Lone Mountain Explained
Shareholders Letter March 1, 2009
Dear Shareholders and Prospective Shareholders
Many of you have called to ask us to explain the significance of the results in our news releases of 2/17/09 and 2/27/09.
You ask, "Are these results good?" The answer is a resounding "YES". Given the estimated grade and tonnage and the leachability at Lone Mountain, our geological team with 150 years of collective copper expertise, enthusiastically believes that we have a significant leachable copper deposit at the Lone Mountain project. Here's why...
The Lone Mountain porphyry copper system is located near Silver City, New Mexico. It is situated in a well-known mining district, seven miles southwest of the Santa Rita-Chino mine and ten miles northeast of the Tyrone mine; both of these mines are large open-pit copper operations owned and operated by Freeport-McMoRran.
What is "leachable copper"?
Leachable copper is the least expensive and most accessible copper to mine from big porphyry copper deposits. Leachable copper mineralization typically forms close to the surface as a "blanket" on the top of the much larger sulphide copper deposit.
Leachable copper is mined using a simple, low cost/low tech leaching process called Solvent Extraction Electrowinning (SX-EW). In the last 15 years SX-EW has revolutionized copper mining and made it possible to mine near-surface leachable copper ores profitable with grades as low as 0.12% copper (at a cutoff grade of 0.05% copper) and at copper prices as low as $US0.70/lb.
Today, producing copper companies in the region are expanding their low operating cost leachable copper projects and shutting down their higher operating cost copper sulfide projects, which also require larger capital costs in the form of mills and flotation plants.
Grade, Tonnage and Leachability at Lone Mountain
In the first phase of our drilling program at our Lone Mountain Project we intersected 600 feet with an average grade of 0.205% leachable copper with the last 50 feet grading 0.498%. Previous drilling at Lone Mountain similarly intersected thick intervals between 0.2 and 0.37% copper.
The Company has calculated a Potential Estimate for the leachable copper zone at Lone Mountain (non NI43-101 compliant) of between 110 and 160 million tonnes grading between 0.20% and 0.29% copper. This is based on all drill data (44 holes, 100-250m spacing) to date on Lone Mountain, including the recently reported drill program by Continent (February 17, 2008). The Estimate is the result of modeling the near surface leachable copper zone and applying simple weighted averages of assays from drill holes within modeled solids.
The quoted figures are reported as an exploration target. The potential quantities and grades are conceptual in nature. Insufficient exploration has been done to define a mineral resource. It is uncertain if additional exploration will result in discovery of a mineral resource on the property. Please bear with us on the legalistic language - that is an Exchange requirement. The important thing to remember is "110 and 160 million tonnes at between 0.20% and 0.29% copper"
Furthermore, our recent metallurgical tests indicate excellent leach recoveries of between 67% to 84%. Please see our 2/27/09 news release for more details.
How does Lone Mountain Compare to Nearby Producing Mines?
The following table shows the tonnage and grade of producing leachable copper mines in Arizona and New Mexico. The Potential Estimate at Lone Mountain of 110 - 160 million tonnes with grades between 0.20% and 0.29% copper are well within the range of many producing leachable copper mines in this region (see following table) including the Bagdad mine with an average grade of 0.12% copper or the Morenci mine with an average grade of 0.19% copper.
Bottom Line
Given the estimated grade and tonnage and the leachability at Lone Mountain, our geological team - with 150 years of collective copper expertise - enthusiastically believes that we have a significant leachable copper deposit at the Lone Mountain project.
Best wishes,
Patrick Highsmith, Chairman
Continent Resources Inc.