Hercules Property



Note: the History of Hercules has been taken from the 43-101 Technical Report, dated September 7, 2012, by Doug McGibbon

The Hercules Property is situated within and on the margins of the Como mining district, located in Lyon County, Nevada. The Como district was worked as early as the late 1850s, before the famous Comstock Lode deposit was discovered about 10 miles (16 km.) to the north by prospectors following float upstream from placer gold deposits at Dayton. By the early 1860’s the Como district was abandoned due to the rich lodes having been discovered at Virginia City (Russell, 1981). In the late 1880’s the Hercules Mining Company explored the occurred with the excavation of another 1,500 feet (450 m) of underground workings.

Although no official records are available, based on the lack of large volumes of dump material and the size of the underground workings, this combined work may have produced approximately 5,000 ounces of gold and 20,000 ounces of silver. Average grades for this production are estimated to have been around 0.5 opt gold and 5 opt silver based on the required value for shipping ore during this period and recently reported underground sampling results (Goodall, 2003). An attempt was made to carry out a placer operation in the northeastern part of the property in the late 1970’s to early 1980’s. This project failed due to the very fine size of gold particles which prevented efficient gravity recovery (H. Duerr, oral communication). More of the recent exploration history of the property is described in Section 9, Exploration. However, none of the work detailed here or in Section 9 was for the benefit of or on behalf of Iconic.

Mr. Paul Noland completed a technical report on the property for Iconic’s joint venture partner Willow Creek Enterprises, Inc. (“Willow Creek”), entitled “Hercules Project, Lyon County, Nevada, Revised Technical Report” and dated April 6, 2011 (the “WCE Report”), to ascertain the potential for the property and provide guidance in further drilling. The WCE Report included an historical estimate (the “Willow Creek Estimate” or ‘WCE’) which the author is not treating as a current mineral resource or mineral reserve under NI 43-101. The WCE Report described the Hercules property as containing a “drill indicated resource” of 24 million tons at an average grade of 0.024 opt Au-equivalent based on 0.010 opt Au-equivalent cut-off grade equating to approximately 580,000 contained ounces (470,000 ounces Au and 6,500,000 ounces Ag). The WCE Report also described an “inferred mineral resource” of approximately 24 million tons at an average grade of 0.021 opt Au-equivalent for approximately 527,000 contained ounces (427,000 ounces Au and 6,000,000 ounces Ag). Au-equivalent was calculated by adding the assayed Au value to 1/60 of the assayed Ag value. These “drill indicated resources”, which the author is treating as a historical estimate, are referred to as the Willow Creek Estimate in this Technical Report. The Willow Creek Estimate was prepared prior to Iconic acquiring an interest in the Hercules property.

The WCE Report used methods to calculate the Willow Creek Estimate similar to an “indicated mineral resource” as identified in section 1.2 of NI 43-101. The Willow Creek Estimate was based on 113 of 221 drill holes distributed throughout four separate Target areas (West Cliffs, Loaves, Northeast and Hercules). Many of the earliest drill holes were assayed for gold only and were consequently removed from consideration in preparing the Willow Creek Estimate. The Willow Creek Estimate utilized polygons created on cross-sections of the existing drill holes. The polygons were projected to surface where surface trench sampling was available. This projection from drill intercept to the surface trenching has not been substantiated by drilling, or confirmed by known geology in most areas. In addition, the trench samples utilized composites of up to 50 feet or greater, which have not been verified sufficiently by resampling or ‘twinning’. Consequently, this trench sampling is not suitable for a NI43-101 compliant resource estimate. The sections were spaced on 100 foot centers through the Hercules and Northeast areas and spaced at 200 foot intervals on the Loaves and West Cliffs areas. A gold equivalent was used based on the historic and unverified metallurgical work conducted in the mid 1980’s. The reported and unverified recoveries in conjunction with the near surface, oxidized intercepts in historic drilling and trenching suggest the low cut-off grades may be an acceptable working hypothesis.

The WCE Report used methods to calculate an “inferred resource” in an equivalent manner as an “inferred mineral resource” identified in section 1.2 of NI 43-101. The method used to identify the “inferred resource” utilized some of the additional 221 drill holes not previously used in the Willow Creek Estimate, which is superseded by this report, as well as abundant surface sampling and geologic mapping of apparent undrilled extensions of alteration and veining from the four areas identified above. The inferred areas were restricted to obvious outcropping alteration and drill intercepts and did not include any significant areas of post-mineral cover.

Based on the above descriptions of the techniques and data used, the author believes that the Willow Creek Estimate in the WCE Report is an historical estimate and does not represent current mineral resources or mineral reserves under NI 43-101. The Willow Creek Estimate for the four Target areas were calculated by Willow Creek using wide spaced and close spaced drill holes with continuity between some areas only suggested by geology and alteration patterns. The author and QP of this report reviewed the historic WCE by examining the cross sections, mineral polygons utilized for the estimate, and drill and trench data. Based on this examination, the author determined that the WCE utilized methods, parameters and assumptions which did not rise to the level of an NI43-101 mineral resource. The author of this report did not review in detail the calculations used in the Willow Creek Estimate to verify their accuracy or validity, since he had already determined that the methods used would not allow the WCE to qualify as a NI43-101 mineral resource. A qualified person has not done sufficient work to classify the Willow Creek Estimate as current mineral resources or mineral reserves under NI 43-101. In addition, the WCE should not be relied upon due to the irregular and sometimes widely spaced drill intercepts, unverifiable drill and trench composite samples, and the unsupported projection of mineral polygons between sections, between drill intercepts, down dip and along strike.

The Willow Creek Estimate is considered relevant only to the extent that it provides an indication that mineralization may exist within the property boundaries and as such it provides the four targets of exploration for Iconic going forward.

An NI 43-101 compliant resource at Hercules is not offered with this report. The author did calculate a resource for the Hercules project which utilized more sophisticated, computer modeling methods. However, this subsequent resource utilized the same drill and trench data as the WCE. These drill and trench data were later determined to be of insufficient spacing for a NI43-101 compliant resource, and could not be sufficiently v erified to the satisfaction of the BCSC. Consequently, that resource has not become part of the current report. Iconic has determined that historic and current drill spacing through the mineralized targets is not sufficient to support a compliant resource estimate. Additional twinning of historic drilling and trenching is also needed before historic data can be used to support a NI 43-101 resource.




Drilling and Exploration

The Project has at least 240 shallow historic drill holes, mostly within the Northeast target zone. Of the drilling which was conducted in 2011, 20 holes were attempted, however 18 holes were drilled to depth, and two holes were lost due to a cave-in at 20 m (70 feet), (Hole H16-11), and equipment failure on the second hole (H20-11). Drilling was performed to an average depth of 96 m (308 feet) of penetration per hole; with a true depth from the surface closer to an average of 67 m (215 feet) of penetration in the four target zones.