Oro Cruz Property

ORO CRUZ PROPERTY    
         

Click to Enlarge Images View of Oro Cruz pit from highway   Jeff Wilson, VP Exploration, viewing mineralized zone at Oro Cruz   Oro Cruz claims map

Summary
The Oro Cruz Property (the “Property”) is Lincoln Mining’s most recent acquisition (see news release dated November 20, 2009). 

The property is located in the Tumco mining district in the Cargo Muchacho Mountains, approximately 14 miles southeast of the operating Mesquite gold mine (New Gold Inc.) and is adjacent to the American Girl gold mine (past producer).   Large-scale mining at Oro Cruz (Golden Cross) occurred during 1890-1916 and 1932-1941, producing greater than 150,000 ozs gold.  In the mid 1990s, the property was mined by MK Gold Company.  MK Gold produced approximately 61,000 ozs gold between 1995-1996 from both open-pit and underground mining operations. Mining ceased in 1996 due to low gold prices. Prior to cessation, MK Gold was conducting a significant pit wall push back to reach in-place “ore.” Gold mineralization remains exposed in the open-pit and in underground workings.  There are multiple exploration targets on the property.

The Company believes that the Oro Cruz Property has near-term potential to be expanded and developed into a producing gold mine through renewed open-pit and underground mining. A NI 43-101 technical report is planned for early 2010.    

Location
The Oro Cruz project is located northwest of Yuma, Arizona, in the Tumco mining district within in the Cargo Muchacho Mountains, Imperial County, California. The Property is adjacent to the American Girl gold mine (past producer) and is approximately 14 miles southeast of the operating Mesquite gold mine.  All-weather access is excellent and takes about 35 minutes from Yuma, Arizona, via Interstate highway 8 westward from Yuma, Arizona, approximately 13 miles to paved county road S34, then northeast approximately 8 miles to Tumco.  Dirt roads provide property access.  Some local access restrictions exist owing to historic mine ruins. The area has electrical power from the state grid.  Logistics are excellent for mining. 

Land
The Company’s 100% owned U.S. subsidiary, Lincoln Gold US Corp., has executed a Letter Agreement with ADGIS. Inc. to acquire 20 lode claims that cover the Oro Cruz gold deposit in Imperial County, California. The Company has staked an additional 68 contiguous lode claims covering a total of approximately 1,800 acres. The Letter Agreement involves advance royalty payments beginning at US$50,000 per year upon signing of a formal agreement, gradually increasing to US$200,000 per year in the 7th year. The NSR royalty is 3% for the first 500,000 ounces gold produced and 4% thereafter. A buy down provision exists on the royalty.

History
The Cargo Muchacho-Tumco district was discovered by the Spaniards and mined as early as 1780-81. The district is believed to have produced the first gold mine in California. Americans began mining the district at the end of the Mexican-American War in 1848. Mining was firmly established in 1877 with completion of the Southern Pacific Railroad to Yuma. Large-scale mining at Oro Cruz (Golden Cross) occurred during 1890-1916 and 1932-1941, producing greater than 150,000 ozs gold. Gold-bearing tailings from these operations remain on the Oro Cruz property. Texasgulf Minerals explored the property from 1985-1989 and conducted some column leach tests. In the early 1990’s, the property was leased by the American Girl Mining Joint Venture and was mined under the JV from 1995-1996 by MK Gold. MK Gold produced approximately 61,000 ozs gold from open-pit and underground operations. Low-grade ore was hauled approximately 2.5 miles to the southeast and heap leached on the American Girl mine property and high-grade ore was hauled approximately 2 miles to the American Girl mine for milling. MK Gold ceased mining when the gold price dropped to $260 per ounce. There are approximately 400 drill holes on the property, which define the known in situ gold resources and drill targets. Underground conditions are said to be in excellent condition.

Geology & Mineralization
The local geology consists largely of metamorphic rocks of the Jurassic Tumco Formation which dip 25˚ to the south forming a homocline. Rock units consist of lower amphibolites facies gneiss and schist. Numerous pegmatite dikes cut the Tumco Formation and are thought to be late Cretacious to early Tertiary in age. Minor Tertiary latite dikes and sills are also present. The western portion of the project area is covered by alluvium and the eastern portion is intruded by Jurassic felsic intrusions. A geologic map of the district was completed by Texasgulf Minerals.

Texasgulf geologists believed that the gold mineralization originated in siliceous, stratabound exhalites which have since been metamorphosed and faulted.  Other geologists believe that the mineralization originated from mesothermal fluids and is structurally controlled. The primary host is the Jurassic Tumco Formation where the gold occurs in local tablular zones in siliceous schist with associated magnetite, banded iron, and minor chalcopyrite. There are no significant sulfides. Very fine native gold occurs as disseminations and in fractures associated by magnetite, hematite and hydrous iron oxides limonite and goethite. Lower grade gold zones often encompass higher grade gold zones. Tertiary north-south to northwest normal faults cut the dipping mineralized zones.

The main Oro Cruz gold deposit is an irregular, elongate, tabular zone that dips approximately 25° downward from the open pit floor for at least 1,650 ft.  Mineralized thicknesses are variable at multiple tens of feet. Lesser, parallel zones of mineralization are present. The deposit remains open down dip with the deepest vertical hole containing 60 ft grading 0.4 oz per ton gold (not true thickness). 

Previous Work
Texasgulf Minerals conducted exploration during the late 1980’s, which included district-wide geologic mapping, airborne and ground magnetic, surface sampling and the drilling. The previous owner of the property and the American Girl Mining Joint Venture also conducted exploration programs. There are over 400 drill holes in the Oro Cruz Property.  Since 1981, there was 196,324 ft of drilling of which 6,818 ft was core drilling.  A total of 79,805 ft have been drilled outside of the main resource area.

Ten exploration targets have been identified on the property and good potential exists for extension of known gold mineralization and discovery of new gold zones. Pan concentrates and gravel samples suggest potential for placer deposits. Magnetic anomalies are thought to be associated with elevated magnetite in the siliceous, gold-bearing zones.

Present Resources
Non-compliant NI 43-101 gold resources were estimated by Mine Development Associates of Reno, Nevada in 1999 (prior to compliance requirements).  Resources were estimated at 3,365,298 tons grading 0.058 oz per ton gold containing approximately 196,000 ozs gold in the “Indicated” category using a 0.01 oz per ton gold cutoff grade.  In addition, 2,683,552 tons of “Inferred” resources were estimated with no grade assignment.

Project Scope & Plans
Lincoln Mining plans to advance the Oro Cruz property to production.  Work will begin with the compilation of a NI 43-101 technical report in January 2010, which is expected to include a resource estimation and work recommendations.  Technical work will follow soon thereafter to include early-stage mine permitting and base-line studies.