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Applied Minerals Provides Updated Resource Statement Of Its Dragon Mine Property

Geological setting

Geologically the property is varied, with Palaeozoic limestone being intruded by the Tertiary igneous Silver City monzonite porphyry and iron ore. The mineralisation is fault controlled and the clay mineralogy is often dependent on the host rock. In the pit area, where there is a large body of iron ore, the clay is dominantly halloysite (100% in places) with the potash feldspar in monzonite being altered to halloysite, kaolinite and illite-smectite. The iron ore is a mixture of goethite, hematite and an amorphous iron phase identified as ferrihydrite (this is a new occurrence identified in the current investigation). The property is located along an extension of the Silver City Quartz Monzonite stockwork and there is interest in whether there is a hidden copper porphyry deposit present at depth. The current exploration for halloysite is ongoing and this statement gives an update of work carried out over the last three years leading to the current commencement of production. Detailed research has been carried out recently by Applied Minerals for new uses of halloysite in plastics, as a flame retardant and in other applications with two new patent applications pending. The Dragon property represents one of the largest known deposits of halloysite in the world, and along with the presence of other clay minerals and iron ore, has the potential to enter a wide range of markets.

SUMMARY OF EXPLORATION

  • Testing of cores from 80 boreholes drilled in 2003, 2005, 2006, 2009 and 2010 totalling 15,362 ft. Average depth of 80 boreholes drilled is 192 ft and range of depths drilled from 50 to 360 ft.
  • The Western area drilled from 2003 to 2006 includes 44 boreholes totalling 9,448 ft and covers an area of 6.33 acres. This was drilled in mainly altered quartz monzonite, which is an intrusive igneous rock with approximately equal parts of orthoclase and plagioclase feldspar. Quartz monzonite porphyry is often associated with copper mineralisation in porphyry copper deposits.
  • The Dragon Pit area drilled in 2009-2010 includes 36 boreholes totalling 5,914 ft and covers an area of 4.95 acres. The area is mainly iron ore and some altered monzanite on the periphery of the area. High levels of halloysite up to 100% are adjacent to the iron ore.
  • To date over 500 samples of borehole material has been tested to determine their mineralogy, particularly for halloysite, kaolinite, illite-smectite levels and other properties.
  • Drilling of five waste piles from previous clay mining activity. Waste piles cover 34.2 acres and have a volume of 1.99 million cubic yards. Following a detailed trenching campaign on the waste piles, fifty-two boreholes were drilled totalling 1,986 ft. The whole rock evaluation included chemical testing by XRF of all 216 samples generated with 69 for their mineralogy by XRD. To determine clay content, samples were processed to <45 µm and <5µm fractions and 185 samples were tested for their mineralogy by XRD and 133 samples for their chemistry by XRF.
  • Evaluation of the iron ore present in the Pit Area (4.95 acres) and elsewhere. Testing of almost 100 samples to determine quality.
  • Detailed evaluation of surface samples from which some halloysite is now being mined from the open pit.

RESOURCE STATEMENT

  • CLAY RESOURCES
    • Clay resources within the Dragon Pit area
    • Clay resources within the Western Area
  • WASTE PILE RESOURCES
    • Whole rock evaluation of five waste piles
    • Evaluation of clay fraction of five waste piles
  • IRON ORE RESOURCES
    • Iron ore resources within the Dragon Pit Area
    • Iron ore resources within the Western Area
  • CLAY RESOURCES

Evaluation based on testing of cores from 80 boreholes drilled in 2003, 2005, 2006, 2009 and 2010 totalling 15,362 ft and covering an area of 11.28 acres. Average depth of 80 boreholes drilled is 192 ft and range of depths drilled from 50 to 360 ft.

  • Dragon Pit area - 4.95 acres

Measured Resource based on drilling in 2009-2010 includes 36 boreholes totalling 5,914 ft of core. The area is mainly iron ore and some altered monzonite on the periphery of the area. High levels of halloysite up to 100% are adjacent to the iron ore and probably formed from solution. There is no alunite present in this area and the halloysite varies in colour from white to light brown, the latter due to the presence of goethite.

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