• Deer Trail

  • Deer Trail

  • Deer Trail

Deer Trail Project
Piute County, Utah, USA

BACKGROUND AND HISTORY

MAG executed an earn-in agreement (the “Agreement”) effective December 20, 2018 to consolidate and acquire 100% of the historic Deer Trail mine and surrounding Alunite Ridge area in Piute County, Utah USA (the “Deer Trail Project”). The Deer Trail Project includes a mixture of patented and unpatented claims totaling approximately 5,600 hectares (“ha”). The counterparties to the Agreement (the “Parties”) contributed their respective Deer Trail claims and property rights to a newly formed company for a 99% interest in the company, with MAG holding the other 1% interest. MAG is the project operator and has the right to earn a 100% interest in the company and the Deer Trail Project, with the Parties retaining a 2% net smelter returns (“NSR”) royalty. In order to earn in 100%, MAG must make a total of $30,000 in escalating annual expenditures ($13,302 expended to June 30, 2022) and $2,000 in advanced royalty payments ($450 paid to June 30, 2022), both over the 10-year term of the agreement by 2028. The combined optional annual commitments do not exceed $2,500/year until after 2025, and all minimum obligatory commitments under the Agreement have been satisfied (see Exploration and Evaluation Assets below).

Deer Trail is a silver-rich Carbonate Replacement Deposit (“CRD”) project potentially related to a Molybdenum-Copper Porphyry system or systems immediately to the west. Consolidating the property package allows MAG to apply its integrated district scale exploration model and apply new technology to the search for an entire suite of mineralization styles expected to occur on the property.

The combined property package came with decades of information generated through prior exploration programs focused on the historic Deer Trail mine itself, the inferred Porphyry centres and veins scattered throughout the property. These data include: extensive surface and underground geological maps; geochemical sampling results; logs, core and chips from over 20,000 m of historic drilling; a districtwide airborne magnetic survey; 15 line kilometers (“km”) of Audio Magneto-Telluric (“AMT”) geophysics, and 2.5 km of U.S. Mine Safety and Health Administration (“MSHA”) certified underground workings. Infrastructure and access to the property are excellent. Pre-existing disturbances identified by MAG have been proactively addressed by MAG and reviewed by governmental regulators, leaving no significant environmental legacy issues.

See the ‘Deer Trail Project’ below for a project exploration update on Phase I and Phase II drill programs.

The Deer Trail Project displays and satisfies MAG’s top criteria when exploring for large CRD systems, specifically: the presence of high silver grades; location on a deep-penetrating regional-scale fault known to host other major CRD-family deposits; location at the top of a thick section of favorable host rocks; and an identifiable plumbing network of faults that localized mineralization.

MAG’s exploration focus on the project is to seek the source of the historically mined high-grade silver-lead-zinc-copper-gold Deer Trail manto in the thick section of high-potential limestone host (Redwall Limestone) that regional mapping indicates lies just below the interlayered sedimentary and limestone sequence that hosts the Deer Trail mine. On this basis, the 2021 Phase I drill program saw the completion of three holes totaling 3,927 m drilled from surface (see Press Release September 7, 2021). The program successfully fulfilled all three of its planned objectives by:

  1. Confirming the presence of a thick section of more favorable carbonate host rocks (the predicted “Redwall Limestone” or “Redwall”) below the Deer Trail mine;
  2. Confirming and projecting two suspected mineralization feeder structures to depth; and
  3. Intercepting high-grade mineralization related to those structures in host rocks below what was historically known.

Two of the three holes from Phase I drilling (holes DT21-02 and 03 – see Press Release September 7, 2021) cut high-grade, multi-stage massive sulphide replacement mineralization in Callville Formation limestones above the Redwall Limestone. Notably, the silver grades in both those holes are comparable to those of the historic Deer Trail massive sulfides, which suggests limited vertical zoning despite being up to 740 m deeper in the system. One of the holes appears to have cut mineralization directly within the Red Fissure fault, while the other appears to be manto-style mineralization fed from the nearby Wet fault. A follow up program (Phase II drilling) is targeting these mineralized structures down dip within the clean carbonates of the Redwall.

Phase II commenced at the Deer Trail Project in Q3 2021 and is planned for 5,000 m of drilling over 5 holes and is in progress. Deviation/directional drilling is being used in Phase II to make the drilling more efficient and accurate. In part, to facilitate the directional drilling, drilling contractors were changed in Q1 2022, with the new contractor having resumed drilling subsequent to the quarter ended March 31, 2022. To date, three holes of Phase II have been successfully completed. The first completed hole of Phase II is an offset of hole DT21-03 designed to test the Wet fault 150 m deeper where it cuts through the Redwall Limestone. The second completed hole is a 200 m offset of hole DT21-02 to test the Red Fissure structure within the Redwall Limestone. The third completed hole is a 1000m offset of DT21-03 designed to test an entirely new area south of the historic mine and drilling area. All assays are pending.

Deer Trail Outlook

Phase II drilling at the Deer Trail Project remains in process subsequent to the quarter end.  Planned for 5 holes totaling 5,000 m of drilling, 2 holes have been completed to date (assays pending) with the balance currently underway with one drill. Deviation/directional drilling is currently being used to test defined targets utilizing previous boreholes without the need to re-drill through difficult ground.

Other highly prospective areas of the large property package are also being considered for further exploration and subsequent drill testing. An orientation AMT geophysical survey undertaken on the alluvium mantled slope at the base of Deer Trail Mountain indicates that the alluvium may be much thinner than previously believed and that drilling targets may also exist under this shallow cover. Environmental baseline studies and permitting in these prospective areas are in process.

COVID-19: Deer Trail Project

Health and safety are two of MAG’s key core values and MAG has implemented strict COVID-19 protocols for the Deer Trail Project in line with guidance from governmental public health agencies. The Company continues to monitor the Utah Department of Health, Center for Disease Control and World Health Organization recommendations, updating the protocols on three occasions in 2021 with the last update in September 2021. The majority of project employees and contractors have now been fully vaccinated. See ‘Virus outbreaks may create instability in world markets and may affect the Company’s Business’ in ‘Risk and Uncertainties’ below.

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Fresnillo Annual Report 2020

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