DEPOSIT TYPE
The mineralization identified at the Long Valley property is typical of the shallower portions of an epithermal, low-sulfidation type of gold-silver deposit. Other examples of this type of deposit, which share some similarities to Long Valley, include the McLaughlin deposit in California and the Hycroft (Sulfur) deposit in Nevada. In common with these deposits, gold and silver mineralization appears to have taken place at very shallow depths and is associated with a relatively recent volcanic-related hydrothermal system. In addition, the mineralized zones are typically associated with clay alteration (kaolinite) and silica replacement of volcaniclastic host rocks. This type of deposit typically contains very low amounts of base metals.

Mineralization
Several areas or zones on the Long Valley property are known to be mineralized with low grades of gold and silver.These areas are known as the North, Middle (also called Central), South, Southeast, and Hilton Creek areas. Based on drilling, mineralization appears to generally be contiguous between the South, Southeast, and Hilton Creek zones. These same zones appear to contain the vast majority of the estimated mineral resources described later in this report. Drilling is widely spaced in and between the North, Middle, and South zones, and it may be possible that with additional drilling, these zones may be shown to be contiguous with the better-defined zones to the south.

The principal host rocks for the gold mineralization are the caldera-fill interbedded siltstone, tuff, and volcaniclastic sedimentary rocks and, to a lesser extent, the adjacent and underlying resurgent rhyolite.

The base of the oxidized zone was generally defined by Royal Gold as the last occurrence of the oxide mineralization within the mineralized zone. As such, mixed oxide-sulfide and sulfide mineralization occurs above this boundary. This oxide/sulfide boundary modeled by Royal Gold is undulating to locally flat-lying, lies at depths of between 100 and 250 feet, and is often coincident with or slightly above the current water table. Grades of gold mineralization are typically the same both above and below the oxide/sulfide boundary.

Gold-silver mineralization is quite continuous throughout the zones and is well defined using a 0.010 oz Au/ton cutoff grade. Numerous zones of higher-grade mineralization (0.050 oz Au/ton) are present within the continuous zones of low-grade (0.010 oz Au/ton) gold mineralization, particularly in the Hilton Creek zone. These higher grades may relate to zones of enhanced structural preparation. Silver grades are generally in the range of 0.1 to 0.5 oz silver (Ag)/ton within the gold-mineralized zones, appear to be more erratic in nature, but generally have a positive correlation with higher gold values.

Mineralized zones contain fracture coatings, veinlets, and disseminated iron oxide minerals that were formerly grains of pyriteand marcasite. Opal and chalcedony veinlets with pyrite or marcasite, or iron oxides, are common, but generally less than a few tenths of an inch in width. Adularia is present in fractures and veinlets at depth and as patches of replacement of the rhyolite groundmass in the western margin of the deposit. In much of the deposit, mineralization is associated with zones of clay alteration and/or silicification.These alteration types are well developed in all of the volcaniclastic sediments and, as such, host-rock type does not appear to have a major control over the distribution and grade of mineralization. The predominant clay mineral has been determined to be kaolinite, while the silicification types can be chalcedony, quartz, or opal.Multiple periods of brecciation and silicification are evidenced by cross-cutting silica veinlets and silicified breccia fragments in otherwise clay-altered rocks.

The distribution of the mineralization appears to be spatially related to faults associated with the north-south-trending Hilton Creek fault zone.Splays of this fault zone are projected to trend through the central part of the Hilton Creek mineralized zone, as well as the Southeast zone, with the assumption that the altering and mineralizing fluids ascended along these fault conduits and then spread laterally.Higher-grade zones may also be related to areas of cross-faults and fractures.

The Hilton Creek mineralized zone is known to be some 8,000 feet in length, while the Southeast zone is about 5,000 feet in length. The mineralized zones are generally flat-lying or have a slight dip (10-15 degrees) to the east and have a width in plan view (across the trend) in the range of 500 to 1,500 feet, but average about 1,000 feet in width. The mineralized zones are typically from 50 to 200 feet thick and average about 125 feet thick in the Hilton Creek zone, and 75 feet thick in the Southeast zone. Mineralization in the South and Southeast zones typically is exposed at or very near the surface, while the top of the Hilton Creek mineralization is usually covered by 20 to 50 feet of alluvium.

The Long Valley Project is planned to be mined using conventional open pit mining methods. The mine design and planning are based on the estimated grade of the resource model(provided by MDA; see Table 16-1for block model location and size)and Whittle pit shell analysis. The ore and waste will be drilled and blasted using a rotary blasthole drill and ammonium nitrate fuel oil (ANFO) and transported in dump trucks. The mine plan calls for the leachable material from the pits to the heap leach pad at a rate of 22,000 short tons per day.The mine plan includes concurrent backfilling and closure within +/-25 feet of original topography.

Pit Design
For the Long Valley project, average mining cost and G&A cost from similar deposits were used as a basis for Whittle costs. Processing costs used in the Whittle pit analysis were specifically evaluated for the Long Valley deposit.

The ultimate pit consists of two separate pits, a larger pit and smaller satellite pit. The primary pit is divided into 3 phases with similar quantity of material, and the smaller satellite pit is considered as a separate 4th phase.

Within the phases, pits were designed with an overall pit slope of 45°, using a batter angle of 80°, bench height of 20 feet (doubled 10 feet benches). Catch berms are 16 feet wide. All in-pit haul roads were designed with a maximum 10% grade and a width of 90 feet.

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The Long Valley project would employ open pit mining with a conventional heap leach system on a 365 day per year 24 hour per day basis. The heap leach will utilize crushed run-of-mine (ROM)material at a P80of 1½ inches (37.5 mm). The crushed material will be agglomerated with cement and transported to the heap leach via conveyor belt.

The heap leach would consist of a suitable area lined with a containment system, typically a linear low-density polyethylene (LLDPE) liner with an over liner of sized material to facilitate drainage and to protect the liner during initial stacking. Within this over liner would be placed drainage pipes to conduct the leach solution to the centralized collection ponds. The crushed material is stacked in lifts on the lined pad by a radial stacker. The stacker would be fed by a series of jump or grasshopper conveyors that would be fed from the main overland conveyor from the agglomeration. The lifts are targeted at 32 feet (10 meters) in height wi ........