Golden Chest Mine
On January 10, 2004, Metaline Contact Mines acquired the long-term lease on the Golden Chest Mine from Paymaster Resources
Incorporated, as well as Paymaster's Exploration Agreement With Option to Lease on the mine with New Jersey Mining Company, of
The Golden Chest Mine, located 1.2 miles east of Murray, Idaho, consists of approximately 230 acres of patented mining claims
situated in Murray district (a sub-district of the northeastern extension of the Coeur d'Alene mining district.
Gold production from the Murray district is estimated at 300,000 ounces, including 200,000 ounces from placers, predominately
in the late 1800's. As the largest lode producer of gold in both the Murray and Coeur d'Alene districts, at 65,000 ounces, the
Golden Chest Mine is considered historic in the evolution of mining in North Idaho. The Golden Chest is leased from J.W. Beasley
Interests, who purchased the property in 1993 from the estate of the late 5-time Oscar winner and Hollywood legend, Johnny Green.
The Green Family had owned the mine continuously since 1916.
In the late 1980's, Newmont Mining Corporation spent over $545,000 on an exploration program at the Golden Chest Mine. Newmont's
exploration program consisted of 1,430 soil samples, 157 rock chip samples, 121 continuous chip samples from four re-opened adits,
and 11,133 feet of drilling. Newmont's work identified a potential open pit target with an inferred resource containing 230,000
ounces of gold. Newmont also identified a high-grade underground target, which was thought to be the faulted offset of the
Katie-Dora Vein. Newmont dropped the project in 1990 because it did not meet its criterion at that time of a 1,000,000-ounce open
Under the terms of its agreement with New Jersey Mining, Metaline Contact Mines receives 10,000 shares of New Jersey's common
stock every 6-months of the 2.5 year exploration period. The Company also receives a 5% NSR on all ores produced during the
exploration period. If New Jersey Mining exercises its option to lease, it will pay the Company an additional 100,000 shares of
its common stock, and a sliding-scale Net Smelter Return ("NSR") production royalty of 3% up to $400 gold prices, increasing to a
maximum of 6% at higher gold prices, and 50,000 shares of New Jersey's common stock for each 10,000 ounces of gold produced. The
company, in turn, pays the underlying property owner a royalty of 50% "in kind" of the royalties it receives.
To date, New Jersey Mining has driven an exploration/development ramp a distance of approximately 500 feet, which successfully
intercepted and exposed the high-grade gold ore of the Katie-Dora Vein previously drilled by Newmont. Chip samples across the
vein have assayed as high as 1.09 ounces of gold per ton across 5.9 feet of true thickness. The Katie-Dora Vein is "open" at
depth. Historic mining did not explore or mine the vein because then-current metallurgical techniques could not recover the
gold contained within sulfides.
In a recent news release, New Jersey Mining President, Fred Brackebusch stated, "high grade gold ore can be produced from the
new vein after minimal capital investment at the Golden Chest Mine." New Jersey Mining has drifted along the Katie-Dora Vein
for about 130 feet, and stockpiled approximately 1,000 tons of ore to be processed at its mill in Kellogg. Metallurgical tests
of the ore indicate that over 90% of the gold is recoverable utilizing conventional flotation technologies.
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© 2004 Metaline Contact Mines