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............................................................Technical Report on the Nixon Fork Alaska Project USA

........................................................Prepared for St Andrew Goldfields LTD

.....................................................Oct. 4 2006

....................................................................................
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TABLE OF CONTENTS
PAGE
1 SUMMARY.................................................................................................................. 1-1
Executive Summary ................................................................................................... 1-1
Technical Summary ................................................................................................... 1-8
2 INTRODUCTION AND TERMS OF REFERENCE .................................................. 2-1
3 RELIANCE ON OTHER EXPERTS ........................................................................... 3-1
4 PROPERTY DESCRIPTION AND LOCATION........................................................ 4-1
5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND
PHYSIOGRAPHY........................................................................................................... 5-1
6 HISTORY.....................................................................................................................6-1
7 GEOLOGICAL SETTING ........................................................................................... 7-1
8 DEPOSIT TYPES......................................................................................................... 8-1
9 MINERALIZATION .................................................................................................... 9-1
10 EXPLORATION....................................................................................................... 10-1
11 DRILLING................................................................................................................ 11-1
12 SAMPLING METHOD AND APPROACH............................................................ 12-1
13 SAMPLE PREPARATION, ANALYSES AND SECURITY ................................. 13-1
14 DATA VERIFICATION .......................................................................................... 14-1
15 ADJACENT PROPERTIES ..................................................................................... 15-1
16 MINERAL PROCESSING AND METALLURGICAL TESTING......................... 16-1
Metallurgical Testing ............................................................................................... 16-1
17 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES.................... 17-1
Underground Resources........................................................................................... 17-1
Tailings....................................................................................................................17-7
Mineral Reserves ..................................................................................................... 17-8
18 OTHER RELEVANT DATA AND INFORMATION ............................................ 18-1
Mining Operations ................................................................................................... 18-1
Recoverability ........................................................................................................ 18-10
Markets .................................................................................................................. 18-12
Contracts ................................................................................................................ 18-12
Environmental Considerations............................................................................... 18-12
Taxes......................................................................................................................18-15
Capital and Operating Cost Estimates ................................................................... 18-15
Economic Analysis ................................................................................................ 18-18
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Payback.................................................................................................................. 18-22
Mine Life ............................................................................................................... 18-22
19 INTERPRETATION AND CONCLUSIONS.......................................................... 19-1
20 RECOMMENDATIONS.......................................................................................... 20-1
21 REFERENCES ......................................................................................................... 21-1
22 SIGNATURE PAGE ................................................................................................ 22-1
23 CERTIFICATE OF QUALIFICATIONS................................................................. 23-1
24 APPENDIX 1............................................................................................................ 24-1
Mine Equipment List ............................................................................................... 24-1
25 APPENDIX 2............................................................................................................ 25-1
Cash Flow Model..................................................................................................... 25-1
LIST OF TABLES
PAGE
Table 1-1 Resource Estimate 2006 - 21 g/t Au Cut-off ................................................. 1-2
Table 1-2 Mineral Reserves ........................................................................................... 1-3
Table 1-3 Sensitivity Analyses of Pre-Tax Cash Flow.................................................. 1-5
Table 1-4 Pre-Tax Cash Flow Summary ....................................................................... 1-6
Table 1-5 Sensitivity Analyses of NPV ......................................................................... 1-7
Table 1-6 Proposed Construction Budget 2006 - 2007............................................... 1-16
Table 2-1 List of Abbreviations..................................................................................... 2-3
Table 6-1 1995 to 1999 Production History .................................................................. 6-1
Table 11-1 2005-2006 Drilling .................................................................................... 11-1
Table 11-2 Significant Intercepts 2005 - 2006 ............................................................ 11-2
Table 17-1 Resource Estimate 2005 - 21 g/t Au Cut-off ............................................. 17-1
Table 17-2 Resource Estimate 2006 - 21 g/t Au Cut-off ............................................. 17-8
Table 17-3 Mineral Reserves ....................................................................................... 17-9
Table 18-1 Production Schedule.................................................................................. 18-1
Table 18-2 Reagent Consumption ............................................................................. 18-10
Table 18-3 Proposed Construction Budget 2006 - 2007........................................... 18-16
Table 18-4 Operating Cost Summary ........................................................................ 18-17
Table 18-5 Sensitivity Analyses of Pre-Tax Cash Flow............................................ 18-19
Table 18-6 Pre-Tax Cash Flow Summary ................................................................. 18-20
Table 18-7 Sensitivity Analyses of NPV ................................................................... 18-21
Table 19-1 Resource Estimate 2006 - 21 g/t Au Cut-off ............................................. 19-2
Table 20-1 Proposed Construction Budget 2006 - 2007............................................. 20-1
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LIST OF FIGURES
PAGE
Figure 1-1 Sensitivity Analysis...................................................................................... 1-7
Figure 4-1 Location Map ............................................................................................... 4-2
Figure 4-2 Federal Claims ............................................................................................. 4-3
Figure 4-3 State Claims ................................................................................................. 4-4
Figure 9-1 North Contact Skarns ................................................................................... 9-2
Figure 10-1 Location of Deposits and Prospects ......................................................... 10-2
figure 11-1 2004 Underground Drilling Section.......................................................... 11-3
Figure 11-2 Whalen Surface Drilling .......................................................................... 11-4
Figure 11-3 Cross Section C3000 Lens - 2005 Drilling .............................................. 11-5
Figure 16-1 Process Flow Sheet .................................................................................. 16-3
Figure 17-1 Longitudinal Section ................................................................................ 17-5
Figure 17-2 Crystal Decline......................................................................................... 17-6
Figure 18-1 Cut and Fill Stoping Method.................................................................... 18-3
Figure 18-2 Site Layout ............................................................................................. 18-11
Figure 18-3 Sensitivity Analysis................................................................................ 18-21
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1 SUMMARY
EXECUTIVE SUMMARY
Scott Wilson Roscoe Postle Associates Inc. (Scott Wilson RPA) was retained by St
Andrew Goldfields Ltd. (St Andrew) to prepare an independent Technical Report on the
Nixon Fork Project, near McGrath, Alaska. The purpose of this report is to update
previous 43-101 Technical Reports in support of a financing. This Technical Report
conforms to NI 43-101 Standards of Disclosure for Mineral Projects. Scott Wilson RPA
visited the property on September 6, 2006.
Rehabilitation work at the Nixon Fork mine has commenced and the property is
expected to begin milling in October 2006.
The 2004-2005 drilling program has led to the following conclusions:
.. The C3000 shoot extends from the lowest mined level (160 m above sea level)
down to the 70 m level and is faulted off at depth.
.. The C3300 shoot extends from the surface (400 m above sea level) to 85 m
above sea level and is open at depth, and remains to be drilled out on the 240
m-300 m levels.
.. Drilling in the C3004 area did not hit any significant mineralization,
essentially closing off this zone at depth.
.. Additional areas to be tested by both surface and underground drilling include:
o the area to the south of C3300
o the vertical extent of the J2100 skarn on the north contact of the
Mystery Creek
o vertical extent of the key beds in the J5A area.
.. Recent drilling at the Mystery Mine confirms the nature of the narrow highgrade
shoots within the larger mineralized envelope.
Surface trenching, mapping, sampling, and drilling within the Whalen Glory Hole and
North Star areas indicate that surface mineralization may extend to depth locally. Two
trenches excavated in the Golden Star Area at the head of the southern gold-in-soil
anomaly in the Holmes Gulch area indicate that the colluvium in these two trenches
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contains between 2 g/t Au and 2.1 g/t Au and that the Holmes Gulch represents a
potential large surface-mineable placer gold deposit.
It is St Andrew’s opinion that the results of the recent drilling have not materially
affected the underground mineral resource as estimated in April 2005 and provided in
Table 1-1. Scott Wilson RPA concurs with this resource estimate.
TABLE 1-1 RESOURCE ESTIMATE 2006 - 21 G/T AU CUT-OFF
St Andrew Goldfields Ltd. - Nixon Fork Mine
Measured
Resources
Indicated
Resources
Inferred
Resources
BODY Tonnes g/t Au Tonnes g/t Au Tonnes g/t Au
Mystery 14,000 26.9
S1750 3,000 28.0
J2102 7,000 23.2 5,000 23.3
C3000 8,000 37.4 12,000 36.9 0 0.0
C30001 2,000 50.1
C30002 3,000 23.5
C3300 15,400 36.5 24,000 40.0 2,000 36.6
C3550 3,000 21.0 14,000 23.4
Whalen 14,000 32.4
TOTAL 23,400 36.8 68,000 33.2 35,000 27.7
oz gold 27,700 72,600 31,200
Tailings 58,000 8.1 58,000 8.1
TOTAL 23,400 36.8 126,000 21.6 93,000 15.5
oz gold 27,700 87,700 46,300
The property generates sufficient cash flow at current prices to payback the estimated
capital estimated to restart the project and, therefore, a portion of the resources can be
designated as reserves, as listed in Table 1-2.
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TABLE 1-2 MINERAL RESERVES
St Andrew Goldfields Ltd. - Nixon Fork Mine
Zone Category Tonnes Grade (g/t Au) Contained
Ounces
C3300 Proven 47,000 34.05 51,500
TOTAL Proven 47,000 34.05 51,500
C3300 Probable 32,800 27.16 28,650
C30001 Probable 2,200 45.55 3,220
C30002 Probable 3,300 21.36 2,270
C3000 Probable 37,900 25.40 30,960
C3550 Probable 3,300 19.09 2,030
Tailings Probable 58,000 8.1 15,100
TOTAL Probable 137,500 18.6 82,230
Scott Wilson RPA is of the opinion that the classification of proven and probable
reserves as presented in Table 1-2 meets the definitions as stated by NI 43-101 and by
“CIM Standards on Mineral Resources and Reserves - Definitions and Guidelines” as
adopted by the CIM Council on December 11, 2005.
The reserves stated above are from the Crystal Garnet mine area only. Copper and
silver grades were not estimated by Scott Wilson RPA for these reserves, but grades of
1.2% Cu and 27 g/t Ag have been reported based on the historic data from the previous
operations. Scott Wilson RPA did not include any revenue from the sale of copper or
silver in the cash flow models presented in this report. A copper flotation circuit is
included in the plant to produce copper concentrate and to remove copper from the
material treated so that the recovery of gold in the cyanide circuit is enhanced. The
revenue from the sale of gold recovered in copper concentrate is included in the cash flow
models.
The copper and silver grades are discussed in two reports filed on sedar.com: the
September 8, 2003 Report on the Nixon Fork Project, Alaska, by Roscoe Postle
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Associates Inc., and April 13, 2005 Technical Report on the Nixon Fork Project, Alaska,
by Roscoe Postle Associates Inc.
PROJECT ECONOMICS AND SENSITIVITY
Scott Wilson RPA has provided a cash flow analysis to demonstrate that the project is
economic and that the resources estimated for the project can be classified as reserves. In
order to do this, Scott Wilson RPA reviewed the cash flow projections on a simple pretax
basis, to show relative sensitivity of various physical factors.
The key input parameters for the life of mine plan case are:
• Production 45,000 tonnes per year
• Reserve and resource base
o Probable Reserves 137,500 tonnes
.. Gold 18.6 g/t
o Proven Reserves 47,000 tonnes
.. Gold 34.05 g/t
• Project life
o Pre-production development to be finished - October 2006
o Production 4 years; 2006 to 2009
• Total production (mined) 126,500 tonnes
.. Gold 29.15 g/t
• Total production (tailings) 58,000 tonnes
.. Gold 8.1 g/t
• Metallurgical recovery
o Gold (gravity circuit) 20%
o Gold (flotation circuit) 50%
o Gold (cyanide circuit) 90%
o Copper 70%
• Average annual payable metal production
o Gold 40,000 ounces
• Operating cost US$359 per tonne milled
• Royalty
o Gold 6%
• Capital costs
o Construction and Pre-production US$9 million
• Metal prices:
o Gold price US$550 per ounce
Treatment charges for gold in the cash flow model are as follow:
• $1.00 per ounce for refining the doré and leach gold
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• $10.00 for shipping, insurance, and treatment of the gold in loaded carbon and
in doré
• Assumed 95% of the gold would be paid in the copper concentrate
The undiscounted pre-tax cash flow at US$550 per ounce gold is US$7.4 million.
The Total Cash Cost is US$406 per ounce gold and the Total Production Cost (including
capital) is US$479 per ounce gold. Simple payback (recovery of capital costs on a pretax
basis) occurs in mid-2009, the third year of full production. The breakeven gold price
that is required to pay back all capital (on a discounted pre-tax basis) is US$508 per
ounce. Average annual gold production during operation is 40,000 ounces per year.
The cash flow models prepared for the Nixon Fork mine are prepared on a standalone
basis. The Net Present Value (NPV) of the base case at a 10% discount rate is
US$3.6 million. In the opinion of the Scott Wilson RPA, the cash flow model at the
assumed metal price is a fair representation of the mine production and pre-tax revenue
going forward, and demonstrates that the estimated mineral reserves are economic.
The Project is most sensitive to gold price, head grade, and operating costs. At a
current gold price of US$590 per ounce, the undiscounted pre-tax cash flow is US$12
million.
The relative impact of the undiscounted pre-tax cash flow on changes in physical and
cost assumptions and estimates is shown in the table below.
TABLE 1-3 SENSITIVITY ANALYSES OF PRE-TAX CASH FLOW
St Andrew Goldfields Ltd. – Nixon Fork Mine
Parameter Variables -20% -10% Base +10% +20%
Head Grade -157% -78% 0% 78% 157%
Recovery -99% -47% 0% 41%
Gold Price -169% -85% 0% 85% 169%
Capital Costs 15% 7% 0% -6% -10%
Operating Costs 123% 61% 0% -61% -123%
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Table 1-4 summarizes the annual and cumulative cash flows.
TABLE 1-4 PRE-TAX CASH FLOW SUMMARY
St Andrew Goldfields Ltd. – Nixon Fork Mine
Year 2006 2007 2008 2009 TOTAL
Cash Flow (‘000 US$)
(8,417)
744
4,786
10,279
7,392
Cumulative (‘000 US$)
(8,417)
(7,673)
(2,888)
7,392
NPV @ 10% (‘000 US$)
3,579
The risks for the mine can be identified in both economic and non-economic terms.
The following key parameters that have the largest effect on the economics have been
examined by running cash flow sensitivities:
• Head Grade
• Recovery
• Gold Price
• Operative Costs
The economics of the Nixon Fork mine are less sensitive to:
• Capital Costs
The results of the sensitivity analyses on discounted cash flow is shown in Figure 1-1
and Table 1-5.
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FIGURE 1-1 SENSITIVITY ANALYSIS
(10,000)
(5,000)
-
5,000
10,000
15,000
0.70 0.80 0.90 1.00 1.10 1.20 1.30
NPV ('000 US$)
Head Grade Gold Price Capital Expenses Operating Expenses Recovery
\
TABLE 1-5 SENSITIVITY ANALYSES OF NPV
St Andrew Goldfields Ltd. – Nixon Fork Mine
Parameter Variables -20% -10% Base +10% +20%
Head Grade -249% -122% 0% 122% 249%
Recovery -156% -73% 0% 64%
Gold Price -263% -132% 0% 132% 263%
Capital Expenses 28% 13% 0% -11% -20%
Operating Expenses 144% 97% 0% -97% -194%
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The sensitivity analysis on recovery was performed on base case numbers of 20%
recovery of gold in the gravity plant, 50% recovery of gold and 70% recovery of copper
in the flotation plant, 90% recovery of gold in the leach plant, and 85% recovery of gold
in the reclaimed tailings. The sensitivity analysis on head grade was performed on base
case values of 29.15 g/t of gold and 8.10 g/t of gold in the reclaimed tailings.
Sensitivity was also tested on the scenario in which zone C3300 would not be
extracted due to insufficient grouting techniques. In the case where this zone is not
mined, approximately 33,000 tonnes of probable reserves would be removed from the
mine plan. The resulting reserve base would amount to 93,000 tonnes at a grade of 29.85
g/t Au. With this effect, the pre-tax NPV reduces from US$3.6 million in the base case to
(US$1.2 million).
The simple payback (recovery of capital costs on a pre-tax basis) occurs after 3.6
years at the end of July 2009, the third year of full production. The mine plan indicates
that the operation has sufficient reserves to continue at the proposed rates for four years,
until 2009.
RECOMMENDATIONS
Scott Wilson RPA recommends that the project construction continue and the project
be placed in operation. A capital budget to rehabilitate and place the facility into
operation is US$9 million.
TECHNICAL SUMMARY
The Nixon Fork property consists of 95 unpatented federal lode and 15 placer claims
and an additional 48 State of Alaska mining claims, mostly overlapping, located in
Township 26 South, Range 21-22 East, Kateel River Meridian. The mine is centred at
63o 14’N, 154o 46’W, 56 km northeast of McGrath, in central Alaska.
St Andrew acquired a lease on the property from the owners, Mespelt & Almasy
Mining LLC, effective February 4, 2003, subject to a 10% net profits interest convertible
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to a 1% Net Smelter Return (NSR) payable to a third party. The provisions of the 10 year
renewable lease include an advance minimum production royalty of US$36,000 per year,
work commitments totalling US$2 million over three years (completed), and a sliding
scale NSR varying from 2% NSR if gold is less than $300 per ounce to 5% NSR if gold is
greater than $450 per ounce. An additional 1% NSR is payable to third parties. All other
metals are subject to a 4% NSR.
Access to the claims is by charter aircraft from Anchorage, Fairbanks or McGrath, all
of which are served by regular scheduled air service. The current 1,280 m landing strip
on the property can handle C-130 Hercules and DC-6 aircraft. Alternative access is by
the Kuskokwim River from Bethal on the coast, to Medfra, which is 13 km south of the
mine, or by winter road from McGrath. Facilities on site include a camp with
accommodation for about 50 persons, a 140 tonne per day (tpd) gravity flotation plant,
assay lab, mechanical shop, and offices. The camp has been refurbished and the mill is in
the process of being modified.
The property was originally staked in 1917 when placer gold was discovered in
Mystery and Ruby Creeks. The Yukon-Treadwell Company and others worked lode
deposits through numerous shafts and open cuts intermittently from 1918 through 1964.
Total production is estimated to have been 42,000 ounces of gold, 11,282 ounces of
silver, and 41, 440 pounds of copper from lode mining from 1920 to 1961.
Since 1984, the property has been explored by a number of companies, including
Battle Mountain Gold from 1984 to 1988 and the Nixon Fork Joint Venture with Central
Alaska Gold as operator from 1989 through 1993. Exploration included soil and
geophysical surveys, trenching and both reverse circulation and core drilling. Nevada
Goldfields Inc. (NGI), a wholly owned subsidiary of Consolidated Nevada Goldfields
Corporation (CNGC), acquired the property in July 1993 and carried out additional
definition drilling and completed a feasibility study in 1994. Exploration by NGI from
1993 to 1998 included surface drilling, a helicopter-borne combined electromagnetic and
magnetic survey, stream and soil surveys, and trenching.
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Derry Michener, Booth & Wahl Inc. (1994) estimated the proven and probable
mineable reserves as of December 1994 to be 117,200 tons averaging 1.32 ounces of gold
per ton (oz/ton Au) (45.21 g/t Au), containing 154,500 ounces of gold based on a cut-off
grade of 0.29 oz/ton Au (9.93 g/t Au) with all gold assays capped at 12 oz/ton Au (411 g/t
Au). This is an historical estimate and does not conform to the requirements of NI 43-
101.
The positive feasibility study resulted in the commencement of construction of the
surface facilities and underground development in March 1995. Total investment by NGI
is reported (NGI March 1998) to be about US$34.4 million for life of mine. Production
from the Crystal-Garnet and Mystery orebodies commenced in October 1995 and
continued until June 4, 1999 when the mine was placed on care and maintenance. The
parent of NGI, Real Del Monte Mining Corporation, the successor to CNGC and its
subsidiaries, filed for Chapter 7 liquidation on June 25, 1999. The property, including the
surface facilities and equipment, was eventually returned to the original owners, Ted
Almasy and Margaret Mespelt.
Historical records from NGI (Burnett, 1999) indicate the total ore mined was 122,381
t at a reconciled grade of 42 g/t Au, or 165,129 contained ounces of gold. Average mill
recovery has been 84.8% since start-up, resulting in the recovery of 137,749 ounces of
gold and 2,145,826 pounds of copper.
Cash operating costs excluding by-product credits and royalties varied from $188 per
ounce gold in 1995 to a high of $338 per ounce gold in 1996. Costs for the final full year
of production in 1998 were $273 per ounce gold.
The Nixon Fork Mine occurs within the Kuskowim mineral belt located within the
broader Tintina Gold Belt and is situated between two regional northeast trending
structures, the Denali Farewell fault system to the south and the Iditarod-Nixon Fork fault
to the north. On the property, skarn mineralization is related to the Mystery Creek stock
that outcrops over a five kilometre by three kilometre area. Thin-bedded limestones and
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minor interbedded dolomite outcrop along the northwest and southeast margins of the
stock. Late quartz-feldspar and quartz porphyry dikes cut both the quartz monzonite and
the sedimentary rocks.
Contact metamorphism and metasomatism have altered the rocks in contact with the
quartz monzonite, developing hornfels in the clastic rocks and marble and skarn in the
carbonate rocks. Sulphide content in the mineralized bodies consists of semi-massive to
massive sulphides, pyrrhotite, chalcopyrite, pyrite, and native gold. The mineralized
bodies range up to six metres in width with an average of three metres. The strike length
of the individual shoots varies from 10 m to 30 m but they extend down dip several
hundred metres. Average grade of the mineralized bodies varies from 9 g/t Au up to 45
g/t Au.
The Crystal-Garnet area includes five mineralized shoots that were accessed by a
decline and mined during the period 1995 to 1998. The majority of the production came
from the C3000 ore shoot that produced 101,000 t at an average reconciled grade of 43.3
g/t Au. The shoot extends from surface, 400 m ASL, to at least 70 m ASL where it is
faulted off at depth. The C3300 shoot rakes south along the faulted monzonite contact.
The C3001, C3002, and C3004 bodies are smaller shoots associated with the noses of
monzodiorite dikes.
The Mystery mine was accessed by a separate decline and consists of three
mineralized zones that have produced a total of 5,159 t at an average grade of 12.9 g/t Au
to a depth of 90 m.
In 2004, St Andrew commenced an underground drill program designed to increase
and upgrade the mineral resources. A total of 11,875 m in 121 holes were completed on
the C3000 and C3300 orebodies, extending the mineralization to depth. Underground
drilling continued in 2005 and 2006 with 85 holes totalling 10,322.1 m drilled on the
C3550, J2200, and Mystery. Although the resources have not been updated, the results
from the drilling do not appear to have increased the resources. Surface drilling in the
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period 2004 to 2006, amounting to 36 holes totalling 4,235.9 m, was carried out on the
Whalen, Warrior, Airport area, and Mystery targets.
Limited trenching carried out on the Whalen Glory Hole and North Star areas in the
summers of 2004 and 2005 indicate that surface mineralization may extend to depth
locally. Two trenches excavated in the Golden Star area, 250 m south of Whalen at the
head of the southern gold-in-soil anomaly in the Holmes Gulch, confirmed historical data
and indicated that the colluvium in the area contains between 2.0 g/t Au and 2.1 g/t Au.
During the summer of 2004, an auger sampling program was carried out on part of
the tailings pond. Based on production records, the recent sampling, and the recently
completed metallurgical testwork, Scott Wilson RPA has re-estimated that the tailings
storage facility contains an indicated mineral resource of 58,000 t at a grade of 8.1 g/t Au,
or 15,100 ounces of gold, and an inferred mineral resource of 58,000 t at 8.1 g/t Au, or
15,100 ounces of gold (Table 1-1).
In late 2003, St Andrew began the federal and state permitting process for operating
permits that would allow commercial operations from the property. St Andrew has
received the necessary permits and approvals from the Bureau of Land Management
(BLM) and the State of Alaska and as of June 7, 2006 was authorized to commence
operations. The reclamation plan calls for the infrastructure to be dismantled and buried
in the existing mine workings and all surface disturbance, excluding the runway which
will remain, to be recontoured and revegetated. A surety bond in the amount of
US$3,526,543 has been posted.
Future operations below the water table (150 level) may require a National Pollutant
Discharge Elimination System (NPDES) permit issued by the Environment Protection
Agency (EPA). A study on the feasibility of grouting off the water inflow is currently
underway by Golder Associates Inc. Preliminary results suggest that a combination of
grouting and pumping may be successful. If the amount of water to be discharged is in
excess of what can be applied to the land under the Solid Waste Management Plan, then it
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will be necessary to begin the NPDES permit process once it is decided to continue
mining at depth. It is anticipated the NPDES process will take approximately 18 months
to two years to complete.
MINING OPERATIONS
The two mines are accessed by ramps. Underground development is currently
underway at the Crystal Garnet mine, preparing it for production. The deposits are
narrow, steeply dipping, pipe-like shoots. The widths of the “pipes” vary from 2 m to 20
m. The stoping method proposed for the mine is a cut and fill method using waste rock
as fill. St Andrew expects that this mechanized method will minimize the overall labour
requirements of the operation and will improve the mine’s productivity and cost
efficiency.
The mine is ventilated by electric fans that force air down ventilation raises. In the
winter, the air is heated by waste heat from the generators or by diesel/waste oil fired
boilers before being forced underground. Some development and rehabilitation work is
required to improve the ventilation circuits.
New mining equipment has been delivered and some new equipment is on order.
Ground conditions are generally very good at the mine. Limited additional ground
support is required. Groundwater was encountered on or below the P Level. A permanent
sump is to be installed below the P Level. Some of the mine discharge water will be used
as makeup water for the mill, but it may be necessary to irrigate with the excess water or
obtain a water discharge (NPDS) permit for the facility to allow disposal of excess water.
Golder Associates is investigating the possibility of grouting the groundwater being
generated below the P Level and have expressed the preliminary opinion that the
formations can be grouted and the water inflow stopped.
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MINE INFRASTRUCTURE
The 12 m diameter shop building was moved to a location beside the mill building to
make room for the mill leach circuit. Warehousing is provided by the use of a series of
export cargo containers located near the shop facility.
Fresh water is provided from Mystery Creek below the Mystery Adit. Domestic
sewage is disposed of by use of a drain field. Office, dry (employee change facility), and
laboratory facilities are provided using eight connected buildings located just north of the
mill building.
A “ponded” fuel storage area is located at the north end of the airstrip. The facility
contains five 10,000 gallon fuel bladders and necessary gauging and pumping equipment.
All electric power for the mine, mill, and campsite is produced by three 832 KW diesel
electric generator units located next to the mill.
All hourly and staff workers are housed in a 50 unit single story Britco Camp Facility
located above and east of the mill area.
MINERAL PROCESSING
St Andrew will use a similar process and much of the same equipment (crushing,
grinding, gravity concentration, and flotation) that was used in the previous operation at
Nixon Fork. However, a cyanide leach circuit will be added to the plant to improve gold
recovery. The loaded carbon from this circuit will be treated off-site
St Andrew intends to mine ore from underground as well as the tailings currently
contained in the tailings impoundment facility. The tailings will be cyanide leached,
filtered, and placed in a filtered tailings disposal area (FTDS) or dry stack. The existing
tailings can only be mined when the pond is not frozen. Tailings will be first processed
during the summer of 2007.
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New ore will be processed from October 2006 to May 2007 at a rate of 240 tpd, with
the resulting tailings also placed in the FDTS until the tailings pond is emptied, inspected,
and repaired. During these eight months of operation, the plant will be operated on a
schedule of two weeks on, two weeks off, or 14 days per month. Existing tailings will be
processed from June to September 2007 at 350 tpd. During the summer months the plant
will be operated every day.
At a production rate of 140 tpd, the recovery will be 75% for gold and 80% for
copper. At a production rate of 240 tpd, the recovery rate will drop to 50% for gold and
70% for copper. These recovery figures are affected by the grinding circuit and by the
residence time in the flotation circuit. St Andrew may decrease mill throughput to
improve recovery if economically justified.
Recoverability by the various processes is expected to be as follows:
• The gravity circuit recovers approximately 20% of the gold.
• The copper concentrate circuit operating at 240 tpd recovers 50% of the gold
and 70% of the copper.
• Recovery of gold is expected to be approximately 85% when processing
existing tailings and 90% of the gold when treating fresh material.
The above recovery figures were used in the cash flow model in this report.
CAPITAL COSTS
Capital costs to restart the Nixon Fork mine are estimated to be US$9 million,
including US$3.2 million surety bond. It is assumed that this bond will be sufficient to
cover the costs of closure at the end of the mine life. A summary of the capital costs is
shown in Table 1-6. The infrastructure changes will cost US
.7 million, the mill and
plant renovations are forecast to cost US$2.9 million, the mine development is forecast to
cost US2.3 million. As production to the mill is scheduled to start in October 2006, most
of the capital budget has been spent or is committed. As of August 31, 2006, US$4.8
million were spent on the project.
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TABLE 1-6 PROPOSED CONSTRUCTION BUDGET
2006 - 2007
St Andrew Goldfields Ltd. - Nixon Fork Mine
Item Amount US$
Surety Bond 3,152,000
Camp & Infrastructure
Water Treatment 109,000
Sewer Improvements 10,000
Camp Improvements 89,250
Office Equipment & Improvements 52,100
Dry Improvements 30,000
Transportation 69,400
Fuel System Improvements - Mandatory 350,000
Subtotal - 709,750
Mill & Power Plant - W/O CN Circuit
Mill Renovation - Directs 1,473,290
Power Generation - Directs 888,226
Mill Renovation & Power Generation -
Indirects 519,361
Subtotal - 2,880,877
Mine
Equipment & Freight 1,265,000
Renovation of existing equipment 237,900
Mine Development 785,570
Subtotal - Mine 2,288,470
TOTAL 9,031,097
OPERATING COSTS
The mine operating costs have been estimated for the Nixon Fork mine to be US$359
per tonne milled for the 240 tpd operation. The cost is based on data generated by Nixon
Fork personnel and its consultants. Development and production costs, excluding labour,
amount to US$21.50 per tonne milled and US$25.39 per tonne milled, respectively. The
operating costs also include a 10% contingency. Milling costs are derived from unit costs
of US$77.05 and US$42.21 per ounce of gold produced from tailings and run-of-mine
(ROM), respectively.
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1-17
In Scott Wilson RPA’s opinion, the estimated costs appear to be reasonable. The
current production and construction manpower level stands at 50 employees (September
2006), and the new operation is estimated to have an average of 46 employees per month
over the remaining life of the mine. The operation is non union.
Table 1-7 below shows the operating costs breakdown for the Nixon Fork Mine. The
expenses outlined in 2006 are for November and December only. As the mill begins
operating in October, previous expenses are considered to be capital rather than
operational.
TABLE 1-7 OPERATING COST SUMMARY
St Andrew Goldfields Ltd. - Nixon Fork Mine
Year 2006* 2007 2008 2009 TOTAL
Mill Feed 9,606 30,888 39,960 46,046 126,500
Gold Ounces 9,003 28,948 37,450 43,154 118,555
Operating Costs (‘000 US$):
Mining
Milling
Power Plant
Shop
Camp
Environmental Compliance
General & Administrative
637
314
589
98
168
10
278
3,928
3,084
3,897
545
979
-
2,917
3,928
3,310
3,897
545
982
-
2,917
1,963
3,137
3,803
567
999
-
1,897
10,455
9,845
12,185
1,754
3,129
10
8,009
Total 2,095 15,350 15,578 12,366 45,389
Operating Cost per Tonne Milled (US$/t) 218 497 390 269 359
Operating Cost per Ounce (US$/oz) 388 478 383 273 368
*for November and December 2006
The operating cost per tonne varies from US$218 in 2006 to US$497 in 2007, with an
average cost of US$359 over the life of the mine. The operating cost per ounce varies
from US$273 in 2009 to US$478 in 2007, with an average cost of US$368 over the life
of the mine.
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2-1
2 INTRODUCTION AND TERMS OF
REFERENCE
Scott Wilson Roscoe Postle Associates Inc. (Scott Wilson RPA) was retained by St
Andrew Goldfields Ltd. (St Andrew) to prepare an independent Technical Report on the
Nixon Fork Project, near McGrath, Alaska. The purpose of this report is to update
previous 43-101 Technical Reports in support of a financing. This Technical Report
conforms to NI 43-101 Standards of Disclosure for Mineral Projects. Scott Wilson RPA
visited the property on September 6, 2006.
St Andrew Goldfields Ltd. owns the Nixon Fork Mine through a wholly owned
subsidiary, Mystery Creek Resources Inc. Rehabilitation work at the Nixon Fork Mine
has commenced and the property is expected to begin milling in October 2006.
SOURCES OF INFORMATION
Site visits were carried out by C. Stewart Wallis, P.Geo., Consulting Geologist with
Scott Wilson RPA, and John Postle, P. Eng., Consulting Mining Engineer with Scott
Wilson RPA. Stewart Wallis first visited the property in June 1993 while employed by
Nevada Goldfields Inc., which acquired the property in July 1993. He visited the
property several times during 1993 and 1994 during the exploration and development
stage. Mr Wallis visited the property as an independent consultant during the period June
19 to 23, 1998, prior to the cessation of mining, and again on May 21 to 22, 2003, in
connection with the Technical Report dated September 8, 2003, and February 17 to 20,
2004, in connection with the underground drilling program and the Technical Report
dated April 13, 2005. Stewart Wallis and John Postle visited the property on September
6, 2006 in conjunction with this report.
Discussions were held with Mr. Paul Jones, Executive Vice President of St Andrew,
and on site with Mr. Bill Burnett, Manager of the Nixon Fork Mine.
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All dollars are United States $ and measurements are Metric unless indicated
otherwise. Standard abbreviations are used, such as copper (Cu), silver (Ag), gold (Au).
Grades of silver and gold are expressed in grams of gold or silver per metric tonne (g/t
Au or g/t Ag), or parts per billion (ppb) unless otherwise noted. Copper and other metals
in sulphides are expressed as a percent (%). Although the property is leased through
Mystery Creek Resources Inc., this report refers to St Andrew, the parent company.
The documentation reviewed, and other sources of information, are listed at the end
of this report in Item 21 References.
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TABLE 2-1 LIST OF ABBREVIATIONS
Units of measurement used in this report conform to the SI (metric) system. All
currency in this report is US dollars (US$) unless otherwise noted.
µ micron kPa kilopascal
°C degree Celsius kVA kilovolt-amperes
°F degree Fahrenheit kW kilowatt
µg microgram kWh kilowatt-hour
A ampere L liter
a annum L/s litres per second
bbl barrels m metre
Btu British thermal units M mega (million)
C$ Canadian dollars m2 square metre
cal calorie m3 cubic metre
cfm cubic metres per minute min minute
cm centimeter MASL metres above sea level
cm2 square centimeter mm millimetre
d day mph miles per hour
dia. diameter MVA megavolt-amperes
dmt dry metric tonne MW megawatt
dwt dead-weight ton MWh megawatt-hour
ft foot m3/h cubic metres per hour
ft/s foot per second opt, oz/st ounce per short ton
ft2 square foot oz Troy ounce (31.1035g)
ft3 cubic foot oz/dmt ounce per dry metric tonne
g gram ppm part per million
G giga (billion) psia pound per square inch absolute
Gal Imperial gallon psig pound per square inch gauge
g/L gram per litre RL relative elevation
g/t gram per tonne s second
gpm Imperial gallons per minute st short ton
gr/ft3 grain per cubic foot stpa short ton per year
gr/m3 grain per cubic metre stpd short ton per day
hr hour t metric tonne
ha hectare tpa metric tonne per year
hp horsepower tpd metric tonne per day
in inch US$ United States dollar
in2 square inch USg United States gallon
J joule USgpm US gallon per minute
k kilo (thousand) V volt
kcal kilocalorie W watt
kg kilogram wmt wet metric tonne
km kilometre yd3 cubic yard
km/h kilometre per hour yr year
km2 square kilometre
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3-1
3 RELIANCE ON OTHER EXPERTS
This report has been prepared by Scott Wilson Roscoe Postle Associates (Scott
Wilson RPA) for St Andrew Goldfields Ltd. (St Andrew). The information, conclusions,
opinions, and estimates contained herein are based on:
• Information available to Scott Wilson RPA at the time of preparation of this
report,
• Assumptions, conditions, and qualifications as set forth in this report, and
• Data, reports, and other information supplied by St Andrew and other third party
sources.
Scott Wilson RPA has not completed an environmental audit and has relied upon a
report by Steffen Robertson and Kirsten Inc., 1997, various reports by Golder Associates
Inc. and recent information provided by the company as to the current status of the
permitting and environmental conditions at the site.
Scott Wilson RPA has not investigated the title to the claims and has not reviewed the
property agreements but has relied on St Andrew to provide the information. Scott
Wilson RPA does not provide an opinion on the validity or legal title of the claims or the
lease agreement.
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4-1
4 PROPERTY DESCRIPTION AND LOCATION
This item has been adequately discussed in the report titled “Technical Report on the
Nixon Fork Project Alaska”, prepared for St Andrew Goldfields Ltd. and dated April 13,
2005. This report is available on SEDAR.
The company indicates that the lease is in good standing, the work commitments have
been completed and all payments have been made as required.
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5-1
5 ACCESSIBILITY, CLIMATE, LOCAL
RESOURCES, INFRASTRUCTURE AND
PHYSIOGRAPHY
This item has been adequately discussed in the report titled “Technical Report on the
Nixon Fork Project Alaska”, prepared for St Andrew Goldfields Ltd. and dated April 13,
2005. This report is available on SEDAR.
The camp has been rehabilitated and the mill is in the process of being refurbished.
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6 HISTORY
This item has been discussed in the report titled “Technical Report on the Nixon Fork
Project Alaska”, prepared for St Andrew Goldfields Ltd. and dated April 13, 2005. This
report is available on SEDAR.
St Andrew compiled the following production history for the years 1995 to 1999.
TABLE 6-1 1995 TO 1999 PRODUCTION HISTORY
St Andrew Goldfields Ltd. - Nixon Fork Mine
Mined Ounces
Year Tonnes g/t Au Ounces Recovered
1995 4,047 92.7 12,062 10,361
1996 36,420 37.9 44,378 36,749
1997 49,059 31.1 49,053 39,665
1998 25,158 58.1 46,993 40,283
1999 7,697 51.1 12,644 10,691
Total 122,381 42.0 165,129 137,749
Tonnages based upon historical mining records. Recovered ounces are
actual ounces. Grades for 1996-1998 are approximated by reconciliation
with smelter settlement sheets.
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7 GEOLOGICAL SETTING
This item has been adequately discussed in the report titled “Technical Report on the
Nixon Fork Project Alaska”, prepared for St Andrew Goldfields Ltd. and dated April 13,
2005. This report is available on SEDAR.
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8-1
8 DEPOSIT TYPES
This item has been adequately discussed in the report titled “Technical Report on the
Nixon Fork Project Alaska”, prepared for St Andrew Goldfields Ltd. and dated April 13,
2005. This report is available on SEDAR.
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9-1
9 MINERALIZATION
This item has been discussed in the report titled “Technical Report on the Nixon Fork
Project, Alaska”, prepared for St Andrew Goldfields Ltd. and dated April 13, 2005. This
report is available on SEDAR.
Since the above reference report was written, recent underground drilling in the J5A
area has provided for the identification of:
.. Significant feeder structures within the quartz monzonite (e.g., quartzarsenopyrite-
pyrite veins with sericitic selvages) inferred to be conduits for
hydrothermal fluids responsible for gold mineralization of the skarns in this
area
.. A single permissive lithological unit located within recrystallized Paleozoic
carbonates believed to be responsible for hosting gold mineralization in at
least 3 mineralized skarns that can now be correlated over a distance of 800
meters along strike (Mystery Mine-M1100; J5A-J2201; and Crystal Mine-
C3000 and C3300).
The majority of the skarn on the north contact of the Mystery Creek pluton is hosted
within a sedimentary unit which is referred to as the “key bed”. The key bed marks a
facies change within the limestone sequence which is characterized by fine-grained
calcareous siltstones. This micritic zone averages three metres in thickness, strikes
northeast, and dips 70o to the southwest. The key bed has been correlated over a strike
distance of 800 m and provides a host for the skarn bodies located in the Crystal, J5A,
and Mystery areas. Skarns hosted by this key bed are calcic-garnet/pyroxene skarns and
exhibit a zonation from the monzonite contact outward that consists of garnetite cores,
hedenbergite-garnet margins and calcite-wollastonite-idocrase rims. This zonation is
consistent throughout all of the calcic skarn zones that are located along the north contact.
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10-1
10 EXPLORATION
In late 2004, Aeroquest conducted a detailed time domain EM and magnetic
(AeroTEM) survey of the entire Mystery Creek Pluton. Flight lines were spaced 50 m
apart, resulting in a higher resolution product than the surveys done in the past. There
were no significant EM anomalies located.
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11-1
11 DRILLING
Since the date of the last Technical Report (RPA 2005) to August 18, 2006, drilling
has amounted to 14,558 m in 121 holes as shown in Table 11-1. Figure 11-1 shows an
underground drilling section from 2004. Figure 11-2 shows surface drilling in 2005.
Figure 11-3 illustrates recent drilling on the C3000 lens.
TABLE 11-1 2005-2006 DRILLING
St Andrew Goldfields Ltd. - Nixon Fork Mine
Target Area Type No. of
Holes
No. of Metres
J2100 Underground 17 2,760.6
3550 Underground 15 1,998.5
3300 Underground 10 1,100.3
Whalen Surface 21 2,850.1
Mystery Underground 35 3,964.7
Mystery Surface 4 517.2
Warrior Surface 11 868.7
3000 packer tests Underground 8 497.9
TOTAL 121 14,458
Significant intercepts are shown in Table 11-2.
The older surface core drilling was HQ (63.5 mm in diameter) while the underground
core drilling was BQ in size (36.5 mm in diameter). The current underground drill
program is NQ in size (47.6 mm diameter). Recently completed surface holes are also
NQ core. Collars for all the surface exploration and underground holes have been
surveyed in addition to downhole surveys at varying intervals of 20 m to 60 m, depending
on the length of the hole. The core is stored on site, although much of the underground
core drilled prior to 1998 has been discarded. Work carried out by Nevada Goldfields
Inc. (NGI), the former owner, followed industry standards. The core was logged on site,
samples marked and the remaining half core stored on site. Special attention was paid to
lithology, alteration oxidation, sulphide and gold content, bedding, foliation, and intrusive
contacts.
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TABLE 11-2 SIGNIFICANT INTERCEPTS 2005 - 2006
St Andrew Goldfields Ltd. - Nixon Fork Mine
DDH Target Intercept Thickness
(m)
g/t Au
N05U004 J2204 114.9-116 1.1 36.8
156.1-157.4 1.3 78.0
160.9-163 2.1 27.4
N05U009 J2204 72.1-73.4 1.3 20.8
N05U010 J2204 57-58 1 33.9
N05U030 C3300 40.8-44.3 3.5 255.2
71.4-73.3 1.9 27.5
76.7-78.2 1.5 22.4
N05U031 C3300 49.5-51 1.5 23.8
60.7-62 1.3 53.6
N05U033 C3300 40-42.8 2.8 47.36
75.9-77 1.1 110.5
N05U038 C3300 51-52.5 1.5 37.6
55-56.6 1.6 53.6
N05-03 Whalen 105-106 1 20.4
N05-14 Whalen 108-110 2 10.89
N05-23 Mystery 36.5-39.5 3 162
N06U011 Mystery 1100 17.7-19.1 1.4 136.6
34.4-38 3.6 15.8
N06U017 Mystery 1100 27-28 1 127.3
40-45 5 13.5
53-56 3 11.9
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12-1
12 SAMPLING METHOD AND APPROACH
The marked core was either sawn in half or split with a hydraulic splitter. Samples,
selected by geological contacts and the sulphide content, are generally taken in 0.5 m to
1.5 m intervals and bagged for shipment. Larger samples were confined to visually lowsulphide
bearing rocks. The remaining half core is stored on site. In 2004, Scott Wilson
RPA provided St Andrew with an industry standard QA/QC program which involved the
addition of blanks, standards and duplicates submitted into the sample stream. Scott
Wilson RPA is of the opinion that the work being carried out meets industry standards.
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13-1
13 SAMPLE PREPARATION, ANALYSES AND
SECURITY
For the programs carried out prior to NGI involvement and for the initial surface
programs conducted by NGI, the sample preparation and assaying was carried out by
Chemex Laboratories and other recognized assay labs using standard industry methods.
Although all the samples were fire assayed for gold, the “finish” method varied and
included AA, gravimetric, and metallic screens. During the period 1989 through 1994,
all samples were assayed for gold, silver, copper, and arsenic. After the commencement
of production by NGI, surface and underground samples were normally prepared and fire
assayed at the mine assay lab using standard industry methods.
For all resource drilling, St Andrew carries out QA/QC programs as recommended by
Scott Wilson RPA in 2004, which includes the submittal in the field of blanks, standards,
and duplicates. Each sample of half core is put into a sample bag, securely fastened and
included in a large shipping bag which is then flown by charter aircraft to the laboratory
in Fairbanks. Initially, assays were sent to SGS laboratories in Fairbanks for sample
preparation and the pulps were sent to SGS Lakefield in Toronto for assay. Gold content
was determined using a standard one assay ton fire assay with gravimetric finish, with
copper and silver determined by aqua regia digestion and AA finish. When SGS closed
its sample prep facility in June 2004, the samples were then sent to ALS Chemex in
Fairbanks for sample preparation and then to Vancouver for standard fire assay and aqua
regia digestion as described above.
During the surface exploration program carried out in 2005 and 2006, field standards
and blanks were not submitted with the samples but duplicates were run every 20 samples
and those that ran > 20 g/t were also rerun on a regular basis by the laboratory.
Commencing in June 2005, the samples were sent to Alaska Assay Labs Inc. in
Fairbanks for preparation and then shipped to Inspectorate in Sparks Nevada for assaying.
Assay methods used at Inspectorate are the same as previously described above.
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Scott Wilson RPA is of the opinion that the sampling procedures and assaying meet
industry standards.
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14-1
14 DATA VERIFICATION
Scott Wilson RPA previously audited the historical database for the resource estimate
reported in 2003. (Roscoe Postle Associates Inc., 2003). Independent sampling was
carried out during the site visit in 2003. For the 2003 resource estimate, Scott Wilson
RPA checked the 1999 NGI Surpac model and identified a few minor errors in the
database, but does not believe they would have any noticeable effect on the estimation of
the resources. Scott Wilson RPA carried out an examination of the available QA/QC data
in 2005 during the audit of the resources published in the report dated April 13, 2005.
During the review, it was observed that 13 of the 65 standards returned values above
three standard deviations from the accepted value. One assay (#2680) appears to be a
mislabelling of the standard. In general the labs appear to show a low bias, lending a
possible conservative element to the resource estimate.
In reviewing the results of the 82 “blanks”, which consisted of “barren-looking
limestone”, the samples generally assayed <0.05 g/t Au; three returned low gold values
between 0.05 g/t and 0.07 g/t Au and there were five samples that returned values >0.07
g/t Au. These values may be the result of actual values in the limestone as it was selected
on the basis of no visible mineralization or alteration.
Scott Wilson RPA also examined the assays for the duplicates of the split core,
duplicates of the rejects and the pulp duplicates. Precision on the core duplicates was
27%, marginally better for the prep duplicates at 15%, and better for the pulp duplicates
(8%). This lack of precision at the core and reject stage is not unexpected for a highgrade
coarse gold deposit and the results are considered acceptable.
During the 2005 surface exploration program, field standards and blanks were not
submitted with the samples, but duplicates were run every 20 samples and those samples
that assayed > 0.20 g/t Au were also rerun.
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15 ADJACENT PROPERTIES
There are no adjacent properties as defined by NI 43-101.
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16-1
16 MINERAL PROCESSING AND
METALLURGICAL TESTING
St Andrew intends to process ore as well as the tailings currently contained in the
tailings impoundment facility in a refurbished process plant outfitted with a new cyanide
leach and gold recovery circuit. For the following description, Scott Wilson RPA has
relied on information provided by St Andrew including test reports, memorandums, data,
and the plan of operation report.
METALLURGICAL TESTING
From December 2003 through October 2005, metallurgical testing was conducted on
mined material and tailings from the Nixon Fork Mine. Chlumsky, Armbrust & Meyer
LLC (CAM) supervised testing by Phillips Enterprises, LLC of Golden, Colorado. The
test work included a gravity circuit and a flotation circuit using fresh ore at Nixon Fork,
and cyanide leaching of gold from flotation concentrate as well as from the previously
processed tailings. CAM was also responsible for the development of the Process Flow
Diagram (PFD).
The objective of the tests was to maximize gold and copper recoveries in order to
provide an economic advantage for the project.
PHASE 1
Phase 1 test work focused on cyanide leaching of whole ore to maximize the gold
recovery into Doré for easy shipment and sale. Due to the high levels of cyanide soluble
copper, a proprietary process for copper/gold separation was tested. As the testing
proceeded, it became apparent that while the process was viable, it was probably
uneconomical due to the large amounts of cyanide consumed.
PHASE 2
The Phase 2 test program focused on a more conventional processing scheme, gravity
recovery of coarse free gold and flotation of the copper minerals with additional gold
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16-2
recovered to a high grade copper concentrate. A separate copper circuit was tested to
make a copper concentrate but more importantly to remove copper from the feed to the
cyanide circuit to enhance the gold recovery in the cyanide circuit.
After 25 flotation tests, it was clear that a 25% copper concentrate could be produced
on a regular basis with an overall gold recovery of 75% and a copper recovery of
approximately 80%. The recovery depends on the grade and the feed rate to the circuits.
PHASE 3
Phase 3 testing focused on recovering gold from the tailings pond. Samples were
taken and gravity and cyanide leaching tests commenced. While the gravity testing was
not as encouraging as hoped, a combination of gravity and cyanide leaching recovered
almost 90% of the gold in the tailings.
As a result of this successful test campaign, CAM developed a PFD (Figure 15-1) and
Samuel Engineering was commissioned to assess the condition of the old process plant
and to develop a capital cost estimate for refurbishing the plant, as well as constructing a
new power generating facility and a new cyanide leach and gold recovery facility.
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17-1
17 MINERAL RESOURCE AND MINERAL
RESERVE ESTIMATES
A number of historical estimates exist for the Nixon Fork Mine and an estimate was
completed in 2003 (Roscoe Postle Associates Inc., September 8, 2003). The most recent
estimate completed in 2005 by the Nixon Fork Mine Staff and Scott Wilson RPA is
shown in Table 17-1 (Roscoe Postle Associates Inc., April 13, 2005).
Detailed information on the methodologies employed in the various resource
estimates is provided below and in the appropriate referenced Technical Reports which
are filed on SEDAR.
TABLE 17-1 RESOURCE ESTIMATE 2005 - 21 G/T AU CUT-OFF
St Andrew Goldfields Ltd. - Nixon Fork Mine
Measured
Resources
Indicated
Resources
Inferred
Resources
BODY Tonnes g/t Au Tonnes g/t Au Tonnes g/t Au
Mystery 14,000 26.9
S1750 3,000 28.0
J2102 7,000 23.2 5,000 23.3
C3000 8,000 37.4 12,000 36.9 0 0.0
C30001 2,000 50.1
C30002 3,000 23.5
C3300 15,400 36.5 24,000 40.0 2,000 36.6
C3550 3,000 21.0 14,000 23.4
Whalen 14,000 32.4
TOTAL 23,400 36.8 68,000 33.2 35,000 27.7
oz gold 27,700 72,600 31,200
Tailings 116,000 8.1
TOTAL 23,400 36.8 68,000 33.2 151,000 12.7
oz gold 27,700 72,600 61,400
UNDERGROUND RESOURCES
For the 2005 estimation of mineral resources for the C3000 and C3300 bodies, St
Andrew supplied Scott Wilson RPA with the updated diamond drilling database, and
reconstructed wireframe solids. The drilling database was inspected and given a cursory
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validation. The wireframe solids were also inspected and validated, and compared to the
diamond drill holes to confirm the geological interpretation.
Scott Wilson RPA estimated the block grades and classified the mineral resources for
the C3000 and C3300 zones using the updated drillhole database and solids models. The
same block size (2 m x 2 m x 2 m) from the 2003 model was retained, as was the
interpolation method (inverse distance squared). The estimation parameters, however,
were adjusted to account for differences in application of the high-grade cap for
individual assays, and bulk density estimates. The high grade cap on individual assays
for both zones was increased to 150 g/t Au. Scott Wilson RPA reviewed the updated
assay database and considers the 150 g/t Au cap to be within an appropriate range for the
observed grade distribution.
The grade interpolation was conducted in three passes using successively larger
search ellipsoids. Blocks estimated in earlier passes were automatically disqualified from
subsequent passes. The first pass used a 7 m x 7 m x 15 m search. The search was
increased to 15 m x 15 m x 15 m for the second pass, and 30 m x 30 m x 30 m for the
third pass. All passes used a minimum of two and maximum of twelve composites
constraint with a maximum of three composites allowed from any one drillhole. This
revision to the estimation procedures was done in order to facilitate classification of
Measured Resources. Scott Wilson RPA notes that all blocks contained within the solids
models were captured using these search ellipsoids.
Gold grades were cut or capped prior to compositing, and zero grades were applied to
unsampled intervals. Composites were generated at 2 m down-hole intervals, with breaks
at the boundaries of the solids models. Composites less than one metre in length were
discarded. Only composites located within the wireframe solid models were used for
grade estimation.
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Blocks estimated in the first pass, and grading above the cut-off of 21 g/t Au, were
assigned to the measured category. Blocks estimated in the second and third passes were
assigned to the Indicated and Inferred categories, respectively.
For the resource estimate, a nominal 7 g/t cut-off was used for construction of the
wireframes and the 21 g/t Au cut-off was applied to the blocks without first grouping
them into stoping blocks. The mined volumes were accounted for by removing blocks
deemed by St Andrew personnel to have been mined. These blocks were located in the
C3000 body above 156 MASL. For C3300, the mined blocks were between the 160 m
and 164 m levels, and between the 330 m and 355 m levels.
St Andrew carried out 113 bulk density measurements of diamond drill core. Prior to
2003, the average bulk density was assigned by ore-type according to the following list:
• Oxide: 2.52 t/m3
• Mixed: 2.72 t/m3
• Sulphide: 2.93 t/m3
For the 2005 estimates in the C3000 and C3300 zones, the bulk densities were reevaluated
and reclassified according to host lithology as well as ore type. These density
measurements were then applied to specific zones within the resource model according to
the relative abundance of the different host rock types. The bulk density estimates vary
from 2.53 to 3.36
In Scott Wilson RPA’s opinion, the drillhole spacing is adequate to resolve local
grade variations to the degree that application of the measured category to at least some
of the resources is warranted. Scott Wilson RPA is of the opinion that it is more
appropriate to apply the cut-off grade to the 2 m x 2 m x 2 m blocks instead of the
“stope” blocks. Scott Wilson RPA notes, however, that if the mineral resources are
subject to the application of mining constraints and stope design for estimation of
reserves, it may be necessary to include dilution.
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Scott Wilson RPA has estimated the resource cut-off grade using the operating cost
estimates and projected metallurgical performance presented in a 2005 study (Chlumsky
et al, 2005). Operating costs were estimated at $251/ton. Revenue was based on the
following prices; gold - $400/oz, silver - $5.00/oz. and copper -
.90/lb. The cut-off
grade used for estimating reserves is discussed below.
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TAILINGS
During operations from 1995 through to 1999, NGI maintained monthly
reconciliation records of the flotation tailings. According to the monthly reports
production of 122,381 t of ore resulted in 114,800 t of tailings grading 6.6 g/t Au
containing approximately 24,300 ounces of gold. Based on the reported production and
using a ratio of 132.8 t of tails per 140 t of ore, as determined from the mine records, H.
Bogart (2004) estimated the tailings tonnage to be 116,000 t containing 24,600 ounces of
gold at a grade of 6.6 g/t Au.
Based on the 2004 sampling carried out on the tailings pond, the average grade has
been determined to be 0.28 oz/ton Au (9.6 g/t). Scott Wilson RPA notes that only half of
the pond has been sampled and based on experience with other projects, Scott Wilson
RPA suggests that the reconciled grade be averaged with the sampled grade to provide an
overall estimated grade for the tailings of 8.1 g/t Au.
Scott Wilson RPA has reclassified the tailings in 2006 (Table 17-2) after the recent
metallurgical testwork indicated the viability of the recovery of the gold but due to the
uncertainty of the tonnage and grade contained within the tailings storage facility, Scott
Wilson RPA is of the opinion that only 50% of the resource should be classified as
indicated and the remainder classified as inferred.
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TABLE 17-2 RESOURCE ESTIMATE 2006 - 21 G/T AU CUT-OFF
St Andrew Goldfields Ltd. - Nixon Fork Mine
Measured
Resources
Indicated
Resources
Inferred
Resources
BODY Tonnes g/t Au Tonnes g/t Au Tonnes g/t Au
Mystery 14,000 26.9
S1750 3,000 28.0
J2102 7,000 23.2 5,000 23.3
C3000 8,000 37.4 12,000 36.9 0 0.0
C30001 2,000 50.1
C30002 3,000 23.5
C3300 15,400 36.5 24,000 40.0 2,000 36.6
C3550 3,000 21.0 14,000 23.4
Whalen 14,000 32.4
TOTAL 23,400 36.8 68,000 33.2 35,000 27.7
oz gold 27,700 72,600 31,200
Tailings 58,000 8.1 58,000 8.1
TOTAL 126,000 21.6 93,000 15.5
oz gold 27,700 87,700 46,300
Scott Wilson RPA is of the opinion that the classification of Measured, Indicated and
Inferred Resources as presented in Table 17-2 meets the definitions as stated by NI 43-
101 and by the “CIM Standards on Mineral Resources and Reserves - Definitions and
Guidelines” as adopted by the CIM Council on December 11, 2005.
MINERAL RESERVES
In order to convert the resources to reserves, the Nixon Fork Mine staff reviewed the
resource models for the C3000 and C3300 in 2 m level slices. Sub-economic resource
blocks within the 7 g/t Au grade shell were included as internal dilution. An additional
10% mining dilution was also included at zero grade and extraction is assumed to be
100%.
Resources below the water table were classified as probable reserves and the
remainder of the resources in other bodies were diluted 10% and classified as probable
reserves as no mining plan has been developed for them.
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TABLE 17-3 MINERAL RESERVES
St Andrew Goldfields Ltd. Nixon Fork Mine
Zone Category Tonnes Grade (g/t Au) Contained
Ounces
C3300 Proven 47,000 34.05 51,500
TOTAL Proven 47,000 34.05 51,500
C3300 Probable 32,800 27.16 28,650
C30001 Probable 2,200 45.55 3,220
C30002 Probable 3,300 21.36 2,270
C3000 Probable 37,900 25.40 30,960
C3550 Probable 3,300 19.09 2,030
Tailings Probable 58,000 8.1 15,100
TOTAL Probable 137,500 18.6 82,230
Scott Wilson RPA is of the opinion that the classification of Proven and Probable
Reserves as presented in Table 17-3 meets the definitions as stated by NI 43-101 and by
the “CIM Standards on Mineral Resources and Reserves - Definitions and Guidelines” as
adopted by the CIM Council on December 11, 2005. The reserves shown in Table 17-3
are only from the Crystal Garnet mine area.
Copper and silver grades were not estimated by Scott Wilson RPA for these reserves
but a grade of 1.2% Cu and 27 g/t Ag have been reported based on the historic data from
the previous operations. Scott Wilson RPA did not include any revenue from the sale of
copper or silver in the cash flow models included in this report. A copper flotation circuit
is included in the plant to produce copper concentrate and to remove copper from the
material treated so that the recovery of gold in the cyanide circuit is enhanced. The
revenue from the sale of gold recovered in copper concentrate is included in the cash flow
models.
The copper and silver grades are discussed in two reports filed on SEDAR;
September 8, 2003 Report on the Nixon Fork Project by Roscoe Postle Associates Inc.
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17-10
and April 13, 2005 Technical report on the Nixon Fork Project, Alaska by Roscoe Postle
Associates Inc.
Cut-off grade, 21 g/t Au, was estimated based on an average mining cost of US$340
per tonne, a gold price of US$550 per ounce and an overall gold recovery of 90%.
A feasibility study was prepared by St Andrew in 2003 and this study was modified
with various studies. The feasibility study and subsequent modifications are sufficient, in
Scott Wilson RPA’s opinion to constitute a prefeasibility study for the project and
therefore supports the classification of a portion of the mineral resources as mineral
reserves.
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18 OTHER RELEVANT DATA AND
INFORMATION
MINING OPERATIONS
MINING METHOD
The two mines are accessed by ramps. Access to the Mystery Creek Mine was by a -
14% 3 m x 4 m decline extends from the portal, at elevation 292 m, 642 m to elevation
202 m. Access to the Crystal Garnet Mine is by a spiral decline driven at -14%. The
decline is 3 m high by 4 m wide. The mine portal is at an elevation of 401 m (above sea
level). The base of the 1,820 m decline is at the 145 m P Level, a vertical depth of 256 m
from the surface.
At the P Level, a crosscut was driven from the C3000 orebody to the lower extension
of the C3300 orebody. A three-dimensional cross-section of the Crystal Garnet Mine is
shown in Figure 9-1. Underground development is currently underway at the mine as per
the development schedule shown in Table 18-1. The development schedule is
approximated using waste tonnages, average drift dimensions of 3.0 m by 3.5 m, and a
specific gravity of 2.7 tonnes/m³. The proposed production schedule was altered by Scott
Wilson RPA to accommodate for the remaining stockpile and available reserves.
TABLE 18-1 PRODUCTION SCHEDULE
St Andrew Goldfields Ltd. - Nixon Fork Mine
Year 2006 2007 2008 2009 TOTAL
Operating Days 360 360 360 180 1260
Mine Rate (tonnes/day) 140 140 140 140 140
Total Ore Tonnes 13,118 45,360 45,360 22,663 126,500
Development Metres 463 1,600 1,600 799 4,462
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STOPING METHOD
The deposits are narrow, steeply dipping, pipe-like shoots. The widths of the “pipes”
vary from 2 m to 20 m. The stoping method used in the past was mechanized shrinkage
stoping. Jackleg drills were used in the stope production, while a single jib jumbo was
used in drift development. Broken ore and waste were excavated from the stopes using
two cubic yard load-haul-dump (LHD) equipment and the broken rock was hauled to the
surface in 13 tonne mine trucks.
A new stoping method has been proposed for the mine which is a cut and fill method
using waste rock as fill. This method is illustrated in Figure 18-1. SAG expects that this
mechanized method will minimize the overall labour requirements of the operation and
will improve the mine’s productivity and cost efficiency. To maintain sufficient material
to feed the mill the mine estimates that they must blast two faces per day. Because the
stoping system is “face” dependent this means that the mine must have several faces that
can be drilled and blasted at any given time to ensure a proper drill, blast, muck and fill
cycle. This is complicated by the fact that the stopes vary in width. The forecast
production is show in Table 18-1.
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MINE VENTILATION
The Crystal Garnet and Mystery Mines are ventilated by single-stage axial-vane
electric fans that force air down ventilation raises at each mine. The raises also serve as
mine escapeways. Air is upcast through the workings and exits the mines by way of the
decline. In the winter, the air is heated to 15° centigrade at the intake point either by
waste heat from the generators or by diesel/waste oil fired boilers before being forced
underground. Some development and rehabilitation work is required to improve the
ventilation circuits.
EQUIPMENT
A list of underground and surface mine equipment currently located at the mine site is
presented in Appendix 1. New mining equipment that has been delivered and new
equipment on order is included on the list. The surface and underground mining
equipment at Nixon Fork has been refurbished (new engines) and placed back into
service. Some new mining equipment has been purchased.
GROUND CONTROL
Ground conditions are generally very good at the mine. Limited additional ground
support is required. Scott Wilson RPA observed that the mine uses a small number of
rockbolts, split sets, and a limited amount of straps and screen. In few timber sets were
observed in the main ramp. The mine plans tend to keep the mine development in the
competent limestone-marble formation.
PUMPING
Groundwater was encountered on or below the P Level in quantities of 50-100 gallons
per minute. A permanent sump is to be installed below the P Level (145 meter elevation)
to the northwest of the new spiral decline. Some of the mine discharge will be used as
makeup water for the mill, but it may be necessary to obtain an irrigation or water
discharge (NPDS) permit for the facility to allow disposal of excess water.
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Golder Associates is investigating the possibility of grouting the ground water being
generated in that area of the mine and have expressed the preliminary opinion that the
formations can be grouted and the water flow stopped.
MINE INFRASTRUCTURE
SHOP AND WAREHOUSING
The 12 m diameter shop building was moved to beside the mill building to make
room for the mill leach circuit. This building is used to service underground and surface
mine equipment, as well as certain mill equipment.
Warehousing is primarily provided by the use of a series of export cargo containers
located near the shop facility. These containers provide semi-adequate storage and are
organized by type material stored; for example, electrical, hydraulic, mechanical, etc.
WATER AND SEWAGE
Fresh water is provided from Mystery Creek below the Mystery Adit. Water is
pumped to a heated 10,000 gallon tank located above the camp. Such water is available
for domestic purposes, mill and mine water, and fire protection.
Domestic sewage is provided by use of a drain field. State permits are required for
the operation of both the water treatment and sewage facility.
OFFICE, DRY AND LABORATORY
Office, dry (employee change facility), and laboratory facilities are provided using
eight connected buildings located just north of the Mill Facility. Three units provide
office facilities for staff, and also provide staff and underground employee dry facilities.
A third two unit facility is used as an assay laboratory.
FUEL STORAGE
A “ponded” fuel storage area is located at the north end of the airstrip. The facility
contains five-10,000 gallon fuel bladders and necessary gauging and pumping facilities.
Fuel is piped to the mill and shop area in a double lined pipe where it is stored in a 1,000
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gallon above-ground tank near the power plant. A similar 1,000 above-ground storage
tank is located near the camp buildings to supply heating oil. A 500 gallon tank for
vehicle fuel is also located at the airstrip facility.
POWER SUPPLY
All electric power for the mine, mill, and campsite was produced by three 832 KW
diesel electric-generator units located next to the mill. Waste heat from the units will be
used to heat the mine intake air and the buildings in the winter. Normally two of the units
are operated at one time, with the third remaining on standby.
CAMP (PERSONNEL) FACILITIES
All hourly and staff workers are housed in a 50 unit single story Britco Camp Facility
located above and east of the mill area. Located within the Britco units are a kitchen,
dining facility with a 20 man capacity, a small recreation or TV room, male and female
showers and toilet facilities, and individual rooms for 50 employees. Telephone facilities
for personal use of the employees are available at the camp.
MINERAL PROCESSING
GENERAL
St Andrew will use a similar process and much of the same equipment (crushing,
grinding, gravity concentration and flotation) as was used in the previous operation at
Nixon Fork. However, a cyanide leach circuit will be added by the summer of 2007 to
the plant to improve gold recovery. The loaded carbon from this circuit will be treated
off site.
St Andrew intends to mine ore from underground as well as the tailings currently
contained in the tailings impoundment facility. The existing tailings will be mined and
processed with the resultant tailings (reprocessed tailings) filtered to remove moisture and
placed in a filtered tailings disposal area (FTDS) or dry stack. The existing tailings can
only be mined when the pond is not frozen. Tailings will be first processed during the
summer of 2007.
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New ore will be processed from October to May at rate of 240 tpd with the resulting
tailings also placed in the FDTS until the tailings pond is emptied, inspected, and
repaired. During these eight months of operation the plant will be operated on a schedule
of two weeks on, two weeks off, or 14 days per month. Existing tailings will be
processed from June to September at 350 tpd. During the summer months the plant will
be operated every day.
Processing of ore is expected to begin in October 2006. Mining and processing of the
existing tailings will begin in June of 2007, and will continue each summer until the pond
is empty, which is expected in summer of 2009. After all the existing tailings are
processed and the pond inspected, St Andrew intends to place the resultant tailings from
newly processed ore in the tailings pond as slurry.
NEW ORE PROCESSING
Ore from the mine will be crushed in a jaw and secondary crusher, and then ground to
approximately 80% passing 80 microns in a rod mill and a ball mill configured in series.
A portion of the ground slurry from the grinding circuit cyclone underflow will pass
through a gravity separation circuit where free gold and heavy minerals are removed.
The gravity concentrate will be cleaned and upgraded and melted to form a Doré metal.
Gravity tailings will be recycled to the grinding circuit. The gravity circuit recovers
approximately 20% of the gold which will be melted at site to produce Doré bars.
The overflow from the cyclone cluster in the grinding circuit will be pumped to a
flotation circuit where a bulk sulphide rougher concentrate containing copper, gold and
silver will be produced. The rougher flotation concentrate, grading 15% Cu or above,
will be filtered and bagged for shipment to smelters. St Andrew reports that they are
negotiating terms for the sale of this concentrate to Noranda (Xstrata’s Horne Smelter).
The gold recovery to the copper concentrate will vary from 50% to 75% and the copper
recovery from 70% to 80% depending on the ore grade and the production rate.
At a production rate of 140 tpd the recovery will be 75% for gold and 80% for
copper. At a production rate of 240 tpd the recovery rate is expected to drop to 50% for
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gold and to 70% for copper. These recovery figures are affected by the grinding circuit
and by the residence time in the flotation circuit. St Andrew reports that the
modifications to the grinding circuit are expected to attain a grind size of approximately
80% passing 100 microns, only slightly coarser than planned, at the higher processing
rate of 240 tpd. St Andrew plans to decrease mill throughput to improve recovery if it is
economically justified.
The tailings from the flotation process will report to the cyanide leach circuit where
most of the remaining gold and silver will be recovered by cyanide leaching. The loaded
carbon from this circuit will be shipped to either an existing gold plant in Alaska or to St
Andrew’s Stock Gold Plant in Timmins, Ontario for treatment to recover the contained
gold and silver. St Andrew reports that the costs for transport and additional
requirements for activated carbon are included in the economic model. The barren
solution from the leach circuit will be recycled and replenished with sodium cyanide and
sodium hydroxide for reuse.
The leached tailings will be thickened and pumped to a filter were the pregnant
solution contained in the slurry will be filtered out and washed with barren solution for
gold recovery. The filtered tailings will then be treated with sulphur dioxide (SO2) and
air in an agitated tank to destroy the free and weak acid dissolvable (WAD) cyanide. The
SO2 will be supplied in the form of sodium metabisulphite (Na2S2O5). The tailings will
then again be filtered to approximately 15% moisture for deposit in the FTDS. These
tailings, with a neutralization ratio of 2.34, are non-acid producing.
Overall gold recovery in the leach circuit is expected to by approximately 90% when
processing new ore, although it is expected to be somewhat dependent upon the head
grade.
EXISTING TAILINGS PROCESSING
The tailings will be loosened using a hydraulic jet to undercut the solids, causing
them to collapse into a sump near the center of the tailings pond. The jet and lowpressure
pump will be mounted on a floating platform in the deeper portion of the tailings
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pond. The solids out of reach of the floating jet and pump will be washed into the sump
with water using hoses. The slurry will be pumped with a low-pressure pump through a
hose to the edge of the tailings pond.
The existing tailings will then be pumped by high-pressure pump to the mill at 45%
solids. At the mill this slurry will be dewatered to 80% solids and the excess water
returned to the pond along with some fines. The dewatered tailings will be mixed with
recycled, barren cyanide solution, and agitated in five leach tanks for 12 to 14 hours. The
leached tailings will then be thickened and filtered as per that described above for new
ore. Recovery of gold is expected to by approximately 85% when processing existing
tailings.
NEW BUILDINGS
A 30 ft by 60 ft frame building has been added to the west side of the mill to
accommodate the new generators and compressor facilities. An 80 ft extension to the
north end of the mill building will house the cyanide leach circuit. The shop building was
moved west of the process plant to allow room for the extension to the mill building.
REAGENTS
The following reagents will be used in the mill process.
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TABLE 18-2 REAGENT CONSUMPTION
St Andrew Goldfields Ltd. - Nixon Fork Mine
Reagent Tailings
(350 tpd)
Ore Mining
(150 tpd)
(lbs/day) (lbs/day)
Potassium Amyl Xanthate 0 40-50
Sodium Meta-bisulphite (Na2S2O5) 575-775 280-375
Anionic Polyacrylamide (flocculant) 14-19 10-15
Cationic DADM (flocculant) 0 10-15
Cytec AERO 6697 0 12-15
Cyquest DP-6 (anionic Polymer) 0 11-15
Methyl Isobutyl Carbinol (MIBC) 0 8-15
Sodium Cyanide (NaCN) 865 300-480
Lime 2900 1400
Copper Sulfate (CuSO4) 40 20
NaOH 3 2
RECOVERABILITY
Recoverability by the various processes is expected to be as follows:
• The gravity circuit recovers approximately 20% of the gold.
• The copper concentrate circuit operating at 240 tonnes per day recovers 50%
of the gold and 70% of the copper.
• Recovery of gold is expected to by approximately 85% when processing
existing tailings and 90% of the gold when treating fresh material. St Andrew
indicates that the leach circuit will be installed for the summer of 2007.
The above recovery figures were used in the cash flow model in this report.
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MARKETS
The principal commodity gold is freely traded at prices that are widely known, so that
prospects for sale of any production are virtually assured. For this short life project Scott
Wilson RPA used a gold price of US$550 per ounce.
CONTRACTS
The following is a list of contracts either in place or about to be put in place for the
mining operation at Nixon Fork.
1. Precision Power LLC Mill & Power Plant Construction
2. Alaska Mechanical Inc. Mill & Site Construction
3. Samuel Engineering Inc. Technical Services – Plant design
4. Statewide Services Fuel System Installation – Completed
5. Lynden Air Cargo Construction Freight Agreement
6. Northern Air Cargo Intermittent Freight Agreements
7. GBM Min. Engr Const Technical Services – Construction
8. Larox, Inc. Rebuilt Filter Purchase
9. Mining Tech. Int’l Inc. Jumbo Purchase
10. Chiulista Camp Services Camp Caterer
11. Golder Associates Inc Technical Services – Env. & Geotech
12. Hoefler Consulting Group Technical Services – Air
13. Johnson Matthey Inc. Dore Processing and Offtake
14. Falconbridge Ltd. Smelter Agreement – Not signed
15. Brooks Fuel Inc. Fuel & Concentrate Transport Agreement – Not
signed
16. Alaska RR – CN RR Concentrate Transport Agreement – Not signed
17. Gold Security Agreement Not Signed
ENVIRONMENTAL CONSIDERATIONS
Scott Wilson RPA has not carried out an environmental audit. There was no visible
evidence of acid rock drainage from the waste rock pile or leaks from the tailings disposal
area observed during the site visits. There are no leaks from the portals of the two adits
as they are both above the water table. An environmental review by Steffen Roberson
and Kirsten (USA) Inc (1997) found the site to be in an overall good condition. Acid
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rock drainage is not considered to be a problem because of the presence of limestone that
acts as a buffer.
An environmental review of the site was prepared by Gochnour & Associates, Inc. of
Parker, Colorado, dated September 2003 and November 2005. Results of the reviews
address the environmental issues covered in St Andrew environmental management plan
for the site.
During the operating period, the main permits required were a Plan of Operations
(POO) issued by the Bureau of Land Management (BLM), Air Quality Control Plan and
Waste Disposal Permit for Tailings from the Alaska Department of Environmental
Conservation (ADEQ), a certificate of Approval to Construct Tailings Dam from the
Alaska Department of Natural Resources (ADNR). A reclamation bond was posted
under the Alaska State Bond Pool and in mid 1998; a total of 95.5 acres had been
disturbed and bonded at an annual cost of $5,134. All the prior operating permits for the
mine have expired and the bonds revoked.
In late 2003, St Andrew began the federal and state permitting process for operating
permits which would allow commercial operations from the property. The Anchorage
Office of the BLM prepared an Environmental Assessment (EA), St Andrew prepared a
Plan of Operations (POO), and J. M. Beck & Associates prepared the Reclamation Plan
and cost estimate. The following permits have been granted to enable St Andrew to begin
construction and mining:
.. Air Quality Control Construction Permit – This permit, issued by the Air
Quality Division of the Alaska Department of Environmental Conservation
(“ADEC”) was issued on July 7, 2005 - Permit No. AQ837CPT01 (Project X-
226).
.. Certificate of Approval to Operate Dam – This permit, issued by the Dam
Safety and Construction Unit of the Alaska Department of Natural Resources
was issued on August 31, 2005 – ID No. AK00213 and allows for the
operation of the tailings dam currently existing at the site.
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.. Decision Record & Finding of No Significant Impact – This Decision Record
was issued on January 31, 2006 by the BLM office in Anchorage. It relates to
both the Plan of Operation and the Environmental Assessment outlined below:
o Plan of Operations – The Plan of Operations (“POO”) for the Nixon
Fork Operation was approved by the BLM on January 31, 2006 and
will become affective upon the posting of financial surety by the
Company
o Environmental Assessment – The BLM Environmental Assessment
(“EA”) of the Nixon Fork Plan of Operations was approved by the
Decision Record on January 31, 2006.
.. Reclamation Plan and Cost Estimate – The Reclamation Plan Approval No.
A20065562 was approved by the Alaska Department of Natural Resources on
January 25, 2006. The Reclamation Plan and Cost Estimate serves as the
basis of determining the amount of Surety Bond which has been deposited
with the BLM.
.. BLM Bond Acceptance and Authorization to Begin Full Operations and
Production – Letter from the BLM dated June 7, 2006 acknowledging receipt
of the surety bond in the amount of $3,526,543 and authorizing full operations
and production under current Plan of Operations.
.. Solid Waste Management Permit – The Solid Waste Management Permit No.
2003-DB0055 for the Nixon Fork Mine was issued by the Water Quality
Division of the Alaska Department of Environmental Conservation on January
25, 2006.
.. Temporary Water Use Authorization – A Temporary Water Use Authorization
No. TWUA 2006-1 was issued for the Nixon Fork Mine by the Alaska
Department of Natural Resources on February 15, 2006. This permit allows
for the use of 99.56 acre-feet of water per year by the operation.
.. Approval of Use of Existing Tailings Pond – Approval of BLM and ADEC to
allow use of the existing tailings pond to deposit gravity-flotation tailings
during the winter of 2006-2007.
The reclamation plan calls for all the infrastructure to be dismantled and buried in the
existing mine workings and all surface disturbance, excluding the runway which will
remain, to be recontoured and revegetated.
Future operations below the water table (150 level) at Nixon Fork may require a
National Pollutant Discharge Elimination System (NPDES) permit issued by the EPA. In
the early summer of 2004 the company made a series of indeterminate draw-down tests
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and in 2005 a series of packer tests were completed. A study is currently underway by
Golder Associates Inc. on the feasibility of grouting off the water inflow. Preliminary
results suggest that a combination of grouting and pumping may be successful. If the
amount of water to be discharged is in excess of that which can be applied to the land
under the Solid Waste Management Plan, then it will be necessary to begin the NPDES
permit process if it is decided to continue mining at depth. It is anticipated the NPDES
process will take approximately 18 months to two years to complete.
TAXES
Nixon Fork Mine is subject to taxation on a state, federal, and local level. Scott
Wilson RPA are not experts in the area of taxation and, therefore, have not ascertained
the levels of taxation that are applicable to the Nixon Fork operation. Scott Wilson RPA
recognize that the application of taxes will affect the overall profitability of the mining
operation. For purposes of this Technical Report, which is to demonstrate that the
mineral reserves are economic, taxes are not included in the cash flow model in the
Economic Analysis section below.
CAPITAL AND OPERATING COST ESTIMATES
CAPITAL COSTS
Capital costs to restart the Nixon Fork mine are estimated to be US$9 million,
including US$3.2 million surety bond. It is assumed that this bond will be sufficient to
cover the costs of closure at the end of the mine life. A summary of the capital costs is
shown in Table 18-3. The infrastructure changes will cost US
.7 million, the mill and
plant renovations are forecast to cost US$2.9 million, the mine development is forecast to
cost US2.3 million.. As production to the mill is scheduled to start in October most of the
capital budget has been spent or is committed. As of the August 31, 2006 US$4.8 million
has been spent on the project.
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TABLE 18-3 PROPOSED CONSTRUCTION
BUDGET 2006 - 2007
St Andrew Goldfields Ltd. - Nixon Fork Mine
Item Amount US$
Surety Bond 3,152,000
Camp & Infrastructure
Water Treatment 109,000
Sewer Improvements 10,000
Camp Improvements 89,250
Office Equipment & Improvements 52,100
Dry Improvements 30,000
Transportation 69,400
Fuel System Improvements - Mandatory 350,000
Sub-Total - 709,750
Mill & Power Plant - W/O CN Circuit
Mill Renovation - Directs 1,473,290
Power Generation - Directs 888,226
Mill Renovation & Power Generation -
Indirects 519,361
Sub-Total - 2,880,877
Mine
Equipment & Freight 1,265,000
Renovation of existing equipment 237,900
Mine Development 785,570
Sub-Total - Mine 2,288,470
TOTAL 9,031,097
OPERATING COSTS
The mine operating costs have been estimated for Nixon Fork mine to be US$331 per
tonne milled for the 240 tpd operation. The cost is based on data generated by Nixon
Fork personnel. Development and production costs, excluding labour, amount to
US$21.50 per tonne milled and US$25.39 per tonne milled, respectively. These costs
also include a 10% contingency. Milling costs are derived from unit costs of US$77.05
and US$42.21 per ounce of gold produced from tailings and run-of-mine (ROM),
respectively.
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Scott Wilson RPA has reviewed some of the details of the cost calculations in light of
the expected improved productivities. The estimated costs appear to be reasonable. The
current production and construction manpower level stands at 50 employees (September
2006), and the new operation is estimated to have an average of 46 employees over the
remaining life of the mine. The operation is non union.
Table 18-4 below shows the operating costs breakdown for the Nixon Fork Mine.
The expenses outlined in 2006 are for November and December only. As the mill begins
operating in October, previous expenses are considered to be capital rather than
operational.
TABLE 18-4 OPERATING COST SUMMARY
St Andrew Goldfields Ltd. - Nixon Fork Mine
Year 2006* 2007 2008 2009 TOTAL
Mill Feed 9,606 30,888 39,960 46,046 126,500
Gold Ounces 9,003 28,948 37,450 43,154 118,555
Operating Costs (‘000 US$):
Mining
Milling
Power Plant
Shop
Camp
Environmental Compliance
General & Administrative
637
314
589
98
168
10
278
3,928
3,084
3,897
545
979
-
2,917
3,928
3,310
3,897
545
982
-
2,917
1,963
3,137
3,803
567
999
-
1,897
10,455
9,845
12,185
1,754
3,129
10
8,009
Total 2,095 15,350 15,578 12,366 45,389
Operating Cost per Tonne Milled (US$/t) 218 497 390 269 359
Operating Cost per Ounce (US$/oz) 388 478 383 273 368
*November and December of 2006
The operating cost per tonne varies from US$218 in 2006 to US$497 in 2007, with an
average cost of US$359 over the life of the mine. The operating cost per ounce varies
from US$273 in 2009 to US$478 in 2007, with an average cost of US$368 over the life
of the mine.
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ECONOMIC ANALYSIS
Scott Wilson RPA has provided a cash flow analysis to demonstrate that the project is
economic and that the resources estimated for the project can be classified as reserves. In
order to do this, Scott Wilson RPA reviewed the cash flow projections on a simple pretax
basis, to show relative sensitivity of various physical factors.
The key input parameters for the life of mine plan case for are:
• Production 45,000 tonnes per year
• Reserve and resource base
o Probable Reserves 137,500 tonnes
.. Gold 18.6 g/t
o Proven Reserves 47,000 tonnes
.. Gold 34.05 g/t
• Project life
o Pre-production development to be finished - October 2006
o Production 4 years; 2006 to 2009
• Total production (mined) 126,500 tonnes
.. Gold 29.15 g/t
• Total production (tailings) 58,000 tonnes
.. Gold 8.1 g/t
• Metallurgical recovery
o Gold (gravity circuit) 20 %
o Gold (flotation circuit) 50 %
o Gold (cyanide circuit) 90 %
o Copper 70 %
• Average annual payable metal production
o Gold 40,000 ounces
• Operating cost US$359 per tonne milled
• Royalty
o Gold 6%
• Capital costs
o Construction and Pre-production US$9 million
• Metal prices:
o Gold price US$550 per ounce
Treatment charges for gold in the cash flow model are as follow:
• $1.00 per ounce for refining the doré and leach gold.
• $10.00 for shipping, insurance and treatment of the gold in loaded carbon and
in doré
• Assumed 95% of the gold would be paid in the copper concentrate
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Copper and silver grades were not estimated by Scott Wilson RPA for the reserves
but a grade of 1.2% Cu and 27 g/t Ag have been reported based on the historic data from
the previous operations. Scott Wilson RPA did not include any revenue from the sale of
copper or silver in the cash flow models included in this report. A copper flotation circuit
is included in the plant to produce copper concentrate and to remove copper from the
material treated so that the recovery of gold in the cyanide circuit is enhanced. The
revenue from the sale of gold recovered in copper concentrate is included in the cash flow
models. To estimate the amount of gold in the copper concentrate the historical copper
grade was used as a head grade for the copper circuit to estimate the amount of copper
concentrate produced.
The undiscounted pre-tax cash flow at US$550 per oz gold is US$7.4 million. The
Total Cash Cost is US$406 per ounce gold and the Total Production Cost is US$479 per
ounce gold. The Total Production Cost includes capital expenses. Simple payback
(recovery of capital costs on a pre-tax basis) occurs in mid-2009, the third year of full
production. The breakeven gold price that is required to payback all capital is US$508
per ounce. At a current gold price of US$590 per ounce, the undiscounted pre-tax cash
flow is US$12.0 million.
The relative impact on undiscounted pre-tax cash flow on changes in physical and
cost assumptions and estimates is shown in the table below.
TABLE 18-5 SENSITIVITY ANALYSES OF PRE-TAX CASH FLOW
St Andrew Goldfields Ltd. – Nixon Fork Mine
Parameter Variables -20% -10% Base +10% +20%
Head Grade -157% -78% 0% 78% 157%
Recovery -99% -47% 0% 41%
Gold Price -169% -85% 0% 85% 169%
Capital Costs 15% 7% 0% -6% -10%
Operating Costs 123% 61% 0% -61% -123%
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The cash flow models prepared for the Nixon Fork mine are included in Appendix 2
as Table 25-1 and are prepared on a stand-alone basis. The Net Present Value (NPV) of
the base case at a 10% discount rate is US$3.6 million. In the opinion of the Scott
Wilson RPA, the cash flow model at the assumed metal price is a fair representation of
the mine production and pre-tax revenue going forward, and demonstrates that the
estimated mineral reserves are economic. Table 18-6 summarizes the annual and
cumulative cash flows.
TABLE 18-6 PRE-TAX CASH FLOW SUMMARY
St Andrew Goldfields Ltd. – Nixon Fork Mine
Year 2006 2007 2008 2009 TOTAL
Cash Flow (‘000 US$)
(8,417)
744
4,786
10,279
7,392
Cumulative (‘000 US$)
(8,417)
(7,673)
(2,888)
7,392
NPV @ 10% (‘000 US$)
3,579
SENSITIVITY ANALYSIS
The risks for the mine can be identified in both economic and non-economic terms.
The following key parameters that have the largest effect on the economics have been
examined by running cash flow sensitivities:
• Head Grade
• Recovery
• Gold Price
• Operative Costs
The economics of the Nixon Fork mine are less sensitive to:
• Capital Costs
The results of the sensitivity analyses of discounted cash flow are shown in Figure
18-3 and Table 18-7. Metallurgical recoveries are tested within the full range of -20% to
+20% unless they exceed 100%.
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FIGURE 18-3 SENSITIVITY ANALYSIS
(10,000)
(5,000)
-
5,000
10,000
15,000
0.70 0.80 0.90 1.00 1.10 1.20 1.30
NPV ('000 US$)
Head Grade Gold Price Capital Expenses Operating Expenses Recovery
\
TABLE 18-7 SENSITIVITY ANALYSES OF NPV
St Andrew Goldfields Ltd. – Nixon Fork Mine
Parameter Variables -20% -10% Base +10% +20%
Head Grade -249% -122% 0% 122% 249%
Recovery -156% -73% 0% 64%
Gold Price -263% -132% 0% 132% 263%
Capital Expenses 28% 13% 0% -11% -20%
Operating Expenses 144% 97% 0% -97% -194%
The sensitivity analysis on recovery was performed on base case numbers of 20%
recovery of gold in the gravity plant, 50% recovery of gold and 70% recovery of copper
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in the flotation plant, 90% recovery of gold in the leach plant, and 85% recovery of gold
in the reclaimed tailings. The sensitivity analysis on head grade was performed on base
case values of 29.15 g/t of gold and 8.10 g/t of gold in the reclaimed tailings.
Sensitivity was also tested on the scenario in which zone C3300 would not be
extracted due to insufficient grouting techniques. In the case where this zone is not
mined, approximately 33,000 tonnes of probable reserves would be removed from the
mine plan. The resulting reserve base would amount to 93,000 tonnes at a grade of 29.85
g/t. With this effect, the pre-tax NPV reduces from US$3.6 million in the base case to
(US$1.2 million).
PAYBACK
The simple payback (recovery of capital costs on a pre-tax basis) occurs after 3.6
years in July of 2009, the third year of full production.
MINE LIFE
The mine plan indicates that the operation has sufficient reserves to continue at the
proposed rates for four years, until 2009.
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19 INTERPRETATION AND CONCLUSIONS
The 2004-2005 drilling program has led to the following conclusions:
.. The C3000 shoot extends from the lowest mined level (160 m above sea level)
down to the 85 m level and is faulted off at depth.
.. The C3300 shoot extends from the surface (400 m above sea level) to 85 m
above sea level and is open at depth, and remains to be drilled out on the 240-
300 m levels.
.. Drilling in the C3004 area did not hit any significant mineralization,
essentially closing off this zone at depth.
.. Additional areas to be tested by both surface and underground drilling include:
o the area to the south of C3300
o the vertical extent of the J2100 skarn on the north contact of the
Mystery Creek
o vertical extent of the key beds in the J5A area.
.. Recent drilling at the Mystery Mine confirms the nature of the narrow highgrade
shoots within the larger mineralized envelope.
Surface trenching, mapping, sampling and drilling within the Whalen Glory Hole and
North Star areas indicate that surface mineralization may extend to depth locally. Two
trenches excavated in the Golden Star Area at the head of the southern gold-in-soil
anomaly in the Holmes Gulch area indicate that the colluvium in these two trenches
contains between 2 g/t and 2.1 g/t Au and that the Holmes Gulch represents a potential
large surface-mineable placer gold deposit.
It is St Andrew’s opinion that the results of the recent drilling have not materially
affected the underground resource statement as estimated in April 2005 and provided in
Table 19-1. Scott Wilson RPA concurs with this assessment.
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TABLE 19-1 RESOURCE ESTIMATE 2006 - 21 G/T AU CUT-OFF
St Andrew Goldfields Ltd. - Nixon Fork Mine
Measured
Resources
Indicated
Resources
Inferred
Resources
BODY Tonnes g/t Au Tonnes g/t Au Tonnes g/t Au
Mystery 14,000 26.9
S1750 3,000 28.0
J2102 7,000 23.2 5,000 23.3
C3000 8,000 37.4 12,000 36.9 0 0.0
C30001 2,000 50.1
C30002 3,000 23.5
C3300 15,400 36.5 24,000 40.0 2,000 36.6
C3550 3,000 21.0 14,000 23.4
Whalen 14,000 32.4
TOTAL 23,400 36.8 68,000 33.2 35,000 27.7
oz gold 27,700 72,600 31,200
Tailings 58,000 8.1 58,000 8.1
TOTAL 126,000 21.6 93,000 15.5
oz gold 27,700 87,700 46,300
Scott Wilson RPA is of the opinion that the classification of Measured, Indicated and
Inferred Resources as presented in Table 19-1 meets the definitions as stated by NI 43-
101 and by the “CIM Standards on Mineral Resources and Reserves - Definitions and
Guidelines” as adopted by the CIM Council on December 11, 2005.
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20 RECOMMENDATIONS
Scott Wilson RPA recommends that the project construction continue and the project
be placed into production. A budget to complete the construction and prepare the mine
for production is provided in Table 20-1. A capital budget to rehabilitate and place the
facility into operation is US$10 million.
TABLE 20-1 PROPOSED CONSTRUCTION
BUDGET 2006 - 2007
St Andrew Goldfields Ltd. Nixon Fork Mine
Item Amount US$
Surety Bond 3,152,000
Camp & Infrastructure
Water Treatment 109,000
Sewer Improvements 10,000
Camp Improvements 89,250
Office Equipment & Improvements 52,100
Dry Improvements 30,000
Transportation 69,400
Fuel System Improvements - Mandatory 350,000
Sub-Total - 709,750
Mill & Power Plant - W/O CN Circuit
Mill Renovation - Directs 1,473,290
Power Generation - Directs 888,226
Mill Renovation & Power Generation -
Indirects 519,361
Sub-Total - 2,880,877
Mine
Equipment & Freight 1,265,000
Renovation of existing equipment 237,900
Mine Development 785,570
Sub-Total - Mine 2,288,470
TOTAL 9,031,097
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21 REFERENCES
Beck, J.M. &Associates, (September 2005): Reclamation Plan and Cost Estimate, Nixon
Fork Mine Project, McGrath Alaska. Prepared for U.S. Bureau of Land Management,
Anchorage Office, and State of Alaska Department of Natural Resources.
Borell, Steve, (2003). Alaska State Mining Law. From the Alaska Miners Association
website.
Bureau of Land Management, Anchorage Field Office, (October 2005): Nixon fork Mine
Environmental Assessment.
Burnett, William J., Ken R. Poule, May 28, 1999: The Nixon Fork Project, an Overview
of Past Mining Operations, Reserves and Resources, and Exploration Potential.
Internal Company Report.
Chlumsky, Armbrust & Meyer, (January 2005): Capital and Operating Cost spread
sheets: Prepared for Mystery Creek Resources Inc.
Chlumsky, Armbrust & Meyer, (January 2005): Process Flow Sheet for the Retreatment
of Nixon Fork Tailings: Prepared for Mystery Creek Resources Inc.
Consolidated Nevada Goldfields Corporation (March 1998): Confidential Information
Memorandum, Nixon Fork Project, McGrath, Alaska. Internal company document.
Decker J. E., et al, (1994): Geology of southwestern Alaska, in, Plafker, G., and Berg, H.
C., eds., the Geology of North America: Geological Society of America, v. G-1 p
285-310.
Derry Michener, Booth, & Wall Inc., (December 9, 1994): Ore Reserves, Nixon Fork
Project, McGrath Alaska. Prepared for Nevada Goldfields, Inc
Gochnour & Associates, Inc. (September 2003): Mystery Creek Resources, Inc., Nixon
Fork Mine Environmental Review.
Gochnour & Associates, Inc. (November 2005): Mystery Creek Resources, Inc., Nixon
Fork Mine Environmental Review.
Jones, Paul C., Miller, Hugh B., (January, 2003): Pre-Feasibility Study for Nixon Fork
Gold Project Alaska. Prepared for Mystery Creek Resources Ltd: Internal company
report.
KPMG Peat Marwick LLP, (February 23, 1996): Review of Metallurgical Policies and
Procedures at the Nixon Fork Mine. Internal company report.
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Meinert, L. D., (1992): Skarns and Skarn Deposits. Geoscience Canada V. 19, no.4, pg
145.
Phillips Enterprises, LLC, (April 2005): Progress Report #3, Metallurgical Test Work on
Nixon Fork Samples through November 30, 2004. Prepared for Mystery Creek
Resources
Pincock Allen & Holt, (June 25, 1996): Due Diligence Review, Grupo Real Del Monte
and Consolidated Nevada Goldfields Properties: Unpublished Company report.
Roscoe Postle Associates Inc, (September 2003): Report on the Nixon Fork Project,
Alaska: Report for St Andrew Goldfields Ltd., filed on Sedar.
Roscoe Postle Associates Inc, (April 13, 2005): Technical Report on the Nixon Fork
Project, Alaska: Report for St Andrew Goldfields Ltd., filed on Sedar.
Steffen Robertson and Kirsten (US) Inc., (October 3, 1997): Final Technical Economic
and Environmental Review: Report for Standard New York, Inc.
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22 SIGNATURE PAGE
This report titled “Technical Report on the Nixon Fork Project, Alaska”, dated
October 2, 2006 and effective September 15, 2006, was prepared and signed by the
following authors:
(Signed and Sealed)
Dated at Vancouver BC
October 2, 2006 C. Stewart Wallis P. Geo
Consulting Geologist
(Signed and Sealed)
Dated at Toronto, Ontario
October 2, 2006 John Postle P. Eng.
Consulting Engineer
(Signed and Sealed)
Dated at Vancouver BC
October 2, 2006 Kevin Scott P.Eng
Consulting Metallurgist
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23 CERTIFICATE OF QUALIFICATIONS
C. STEWART WALLIS
I, C. Stewart Wallis, P. Geo., as an author of this report entitled “Technical Report on
the Nixon Fork Project”, prepared for St Andrew Goldfields Ltd., and dated October 2,
2006, do hereby certify that:
1. I am a Consulting Geologist with Scott Wilson Roscoe Postle Associates Inc. My
office address is Suite 304, 595 Howe Street, Vancouver, B.C. V6C 2T5.
2. I am a graduate of McMaster University, Hamilton, Canada, in 1967 with a
Bachelor of Science degree in Geology.
3. I am registered as a Professional Geologist in the Province of British Columbia
(Reg.# 372) and Saskatchewan (Reg.# 10829), a Professional Geologist in the State
of Wyoming (Reg.# PG-2616) and a Certified Professional Geologist registered
with the American Institute of Professional Geologists. I have worked as a
geologist for a total of 38 years since my graduation. My relevant experience for
the purpose of the Technical Report is:
• Review and report as a consultant on numerous exploration and mining
projects around the world for due diligence and regulatory requirements,
including:
o Technical Report on the Pitilla Properties, Sonora Mexico
o Technical Report on the Dolores Property, Mexico
• Managing Director of a consulting company in charge of evaluations, due
diligence, and technical reports on a wide variety of commodities
throughout the world.
4. I have read the definition of "qualified person" set out in National Instrument
43-101 ("NI43-101") and certify that by reason of my education, affiliation with a
professional association (as defined in NI43-101) and past relevant work
experience, I fulfill the requirements to be a "qualified person" for the purposes of
NI43-101.
5. I visited the Nixon Fork Property on September 6, 2006.
6. I am responsible for the overall preparation of the Technical Report.
7. I am independent of the Issuer applying the test set out in Section 1.4 of National
Instrument 43-101.
8. I have had prior involvement with the property that is the subject of the Technical
Report in that I was employed by Nevada Goldfields Inc at the time of acquisition
in 1993. I also visited the property as an independent consultant during the period
June 19-23, 1998, in
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9. I have read National Instrument 43-101, and the Technical Report has been
prepared in compliance with National Instrument 43-101 and Form 43-101F1.
10. To the best of my knowledge, information, and belief, as of the date of the report,
the Technical Report contains all scientific and technical information that is
required to be disclosed to make the technical report not misleading.
Dated 2nd day of October, 2006
(Signed and Sealed)
C. Stewart Wallis, P.Geo.
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KEVIN C. SCOTT
I, Kevin C. Scott P.Eng., as an author of this report entitled “Technical Report on the
Nixon Fork Project”, prepared for St Andrew Goldfields Ltd., and dated October 2, 2006,
do hereby certify that:
1. I am a Consulting Metallurgist with Scott Wilson Roscoe Postle Associates Inc. of
Suite 501, 55 University Ave Toronto, ON, M5J 2H7.
2. I am a graduate of University of British Columbia, Vancouver, Canada in 1989 with a
Bachelor of Applied Science degree in Metals and Materials Engineering.
3. I am registered as a Professional Engineer in the Province of British Colombia
(License # 25314). I have worked as a metallurgical engineer for a total of 16 years
since my graduation. My relevant experience for the purpose of the Technical Report
is:
• Reviews and reports as a metallurgical consultant on a number of mining
operations and projects for due diligence and financial monitoring requirements
• Process engineer at three Canadian base metals mineral processing operations
• Senior metallurgical engineer working for three multi-national engineering and
construction companies on feasibility studies and in engineering design of mineral
processing plants in Canada and South America
• Senior process manager in charge of process design and engineering for a
metallurgical processing plant in South America
4. I have read the definition of "qualified person" set out in National Instrument 43-101
(NI43-101) and certify that by reason of my education, affiliation with a professional
association (as defined in NI43-101) and past relevant work experience, I fulfill the
requirements to be a "qualified person" for the purposes of NI43-101.
5. I have not visited the Nixon Fork Property.
6. I am responsible for preparation of Items 16 and parts of Items 18 of the Technical
Report.
7. I am independent of the Issuer applying the test set out in Section 1.4 of National
Instrument 43-101.
8. I have had no prior involvement with the property that is the subject of the Technical
Report.
9. I have read National Instrument 43-101, and the Technical Report has been prepared
in compliance with National Instrument 43-101 and Form 43-101F1.
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10. To the best of my knowledge, information, and belief, the Technical Report contains
all scientific and technical information that is required to be disclosed to make the
technical report not misleading.
Dated 2nd day of October, 2006
(Signed and Sealed)
Kevin C. Scott, P.Eng.
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JOHN T. POSTLE
I, John T. Postle, P.Eng., as an author of this report entitled “Technical Report on the
Nixon Fork Project”, prepared for St Andrew Goldfields Ltd., and dated October 2, 2006,
do hereby certify that:
1. I am a Consulting Mining Engineer with Scott Wilson Roscoe Postle Associates Inc.
of Suite 501, 55 University Ave Toronto, ON, M5J 2H7.
2. I am a graduate of the University of British Columbia, Canada, in 1965 with a
Bachelor of Science (Applied) degree in Mining Engineering and Stanford
University, Stanford, California, in 1968 with a Master Degree in Earth Sciences.
3. I am registered as a Professional Engineer in the Provinces of Ontario (No.
37184017) and British Columbia (No. 6750). I have worked as a professional mining
engineer for a total of 38 years since my graduation. My relevant experience for the
purpose of the Technical Report is:
• Review and report as a consultant on numerous exploration and mining projects
around the world for due diligence and regulatory requirements
• Mining consulting services to international financial institutions, corporations,
utilities and law firms
• Senior Mining Engineer with a major Canadian mining company in charge of an
open pit and underground operation
• Mine Planning Engineer with a major Canadian mining company in charge of
feasibility studies and long-term development plans
• Past Chairman of the Mineral Economics Committee of the Canadian Institute of
Mining, Metallurgy and Petroleum (CIM) and Co-Chairman of a CIM Standing
Committee on Ore Reserve Definitions
4. I have read the definition of "qualified person" set out in National Instrument 43-101
("NI43-101") and certify that by reason of my education, affiliation with a
professional association (as defined in NI43-101) and past relevant work experience, I
fulfill the requirements to be a "qualified person" for the purposes of NI43-101.
5. I visited the Nixon Fork Property on September 6, 2006.
6. I am responsible for the preparation of the part of Item 1 (Summary), Items 17 and
18 of the Technical Report.
7. I am independent of the Issuer applying the test set out in Section 1.4 of National
Instrument 43-101.
8. I have had no prior involvement with the property that is the subject of the Technical
Report.
9. I have read National Instrument 43-101, and the Technical Report has been prepared
in compliance with National Instrument 43-101 and Form 43-101F1.
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23-6
10. To the best of my knowledge, information, and belief, the Technical Report contains
all scientific and technical information that is required to be disclosed to make the
technical report not misleading.
Dated 2nd day of October, 2006
(Signed and Sealed)
John T. Postle, P.Eng.
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24-1
24 APPENDIX 1
MINE EQUIPMENT LIST
Mining Equipment List:
1) Three Atlas Copco 2.5 yd muckers with push plates. All have new engines (two 912
engines, one F5L413).
2) Two Atlas Copco 14 yd haul trucks, new 413 engines
3) One Jarvis Clark 10 ton haul truck with 8 cylinder 413 engine
4) 2 Ford Newholland mantrip (tractor)
5) 1 Kubota maintenance tractor (w/fuel and service packs)
6) 1 John Deere tractor (engineering)
7) 1 MTI Vein Runner electric/hydraulic jumbo capable of 10 ft rounds
8) 1 double long tom for development (operates with two Gardner Denver air hammers)
9) 25 Gardner Denver Jacklegs
10) 6 Wilden Air pumps
11) 4 -25hp flygt pumps
12) 3-4 25 hp booster fans
13) 2 -50 hp booster fans
14) 150 hp surface main supply fan with new blades. Capable of 56,000 cfm
15) One 350 CFM diesel compressor, one 825 CFM diesel powered compressor, one 190
amp electric Joy screw compressor, one 1200 cfm electric compressor and receiving
tank.
16) Mine heat and 4160 volt MPCs and electricity
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25-1
25 APPENDIX 2
CASH FLOW MODEL
2006 2007 2008 2009 TOTAL
PRODUCTION
Operating Days days 1 49 360 360 180 1,049
Mine Rate t/day 1 40 140 140 140 140
Production t/day 9 8 140 140 140 134
Total Ore Tonnes tonnes 13,118 45,360 45,360 22,663 126,500
Ore Stockpile tonnes 3,512 17,984 23,384 0 0
PROCESSING
Operating Days days 5 1 143 185 213 592
Mill Rate t/day 2 40 240 240 240 240
Mill Availability t/day 2 16 216 216 216 216
Mill Feed tonnes 9 ,606 30,888 39,960 46,046 126,500
Grade
1.00 Gold g/t 2 9.15 29.15 29.15 29.15 29.15
Contained Metal
Gold ozs 9,003 28,948 37,450 43,154 118,555
Gravity Plant
1.00 Au Recovery % 20.0% 20.0% 20.0% 20.0% 20.0%
Recovered Au ozs 1 ,801 5,790 7,490 8,631 23,711
Remaining
Gold ozs 7 ,202 23,158 29,960 34,523 94,844
Copper Flotation Plant
1.00 Au Recovery % 50.0% 50.0% 50.0% 50.0% 50.0%
Recovered Au ozs 3 ,601 11,579 14,980 17,262 47,422
Remaining
Gold ozs 3 ,601 11,579 14,980 17,262 47,422
Leach Plant
1.00 Au Recovery % 0.0% 45.9% 90.0% 90.0% 72.4%
Recovered Au ozs - 5,320 13,482 15,535 34,337
Remaining
Gold ozs 3 ,601 6,259 1,498 1,726 13,084
Reclaimed Tailings
Operating Days days - 122 61 49 232
Tonnes treated t/day - 350 350 350 350
Tonnes treated tonnes - 42,700 21,350 17,291 81,341
1.00 Grade Au g/t - 8.10 8.10 8.10 8.10
1.00 Recovery % - 85% 85% 85% 85%
Metal Produced ozs - 9,452 4,726 3,828 18,006
Net Metal Products
Gold from gravity and leach ozs 1 ,801 11,110 20,972 24,166 58,048
Gold from copper concentrate ozs 3 ,601 11,579 14,980 17,262 47,422
Gold from reclaimed tailings ozs - 9,452 4,726 3,828 18,006
Total 5,402 32,141 40,678 45,255 123,476
Year
TABLE 25-1 PRE-TAX CASH FLOW
St Andrew Goldfields Ltd. - Nixon Fork Mine
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25-2
Year 2006 2007 2008 2009 TOTAL
TABLE 25-1 PRE-TAX CASH FLOW
St Andrew Goldfields Ltd. - Nixon Fork Mine
REVENUE
Gold from gravity & leach circuits, and reclaimed tailings
1.00 Gold Price $/oz 5 50 550 550 550 550
Revenue '000 US$ 9 90 11,309 14,134 15,397 41,830
Refining '000 US$ 2 21 26 28 76
Shipping '000 US$ 1 8 206 257 280 761
Revenue '000 US$ 9 70 11,083 13,851 15,089 40,993
Royalty '000 US$ 5 8 665 831 905 2,460
Net Revenue 000 US$ 912 10,418 13,020 14,183 38,534
Gold from copper concentrate
Payable ozs 3 ,421 11,000 14,231 16,399 45,051
Refining '000 US$ 4 12 15 17 47
Revenue '000 US$ 1 ,878 6,039 7,812 9,002 24,731
Royalty '000 US$ 1 13 362 469 540 1,484
Net Revenue 000 US$ 1,765 5,676 7,343 8,462 23,247
TOTAL NET REVENUE '000 US$ 2,678 16,094 20,364 22,645 61,780
OPERATING EXPENSES
Mining Costs
### Development '000 US$ 3 26 2,005 2,005 1,002 5,339
Production '000 US$ 3 11 1,923 1,923 961 5,117
Total '000 US$ 6 37 3,928 3,928 1,963 10,455
Milling Costs '000 US$ 3 14 3,084 3,310 3,137 9,845
Power Plant '000 US$ 5 89 3,897 3,897 3,803 12,185
Shop '000 US$ 9 8 545 545 567 1,754
Camp Cost '000 US$ 1 68 979 982 999 3,129
Environmental Compliance
& Outside Engineering
General & Administrative Cost '000 US$ 2 78 2,917 2,917 1,897 8,009
EXPENSE SUMMARY
Net Operating Expenses ¹ '000 US$ 2 ,095 15,350 15,578 12,366 45,389
$/t milled 2 18 497 390 269 359
$/oz 3 88 478 383 273 368
Net Capital Expenses '000 US$ 9 ,000 - - - 9,000
Total '000 US$ 11,095 15,350 15,578 12,366 54,389
PRE-TAX CASH FLOW
Annual '000 US$ (8,417) 744 4,786 10,279 7,392
Cumulative '000 US$ (8,417) (7,673) (2,888) 7,392
PRE-TAX NPV '000 US$ 3,579
Unit Cost of Production
Operating ² US$/oz 423 516 421 311 406
Capital US$/oz 73
Total ³ US$/oz 479
Notes 1 Net operating expenses for 2006 are from November and December
2 Equivalent to Gold Institute Total Cash Costs
3 Equivalent to Gold Institute Total Production Cost
'000 US$ 1 0 - - - 1 0
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25-3