YALE RESOURCES LTD V.YLL

Mexico Mike Article

[YLL]

Last week I spent a day at the La Verde Project, in Sonora, Mx. The property was acquired earlier this year by V.YLL - Yale Resources for US $1.6 Million in staged payments, and then subsequently additional holdings in the surrounding area were staked to increase the total land package.

https://www.yaleresources.com/s.....A-STATE...

This is the 4th project within the suite of properties controlled by Yale, and IMO it is the most prospective. There is widespread alteration throughout the property area, and numerous surface showings. The potential here is for a large tonnage deposit (or several deposits) that can create critical mass necessary to put Yale on the radar of serious mineral resources. That is probably the most important consideration for a project generator like YLL. Large discoveries tend to support large asset value and market caps for juniors. While the silver properties in Zacatecas have yielded some high grade results, they are not likely to develop into big scale development. Urique, the JV with EXM.V is an intriguing prospect with excellent potential, but it will probably amount to smaller, high grade deposits.

Within the La Verde property package, there are several past producing mines. However these mines are pretty much narrow access workings that produced very limited volumes of high grade ore. The reason is that they developed at the turn of the last century and only the very highest grade copper mineralization would have been economic to extract and transport to a mill. In fact, the dumps of 'waste rock' that surround these old mine workings are most likely economic feedstock for a producing operation today, and tens of thousands of tonnes of this mineralization is sitting on surface if the company chooses to commence small, start-up mining to process it.

Road access to the property is served by paved highway from the main city of Hermasillo, until the last few kilometers where a gravel road extends right to the old workings. Power infrastructure is in close proximity. Water access is limited, but Mexican mining law dictates that mines are a priority development and hence local land owners are compelled to sell water rights at reasonable prices to mine operators, so it will not present a major hurdle.

The most significant of the historic workings was the La Verde Grande, where 2 adits extend on either side of a small valley into the adjacent hillsides. These tunnels penetrate for just limited distances underground, and a second lower level has also been developed with shaft access. A third adit is also open a few metres below, and this just extends a few metres in, with a side tunnel halfway along.

The company has untaken sampling work every five meters in these tunnels, cutting channels across the open mineralized face from the top to the bottom of the tunnel walls. There was obvious secondary copper mineralization exposed throughout the interior of the workings, and I toured the entire area except in a couple of small caves where hundreds of bats flying within the narrow area made it prohibitive to enter.

The tunnels appear to have been developed along old fault structures, which probably governed the emplacement of the highest grade copper. Historic data indicates that signficant lead values were also encountered, along with some silver.

Once the company has completed mapping and sampling of the underground workings, they plan to do a drill program to outline the entire deposit and prove it up to NI43-101 resource standards. By my own estimates, I would imagine a relatively low risk confirmation drill program could define an area of about 30m depth, 50m extending into either hillside, and perhaps 80m in mineralized width of skarn ore. That would suggest about 750,000 tonnes of medium grading ore that can be easily developed and would probably be ideal for processing in a heap leach operation and perhaps an electro-winning cathode copper process. Even average grades of 1-2% Cu could be economic for that.

The upside is that the system may extend to greater depths and perhaps even swell across a much wider area of mineralization. I would estimate that at least 1 million tonnes, and preferably 5 million tonnes of ore would be needed to contemplate any sort of development decision at this time. Just investing in infrastructure and a processing plant would require several years of mine life for capital return.

The issue is more manageable if the company can successfully establish other mines on the property that could all produce ore for processing at a central plant, as the historic miners did. Further into the property, the El Picacho workings are noted for a very small tonnage of higher grade copper mineralization that was extracted from an open pit. No previous drilling has been completed there, but there are some veins and stockwork zones that appear to continue below the open workings, which could represent a new discovery area.

Further up a steep hillside from El Picacho, the La Tescalana Mine sits along a narrow ridge. Again, this was a very low volume mine that was probably extremely high grade, as it would not be worth the long climb and difficult access to extract lower grade material from that spot. Also, there is almost no waste rock at surface so all of the ore that was extracted from the workings was probably rich in copper and shipped to the mill for processing by burrow in small loads.

La Tescalana workings dipped steeply into the ridge, and line up roughly with La Verde Grande, and also with 3 other small mines further to the south. The linear relationship of all these old mines, plus the apparent structural controls on the mineralization, would suggest that they are all just the near surface expressions of a much larger system to depth.

Skarn ore is created when an intrusive reacts with sedimentary host rock. The stratigraphy of the host rock is clearly visible along some of the small mountains on the property, and it appears the upper levels of the rock has a domed geometry, which also suggests that a large intrusive mass may have displaced the surface rock strata upwards. So I am hopeful that the company may find a significant, high grade contact zone underlies the entire district, or perhaps localized higher grade feeder zones may extend from the intrusive, downdip from the old mines.

A final intriguing prospect is for a large porphyry system to extend in proximity to the intrusive. To date, one small porphyry has been identified by the previous operator of the property, but only anomalous values of metals were encountered. More exploration is warranted, since many large and productive porphyries exist within the region.

I think Yale has gained a valuable exploration asset with this acquisition, and they paid a reasonable price to get 100% control. There is enough remnant resources from the old mines to give a taste of possible future production, but it will take some good fortune at the end of a drill bit to make the project into a company maker. There is certainly enough evidence of widespread mineralization to be encouraging that some positive surprises are waiting for discovery.

Yale has been a very sedate performer through the bull market so far. The company has a very tight share structure, and respected, competent management, so exploration success should translate into good share performance for investors. I think the stock is a bargain at the current price, but so many other early stage explorers are also in the bargain bin right now, and there is probably not going to be any drilling commencing until 3 months or so passes. The stock appears to be sitting at strong support in the low 20-cent range, so I think there is limited downside risk, but I also think it will require some patience to wait it out and see if they can deliver a big discovery later in the year. The other projects the company controlls also have the potential to generate attractive discoveries that could get more attention from investors.

I own shares of Yale. I have no relationship with the company. My direct travel expenses were paid by the company, but I do not receive any form of compensation for presenting my comments and opinions.

cheers!

mike