U.S. REPORT (September 02, 1991)

Ongoing delineation drilling and engineering by USMX (NASDAQ) is reported to have nearly doubled minable gold reserves at the Yankee project, 65 miles northwest of Ely, Nev.

With proven minable reserves now totalling 1.9 million tons grading 0.050 oz. gold per ton, USMX expects to begin open pit mining in the fourth quarter of this year. Initial gold recovery from the heap leach operation is scheduled for the 1992 first quarter.

The project’s final feasibility report is based on mining of 620,000 tons per year to recover about 25,000 oz. gold annually for the next three years. USMX describes Yankee as having “excellent” potential for further expansion of reserves.

The project is permitted for the initial phase of mining and construction, while permitting to incorporate the new reserves is reported to be well advanced. Capital costs are

estimated at less than US$4 million.

The Yankee project is one of a number of exploration and mine projects located within the company’s Alligator Ridge property. This large property — 25×7 miles — was acquired several years ago from Nerco and Kennecott for a total

consideration of about US$3.8 million.

USMX is currently mining the Winrock and Casino projects, and is also re-working the Alligator Ridge-Vantage heap leach. This year the company expects to produce a total of about 42,000 oz. from these operations, with the bulk of gold production coming from Casino (about 17,000 oz.) and Vantage (about 16,000 oz.). USMX reports a US$239 cash cost per oz. for its gold production.

Exploration is continuing on the Alligator Ridge property which contains a number of advanced exploration targets as well as anomalous areas that remain to be tested.

USMX said recent drilling on the South Casino project was successful in further defining the Poker Flats deposit. More drilling is planned for this September to expand the resource and to assist in engineering work. Rock chip sampling near the East Top deposit returned gold mineralization in outcrop, with the best interval being a 30-ft.-wide zone assaying 0.18 oz. gold per ton.

USMX is of the view that this represents an obvious extension of the East Top deposit to the south. The best hole drilled in the East Top deposit returned 60 ft. with an average grade of 0.51 oz. gold. Pegasus Gold (TSE) has a 35% interest in USMX.

Shareholders of Centurion Gold and U.S. Precious Metals recently approved a plan to amalgamate the companies into a single entity known as Siskon Gold (NASDAQ). Siskon began trading on Aug. 26.

The purpose of the amalgamation was to consolidate the management and properties of the two companies into one corporation in order to lower administrative expenses and enhance opportunities for financing of mineral properties.

Siskon is active on a number of gold projects in the western U.S.

Transgold Explorations & Investments (CDN) reported concluding a private placement involving 750,000 units sold at 20 cents per unit. Each unit comprises one common share and one warrant exercisable for 18 months for one additional share at 25 cents. The company recently changed its name from Transgold Resources and consolidated its stock on a 4-old-for-1-new-share basis.

Widespread speculation that Amax Gold (NYSE) was considering acquiring the Fort Knox gold project near Fairbanks, Alaska, was confirmed when the Denver-based company announced it was involved in negotiations with the project’s owners.

Amax said negotiations with Fairbanks Gold (TSE) and its joint venturers are continuing, “but no assurance can be given that any agreements will be reached.” Fairbanks has a 51% interest in Fort Knox, with the remaining interest held by private interests.

The Fort Knox gold deposit was last reported to contain minable reserves of 220 million tons grading 0.024 oz. gold per ton, with an overall strip ratio of 0.82-to-1. Recent drilling on the property to enhance current reserves returned a spectacular 530-ft. intersection grading 0.42 oz. gold per ton. A unit of Inco (TSE) was also speculated to have shown interest in acquiring the Fort Knox project, as the company has interests in properties in the Fairbanks gold district. But those negotiations were reported to have hit a snag because of tax considerations.

Officials from Fairbanks Gold have no comment on any of the terms under discussion with Amax.