Silver Bullet’s King Tut grades fit for a pharaoh

Silver Bullet Mines (TSXV: SBMI; US-OTC: SBMCF) has bought the past-producing underground King Tut gold mine in Arizona on “very low” cash terms in a deal almost as mysterious as the ancient Egyptian pharaoh. Shares surged.

No shares were issued in the acquisition for the mine that reportedly hosts grades as high as 61.7 grams gold per tonne, the Burlington, Ont.-based Silver Bullet said Wednesday. There were no royalties and no finders fees either.

“There’s no documentation [on the mine], none,” Peter Clausi, director and vice-president of capital markets with Silver Bullet Mines, told The Northern Miner by phone on Wednesday. “Why buy it? The cost we paid to acquire it is so low as to be virtually no risk to the company.”

Clausi wouldn’t say how much Silver Bullet paid for the asset, nor whom it bought it from, except to say that it was an “arm’s-length third party”.

Company shares hit a three-year high of 23¢ apiece on Wednesday afternoon in Toronto for a market capitalization of $27 million.

Nearby mill

As its next step, Silver Bullet aims to start production at King Tut as soon as possible by mining and shipping 50 tons per day to Silver Bullet’s mill in Globe, less than 80 km away in east-central Ariz.

The 32-hectare King Tut site is on government land. Silver Bullet also operates the Super Champ silver-gold mine and the Buckeye silver mine, both near Globe.

Clausi explained the King Tut gold deposit’s significance.

“If we get 38 oz. of gold per ton in the concentrate – let’s use [a price of] $3,000 per oz. of gold. That’s roughly $115,000 per ton of gross economic value,” he said.

The little the company says it knows about the mine is based on the experiences of Ron Murphy, Silver Bullet’s vice-president of mining, and his brother Dan, the mill manager at Globe. Both worked at King Tut in the 1980s and were involved in gold extraction, processing and sales.

Mining database Mindat indicates there was a King Tut placer mine in Arizona where gold was extracted in the 1930s and 1940s. It was later owned by Placer Mining Resources International in 1977, but doesn’t mention mining in the 1980s. That site is in Mohave County, northwest Arizona, more than 500 km from Globe.

High grades

The Murphys’ visual inspections of the King Tut vein suggest it hosts high grades with two to three-foot widths containing free gold, the company says.

Assays results from 50 tons of waste material taken from King Tut to the Globe mill returned about 0.3 oz. per ton gold and up to 1.8 oz. per ton, or 10.3 grams gold and 61.7 grams gold, respectively.

The mine has an adit that extends less than 100 feet (30 metres) and might require further safety work. Clausi couldn’t say whether the mine has lift or ramp access.

“It’s close to a highway [and] it’s in a mining jurisdiction,” he said. “Arizona’s great and it’s like Sudbury, it lives for mining. There’s an available talent pool and a mining-friendly mindset.”