ENGINEER MINE PROPERTY

Introduction

The Engineer Mine Property is situated 32 kilometres west of Atlin, British Columbia, and 140 kilometres south of Whitehorse, Yukon. Access is by helicopter, floatplane or boat from Atlin, or by boat / barge from the village of Tagish, 55 kilometres to the north.

History

Engineer Mine was a high-grade gold producer that reached its zenith in the mid-1920s and ceased production in the early 1930’s; primarily due to water ingress issues and an overwhelmed and antiquated mine water pumping system. The main period of mining and development at Engineer Mine was from 1925 to 1927 by Engineer Gold Mines of New York. Underground mining consisted of about 5,500 metres of drifts, shafts, raises and stopes on eight levels. The presence of visible gold was the primary method of identifying and following ore shoots in the veins.

More than 560 kilograms of gold and 278 kilograms of silver were officially produced at realized grades exceeding 39 g/t gold and 20 g/t silver, respectively, from high-grade epithermal quartz-carbonate veins on 5 mine levels. The presence of visible gold was the primary method of identifying and following ore shoots in the veins. All veins remain open at depth and little exploration has been conducted deeper than 200 metres below surface.

Recent History

Several exploration companies worked on the property from the 1960’s to 1980’s, to varying degrees. These include: Tagish Gold Mines in the early 1960’s, Nu-Energy Resources Limited in 1975 who sampled the hydrothermal breccia zone along Shear Zone A on the 5-Level, and Nu-Lady Gold Mines Ltd. in 1979. In 1987, Total Erickson Resources Limited conducted the most comprehensive modern exploration of the property to that date, including an aeromagnetic survey, detailed geology, and drilling.

Gentry Resources Ltd. optioned the property from Total Erickson in 1989, and acquired title to the property in 1990 with Winslow Gold Corp. Ampex Mining acquired an interest in the property from Winslow in 1993, and through further transactions the property interest was passed to Old Engineer Mining Corp. who underwent a name change to Engineer Mining Corp in 1997. Limited mining and development activities occurred through this time.

In 2007, BCGold Corp. optioned the property from Engineer Mining Corp. An exploration program began in 2007 and carried on into 2008, including drilling and property wide compilation. BCGold has spent $1.4 million in exploration at the Engineer Mine Property since acquisition in January, 2007.

Present Condition

A trailer camp with kitchen and housing facilities is established at the old town site on the Engineer Property, immediately up the road from the Burns Building on Tagish Lake. Seasonal tent frames are used for core-logging and processing. Many old roads provide good access to the various showings and developed sites on the property. Some roads have grown over with dense alder but many have been cleared out and are easily passable by ATV.

The underground workings are in various conditions of access. Of the eight levels of underground workings the bottom three are currently flooded (Levels 6, 7, and 8) and the upper four are on local
workings on the veins. The 5-Level comprises the longest and most continuous set of tunnels with
over 3000 metres of workings. At several locations on the 5-level, along the major veins, interconnected stopes extend up to 70 metres above the tunnel to surface and shafts provide access by rope or ladder to sections of the upper levels. The portal near the lakeshore on Tagish Lake is the main entrance. Entrance is by foot, or by electric locomotive. Track is laid over 400 metres along the main cross cut and south along part of the Engineer vein tunnel.

The 5-Level is mostly dry and well-habilitated with water levels less than 30 cm. Some sections at the back of tunnels are flooded and require chest waders for entry. Also, the southern part of the Double Decker vein is accessible but with some effort to climb over and around the unrestored timbers above an underhand stope. The tunnel to the southern section of the Engineer vein is blocked by fallen rubble and timbers but access is possible through a small hole. Air is generally good through most of the 5-Level, except at times towards the northeast around the Boulder-Governor system. Air may be circulated with a compressor and fan system.

Potential Mineral Target

The Engineer Mine Property does not have a NI 43-101 compliant or, for that matter, historic resource estimate. That is not to say that the potential for finding additional high-grade gold mineralization and developing a compliant resource is limited. On the contrary, the exploration upside for additional high grade gold mineralization at Engineer Mine is considered excellent. Significant potential also exists for a bulk tonnage, lower grade gold resource associated with the Shear Zone “A” hydrothermal breccia system, partially drill tested by BCGold in 2008.

Typically, narrow-vein, high grade historic gold mines rarely had more than a year or two of mineral reserves ahead of them at any given time. This is because in these types of mineral deposits, gold mineralization is concentrated in erratically distributed and discrete, high-grade pockets, exhibiting what is termed a high “nugget effect”. It is this nugget effect that makes conventional gold grade and tonnage estimates, based primarily upon diamond drilling very difficult and unreliable. The “old timers” chose to put more time, effort and dollars into tunneling on structure and mining on grade, instead of trying to develop a mineral resource by conventional means. Diamond drilling was merely a tool used to locate new veins. There are more than 25 known veins at Engineer Mine. Only 4 have seen limited production and exploration to date.

BCGold has calculated a potential mineral target at Engineer Mine consisting of between 100,000 to 150,000 tonnes, averaging 8-12 g/t gold and containing between 26,000 and 57,000 ounces of gold. This estimate is conceptual in nature and mostly confined above the lowermost mine workings (8 Level). It is non NI 43-101 compliant and based on a 3-D Vulcan^TM model developed by BCGold Corp. that incorporates historic geological maps and sections, chip samples and production records. There has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in this target being delineated as a mineral resource.

Near Term Production Potential

The Engineer Mine Property offers excellent potential for near-term, small-scale, high-grade gold production from existing underground headings on the Engineer, Double Decker and Boulder Veins. BCGold was issued a dewatering permit by the British Columbia Ministry of Environment in April 2009, that allows the Company to dewater the lowermost 3 levels of the mine, which are currently flooded. De-watering the mine would provide access to the lowermost 8th Level of the mine, which has remained flooded since the mine closed in the early 1930’s. It is on this level along the Double Decker Vein that historic sampling records indicate a 24.7 metre section averaged 38.0 grams per tonne (g/t) gold, containing a 10.0 metre interval averaging 84.3 g/t gold, across the width of the drift (Brinker Report, 1927). Reportedly, only 10 metres was mined above this interval on the 8th Level before the mine closed in the early 1930’s, primarily due to water ingress issues and an overwhelmed and antiquated mine water pumping system.

Prior to de-watering the mine however, BCGold intends to drill-test depth extensions of the high-grade stopes of the Engineer and Double Decker Veins in 2010, between the 5th and 8th Levels of the mine. This will be the first time that BCGold will focus on exploring for additional high-grade gold shoots at Engineer Mine. Drilling success on these high-grade gold targets would provide the impetus to dewater the lowest 3 levels of the mine to provide access for geological mapping, bulk sampling, resource definition drilling and test mining.

BCGold has most of the required equipment on site to facilitate underground dewatering, rehabilitation and bulk sampling of vein zones below the 5th Level. The Company also has the ability to process any mined gold-bearing material by utilizing a fully operational and permitted 25 tonnes per day (tpd) mill on the property – see
Photo Gallery.

Previous Exploration - BCGold Corp.

2007 Exploration Program

In 2007, BCGold completed a $250,000 exploration program on the Engineer Mine Property. The field portion of this program encompassed a preliminary environmental review by Golder Associates, a comprehensive geological overview, rock sampling, re-logging of select drill core, and confirmatory underground mapping and sampling of the 5th Level workings. BCGold also compiled all available historic mine data and has developed a 3-dimensional model of the Engineer Mine using VULCAN™ software. This model provided the basis for a preliminary potential resource estimate and is being used for exploration planning purposes.

Narrow vein, high-grade gold and shear-hosted, bulk tonnage gold exploration targets

It soon became apparent after a preliminary inspection of historic records, mine plans, underground mapping and sampling on 5th Level and development of a 3D VULCAN™ model that excellent potential exists for additional high-grade and gold and silver vein mineralization at the Engineer Mine Property. This potential is manifest by 1) all known, major veins remain open along strike and dip, 2) the existence of significant high-grade gold mineralization (24.7 metres averaging 38.03 g/t Au, containing 10 metres averaging 84.35 g/t Au) on the deepest mine level, 3) an estimated potential mineral target of up to 57,000 ounces of gold from known veins, and 4) a number of earlier, gold-bearing drill hole vein intercepts, that appear to represent new, untested veins have never been followed up. Furthermore, no significant exploration has been conducted on any vein-type mineralization at Engineer Mine deeper than 200 metres below surface.

In 2007, BCGold sampling on the Shaft Vein on the 5th Level returned bonanza-grade gold (Au) and silver (Ag) assays from select grab samples. One sample, taken from a narrow vein exposed in the drift back assayed 860 g/t Au (25.08 oz/ton) and 1,774 g/t Ag (51.74 oz/ton). This sample was retrieved from more than 85 metres below any previous development on the Shaft Vein. As this vein is largely un-explored and has received minimal historic development, the exploration upside for additional and similar high-grade gold and silver mineralization along the Shaft Vein is excellent.

In March, 2008 BCGold received a technical report prepared by Mr. Clive Aspinall, M.Sc., P.Eng., a company consultant, recommending a 5,000 metre diamond drill program to be completed on the near-surface, bulk-tonnage gold Shear Zone “A” target.

Historic underground chip sampling across Shear Zone “A” supports the premise that this mineralized structure could host a 0.5 million – 2 million ounce, 6-12 g/t gold deposit. This potential quantity is conceptual in nature. There has been insufficient exploration to define a mineral resource on Shear Zone “A” and it is uncertain that further exploration will result in this target being delineated as a mineral resource. Shear Zone “A” had not been systematically explored by diamond drilling.

Mr. Aspinall’s technical report also made recommendations to dewater the existing underground workings to the 6th Level (Engineer Mine is currently flooded below 5th Level), mine rehabilitation and underground mapping and sampling. Suggested sampling included a 500 kilogram bulk sample from the high-grade Engineer Vein on the 6th Level.

2008 Exploration Program

In 2008 BCGold conducted a $1.2 million exploration program at the Engineer Mine Property and drilled 7 holes in 1,846 metres, targeting a 400 metre long segment of Shear Zone “A” for low-grade, bulk tonnage gold mineralization. BCGold drilled 7 holes in 1,846 metres, targeting a 400 metre long segment of Shear Zone “A” for low-grade, bulk tonnage gold mineralization. Drilling confirmed that Shear Zone “A” is a major structural feature that hosts significant widths of hydrothermal breccia with low grade gold and silver values. Assayed widths and grades are tabulated below in Table 1 and graphically presented in Figure 2.

Table 1

Shear Zone “A” is a northwest-trending splay of the terrane-bounding Llewellyn fault, with a protracted deformation history possibly beginning as early as Middle Jurassic. The sub-vertical Shear Zone “A” has been demonstrated, by drilling, to host multiple phases of hydrothermal breccia and quartz-carbonate veins that are genetically and temporally related to a nearby Eocene Sloko volcanic complex. The historically producing high-grade gold veins on the Property, the Engineer and Double Decker veins, are tensional veins associated with the latest reactivation of Shear Zone “A” and are spatially related to a hydrothermal event related to the Sloko volcanic centre. BCGold’s 2008 drill program targeted Shear Zone “A” at its intersection with the northernmost extent of the high-grade gold veins, partially testing the hydrothermal breccias-bearing structure between 50 – 250 metres below surface. All 6 completed holes were successful in hitting the hydrothermal breccia and quartz vein zone.

While the drill results for Shear Zone ‘A’ fell short of management’s expectations in terms of gold grades, BCGold is highly encouraged by the size and continuity of the Shear Zone ‘A’ hydrothermal breccia zone and the exploration implications. BCGold will review these results in conjunction with other, on-going studies over the next few months to determine the best way to proceed at the Engineer Mine Property.

Shear Zone “A” Hydrothermal Breccias

The Shear Zone “A” hydrothermal breccia zone is up to 40 metres wide at its southern end, and branches out to the north into several fingering bodies and individual breccia lenses ranging from 20 centimetres to 30 metres wide. The strongly sheared and silicified zone that hosts the veins and breccia bodies is 80 metres wide. It is localized along the northern boundary of a deformation zone approximately 150 metres wide that makes up the older Shear Zone “A” corridor. Mineralization in Shear Zone “A” remains open along strike and at depth.

Several phases of hydrothermal breccia and multiple cross-cutting quartz and quartz-pyrite veins occur in the Shear Zone “A”. Quartz and/or pyrite-cemented breccias have angular to subrounded wall rock argillite clasts as well as earlier vein and breccia clasts. Intrusive clasts from the local monzodiorite porphyritic dyke suite are also found locally. Late fine-grained silicification is pervasive across some earlier breccias. Mineralization is associated with arsenopyrite and stibnite in fine quartz veins. Zones of the late, pervasive silicification return the best gold and silver values of up to 1.5 g/t over 0.9 metres (BCGE-08-01).

Additional Work and Studies

In 2008, BCGold geologically mapped and sampled the surface and 5th Level underground in detail. BCGold also conducted limited underground restoration work on the 5th Level, developing access to the internal shaft in preparation to de-water the lower workings in 2009.

A total of 72 rock samples were collected as evenly-spaced channel samples over a cumulative strike length of 41 metres from 7 accessible vein segments on the 5th level. BCGold has also analysed more than 1,900 rock and core samples using an ASD TerraSpec (350-2500nm) spectrometer. Results will be used for alteration mapping and to vector towards higher gold grades in the Shear Zone “A” hydrothermal breccia system. A number of select rock samples were also submitted for petrographic analysis. Results have been compiled, interpreted and modeled 3-dimensionally, using VULCAN^TM software and in-house expertise.

2009 Exploration Program

BCGold curtailed exploration at the Engineer Mine property in 2009, primarily due to economic constraints brought about by the global equity market meltdown. Management made the difficult decision to put the Engineer Mine property on hold until market conditions improved substantially. Prior to this decision, BCGold was taking the steps necessary to de-water the lowermost levels of the mine to provide access to high-grade stopes on the Engineer and Double Decker veins on 8 Level.

In May, 2009, BCGold announced the Company had received a permit from the British Columbia Ministry of Environment to fully dewater the lowermost 3 levels of the Engineer Mine. During the summer months Snowden was commissioned to prepare a bulk sampling protocol for the Engineer Mine, as this would provide a sound basis for an underground definition drill program, a NI 43-101 compliant Mineral Resource estimate and possibly future trial mining. A detailed report and proposed protocol was received by the Company in October, 2009.

2010 Proposed Exploration Program

BCGold is currently formulating plans to drill-test depth extensions of the high-grade stopes of the Engineer and Double Decker Veins in 2010, between the 5th and 8th Levels of the mine. Drilling success on these high-grade gold targets would provide the impetus to dewater the lowest 3 levels of the mine to provide access for geological mapping, bulk sampling, resource definition drilling and test mining.

last updated: January 15, 2010