft Composite

WO3 %

Waste

10 ft Composite

WO3 %

Number of Composites 1,471 376 40 2,254

Mean % WO3 0.263 0.070 0.041 0.016

Standard Deviation 0.717 0.098 0.063 0.077

Minimum Value % WO3 0.0001 0.0001 0.0001 0.0001

Maximum Value % WO3 6.003 0.749 0.239 1.000

Coefficient of Variation 2.72 1.40 1.52 4.78

14.2.4 VARIOGRAPHY

All drill holes were “passed through” the geologic tungsten solids with the points each hole entered and

left the solid determined. For all zones 10 foot (3.05 m) down hole composites were produced for the

segments of drill holes within the mineralized solids. Composites less than 5 ft (1.52 m) at the end of

holes were joined with the adjoining samples to produce a uniform support of composites 10 ± 5 ft. For

intervals of holes with missing assays, a nominal 0.0001 % WO3 was inserted. Statistics for 10 ft

composites are shown in Table 16. Similar 10 ft composites were also formed for the waste material

from parts of drill holes outside the mineralized solids.

Table 16: Semivariogram parameters for WO3

Zone Variable Azimuth Dip Nugget

Effect

Short

Structure

Long

Structure

Short

Range (ft)

Long

Range (ft)

Emerald WO3

15 0 0.50 0.25 0.35 20 80

285 0 0.50 0.25 0.35 35 300

0 -90 0.50 0.25 0.35 10 200

East Emerald

WO3

30 0 0.40 0.20 0.50 10 50

300 0 0.40 0.20 0.50 50 220

0 -90 0.40 0.20 0.50 40 150

Waste WO3 Omni Directional 0.20 0.15 0.40 80 300

61

14.2.5 BLOCK MODEL

A block models with block dimensions 25 x 25 x 25 ft were placed over all solids with the proportion of

each block below the topographic surface and inside the solid recorded. The block model parameters

are listed below.

Minimum Easting 7800 E Column size = 25 ft 72 columns

Minimum Northing 5000 N Row size = 25 ft 256 rows

Maximum elevation 4650 Level size = 25 ft 66 levels

No Rotation

For each block the percentage within underground workings was also recorded. The percentage of

underground workings was always assumed to be within the mineralized solid and was subtracted out.

14.2.6 Grade Interpolation

Tungsten grades were interpolated into the block model by ordinary kriging. Each of the three solids was

estimated using only composites within that solid. Search ellipses to constrain the ordinary kriging runs

were based on the ranges of the semivariograms along the three principal directions of anisotropy. A

minimum of four composites were required to estimate a block, and a maximum of 12 composites were

allowed. If more than 12 composites were found, then the closest 12 were used. The blocks were

estimated in a series of runs or passes with the search ellipse for Pass 1 set at ¼ the ranges of the

semivariogram. For blocks not estimated during Pass 1, the search ellipse was expanded to ½ the ranges

of the semivariogram and the kriging exercise was repeated. For blocks still not estimated, the search

ellipse was expanded to the full range of the semivariogram. Finally, a fourth pass using dimensions of

the search ellipse equal to twice the semivariogram range was completed to fill in blocks still not

estimated (Table 17). An isotropic search for estimated blocks containing some percentage of waste was

completed in three passes and the waste part of the blocks was estimated from composites outside the

mineralized zones.

Table 17: Kriging search strategy

Zone Pass Direction Dist.

(ft.)

Direction Dist.

(ft.)

Direction Dist.

(ft.)

Emerald

1 Az 15 Dip 0 20 Az 285 Dip 0 75 Az 0 Dip -90 50




East Emerald

East Emerald Lower

1 Az 30 Dip 0 12.5 Az 300 Dip 0 55 Az 0 Dip -90 37.5

2 Az 30 Dip 0 25 Az 300 Dip 0 110 Az 0 Dip -90 75.0



Waste 1 Omni Directional 75

2 Omni Directional 150

62

Zone Pass Direction Dist.

(ft.)

Direction Dist.

(ft.)

Direction Dist.

(ft.) 3 Omni Directional 300

14.2.7 SPECIFIC GRAVITY

During 2008, 100 pieces of drill core from the East Emerald zone, were measured for specific gravity by

the weight in air-weight in water method. The East Emerald zone consists of finely disseminated

scheelite grains in light brown to green garnet-diopside skarn. Samples were taken from both

mineralized and unmineralized sections of core within the skarn zone with the results sorted into five

grade ranges (Table 18).

Table 18: Summary of specific gravity determinations in the Emerald Tungsten zone

Sample

Type

Sample

Location

Hole

Footage Specific Gravity

0 to 0.05

% WO3

0.05 to 0.1

% WO3

0.1 to 0.3

% WO3

0.3 to 0.5

% WO3

>0.5

% WO3

Core

JS07-33

330 2.37 2.37

334 2.42 2.42

328 2.78 2.78

336 3.02 3.02

335 3.57 3.57

364 2.74 2.74

371 3.61 3.61

368 2.92 2.92

368 3.31 3.31

369 2.84 2.84

371 3.16 3.16

370 3.08 3.08

370 3.39 3.39

JS07-34

327 3.09 3.09

412 3.08 3.08

435 2.79 2.79

443 2.53 2.53

422 3.19 3.19

425 2.73 2.73

421 2.67 2.67

421 3.42 3.42

420 3.19 3.19

422 3.00 3.00

JS07-36

203 3.46 3.46

203 3.21 3.21

202 3.13 3.13

223 3.13 3.13

227 3.14 3.14

63

Sample

Type

Sample

Location

Hole


0 to 0.05

% WO3

0.05 to 0.1

% WO3

0.1 to 0.3

% WO3

0.3 to 0.5

% WO3

>0.5

% WO3

329 3.33 3.33

331 3.32 3.32

334 3.37 3.37

335 3.31 3.31

JS07-37

183 3.09 3.09

173 3.24 3.24

JS07-38

231 3.31 3.31

232 3.29 3.29

242 3.44 3.44

243 3.36 3.36

238 3.32 3.32

244 3.35 3.35

248 3.42 3.42

246 3.34 3.34

244 3.10 3.10

337 2.39 2.39

333 3.36 3.36

336 2.58 2.58

JS07-38 335 3.24 3.24

JS07-39

275 2.73 2.73

280 3.25 3.25

281 3.24 3.24

286 3.13 3.13

273 2.87 2.87

285 3.09 3.09

274 3.29 3.29

JS07-40

128 2.99 2.99

134 3.29 3.29

138 3.11 3.11

135 3.22 3.22

137 3.34 3.34

136 3.05 3.05

JS07-41

224 3.33 3.33

231 3.16 3.16

227 3.28 3.28

230 2.98 2.98

228 3.24 3.24

235 3.08 3.08

240 3.20 3.20

246 2.86 2.86

247 2.84 2.84

64

Sample

Type

Sample

Location

Hole


0 to 0.05

% WO3

0.05 to 0.1

% WO3

0.1 to 0.3

% WO3

0.3 to 0.5

% WO3

>0.5

% WO3

248 3.25 3.25

258 3.32 3.32

JS07-42

203 3.29 3.29

197 3.38 3.38

206 3.35 3.35

204 3.33 3.33

213 3.37 3.37

JS07-46

118 2.95 2.95

120 3.22 3.22

169 3.21 3.21

173 3.02 3.02

174 3.29 3.29

176 3.25 3.25

174 3.28 3.28

176 3.11 3.11

175 3.30 3.30

JS07-47

150 3.15 3.15

141 3.20 3.20

142 3.36 3.36

143 3.32 3.32

222 2.96 2.96

219 3.20 3.20

220 3.23 3.23

221 3.29 3.29

221 3.44 3.44

JS07-46

233 3.10 3.10

232 3.37 3.37

240 2.93 2.93

237 3.01 3.01

234 3.38 3.38

JS07-47 225 3.16 3.16

Averages 3.05 3.11 3.19 3.14 3.24

Bulk density is a function of the tungsten grade within a sample. This increase in SG is also the result of

increased garnet and diopside content with increased scheelite. Blocks within the mineralized zone but

with grades less than 0.05 % WO3 were assigned an average SG of 3.05 (tonnage factor of 10.51 ft3/t).

Blocks with grades from 0.05 to 0.1 % WO3 were assigned a specific gravity of 3.11 (tonnage factor of

10.31 ft3/t). Blocks with grades from 0.1 to 0.5 % WO3 were assigned a specific gravity of 3.16 (tonnage

factor of 10.14 ft3/t) the average of samples between 0.1 and 0.5 % WO3. Blocks with grades greater

than 0.5 % WO3 were assigned a value of 3.24 (tonnage factor of 9.89 ft3/t). The parts of blocks in the

waste surrounding the skarn zone were assigned a value of 2.77 (tonnage factor of 11.57 ft3/t).

65

Only historic drilling was used for the estimate on the Emerald; therefore, no drill core was available to

test. Ed Lawrence collected samples from the dumps around the mine and tested them for specific

gravity.

Twenty-one samples of waste rock, consisting mostly of Reeves limestone, had an average SG of 2.71

(tonnage factor of 11.83 ft3/t).

Thirteen samples of mineralized rock with a high proportion of pyrrhotite had an average SG of 5.63.

Considering that the majority of this high-grade style of mineralization has been mined, and using the

geological sections of the Emerald mined stopes as a guide, Mr. Lawrence estimates the proportion of

ore to waste in the remaining mineralized zone to be 15 to 85. Using these estimates, a reasonable

specific gravity for the material remaining might be ((0.15 * 5.63) + (0.85*2.71)) or 3.15 (tonnage factor

of 10.18 ft3/t).

66

14.3 LEAD AND ZINC RESOURCE SUMMARY

This lead-zinc resource was produced from the historic and recent drill hole database, and from an

underground and surface mine model produced by Sultan from the original paper plans and sections.

For the underground workings, sectional polygons at 100-ft spacing, were created using Gemcom Surpac

software. Twenty different headings were modeled. The digital model is a best representation of the

mine workings, and is not to be used for purposes other than assisting in preparing the resource

estimate in this report.

14.3.1 DATA ANALYSIS

A geologic solid representing the extents of mineralization, and the data from 5,042 drill holes were

used for this estimation. The drill holes were compared to the geologic solid and all assays within the

solid were tagged. Table 19 shows the sample statistics for assays within the geologic solid.

Table 19: Sample statistics for lead and zinc

Pb (%) Zn (%)

Number of assays 6,580 8,334

Mean Value 2.54 4.86

Standard Deviation 5.11 5.40

Minimum Value 0.001 0.001

Maximum Value 60.50 34.30

Coefficient of Variation 2.01 1.11

The grade distributions for both lead and zinc within the solid were examined using lognormal

cumulative probability plots.

For zinc, four overlapping lognormal populations were found with the highest population representing

67% of the data having a mean of 5.65% Zn. There was no need to cap this population, as no outliers

exist.

For lead, the upper most population represented 0.19% of the data with a mean of 28.17% Pb. This

population was considered erratic outliers and was capped at two SD above the mean of the next lower

population. A cap value of 47% was used to cap five assay results. The results of capping are shown in

Table 20.

Table 20: Capped sample statistics for lead and zinc

Pb (%) Zn (%)

Number of assays 6,580 8,334



67

Pb (%) Zn (%)




14.3.2 COMPOSITES

A histogram of sample intervals (Figure 23) showed that 5 ft was the most common sampling length, so

uniform down hole 5 ft composites were produced to honour the boundaries of the mineralized solid.

Small sample lengths at the boundaries were left alone if more than 2.5 ft, or combined with the

adjoining sample if less than 2.5 ft to produce a uniform support of 5 ± 2.5 ft

Figure 23: Histogram of assay sample lengths

The 5 ft composite statistics are tabulated below (Table 21).

Table 21: 5 ft Composite statistics for lead and zinc

Pb (%) Zn (%)

Number of Composites 35,193 35,193



Histogram - Pb-Zn Sample Lengths

0

5

10

15

20

25

30

35

40

SAMPLEN

0

1

2

3

4

5

6

7

8

9

10

Perc

ent

9206 N4.1187 M3.1222 S

68

Pb (%) Zn (%)




There were many unsampled intervals within the mineralized solid, so for these intervals a nominal

value of 0.001% was inserted for both lead and zinc. This has resulted in far more 5 ft composites than

individual assay results. It has also seriously reduced the mean grade for both lead and zinc, and

increased the coefficient of variation.

14.3.3 VARIOGRAPHY

Pairwise relative semivariograms were produced in both the horizontal and vertical planes with nested

spherical models fit to the data (Table 22). The nugget to sill ratio was 36% for both Pb and Zn, indicating

reasonable sampling variability.

Table 22: Semivariogram parameters of lead and zinc

Variable Azimuth/Dip Co C1 C2 Short Range (ft) Long Range (ft)

Pb 200 / -10 0.25 0.17 0.28 15 60

111 / 0 0.25 0.17 0.28 25 120

0 / -90 0.25 0.17 0.28 12 48

Zn 200 / -10 0.30 0.25 0.28 15 60

111 / 0 0.30 0.25 0.28 28 100

0 / -90 0.30 0.25 0.28 15 48

14.3.4 BULK DENSITY

Eleven sections of drill core were measured for specific gravity by the weight in air-weight in water

method. These were broken down into combined Pb+Zn grade ranges to show the increase in SG with

Pb-Zn content (Table 23). The resource estimate used these ranges and the combined estimated Pb+Zn

to establish a tonnage factor for each estimated block.

69

Table 23: Specific gravity determinations

Pb% Zn% Pb+Zn SG Tonnage Factor(cu.ft./ton)

0.14 0.64 0.78 2.82 11.35

0.16 0.75 0.91 2.63 12.17

0 to 1.0% 2.73 11.72

0.15 1.34 1.49 2.82 11.35

1.44 0.45 1.89 2.77 11.55

>=1 to 2 % 2.80 11.43

0.87 1.94 2.81 2.78 11.51

0.37 3.08 3.45 2.91 11.00

0.22 3.64 3.86 2.87 11.15

1.08 4.24 5.32 2.92 10.96

>=2 to 5% 2.87 11.15

1.39 6.72 8.11 2.89 11.07

0.19 11.03 11.22 2.91 11.00

8.87 11.33 20.20 2.93 10.93

>= 5% 2.91 11.00

14.3.5 BLOCK MODEL

A block model with blocks 25 x 25 x 25 ft in dimension was superimposed over the mineralized solid. The

block model origin is as follows:

Lower Left Corner

5500 E Column size – 25 ft 168 Columns

2900 N Row size - 25 ft 338 Rows

Top of Model

5350 Elevation Level size - 25 ft 63 Levels

No Rotation

For each block, the percentage within the Pb+Zn mineralized solid and the percentage within the

underground workings was recorded. The tonnage for any given block was equal to:

Tonnage = block volume * (% inside solid - % in workings) / tonnage factor

14.3.6 GRADE INTERPOLATION

Grades for lead and zinc were interpolated into the block model using ordinary kriging. Any block with

some proportion within the mineralized solid was estimated in a series of passes with the search ellipse

for each pass a function of the semivariogram ranges. For pass 1, a minimum of four composites were

required within a search ellipse with dimensions equal to ¼ of the semivariogram range in each of the

three principal directions. In all passes, the maximum number of composites allowed from any one drill

70

hole was set at three to insure that a minimum of two drill holes were always used in an estimate. If a

given block was not estimated during pass 1, a second pass was completed using a search ellipse with

dimensions equal to ½ the semivariogram range. A third pass at the full range, and a fourth pass at twice

the range were completed to fill in the block model. In all cases, the maximum number of composites

was set to 12, and if more than 12 were found in any search, the closest 12 were used. The exercise was

completed twice; once for Pb, and again for Zn. Since Zn had a shorter range in the Az 100 direction for

pass 4, the lead range was used to insure both lead and zinc were interpolated into all blocks estimated.

The parameters for kriging are tabulated below (Table 24).

Table 24: Parameters used in Kriging

Variable Pass Number

Estimated Az/Dip

Dist.

(ft) Az/Dip

Dist.

(ft) Az/Dip

Dist.

(ft)

Pb

1 2,373 200/-10 15 100/0 30 0/-90 12

2 16,460 200/-10 30 100/0 60 0/-90 24

3 47,186 200/-10 60 100/0 120 0/-90 48

4 31,221 200/-10 120 100/0 240 0/-90 96

Zn

1 1,714 200/-10 15 100/0 25 0/-90 12

2 13,748 200/-10 30 100/0 50 0/-90 24

3 45,042 200/-10 60 100/0 100 0/-90 48

4 36,636 200/-10 120 100/0 240 0/-90 96

71

14.4 MINERAL RESOURCE CLASSIFICATION AND TABULATION

The mineralization delineated on the Jersey-Emerald property was classified as a mineral resource, and

the values are reported according to CIM Definition Standards on Mineral Resources and Mineral

Reserves (CIM, 2010), and NI 43-101.

14.4.1 TUNGSTEN ZONES

2006 Estimate for Dodger and Invincible

Classification for the Tungsten zones also depended on both geologic and grade continuity. The geologic

continuity has been established by underground mining, sampling, mapping, and drilling. The grade

continuity can be quantified by the semivariograms for the respective zones.

Measured blocks were those estimated in pass 1 using a search ellipse with dimensions equal to ¼ of the

semivariogram ranges. Ranges for WO3 in the Dodger zones were longer, and as a result more measured

blocks are reported in the Dodger Zones than in the Invincible.

Indicated blocks were those estimated in pass 2 using a search ellipse with dimensions equal to ½ the

semivariogram ranges. All other blocks estimated in passes 3 or 4 were classified as inferred.

Tonnage Reduction for Underground Mined Out Areas

Over the life-of-mine in the tungsten bearing zones, 1,597,802 t of tungsten ore grading 0.76% WO3 were

mined and milled. This tonnage is tabulated by zone in Table 25, and the mine locations are shown on

Figure 24.

Table 25: Summary of mining history in tungsten zones

Tungsten Zone Tonnage (tons) Average WO3 (%)

Emerald Mine 734,000 0.93

Feeney Mine 60,000 0.92

Invincible Mine 283,000 0.65

Dodger 4400 Mine 138,000 0.56

East Dodger Mine 384,000 0.56

Note. Tonnages in Table have been rounded to nearest thousand so total does not exactly match the total quoted above

The Emerald and Feeney mines are believed to be depleted of tungsten ore. However, the Invincible,

and the two Dodger zones, still have a significant tonnage remaining. The underground surveying was

considered to be current and up to date at the time of mine closure.

Underground level plans for the Invincible, Dodger 4400, and East Dodger zones were digitized and 3D

solids, depicting underground development, were created by Walcott. Blocks within the tungsten zone

models were then adjusted with tonnage subtracted for mined out material (Figure 25).

72

Figure 24: Location of historic tungsten mines on the Jersey-Emerald property

73

The results are tabulated for all zones and then individually for Dodger and Invincible zones in Tables 26,

27, and 28. While at this time no economic studies have been completed for the Jersey-Emerald project,

historic cut-offs and current prices for tungsten suggest that a reasonable economic cut-off grade might

be in the range of 0.15% WO3 and this base case has been highlighted in all tables.

Figure 25: Cross section looking west showing estimated blocks with underground working

superimposed

74

Table 26: Total WO3 resource for Dodger and Invincible zones

MEASURED INDICATED

Cut-off

WO3 (%)

Tons> Cut-off

(tons)

Grade > Cut-off

Tons> Cut-off

(tons)

Grade > Cut-off

WO3 (%) WO3 (%)

0.10 1,700,000 0.304 1,880,000 0.291

0.12 1,480,000 0.333 1,610,000 0.322

0.14 1,290,000 0.362 1,410,000 0.350

0.15 1,200,000 0.379 1,310,000 0.365

0.16 1,120,000 0.397 1,260,000 0.374

0.18 980,000 0.429 1,120,000 0.399

0.20 880,000 0.454 1,000,000 0.423

0.22 780,000 0.486 900,000 0.447

0.24 730,000 0.504 810,000 0.472

0.26 660,000 0.531 690,000 0.508

0.28 610,000 0.554 610,000 0.541

0.30 560,000 0.574 560,000 0.564

INFERRED

MEASURED PLUS INDICATED

Cut-off

WO3 (%)

Tons> Cut-off

(tons)

Grade > Cut-off Tons> Cut-off

(tons)

Grade > Cut-off

WO3 (%) WO3 (%)

0.10 1,590,000 0.333 3,590,000 0.297

0.12 1,400,000 0.362 3,090,000 0.327

0.14 1,270,000 0.386 2,700,000 0.356

0.15 1,210,000 0.397 2,510,000 0.372

0.16 1,160,000 0.408 2,370,000 0.385

0.18 1,080,000 0.427 2,090,000 0.413

0.20 990,000 0.447 1,890,000 0.438

0.22 920,000 0.468 1,680,000 0.465

0.24 830,000 0.490 1,540,000 0.487

0.26 770,000 0.510 1,350,000 0.520

0.28 730,000 0.522 1,220,000 0.548

0.30 680,000 0.541 1,120,000 0.569

This total resource can be subdivided into the two separate zones: Dodger, and Invincible.

75

Table 27: Dodger resource

MEASURED INDICATED

Cut-off

WO3 (%)

Tons> Cut-off

(tons)


(tons)

Grade > Cut-off

WO3 (%) WO3 (%)

0.10 1,700,000 0.304 1,630,000 0.277

0.12 1,470,000 0.333 1,370,000 0.309

0.14 1,290,000 0.362 1,190,000 0.337

0.15 1,200,000 0.380 1,100,000 0.352

0.16 1,110,000 0.397 1,050,000 0.362

0.18 970,000 0.429 920,000 0.389

0.20 880,000 0.455 820,000 0.412

0.22 780,000 0.487 730,000 0.437

0.24 730,000 0.505 660,000 0.461

0.26 660,000 0.532 560,000 0.498

0.28 600,000 0.555 480,000 0.534

0.30 560,000 0.576 440,000 0.556

INFERRED


Cut-off

WO3 (%)

Tons> Cut-off

(tons)


(tons)

Grade > Cut-off

WO3 (%) WO3 (%)

0.10 250,000 0.214 3,330,000 0.291

0.12 170,000 0.266 2,850,000 0.322

0.14 150,000 0.286 2,480,000 0.350

0.15 130,000 0.299 2,300,000 0.367

0.16 110,000 0.328 2,160,000 0.380

0.18 100,000 0.346 1,890,000 0.409

0.20 80,000 0.373 1,700,000 0.434

0.22 70,000 0.417 1,510,000 0.463

0.24 60,000 0.444 1,380,000 0.484

0.26 50,000 0.480 1,210,000 0.517

0.28 50,000 0.482 1,080,000 0.546

0.30 40,000 0.510 1,000,000 0.567

76

Table 28: Invincible resource

MEASURED INDICATED

Cut-off

WO3 (%)

Tons> Cut-off

(tons)

Grade > Cut-off

Tons> Cut-off

(tons)

Grade > Cut-off

WO3 (%) WO3 (%)

0.10 7,600 0.238 252,000 0.380

0.12 6,100 0.269 236,000 0.398

0.14 4,600 0.311 219,000 0.418

0.15 4,600 0.311 211,000 0.429

0.16 4,600 0.311 205,000 0.436

0.18 4,600 0.311 196,000 0.450

0.20 4,600 0.311 182,000 0.470

0.22 3,200 0.361 170,000 0.487

0.24 3,200 0.361 151,000 0.520

0.26 3,200 0.361 136,000 0.549

0.28 3,200 0.361 128,000 0.567

0.30 3,200 0.361 117,000 0.592

INFERRED


Cut-off

WO3 (%)

Tons> Cut-off

(tons)


(tons)

Grade > Cut-off

WO3 (%) WO3 (%)

0.10 1,340,000 0.354 259,000 0.376

0.12 1,240,000 0.375 242,000 0.394

0.14 1,130,000 0.399 224,000 0.416

0.15 1,080,000 0.410 215,000 0.427

0.16 1,052,000 0.417 210,000 0.434

0.18 977,000 0.436 200,000 0.447

0.20 908,000 0.454 186,000 0.466

0.22 848,000 0.472 173,000 0.485

0.24 776,000 0.494 154,000 0.517

0.26 722,000 0.512 139,000 0.545

0.28 686,000 0.525 131,000 0.562

0.30 637,000 0.543 120,000 0.586

2008 Estimate for Emerald Tungsten Zones

Geologic continuity of the Emerald tungsten zones has been established through underground mapping

and diamond drilling. Grade continuity has been quantified through the use of the semivariograms. In

the parts of the Emerald zone that surround the old mine workings, all of the resource is classified as

inferred, due to the lack of current drill holes and SG determinations. For the East Emerald and East

Emerald Lower zones, the blocks are classified as indicated and inferred based on grade continuity.

77

Blocks estimated in Pass 1 or 2 using search ellipse dimensions of up to ½ the semivariogram range were

classified as indicated. The remaining blocks estimated were classified as inferred.

The following grade tonnage tables (Tables 29 and 30) outline the results at a series of WO3 cut-off

grades. At this time, no economic analysis has been completed and as a result, no economic cut-off is

known. A cut-off of 0.15% WO3 has been highlighted as a possible open pit cut-off, while a cut-off of

0.24 % WO3 might reflect underground mining.

For the Emerald zone, the existing underground workings were modeled, and the proportions of blocks

that have been mined out were removed from the resource. Additionally, for the Emerald Zone north of

6750 N and above the 3950 level, all blocks were presumed to be mined out by the surface open pit and

were removed from the resource (Figure 26).

Figure 26: Isometric drawing showing blocks above the 3950 level and north of 6750 N (in yellow) that

were removed from the resource in the open pit area.

78

Table 29: Emerald and East Emerald - Indicated resource

WO3 Cut-off (%) Tons> Cut-off (tons) Grade > Cut-off WO3 % Pounds of WO3

0.10 510,000 0.157 1,601,400

0.12 391,000 0.172 1,345,040

0.14 288,000 0.187 1,077,120

0.15 256,000 0.192 983,040

0.16 205,000 0.202 828,200

0.18 140,000 0.217 607,600

0.20 83,000 0.237 393,420

0.22 62,000 0.247 306,280

0.24 18,000 0.282 101,520

0.26 11,000 0.307 67,540

0.28 7,000 0.326 45,640

0.30 4,000 0.354 28,320

Table 30: Emerald and East Emerald -Inferred resource

WO3 Cut-off (%) Tons> Cut-off (tons) Grade > Cut-off WO3 % Pounds of WO3

0.10 2,580,000 0.195 10,062,000

0.12 1,980,000 0.221 8,751,600

0.14 1,520,000 0.249 7,569,600

0.15 1,220,000 0.274 6,685,600

0.16 930,000 0.312 5,803,200

0.18 750,000 0.345 5,175,000

0.20 570,000 0.394 4,491,600

0.22 500,000 0.419 4,190,000

0.24 430,000 0.452 3,887,200

0.26 380,000 0.478 3,632,800

0.28 350,000 0.497 3,479,000

0.30 320,000 0.513 3,283,200

79

14.4.2 DODGER 4200 MOLYBDENUM ZONE

Classification within the Dodger 4200 molybdenum zone was based on grade continuity and to an extent

on the limited amount of drill hole information. The geologic continuity of the granite is well established

from drilling and underground exposure. The semivariogram model can quantify grade continuity. No

material was considered measured at this time due to the short range of the semivariograms, and

because no blocks were estimated during pass 1 with search ellipse dimensions at ¼ of the

semivariogram range. Blocks estimated during pass 2 using a search ellipse equal to ½ the

semivariogram range were classified as indicated. All remaining blocks were classified as inferred at this

time (Tables 31 and 32).

Table 31: Dodger 4200 Mo Zone – Indicated resource

Mo Cut-off

(%)

Tons> Cut-off

(tons)

Grade > Cut-off

Mo (%) Pounds Mo

0.01 49,000 0.067 65,660

0.02 37,000 0.085 62,900

0.03 37,000 0.085 62,900

0.04 32,000 0.091 58,240

0.05 28,000 0.098 54,880

0.06 25,000 0.103 51,500

0.07 25,000 0.103 51,500

0.08 25,000 0.103 51,500

0.09 17,000 0.112 38,080

0.10 13,000 0.117 30,420

0.11 8,000 0.123 19,680

0.12 8,000 0.123 19,680

Table 32: Dodger 4200 Mo Zone – Inferred resource

Mo Cut-off

(%)

Tons> Cut-off

(tons)

Grade > Cut-off

Mo (%) Pounds Mo

0.01 3,377,000 0.034 2,296,360

0.02 1,946,000 0.048 1,868,160

0.03 1,190,000 0.064 1,523,200

0.04 744,000 0.082 1,220,160

0.05 481,000 0.103 990,860

0.06 387,000 0.115 890,100

0.07 265,000 0.138 731,400

0.08 217,000 0.152 659,680

0.09 188,000 0.162 609,120

0.10 163,000 0.173 563,980

80

Mo Cut-off

(%)

Tons> Cut-off

(tons)

Grade > Cut-off

Mo (%) Pounds Mo

0.11 155,000 0.177 548,700

0.12 142,000 0.182 516,880

14.4.3 JERSEY LEAD AND ZINC RESOURCE

Geologic continuity of the Jersey Pb-Zn zone has been established through underground mining,

mapping, and diamond drilling. Grade continuity has been quantified through the use of the

semivariograms. Within the Jersey zone that surrounds the old mine workings, blocks are classified as

indicated and inferred based on grade continuity. Blocks estimated in Pass 1 or 2 using search ellipse

dimensions of up to ½ the semivariogram range were classified as indicated. The remaining blocks

estimated were classified as inferred.

Without the benefit of a preliminary economic assessment to evaluate mineable grades for the lead-zinc

mineralization, a benchmark grade that is similar to the historic mined grade for the deposit may be

considered. The various mines located along the Kootenay Arc lead-zinc belt produced combined Pb-Zn

ores of approximately 5%. This estimate shows an indicated resource of 5,320,000 t averaging 1.04%

lead and 2.60% Zn ,and an inferred resource of 16,930,000 t averaging 1.00% Pb and 2.18% Zn using a

cut-off grade of 1.5% combined Pb-Zn. Within this large low-grade resource there is an indicated

resource of 1,900,000 t averaging 1.96% Pb and 4.10% Zn, and an inferred resource of 4,980,000 t

averaging 1.95% Pb and 3.37% Zn using a cut-off grade of 3.5% combined Pb-Zn (Tables 33 and 34).

Table 33: Jersey indicated lead-zinc resource

Cut-off

Pb+Zn (%)

Tons > Cut-off

(tons)

Million Lbs.

Pb

Million Lbs.

Zn Pb (%) Zn (%)

1.00 7,030,000 0.85 2.21 120.1 310.3

1.25 6,110,000 0.95 2.41 115.8 294.0

1.50 5,320,000 1.04 2.60 111.0 277.1

2.00 4,050,000 1.25 3.00 101.3 242.7

2.50 3,110,000 1.48 3.38 91.8 210.0

3.00 2,430,000 1.71 3.73 83.3 181.3

3.50 1,900,000 1.96 4.10 74.6 155.9

4.00 1,510,000 2.20 4.47 66.4 135.0

4.50 1,230,000 2.43 4.79 59.7 117.8

5.00 1,000,000 2.68 5.10 53.6 102.0

81

Table 34: Jersey inferred lead-zinc resource

Cut-off

Pb+Zn (%)

Tons > Cut-off

(tons)

Million Lbs.

Pb

Million Lbs.

Zn Pb (%) Zn (%)

1.00 23,970,000 0.79 1.82 379.7 871.5

1.25 19,930,000 0.90 2.01 359.1 801.2

1.50 16,930,000 1.00 2.18 339.6 738.1

2.00 12,440,000 1.21 2.50 301.3 621.5

2.50 9,130,000 1.44 2.81 262.2 512.4

3.00 6,720,000 1.68 3.10 225.7 416.9

3.50 4,980,000 1.95 3.37 194.5 335.6

4.00 3,680,000 2.26 3.62 166.1 266.7

4.50 2,740,000 2.57 3.88 141.1 212.4

5.00 2,130,000 2.88 4.06 122.7 172.8

14.4.4 SUMMARY OF ALL RESOURCES

The estimated resources for the various mineralized zones are summarized in Table 35.

Table 35: Summary of Jersey-Emerald resources for WO3, Mo, and Pb-Zn

Year

Estimated Deposit Classification Cut-off Tons>Cut-off

Average

Grade

Contained

Pounds

2006

Dodger

East Dodger

Invincible

Measured

0.15 %

WO3

1,200,000 0.38 %WO3 9,096,000 WO3

Indicated 1,310,000 0.37 %WO3 9,563,000 WO3

Measured + Indicated 2,510,000 0.37 %WO3 18,674,000

WO3 Inferred 1,210,000 0.40 %WO3 9,607,000 WO3

2008 Emerald

East Emerald

Indicated 256,000 0.19 %WO3 983,000 WO3

Inferred 1,220,000 0.28 %WO3 6,686,000 WO3

2006 + 2008 Combined Measured + Indicated 2,766,000 0.36%WO3 19,657,000

WO3 Inferred 2,430,000 0.34%WO3 16,293,000

WO3 2006

Dodger 4200

Mo

Indicated 0.05 %

Mo

28,000 0.098 % Mo 54,880 Mo

Inferred 481,000 0.103 % Mo 990,860 Mo

2010 Jersey Pb- Zn

Indicated 1.50%

Pb+Zn

1,900,000 1.96 % Pb 74,600,000 Pb

Inferred 4,980,000 1.95 % Pb 194,500,000 Pb

Indicated 3.50%

Pb+Zn

1,900,000 4.10 % Zn 155,900,000 Zn

Inferred 4,980,000 3.37 % Zn 335,600,000 Zn

82

15 THROUGH 22 ARE NOT APPLICABLE TO THIS TECHNICAL REPORT

Items 15 through 22 as outlined below are not applicable to this technical report.

Item 15: Mineral Reserve Estimates Item 16: Mining Methods Item 17: Recovery Methods Item 18: Project Infrastructure Item 19: Market Studies and Contracts Item 20: Environmental Studies, Permitting and Social or Community Impact Item 21: Capital and Operating Costs Item 22: Economic Analysis

83

23 ADJACENT PROPERTIES

The area around the Jersey-Emerald property has undergone extensive historic exploration and

development. A listing of Minfile occurrences from the BC Ministry of Energy and Mines website

indicates numerous showings and past producers in close proximity to the JerseyEmerald property. A

summary of the significant listings are provided below. Figure 27 shows the Minfile locations.

The information presented is not necessarily indicative of the mineralization on the Jersey-Emerald

property.

23.1 HB

The HB property is located on Aspen Creek, a tributary of Sheep Creek, directly north of the Jersey-

Emerald property. The north end of the No. 1 ore body outcropped at an elevation of 1219 m, west of

Aspen Creek, and almost 1.6 km north of Sheep Creek.

The Consolidated Mining and Smelting Company of Canada (Limited) optioned the claims in 1911. The

No. 2 level crosscut was driven during the winter but results were disappointing and the option was

dropped in 1912. On the expiry of the lease, the entire property was optioned to a Spokane syndicate

operating under the name Hudson Bay Zinc Company. The low-level No. 7 crosscut (3,100 level) was

started in 1915 and reached a length of 579 m on completion in 1916. Diamond drilling (473 m) from the

crosscut failed to find ore and the option was given up in 1917. Exploration work was all done in the

heavily oxidized zone at the north and on No. 1 ore body where the flat-plunging ore was exposed on

surface. The Consolidated Mining and Smelting Company returned in 1927, and starting about 1946, the

company began geological investigations that led to an intensive diamond drilling program beginning in

1948. Large bodies of low-grade disseminated sulphides plunging gently south from the oxidized ore

body were indicated by this drilling. In 1951, construction of a 1,000 ton per day concentrator began and

a new adit level (No. 8) was driven 823 m north from the Sheep Creek valley mill site to the ore zone.

David Minerals Ltd., by an agreement dated May 8, 1981, purchased the mine, mill, and adjacent

properties from Cominco Ltd. Renovation of the HB. mill was carried out to prepare a flotation circuit to

custom mill gold-bearing sulphide ores, and a second circuit to treat molybdenite-gold ore from the

company's Rossland properties. A gold circuit was put into operation for a short period on ore from the

Gold Belt property in December 1981.

The HB ore bodies are thought to be Kootenay Arc-type carbonate-hosted sedimentary exhalative)

deposits. The ore bodies are located within dolomitized limestone of the Lower Cambrian Laib

Formation, Reeves Member (correlative with limestone of the Badshot Formation). The east boundary

of the Laib Formation is in contact with argillites of the Lower to Middle Ordovician Active Formation, on

a fault contact, with the Active rocks overthrust from the east over the Reeves rocks.

84

Two distinct calcareous layers of the Reeves Member can be recognized in the area, an upper one about

110 m thick separated from a lower 12-metre member by 15 to 30 m of micaceous brown limey argillite.

The HB ore bodies occur within a hundred m or so to the west of the thrust fault. It is thought that the

mineralization is related to the intrusion of granitic stocks of the Middle to Late Jurassic Nelson

Intrusions with the nearest outcrop about 1 kilometre away from the mine. The only intrusives present

in the mine are post-ore m dykes up to 3 m thick.

In the vicinity of the HB mine, the beds are folded into a broad synclinorium, and the limestone layers in

the mine are on the west limb of this structure. The principal ore zones consist of three steeply dipping,

parallel zones lying approximately side by side and extending as pencil-like shoots for about 900 m along

the gentle south plunge of the controlling structures. The largest and most easterly ore zone has a

maximum height of about 140 m and a maximum width of 30 m. Within these zones are steeply dipping

discontinuous ore stringers with a lead to zinc ratio of 1:5. There is evidence to indicate ore deposition

was controlled by shear zones within the folded limestone; the best ore concentrations occurring at the

junctions between steeply dipping shears (the pencil-like ore bodies) and flat lying shears (the flat-lying

brecciated ore bodies).

The mineralogy of the ore is relatively simple with pyrite, sphalerite and galena in order of abundance

and minor pyrrhotite found locally. The northern portion of these bodies is exposed at surface, near the

original HB claim, and are oxidized to a depth of about 100 m at that point. A smaller zone, located to

the southwest of the main HB mine, is known as the Garnet ore body. The Garnet zone was mined from

the surface from a small open pit, whereas the main mine is entirely underground.

The HB mine produced 6,656,101 t of ore in 29 years between 1912 and 1978. Recovered from this ore

were 29,425,521 g of Ag, 49,511,536 kg of Pb, 260,431,646 kg of Zn, 2,019,586 kg of Cd, 105,412 kg of

Cu, and 6,159 g of Au. Measured and indicated reserves published December 31, 1978 by Canadian

Pacific Ltd. were given as approximately 36,287 t grading 0.1% Pb and 4.1% Zn (Energy, Mines and

Resources Canada Mineral Bulletin MR 198, page 209).

23.2 MOLLY

The Molly molybdenum property is located at about 1219 m elevation on the south side of Lost Creek,

12.8 km south-southeast of Salmo. The four claims comprising the property were the Bromyrite King,

Bromyrite, Molybdenite, and Molybdenum No.1. In 1914, the property was leased for 6 months to Bell

brothers of Salmo and molybdenum ore was shipped to Denver, Colorado from open cuts and pits. Early

in 1915, the property was leased for one year to B.C. Molybdenite Company, Limited and additional ore

was shipped to Denver. In 1916, the property was under lease to International Molybdenum Company,

Limited who shipped about 90 tonnes of ore to their plant at Renfrew, Ontario. The original owners

resumed work on the property in 1917 and shipped about 45 t of ore to the Mines Branch, Ottawa.

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The property was restaked as the Molly and Molly 1-9 claims (Lots 14232-14241 respectively). The

Consolidated Mining and Smelting Company of Canada Limited purchased the property in 1926 and a

small amount of underground work and diamond drilling was carried out the following year. The claims

were Crown-granted to the company in 1930. The workings at that time included about 30 m of drift

and crosscut, an 18-m raise, and a winze.

Scheelite was discovered on the Molly 4 claim, about 305 m southeast and 122 m above the

molybdenum showing, by Joe Gollo, of Howser, in 1942; the company carried out considerable

exploration for scheelite that same year. Further work by the company on the molybdenum showing

during the period July 1942-February 1943 included 35 m of crosscut, 21 m of drift, and a 5-m raise; a

small tonnage of ore was mined but not shipped.

The Molly mine is hosted by granites of the Lost Creek stock of the Middle to Late Jurassic Nelson

Intrusions, which are intruded into a sequence of argillites and limy argillites of the Ordovician Active

Formation. The granite is quartz rich and appears to have an upper fine-grained, aplitic chilled zone or

border capping in the order of 2 m thick.

The aplite is sparsely impregnated with molybdenum but the main molybdenum ore occurs below this

capping within a zone about 3 m thick containing numerous joints parallel to the intrusive contact. The

best mineralization appears within this sheeted zone where the intrusive contact dips at low angles

and/or where there are prominent fractures intersecting this sheeting. Molybdenite occurs as selvages

on the joint planes or disseminated between the joints. The more massive granite below the sheeted

zone is host to very little molybdenite. Tungsten, as scheelite, occurs locally disseminated in skarn zones

of small size.

Records indicate that the Molly mine produced at least 171 t of ore which carried 3.5 to 5.88% MoS2.

From 1914 to 1917, a total of 11,366 kg of molybdenum were produced. Minor pyrite, pyrrhotite, and

uraninite are also associated with the deposit. A sample assayed 0.13 equivalent uranium (Geological

Survey of Canada, Economic Geology #16).

23.3 SUMMIT, ORE HILL, AND BONANZA

A series of historic mines that produced silver, gold, lead, and zinc are located to the northeast of the

Jersey-Emerald property. These are generally quartz vein occurrences that cut the Lower Cambrian Laib

formation limestone and schist.

The Summit occurrence is a quartz-siderite vein deposit which contains erratically distributed pyrite,

galena and sphalerite within a narrow fault zone striking 55 degrees and dipping southeast. Most of the

mine production was from a 20 m long "Glory Hole". Production from 1906 to 1938 totaled about 1094

t, which contained 27,059 g of Au, 37,883 g of Ag, 13,728 kg of Pb, and 12,988 kg of Zn.

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The Ore Hill vein deposit includes several adits with over 1000 m of underground development.

Between 1906 and 1940, 2,241 t of ore were mined and 88,612 g of Au, 168,424 g of Ag, 80,257 kg of

Pb, and 75,651 kg of Zn were recovered. South of the adits, a trench exposes limestone in fault contact

with schists. The fault strikes 050° and dips 75° southeast. A 1 m wide lamprophyre dyke is injected

along the fault and there is about 30 cm of fine-grained galena, sphalerite, pyrrhotite ,and pyrite on the

footwall side, within highly altered limestones. North of this exposure, in the adits, the vein is about 45

cm wide within quartzite but narrows along strike as it crosscuts argillites. No mineralization is reported

in the quartzite section.

The Bonanza North and South veins are developed by four adits on the Dip claim. About 17 t were

shipped in 1910, but the value of the shipment was not reported (Minister of Mines Annual Report

1910, page 110). In 1963, 14 tonnes were mined, from which 124 g of Au, 2,861 g of Ag, and 118 kg of

lead were recovered. Results of a 1982 sampling program indicate that there is a mineralized shoot

above and below the second level on the North vein. Potential is indicated at depth where the

productive horizon is projected to below an elevation of 914 m. In 1983, 2720 t of proven and possible

ore at a grade of 18.86 g/t Au was outlined on the North Bonanza vein (Assessment Report 11249). A

later estimate of the resource on the property was reported to be 14,254 t grading 10.28 g/t Au (George

Cross News Letter No.217 (November 12, 1987).

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Figure 27: Minfile occurrences in property area

88

24 OTHER RELEVANT DATA AND INFORMATION

The Jersey-Emerald property had undergone historic mining for a variety of commodities, over a

significant span of time. Both underground and surface mining methods were utilized in the extraction

of ore. Remnants of this historic work exist on the property surface, including open cuts and pits, portals

to underground access, waste dumps, and mill tailings. The zones of mineralization covered in this

report are primarily within or adjacent to these areas of previous mining, and is therefore would be

considered to fall under brownfields exploration.

Brownfields exploration may allow for more readily available permitting and advancement of continued

work, and for eventual development of resources on the property. However, further consideration is

required to ascertain the level of liability attached to the remnant disturbed areas from historic mining.

Sultan continued baseline environmental data collection on the property, including surface stream

water sampling and sampling of waters draining the underground workings.

24.1 2007 WARDROP SCOPING STUDY – TUNGSTEN

In 2007, Sultan commissioned Wardrop to complete a scoping study for the Jersey-Emerald property.

The work involved developing conceptual design of all aspects of the project, including mine design,

mineral processing, tailings disposal, concentrate transportation and economic evaluation.

The Wardrop report was based upon the findings of the original 2006 Giroux and Grunenberg resource

estimate on the Dodger and Invincible tungsten zones. Wardrop recognized other zones that could be

developed to benefit economic production on the property.

In 2007, Wardrop estimated an initial capital cost for mining and milling of $85.3 million. Operating

expenditure was averaged for the expected life of project at $70.92/t of ore based upon annual ore

production of 1100 tons per day and 365 days of operation. Mine closure costs were estimated at

$10.25 million. Reclamation costs were estimated at $5.0 million. Payback time for investment was

estimated at 4 to 4.5 years.

The Jersey-Emerald property would produce two scheelite concentrate products: a gravity concentrate

with a grade of 75% WO3; and a flotation concentrate with a grade of 65% WO3.

Scheelite concentrate is not sold on the open market. Sale of scheelite concentrate is through private

sale contracts. The concentrate pricing for the financial evaluation in this study is based on free market

values for ammonium paratungstate (APT). The APT price is listed on the London Metal Exchange.

The Wardrop report concluded that the financial evaluation in 2007 shows that the Jersey-Emerald is a

marginally positive project. A number of opportunities were to be investigated to make the project

more robust and potentially improve the value of the property. This included:

Processing the existing tailings dam materials

89

Further exploration of tungsten deposits

Recovery of lead/zinc pillars

Further exploration of lead and zinc deposits.

Optimizing the scheduling of ore from each of the various sources will be necessary to minimize initial

capital and maximize early cash flow for the project. Utilizing existing infrastructure will be critical in

achieving this goal.

The mill could be designed to process the following materials:

Tungsten

Molybdenum

Lead/zinc

Tungsten tailings (existing on site)

The different ores could be batched through the mill and treated individually.

24.1.1 DISCUSSION

The authors of this report recognize that the Wardrop scoping study may in some cases be out of date.

However, some of the concepts expressed in the scoping report may be considered presently valid.

While startup and operating costs may have inflated since 2007, the metal pricing has in some cases

doubled over that time, from approximately $200 per metric tonne unit (MTU) for tungsten concentrate

in 2006, to over $350 per MTU today. Tungsten is one of the few metals that have withstood the recent

metals bear market.

Tungsten prices are generally based on MTU of APT, a more refined downstream product. A MTU of APT

is 10 kg, which contains 6.95 kg of W. The price of W is calculated by first dividing the price per kilogram

of APT by 6.95 to get the price in dollars per kg, and then dividing by 2.2 to get the price in dollars per lb.

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25 INTERPRETATION AND CONCLUSIONS

The quantification of resources on the Jersey-Emerald property was conducted as an assessment of

tungsten at the Emerald mine, the East Emerald exploration zones, the Dodger, and the Invincible mine

areas. The results of the study summarized in this report demonstrate potential for tungsten resources

for all zones examined. As well, a small molybdenum resource was assessed.

25.1 TUNGSTEN

This resource study indicates that average grades of tungsten within the zones are significant enough for

underground mining methods of extraction. The near-surface geometry of some portions of the zones

also suggests potential for open pit extraction.

The skarn mineralization associated with the deposition of tungsten is primarily generated by the

intrusion of the underlying granitic stock into limey country rock. Drill hole data indicates that the

granite surface is extensive and is possibly more complex in geometry than shown on current

interpretations. The model showing the granite surface might be more accurately defined by adding

geology from the more recent drill holes completed into the surface. A more detailed interpretation of

the geometry of the granite surface, with emphasis on its proximity and contact with limey host rock, is

a recommended tool for further exploration.

Based on the results of the resource calculations, further work is recommended to better define and

upgrade the tungsten resources in the Emerald and East Emerald area of the property, and in the

Invincible and Dodger Tungsten zones. Continued exploration for tungsten outside of these zones is also

recommended.

The Invincible Mine workings may provide further access for testing of the East Emerald tungsten zone,

and for further investigation of molybdenum mineralization noted in mine plans and within the waste

piles excavated during decline development. Dewatering of the mine workings and stabilization of

access portals is required for re-establishment of this access.

Historic mine plans and drill hole data indicate that there are remaining tungsten reserves within the

East Dodger mine. This area is readily accessible utilizing the existing infrastructure. Testing of the East

Dodger zone requires a series of short drill holes completed from stations set along the Dodger 4200

North drift. A total of 5,000 m of drilling in 35 drill holes is recommended to test this zone. Note that this

drilling can be completed contemporaneously with molybdenum exploration drilling described below.

25.2 MOLYBDENUM

The initial exploration to explore for molybdenum on the property includes investigating the north,

south, and depth continuity of the East Dodger Mo zone. This includes underground core drilling from

drill stations set up along the Dodger 4200 North drift. Drilling can be completed contemporaneously

91

with the planned tungsten exploratory drilling as described above. Drill station locations and drillhole

alignments will be designed to test to depth below the known stockwork zone, and to test for continuity

of the zone between the Dodger 4200 and 4400 levels, and to the south of previous drilling.

25.3 LEAD AND ZINC

The results of the resource estimate summarized in this report demonstrate strong potential for

remnant lead-zinc resources within and adjacent to the historic Jersey mine workings.

The results indicate that combined lead-zinc grades in the remnant blocks may be significant enough to

support underground bulk mining methods of extraction. The near-surface geometry of some portions

of the zones also suggests potential for open pit extraction.

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26 RECOMMENDATIONS

26.1 EXPLORATION

In the following recommendations, calculations for the cost of diamond drilling are based upon a broad

average of underground and surface drilling utilizing either a Discovery-1 diamond drill capable of

drilling BTW size core, or an A5 B20 drill capable of drilling NQ2 size core.

Total drilling cost estimated in each section is presented as a total of all expenses, as summarized below:

Drill coring at $100/metre

Mobilization, water pumping, drilling additives at $5/metre

Sample assaying average of 1 per 10 metres at $30, or $3 per metre

Geology and sampling at $15 to $20 per metre

Road preparation, maintenance and reclamation at $15/metre.

An additional $5 to $10 per metre might be added for underground work, requiring a shift boss

and other safety measures.

26.1.1 TUNGSTEN

Completion of the 16,000 m of surface and underground diamond drilling, trenching and support for

tungsten mineralization on the property is estimated at a cost of $2,450,000.

Dewatering of the Invincible Mine workings and access rehabilitation/stabilization is estimated to cost

$250,000, but would be highly variable depending upon volumes of water currently in place as well as

recharge into the mine from the surrounding capture area. To consider are:

Pumping rates of pumps used in mine dewatering;

Dynamic water levels in underground workings;

Discharge of groundwater into mine (from fractures);

Water quality of groundwater collected in the mine;

Water quality of mine water discharged from the mine; and

Groundwater levels in potential local bedrock aquifer(s) influenced by mine dewatering.

The estimated cost for dewatering provided above is calculated for 150 days of pumping at a rate of 0.2

cubic metres per minute. Cost is for pump and power supply rental ($500/day), installation, and

qualified persons (800/day) to set and maintain pumps, hoses, and discharge areas. Monitoring of water

quality for the safety of people and the environment would also be required as part of the process.

Specific gravity determinations should be made on all grade ranges of mineralization to better establish

a tonnage factor for resource estimation.

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26.1.2 MOLYBDENUM

A total of 3,000 m of diamond drilling in 15 holes is recommended for this stage of testing. As well,

specific gravity determinations should be made on all grade ranges of mineralization to better establish

a tonnage factor for resource estimation. Most of this drilling would be from currently available

underground access. The proposed budget for this phase is estimated at $500,000.

26.1.3 LEAD AND ZINC

Based on the results of this resource estimation, further work is recommended to better define the

lead-zinc resource. There are two primary areas of concern for future work: 1) the resource blocks need

to be verified by current drilling to quantify size and grade, and to increase the confidence in the

estimate, and 2) the underground workings need to be more accurately modeled to define pockets of

mineralization that may have been previously mined.

Diamond drilling is required to verify intercepts reported in the historic drilling used to obtain

preliminary resources in the Jersey lead-zinc mine. Availability of access to the underground workings to

reach resource blocks that infer the best combination of grade and tonnage will determine which areas

are to be tested. A small initial program of 10 to 20 short drill holes (up to 100 ft each) in two or three

different areas of the mine will provide initial feedback of the remnant resource potential. Specific

gravity determinations should be made on all grade ranges of mineralization to better establish a

tonnage factor for resource estimation. The proposed budget for this phase (2000m drilling) is

estimated $350,000.

It is estimated that a much larger drill program would be required to fully define the lead-zinc resource.

Existing Mined-Out-Areas Model

The second part of continued exploration of the historic lead-zinc workings should address the accuracy

of the modeled underground workings. These flat-lying room and pillar style lead and zinc mine

workings are quite complex. The historic paper plans and sections provide rudimentary data for

modeling the mine workings in 3D software. It is recommended that more accurate surveys be

conducted underground in three areas that are determined for follow-up drilling due to readily available

access and significant resource estimation. The size of the area to be covered and the methodology of

survey will dictate the cost. A rough estimate of $150,000 is proposed to survey areas determined for

future drilling.

26.2 PRELIMINARY ECONOMIC ASSESSMENT

It is recommended that a preliminary economic assessment for all resources on the property be

completed by the company at this stage. This will eventually provide Margaux with approximate

tonnages and grades of each of the resources for feasibility, and will add to and update the scoping

94

study completed by Wardrop in 2007 for tungsten alone. The study for the combined resources will

include:

1. Preparation of a complex mine plan. 2. Design and costing of surface facilities. 3. Implementation and completion of environmental studies. 4. Review of ore transport options. 5. Review of tailings disposal options. 6. Review wastewater disposal alternatives. 7. Review historic metallurgy and conduct further metallurgical testing.

Costing for completion of the preliminary economic assessment will vary depending upon the level of

work required at the site. Based on review of similar studies, the cost associated will range between

$150,000 and $300,000. However, previous work on the property by Wardrop in 2007, directed towards

tungsten alone, may provide a base for a new combined-resource economic assessment, and possibly

decrease the cost to under $150,000.

26.3 DATA MINING

Much of the historic data for the Jersey-Emerald project has been stored in paper copies at Sultan’s

offices. Sultan has advanced the project by entering data into digital form for greater transportability

and for use in modern software applications. However, there is still much data that could be gleaned

from the maps and files in storage. It is recommended that the files be re-visited for possible data

acquisition and entry. As well, some of the work completed by Sultan has yet to be entered or compiled

into a modern format. Much of the sample locations and assay results data is still on printed format.

These should be re-entered for portability. This work could include:

Collect all existing data (drilling, soil, rock, and geophysical, plus metadata) into a single relational

database, using a simple portable database management system such as Microsoft Access that most

off-the-shelf and custom modeling and GIS software packages can read directly. This will be the

project’s only database, and will supersede all other data sources. Correct existing database errors,

such as sample numbers, before adding other information such as the historic ICP results.

An estimated cost for this work is $35,000 (45-50 days work for a qualified professional).

95

27 REFERENCES

Ball, C.W., 1954; The Emerald, Feeney and Dodger Tungsten Ore bodies, Salmo, B.C.: Economic

Geology, Vol. 49, No. 6, p.625.

Cowie, S., 2007; Wardrop Report to Sultan Minerals Inc, Technical Report on the Jersey-Emerald

Property, British Columbia, NI 43-101 report, 170pp.

Fyles, J.T. and Hewlett, C.G., 1959; Stratigraphy and Structure of the Salmo Lead Zinc Area: B.C.D.M.,

Bulletin No. 41.

Grunenberg, P.B., 1994; Summary of Research on the Jersey Property, Nelson M.D.: Unpublished

Report for Sultan Minerals Inc., 5pp.

Grunenberg, P.B. and Giroux, G., 2006; Summary Report and Preliminary Resource Calculations for

the Dodger 4200 Molybdenum Zone, and Tungsten Zones, Jersey-Emerald Property, British Columbia,

43-101 report, 67pp.

Grunenberg, P.B. and Giroux, G., 2008; Summary Report and Preliminary Resource Calculations

for the East Emerald and Emerald Mine Tungsten Zones, Jersey-Emerald Property, British

Columbia, 43-101 report, 72pp

Grunenberg, P.B. and Giroux, G., 2010; Resource Estimation for the Jersey Lead Zinc Deposit, ,

Jersey-Emerald Property, British Columbia, 43-101 report, 48pp

Hoy, T. and Andrew, K.P.E., 1989; The Rossland Group, Nelson Map Area, Southeastern British

Columbia: BC Ministry of Energy, Mines and Petroleum Resources, Geological Fieldwork, 1988,

Paper 1989-1.

Hoy, T. and Dunne, K.P.E., 1997; Early Jurassic Rossland Group – Part I Stratigraphy and

Tectonics: BC Ministry of Energy and Mines, Bulletin 102.

Hoy, T. and Dunne, K.P.E., 1998; Geological Compilation of the Trail Map-Area: BC Ministry of

Energy and Mines, Geoscience Map 1998-1.

Lawrence, E.A., 1974; A Summary Report of the Production History and Geology of the Salmo

Division, Canex Placer Limited: Unpublished Internal Report for Canex Placer Limited.

Lawrence, E.A. (2005) Jersey Molybdenum Potential; Private Report for Sultan Minerals

Little, H.W., 1960; Nelson Map Area, West Half, B.C.: Geological Survey of Canada, Memoir 308.

96

MacDonald, A.S., 1970; The Salmo Lead-Zinc Deposits: A Study of Their Deformation and

Metamorphic Features: Unpublished PhD. Thesis, University of British Columbia.

Minfile, 1991; Emerald Tungsten Property, Minfile Nos. 082FSW009 and 082FSW010: Ministry of

Energy, Mines and Petroleum Resources, Mineral Resources Division, Minfile Master Report 1991,

p.19-21.

Minister of Mines Annual Reports for 1896, 1948 - 1970: British Columbia Department of Mines.

Ray, G.E., 1996; Characteristics of Gold Skarns: Presentation Notes for Short Course on New Mineral

Deposit Models of the Cordillera.

Simandl, G.J. and Paradis, S., 2009; Carbonate-Hosted, NonSulphide, Zinc-Lead Deoposits in the

Southern Kootenay Arc, British Columbia (NTS 082F/03), GSC Geological Fieldwork 2008, Paper 2009-

1.

Smith, P.A., 1994; Dighem Survey for Sultan Minerals Inc., Salmo Property, British Columbia, NTS

082F/3, 115pp.

Stevenson, J.S., 1943; Tungsten Deposits of British Columbia: British Columbia Department of Mines,

Bulletin No. 10.

Tan, G. and P. Tse (2006) Phase-1 Metallurgical testing for molybdenum floatation from a Jersey

Project Composite: PRA Report for Sultan Minerals Inc., August 30, 2006.

Troup, A.G., 1995; Diamond Drilling Report on the Jersey Property, Nelson Mining Division, B.C.:

Sultan Minerals Inc. Unpublished Assessment Report, 25pp.

Troup, A.G., 1994; Geophysical, Geochemical and Core Research on the Jersey Property, Nelson

Mining Division, B.C.: Sultan Minerals Inc. Unpublished Assessment Report, 26pp.

Wardrop Engineering Inc., 2007; Technical Report on the Jersey-Emerald Property, British Columbia,

153pp.

Wardrop Engineering Inc., 2008; Jersey-Emerald Mine Environmental Baseline Study 2007-2008,

70pp.

WEBSITES:

BC Ministry of Energy and Mines Minfile Website http://minfile.gov.bc.ca

Mineral Titles Online http://www.empr.gov.bc.ca/TITLES/MINERALTITLES/MTO

SULTAN MINERALS INC: www.sultanminerals.com

CIM: http://web.cim.org/UserFiles/File/CIM_DEFINITON_STANDARDS_Nov_2010.pdf

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SIGNATURE PAGE

Report To:

Margaux Resources Inc. 1600-510 5th Street Calgary, Alberta T2P 3S2

Technical Report for the Jersey-Emerald Property, Salmo, BC

Report Date: March 15, 2014 Revised March 28, 2014 Effective Date: February 28, 2014

Prepared by: “Gary Giroux” Date: March 15, 2014

Gary Giroux, P.Eng., MASc. Prepared by: “Perry Grunenberg” Date: March 15, 2014


98

CERTIFICATE OF QUALIFICATIONS FOR GARY GIROUX

I, G.H. Giroux, of 982 Broadview Drive, North Vancouver, British Columbia, do hereby certify that:

1) I am a consulting geological engineer with an office at #1215 - 675 West Hastings Street, Vancouver,

British Columbia.

2) I am a graduate of the University of British Columbia in 1970 with a B.A. Sc., and in 1984 with a M.A.

Sc., both in Geological Engineering.

3) I am a member in good standing of the Association of Professional Engineers and Geoscientists of

the Province of British Columbia.

4) I have practiced my profession continuously since 1970. I have had over 30 years experience

calculating mineral resources. I have previously completed resource estimations on a wide variety of

deposits many similar to the Jersey deposit.

5) I have read the definition of “qualified person” set out in NI 43-101 and certify that by reason of

education, experience, independence and affiliation with a professional association, I meet the

requirements of an Independent Qualified Person.

6) This report titled “Technical Report for the Jersey-Emerald Property, Salmo, BC” dated March 15,

2014, revised March 28, 2014, is based on a study of the data and literature available on the Jersey

Project. I am responsible for the resource estimations shown in Section 14 and completed in Vancouver

during 2006 through 2010. I visited the property on February 19 and 20, 2009 to examine drill core and

underground workings.

7) I have previously completed resource estimates for the Dodger 4200 Molybdenum Zone and the

Tungsten Zone on the Jersey-Emerald Property in 2006, the Emerald and East Emerald Tungsten Zone in

2008 and the Jersey Pb-Zn Zone in 2009.

8) As of the date of this certificate, to the best of my knowledge, information and belief, the technical

report contains all scientific and technical information that is required to be disclosed to make the

technical report not misleading.

9) I am independent of the issuer applying all of the tests in section 1.5 of NI 43-101.

10) I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has been

prepared in compliance with that instrument and form.

Dated this 15th day of March, 2014

“G. H. Giroux”

G. H. Giroux, P.Eng., MASc.

99

CERTIFICATE OF QUALIFICATIONS FOR PERRY GRUNENBERG

I, Perry Grunenberg, of 2016 High Country Boulevard, Kamloops, BC, do hereby certify that:

1. I am a consulting Geoscientist with PBG Geoscience having an office at 2016 High Country Blvd,

Kamloops, British Columbia, V2E 1L1.

2. This certificate applies to the report titled “Technical Report For The Jersey-Emerald Property,

Salmo, BC” dated March 15, 2014, revised March 28, 2014.

3. I am a graduate of the University of British Columbia with the degree of Bachelor of Science in

Geology (1982).

4. I am a member of the Association of Professional Engineers and Geoscientists of British

Columbia (Registration No. 19246)

5. I have practiced my profession in North America since 1982, having worked as an employee and

consultant for major mining corporations, junior resource companies, and BC government

ministries.

6. As a result of my experience and qualification I am a Qualified Person as defined in NI 43-101.

7. I personally managed exploration programs on the Jersey-Emerald property including diamond

drilling programs for the exploration of molybdenum, gold and tungsten within the property and

surrounding claims. I also created the 3 dimensional geologic solids and underground mine

model for the tungsten and lead-zinc mines utilizing Gemcom Surpac software.

8. I have personally prepared or have reviewed all sections of this report including the illustrations.

Section 14 of this report was primarily prepared by the co-author, Gary Giroux.

9. In the preparation of this report I am independent of the company Margaux Resources Inc. as

described in section 1.4 of NI 43-101.

10. I have read NI 43-101 and Form 43-101F1, and the Technical Report has been prepared in

compliance with that instrument and form.

11. As of the date of the certificate, I am not aware of any material fact or material change with

respect to the subject matter of this technical report that is not reflected in this report, the

omission to disclose which would make this report misleading.

Dated this 15th day of March, 2014


Documents

TECHNICAL REPORT FOR THE JERSEY-EMERALD PROPERTY, SALMO… · property located near Salmo, BC. Mr. Giroux and Mr. Grunenberg are qualified persons as defined in National Instrument