Company Property Holdings

The principal property of the Company is a wholly owned interest in 240+ claims, comprising most of the San Francisco Mining District located in Beaver County Utah and includes 330 acres in the Beaver Lake Mining District. Horn Silver also owns a 50% interest in 7 patented mining claims comprising the Imperial Group.

The two principal mines, the Horn Silver Mine and the Cactus Mine have produced significant amounts of silver, lead, copper, zinc and gold. The ores from these mines exist in both the oxidized and sulfide state. Limited production has been achieved from several smaller mines in the district.

The Horn Silver Mine

Horn Silver Mine – OVERVIEW

The Horn Silver Mine, which represents less than 1% of the overall acreage, shipped silver, gold, copper and lead ore from one breccia pipe and was one of the largest producers of the silver in the United States until 1930. During its production history the Horn Silver Mine produced 17 million ounces of silver, 25 thousand ounces of gold, 9 million pounds of copper, 196 thousand tons of lead and 23 thousand tons of zinc; all from a single 20 acre mining claim. The value of this mine production at current metal prices is around $300,000,000.

The San Francisco Mining District was organized in 1871, but attracted little attention until the discovery of the Horn Silver Mine by James Ryan and Samuel Hawks in 1875. Subsequent owners of the mine extracted 25,000 tons of high-grade lead silver ore and had developed the mine to a depth of about 280 feet. The mine was then sold to Horn Silver Mining Company which was incorporated under Utah law in 1879. Two mills were constructed near Frisco, a townsite near the mine. The mine operated continuously until 1885, with the mineralized material being treated at the two plants.

In 1885, a cave in from the 700 foot level to the surface caused considerable damage, requiring that a new shaft be sunk to a depth of 1,600 feet, unfortunately again in the volcanic rocks east of the or zone. The mine was operated through the new shaft until 1919 when the mine was closed for economic reasons.

In 1929, mine was leased to Albert Lee. Kipps and a program of rehabilitation of the underground workings to develop lower levels was begun. This program lead to the discovery of a substantial tonnage of ore. In 1944, Mr. Kipps assigned his lease to Metal Producers, Inc. The 1,600 foot production shaft had to be abandoned due to subsidence of the hanging wall of the vein structure. A connection was them driven from the existing King David mineshaft located in the stable limestone footwall to connect with the 650 foot level of the mine.

The mine can be accessed by the 816 foot King David timbered shaft sunk in the limestone footwall some 1,200 feet from the old mineral deposit and an interior shaft sunk to the 1,100 foot level from the 700 foot level. All other shafts fitted for hoisting ore or waste were sunk into the highly altered volcanic hanging wall and have caved in many years ago. A manway serving as an escape route is open to the south end of the mineralized zone.

The mine has been explored along the fault line to the 1,600 foot level, but only limited lateral work is been attempted below the 1,100 foot level or into the limestone footwall for any distance. Mineable ore bottomed in the main fault line zone and only insignificant amounts of mineralized material have been discovered below the 1,000 foot level.

Horn Silver Mine – Geology

Mineralization is hosted by a north-south trending high angle fault zone which reaches widths of 100 feet and juxtaposes west dipping Cambro-Ordovician carbonates on its west side with Tertiary volcanics on the eastside. Quartz monzonite intrudes the structure in the northern part of the mine area. Mineralization in the fault zone consists of silver-rich lead and zinc oxides and some copper oxides to a depth of about 600 feet. Below 600 feet, the mineralization is dominated by sulfides, though oxidation in the structure extends to at least 1,000 feet in depth.

Total production of oxide, mixed sulfide and oxidized, and sulfide ore from 1875 through 1952 (the last year of operation) was 835,000 tons averaging 21.5 ounces per ton of silver and 23% lead. A zone of supergene copper enrichment was mined mainly between 1899 and 1905. For the 290,000 tons of ore for which zinc production was reported, the average grade was 8%. Zinc grades were not reported until 1904. Zinc rich ore was avoided in favor of lead-silver rich oxide ore for most of the life of the mine due to a lack of processing facilities and the suitability of the oxide ores for direct shipping.

Reviews of the property since production ended, report extensive zinc rich oxide and zinc rich sulfide ore remaining in place in the workings. Little drilling has been done to determine the extent of this mineralization in the bedded carbonate rocks away from the existing workings.

Underground development in the mineralized fault zone reaches a depth of 1,600 feet and extends long strike for approximately 700 feet. No extensive lateral workings were developed below the 900 foot level. Stoping was so extensive that in 1885 all workings above the 700 foot level collapsed. Workings below the 600 foot level are in sulfide rock to at least 1,000 feet below the surface. In several areas, manto-style mineralization following the carbonate bedding dipping west was exploited. One area occurred on the 300 foot level, but little is recorded of its extent.

In the 1930s, a manto-style sulfide mineralized zone, up to 80 feet thick based on stope thickness, was mined between the 800 and 900 level workings and extended at least 175 feet down dip into the carbonates. Manto – style mineralization is recorded on the 700 foot level as well. Only two reverse circulation precaution drill holes tested the carbonates on the west side of the mineralized fault. These holes were drilled in 1989 and are 490 feet and 960 feet deep. Because of the western rise in topography, neither hole was deep enough to reach the downdip projection of the 800/900 level manto.

The Cactus Mine

The Cactus mine, with the production history dating from 1910, shipped significant amounts of copper, gold and silver until about 1913. The Cactus Mine is located on Horn Silver’s patented claims near the northern boundary of the properties. It was discovered in 1870. During the 1880s, a French company constructed a charcoal fired smelter near the outcrop, which produced an unknown amount of blister copper.

In 1900, the mine was acquired by Samuel Newhouse, who built a 1,000 ton per day concentrator, and mined and treated nearly one million tons of ore mined underground from the timbered square-set stopes. The mine was developed to the 900 foot level. Ore was mined from an elongate breccia pipe enclosed in the main granodiorite stock. The breccia filling consisted of quartz, tourmaline, siderite, specularite and chalcopyrite, the latter constituting the only commercial material as an ore of copper containing minor amounts of gold and silver.

The Cactus Mine has not been operated since 1913. Due to the caved condition of the timbered stopes, it is impossible to estimate the tonnage and grade of any mineralized material left in the stopes from prior operations, or to examine any blocks of mineralize material left unmined, if any. No proven reserves of commercial mineralized rock are known to exist in the Cactus Mine.

Marble Deposits

Thirteen of the claims contain significant tonnages of marble. A series of lessors have conducted operations on certain of these claims more or less continuously since 1988. These operations have been of a very small scale, with shipments totaling only 50,000 tons for the entire period, primarily for landscaping rock. The deposits are currently leased to Great American Resources.

Wollastonite

During 1990 exploration, included drilling and surface mapping of the Washington claim, which contains a significant amount of Wollastonite (a fibrous calcium meta-silicate). The results of this work delineated in excess of one million tons of Wollastonite. Wollastonite is used in a wide variety of industrial applications including plastics, ceramics and friction products. Industrial mineral deposits that are distant from markets, as is the case in this instance, suffer a distinct economic disadvantage due to transportation costs.

Cupris Tungsten

A tungsten mineral in the form of scheelite has been observed near the Cupric Mine shaft with a significant distribution of mineraliztion grading less than 0.5%, with higher grade material occurring in fractured areas of the host rock. Efforts have been made to delineate economic reserves of tungsten in this area including bulk sampling of in excess of 200,000 pounds which assayed about 0.20% tungsten. A small shipment of ore containing 0.8% tungsten was mined and shipped in 1943.

Imperial Mine

In 1989 Horn Silver acquired a one half interest in the Imperial mine and adjacent patented mining claims. This group of seven claims adjoins Horn Silver Mines properties and contains potentially significant reserves of sulfide copper ore as well as important tunnel sites.

An area of contact between the limestone and quartzite sedimentary rocks and the Cactus Stock granodiorite, produced extensive copper mineralization in this group of seven claims. The area was primarily prospected for gold and silver ores. The mineralized area contains some gold and silver values. Some geological reports have inferred significant mineable tonnages of copper ore, however, access to the claims is difficult due to steep topography.