Management wishes to update shareholders on the status of the Company and its current activities.
Responding to an eroding climate for the mining industry in general and gold in particular, over the past year Tombstone has concentrated on reducing costs while protecting and consolidating its key property assets. The Company has a positive working capital position of $1.1 million and project receivables of an additional $1.5 million. Maintenance and overhead costs have been reduced to approximately $300,000 per year. With this strong financial position, Tombstone is well placed to react to changing market conditions and to take advantage of business opportunities.
Our property portfolio consists of five key projects: Minoro, Honduras; Seboruco, Venezuela; Tres Marias, Mexico; Lorrie, Yukon; and, Jackpot, British Columbia. In addition to these principal assets, the Company owns a substantial exploration portfolio in Venezuela, and has a database of 25,000 proprietary exploration/development records compiled by New Jersey Zinc Exploration Company.
Minoro Project, Honduras
In the summer of 1997 the Company was required to discontinue physical operations at Minoro pending granting of exploitation rights to the property by the Honduran government. During the last two years all necessary studies and reports were filed with the applicable government ministries. We are pleased to report that exploitation rights to Minoro have now been granted to Tombstone, and work can continue on the Project. For the past 30 days work crews have been actively preparing the project for further exploration and development.
Tombstone now owns 100% of the Minoro Project, as a result of recent negotiations with Glamis Gold Ltd. to acquire its 20% participating interest.
To date 186 drill holes have been completed at Minoro. The potential of the deposit now stands at 1.4 million ounces of gold, plus copper, which makes it the largest known gold/copper resource in Honduras. Tombstone is currently entertaining joint venture proposals.
Seboruco Project, Venezuela
In the early 1960's New Jersey Zinc evaluated this red-bed copper/silver showing located in the western part of Venezuela, however were unable to conclude a satisfactory agreement with the property owners, nor were they able to obtain rights to the copper from the government of the time. The Project had lain forgotten until Tombstone rediscovered it in the NJZ files.
The Company acquired a 100% interest in Seboruco in March, 1998, and then entered into a joint venture with Corriente Resources Inc. (TSO:CTQ) whereby Corriente can earn a 60% interest in the Project by incurring expenditures of US$500,000 over two years. Two preliminary exploration programs have been carried out, and results to date confirm the possibility identified by NJZ of 20+ million tonnes of 1-2% oxide copper and 1 ounce per tonne silver.
Exploration work has been suspended pending the receipt of further work permits from the Venezuelan government. A further program is scheduled for the fall.
Tres Marias Project, Mexico
The Tres Marias Project, located approximately 270 kilometres northeast of Chihuahua City, Mexico, is a dissolution breccia pipe containing high grade zinc and germanium mineralization hosted in Cretaceous limestones, shales and siltstones. The host carbonate has been identified to a depth of 1,000 metres. Historical near-surface production at Tres Marias extracted less than 150,000 tonnes grading between 20% - 40% zinc.
To date 16 holes have been diamond drilled by previous operators at Tres Marias. The average value of mineralized intercepts from these holes is 11.2% zinc over 6.3 metres.
Tres Marias has been subject to Mexican permitting reviews for the past four years. During this time no mechanical exploration has been possible. We are pleased to announce that approvals for a significant diamond drill and exploration program have now been granted to Tombstone by the Mexican government. A work program is being developed, and joint venture discussions are underway.
Lorrie Project, Yukon
The Lorrie Project is located in the Ogilvie Mountains, 90 kilometres east-northeast of Dawson City, and consists of 211 claims. In 1998 Homestake Canada and Prime Resources Group conducted a $225,000 reconnaissance program which led to the discovery of a zone of widespread copper/gold mineralization. Values up to 387 g/t gold were obtained from trench sampling; significant intercepts include 14.5 g/t gold over 6.0 metres and 0.42% Cu over 61 metres. A 1,500-2,000 metre drill program was recommended by Homestake.
In early 1999 Homestake/Prime returned the Project to the Company prior to commencement of the recommended drill program. The claims are in good standing for five years. Joint venture discussions with other exploration/development companies are in progress.
Jackpot Project, British Columbia
Tombstone acquired the zinc/lead Jackpot Project when it purchased New Jersey Zinc (Canada) in 1997. This former producer is located in southeastern British Columbia. Previous resource development was concentrated in only five zones, with indicated reserves to date at approximately 1.0 million tonnes grading 4.68% combined lead-zinc. Inferred reserves are approximately 3.2 million tonnes. NJZ estimated an exploration potential for an additional 6 to 10 million tonnes from known targets. Much of this previous work was not assayed for silver or gold, even though during the period 1902 to 1929 more than 1,000 ounces of gold (0.016 oz/T) and 270,000 ounces of silver (4.35 oz/T) were mined from two zones.
The Company is currently considering proposals in respect of Jackpot.
New Jersey Zinc Database
In 1997 the Company acquired the historical databases of New Jersey Zinc, the Empire Zinc Mining Co. and Gulf Western. These materials represent worldwide exploration and development work by these companies since the late 1800's. Tombstone retained a team of geologists to organize this information and to prepare a computerized indexing system. This process resulted in a proprietary database of over 25,000 records and reports focussing primarily on zinc occurrences throughout the world.
In this market of low commodity prices and limited exploration budgets, the New Jersey Zinc database presents a unique exploration opportunity for project identification and development, as already evidenced by the Company's acquisition of the Seboruco deposit in Venezuela.
The Company will continue with its joint venture efforts, and is examining other business opportunities to enhance shareholder value. TEL: (604) 682-1545 Richard P. Clark, Chief Executive Officer FAX: (604) 682-1514 Internet: www.tombstone-exp.com
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