Mother Lode business strategy involves sale of gold properties

Modeled after English and South African gold mining organizations, Mother Lode’s sole objective is to “sell off our precious mineral assets, at some propitious time, and re- lever those funds into the next stage of the economic cycle,” President John Gruen told The Northern Miner.

The company has amassed about 18,000 acres of land in the Mother Lode region of California, including the Idaho-Maryland/Brunswick which produced more than two million oz of gold to a depth of only 1,300 ft. Gruen confirmed that company geologists have at least 800,000 oz of gold in sight with the potential for approximately 2.5 million oz to depth. “At the moment we have two major underground mining firms evaluating the property for potential development,” he said.

Mother Lode has mineral and partial surface rights to the Big Canyon and Blue Gouge mines in El Dorado Cty. Consolidated Gold Fields had the property before but it was forced out by an anti-mining ordinance that was recently declared unconstitutional. “A major mining company has delivered to us a joint venture agreement in principal for the Blue Gouge property and is further analyzing the Big Canyon project,” he said.

A subsidiary of Mother Lode is involved in a joint venture with Meridian Minerals, a subsidiary of Burlington Resources (NYSE), between Jackson and Plymouth, Calif. Gruen said that Meridian has confirmed both underground and open pit potential on the property and a feasibility study could begin in mid-1990.

Negotiations are under way for a processing plant that would service its land holdings on the Melones fault of the Mother Lode belt. The properties do not have sufficient reserves to stand alone, he said.

The company also has the option to purchase a 49% working interest in Meridian’s Royal Mountain King project which began production Feb 23. The $54-million project is scheduled to build gradually towards an operating rate of 3,000 tons per day at a grade of 0.068 oz. Over its 13-year life, the mine is expected to produce 60,000 oz gold and 40,000 oz silver each year.

The agreement calls for Mother Lode to pay 125% of its 49% share of all costs, expenses, and liabilities. Alternately, the company can elect a 30% net profits non-participating interest or a 3% net operating profits (non-participating) interest, increasing to a 27% net profits interest after payout. This election occurs once the project has reached 70% of design capacity.

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