Resource World Magazine

28 www.resourceworld.com A U G U S T / S E P T E M B E R 2 0 1 7 W e like high-grade gold assets that have the potential to be brought into production quickly and economically. We believe Providence Gold Mines Inc. [PHD- TSXV], formerly Red Hut Metals, has acquired a project that has those key attributes. The company has an option to acquire the Providence Group of Mines in the Summerville Mining District, Tuolumne County, California. These mines lie within the eastern belt of the famous Mother Lode District. Numerous high-grade, past-producing, Mother Lode, gold mines are found within this belt, including the Carson Hill Mine (3,000 feet deep/pro- duced 1.3 million oz. gold) and the Central Eureka Mine (4,855 feet deep/produced 1.8 million oz. gold) to name just a couple. The first question that we always ask when an older, but intriguing asset is brought to our attention is; why hasn't it been mined out or re-developed yet? In the case of the Providence deposit, the mine was opened in 1894 and shut down in 1907 during active and profit- able operations. The owner was looking to sell the mine and did not extend the lease to the current operator at that time. The lower levels of the mine were then allowed to flood and were never re-opened. The mine was sold in 1911 but the new com- pany was underfunded and only mined above the water table before they ran out of money. Operations were shut down in 1917 due to war conditions. In 1918, a large brush fire destroyed the surface workings and the mill and most of the mining records. From that point on, only a limited amount of work was completed on the mine. The patented claims were acquired by the current owner in 1964. These patented claims are what Providence Gold Mines has optioned. They cover the historic Providence, Consuelo and Goodenough mines which consist of four, high-grade, gold-bearing, quartz veins that are parallel to each other. An estimated 225,000 ounces of gold was recovered from 1894 to 1916. It is reported that a single chamber (stope) in the mine has produced up to 30,000 ounces of gold with grades between 0.5 and 0.8 oz/ton. Mill recoveries back then were very inef- ficient with maximum recoveries of only about 50%. It therefore stands to reason that these mines probably produced dou- ble what was reported prior to processing. What is exciting to us is the fact that only one of the major mineralized stopes was mined to 1,100 feet deep. The other ore shoots were only mined down 100 to 200 feet. This is significant because the mines in the Mother Lode District are historically very deep, in some cases more than 5,000 feet deep. This means the Providence Mine remains open for expansion. With modern exploration, extrac- tion and milling technology, we believe Providence Gold Mines has an excellent opportunity to re-start and profit from this historic mine. Permitting a mine in California can be onerous but since the mine is on patented ground and in a rela- tively remote area of the state, permitting should not be an issue. Providence has an option to earn 100% interest in its namesake property with a 2.5% royalty, of which 1% can be purchased back for $1 million. The com- pany intends to perform a three-phase exploration program. Phase 1 will focus on geological mapping of surface rocks and underground workings to develop a structural model. Phase 2 will consist of drilling, dewatering and the reclama- tion of the mine. Phase 3 will focus on the sampling of underground workings and additional underground drilling and mine reclamation. The entire program is expected to cost just over $2 million. n Stew Vorberg and Doug Wood are Investment Advisors with Mackie Research Capital Corporation (MRCC). This article was prepared, in part, under contract by Thomas Schuster. The opinions, estimates and projections herein are those of the authors and may not reflect that of MRCC. The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no repre- sentation or warranty, expressed or implied, is made as to their accuracy or completeness. The issuer(s) mentioned in this article may not be suitable for all investors. Please con- sult an investment professional for advice regarding your particular circumstance. Neither the author nor MRCC accepts liabil- ity whatsoever for any loss arising from any use of this article or its contents. Information may be available to MRCC which is not reflected herein. This article is not to be con- strued as an offer to sell or a solicitation for an offer to buy any securities. The informa- tion contained in this article is not intended to constitute a research report. Stew Vorberg and Doug Wood are beneficial owners of the company highlighted in this article. Broker's Picks by Stew Vorberg and Doug Wood PROVIDENCE GOLD MINES – abandoned and forgotten for 85 years

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