The Talapoosa project is a disseminated, quartz-adularia style epithermal gold-silver deposit located 45 kilometers east of Reno, Nevada. Since 1977, eight mining companies have carried out exploration and development with 564 drill holes totaling 71,000 meters along with extensive metallurgical test work and environmental studies. A feasibility study was completed by Miramar Mining Corporation in 1996.
The Talapoosa deposit is hosted by late Tertiary volcanics, volcaniclastics, hydrothermal breccias, sediments and intrusives of dacitic to andesitic composition and is structurally controlled. The deposit is faulted by post-mineral dip slip movement along high-angle faults into the outcropping Main Zone and the down-faulted Bear Creek Zone to the south. The deposit is further subdivided into oxide and sulfide mineralization. The oxide mineralization lies near the surface in both zones while the deeper sulfide mineralization occurs at depth in the Bear Creek Zone.
The Bear Creek Zone has horizontal dimensions of over 700 meters east-west by 300 meters north-south and dips approximately 30 degrees to the south. The upper portion of the Bear Creek Zone, which extends from near surface to as deep as 80 meters in the south, is dominated by widespread and intense argillic alteration associated with the narrow steeply dipping higher grade vein-breccia structures. These vein-breccia structures are up to several meters in width with grades ranging between 2 g/t and 14 g/t gold. The lower portion of the Bear Creek Zone is characterized by moderate to intense silicification and stockwork veining. Drill intercepts of up to 50 meters (true thickness) with average grades ranging between 0.9 g/t and 2.5 g/t are typical of this lower zone.
In 2010 a NI 43-101 compliant mineral resource estimate by Mine Development Associates Inc. ("MDA") reported a measured and indicated resource of 632,000 ounces of gold and 8.2 million ounces of silver. Inferred mineral resources add an additional 326,000 ounces of gold and approximately 4.3 million ounces of silver.
Chesapeake has vended its interest in Talapoosa to Gunpoint Exploration Ltd (TSX.V:GUN) pursuant to a business transaction that closed on November 29, 2010. Chesapeake owns 32,017,899 common shares of Gunpoint, representing 74.5% of the issued and outstanding shares of Gunpoint.
Gunpoint drilled two lines of inclined holes spaced 200 meters apart across the Bear Creek zone. The drill program was designed to test the interpretation of the mineralization as steeply rather than gently dipping vein zones and to determine the average gold and silver grades across the entire mineralized intervals in order to compare it to the grade of the existing resource. The drill holes returned composite gold grades across broad intervals of mineralization with average values approximately 20% higher than the stated resource.
In March, 2015 Gunpoint agreed to option Talapoosa to Timberline Resources Corporation ("Timberline") (TSX.V:TBR). For the option to acquire a 100%, Timberline paid US$300,000 and issued 2 million common shares to Gunpoint. To exercise the option to purchase Talapoosa, Timberline has agreed to pay Gunpoint US$10 million by September, 2018. Also, in the event the price of gold averages US$1,600 or above for 90 consecutive trading days following Timberline exercising the purchase option, Gunpoint will receive an additional US$10 million in cash and common shares from Timberline. Gunpoint retains a 1% net smelter royalty in Talapoosa.
In April, 2015 Timberline completed a Preliminary Economic Estimate (“PEA”) on Talapoosa. The PEA indicated a robust open pit heap leach operation. At $1,150/oz gold and $16/oz silver, the PEA indicates an after-tax NPV of US$136 million and a 39% internal rate of return. Average annual production over an 11 year mine life is 55,000 ounces of gold and 679,000 ounces of silver. Employing contract mining at a processing rate of 3.8 million tons per annum, the capital cost is US$51 million.
Steven Ristorcelli, C.P.G. and Michael Lindholm, P.G., of MDA are the Qualified Persons (as defined in National Instrument 43-101) responsible for the mineral resource estimate.