CLAYTON SILVER PROJECT

CLAYTON SILVER PROJECT

The Clayton Silver Mine was discovered in the late 1800’s and historically was one of the most active underground mines in the Bayhorse Mining District in central Idaho for lead, zinc, silver, and copper with minor gold.  Located approximately 30 km south-southwest of Challis in Custer County, central Idaho, the 1,134 acre property consists of 29 patented mining claims, two patented mills sites (comprising approximately 565 acres), and 28 unpatented mining claims adjacent to and surrounding the Company's patented claims covering an additional 569 acres. 

Mine History

The Clayton Silver Mine, discovered in 1877, and historically one of the most active mines in the Bayhorse Mining District in central Idaho, was an underground Pb-Zn-Cu-Ag mine. The Clayton Silver Mine was one of the largest silver producers in Custer County, Idaho and in the state of Idaho outside of the Coeur d’Alene district. Prospect mining at the Clayton Silver Mine site began in 1927 (Clark Mining Co.), at which time the property consisted of 25 patented and seven unpatented claims and was known as the Camp Bird Group. Mining was sporadic until 1935. The Clayton Silver Mine, one of nearly 50 in the district, was largely operational from 1935 through 1986. Until mining operations ceased in 1986, records indicate the mine produced approximately 7 million Troy ounces of silver, 86.8 million pounds of lead, an estimated 28.2 million pounds of zinc, 1.7 million pounds of copper and 1,454 Troy ounces of gold. It is likely that even greater amounts of minerals were mined and recovered considering the lack of production records in the early years of the mine's operation.

The Company has compiled and comprehensively reviewed available historical drilling and mining information for the Clayton Mine and the Clayton Silver Property.  Information available in the public domain was obtained from both the United States and Idaho Geological Surveys.  Several sub-surface mine plans were obtained from private sources, as well as the U.S. Department of the Interior, Office of Surface Mining.  These data provide the basis for an initial compilation of the sub-surface workings tied to surface.  The underground workings are flooded and inaccessible and, consequently, historical records are the only source of information available.  

The Clayton silver-lead-zinc-copper mine had total production of 7,031,110 oz silver, 86,771,527 lbs lead, 28,172,211 lbs zinc, and 1,664,177 lbs copper, with 2,154 oz gold from an estimated 2,145,652 tonnes of ore mined between 1934 and 1985, with the mine operating almost continuously over 50 years until its closure in 1986 due to low metal prices.  

The Clayton Mine was developed on 8 levels to a depth of 1,100 feet below surface and is comprised of approximately 19,690 feet of underground development.  Two major ore bodies were partly mined: the “South Ore Body” and the “North Ore Body”.  Both are tabular ore bodies raking northeast to depth.  Production was initiated on the South Ore Body and development extended to the North Ore Body. Mineralization is open to the north, the south and to depth, all of which is untested. For example, there is potential for resources to exist at shallower depths below and adjacent to the South Ore Body.  

Historical records indicate the South Ore Body was mined from the 100-foot level to the 800-foot level, while the North Ore Body was mined from the 100-foot level to the 1100-foot level.  Internal mine records from 1966 indicate a resource of 597,075 tonnes between the 800-foot level and 1300-foot level, having a weighted average grade of 3.83 oz Ag/t.  Values for lead and zinc were not disclosed. Underground development on the 800-foot level was extended to the North Ore Body, with subsequent development down to the 1100-foot level to access the ore.  

Records indicate that as of January 1, 1982, there were approximately 458,590 tonnes of ore identified between the 800 and 1100 foot levels.  Of this resource, 52,800 tonnes were mined in 1983, 76,110 tonnes in 1984 and 102,258 in 1985, suggesting 227,422 tonnes have not been mined.  Additional tonnage identified down to the 1530-foot level was not mined and, therefore, is interpreted to remain available.  Significant potential is demonstrated in hole 1501-A, drilled in the mid-1960’s, which penetrated the mineralized zone at 1,425 feet.  At that depth, the hole intercepted 22 feet of 4.07 oz Ag/t, 5.75% lead and 5.37% zinc (note: true width is unknown).  

On November 23, 2015, CMX filed on SEDAR a NI 43-101 compliant technical report dated March 7, 2013 for the Clayton Silver Property. 

CMX Expands Clayton Landholdings

In October 2022, the Company completed its claims staking program surrounding the 100%-owned Clayton Silver Property. A total of 22 lode claims were surveyed and staked on federal Bureau of Land Management land, adding approximately 450 acres. The staking increased the Company's land position by 66%, bringing the total acreage covered to 1,134 acres. The 22 new claims are adjacent to and surround the Company's patented claims and cover the historic Rob Roy silver/lead/zinc mine immediately north of the Clayton patented claims. An important part of the Company's strategy is to gain control of land surrounding the Clayton Mine prior to starting a drilling program. 

Clayton Mine Stockpile Evaluation Program

In  August 2014, representatives of the Company collected samples from 16 locations on the Mine Stockpile situated immediately adjacent to the old Clayton Mine workings and extending to the south.  An aggregate of over 3,000 kilograms of sample material was collected.  Sample locations were selected to ensure representative samples.  CMX representatives were on site during sampling to ensure random sample selection.  A tracked backhoe was used to trench to a maximum depth of approximately 12 feet and five representative samples, each weighing roughly 33 kg, were taken at 2-3 foot intervals for each location.  

The results from analysis of the stockpile samples confirmed the presence of a suite of metals of potential interest.  Panning of material from the stockpile has confirmed the presence of free, relatively coarse gold, while analysis of the samples documents the presence of gold in each sample.  In particular, assays confirmed gold values up to 2.84 gm/t (Sample 11369) with an average of 0.80 gm/t for the 16 locations comprised of the initial suite of samples.      

Sampling Results: 

The 2014 Mine Stockpile sampling program statistical averages of the 16 locations were as follows: 

• Au – 0.80 gms/t 

• Ag – 24.31 gms/t 

• Pb – 0.44% 

• Zn – 0.27% 

Mine Stockpile Exploitation Potential 

The stockpile consists of rock that was not processed through the mill as the grade was not considered high enough at the time it was mined. The stockpile is estimated to contain greater than 500,000 tonnes and could be as much as 1,000,000 tonnes of metal-bearing material readily available for immediate processing. 

In May 2022, the Company signed an agreement with Sulphide Remediation Inc. (“SRI”) (https://www.sulphide-remediation.com/), an affiliate of ABH Engineering Inc. of Surrey, B.C., a firm specializing in mineral processing (https://www.abhengineeringinc.com/). SRI utilizes precision ore sorting technology to high-grade mine stockpiles of unprocessed rock to enhance the grade of material delivered to a toll mill. Dual Energy X-Ray Transmission technologies differentiate between rocks based on small fluctuations in density profiles and are effective at removing sulphides and concentrating valuable metals. The sorted rock can be treated at existing mills/smelters where valuable metals will be extracted and sulphides will be safely handled. SRI has some of the world's leading experts in crushing, screening and ore sorting. Pursuant to the agreement with the Company, SRI has taken samples from the Clayton stockpile with no upfront cost to the Company. The 536 kilograms of samples have been shipped to the TOMRA test facility in Sydney, Australia for analysis and process testing. The testing program will inform SRI as to the best ore sorting process for the Company’s stockpile.

Results pending from testing the ore sorting process on the Clayton stockpile material are expected to confirm suitability of the material for the ore sorting process. With positive results, SRI will at its cost construct and deliver an optimal ore sorting system to the Clayton Mine site. The system will be capable of processing from 3,000 tonnes to 4,000 tonnes per day. SRI will manage all aspects of the stockpile processing program. After deducting operating expenses from the revenue received for the processed stockpile material from the toll mill or smelter, the net profits will be shared 50:50 between the Company and SRI. The goal is to generate cash flow for the Company in 2023.

Clayton Historical Information 

The historic production disclosed above from the Clayton Silver Mine, mainly of silver, lead and zinc, has an aggregate present value of approximately USD $290 million (using April 2022 spot commodity prices of $21.00/oz silver, $1.00/lb lead, $1.65/lb zinc, copper $3.61/lb, $1,800/oz gold). This value is provided for demonstration purposes and is not intended to represent fair value of historical production. The mine operated for several decades, mainly from the 1950s to the mid-1980s and was economic. CMX's strategy will be to run a mill that has twice or three times the capacity of the old mill, greatly improving economies of scale and increasing the present value of the potential resource.   

Previous operators did very little exploration or development drilling to look for other resources. If resources with recoverable metals values several times what has been recovered previously are confirmed through drilling, the enhanced present value of the Clayton Silver Property will increase the enterprise value of CMX substantially.   ​ 

Clayton Underground Potential 

CMX considers the significant prize at the Clayton Silver Mine to be the potential for confirming and adding mineral resources underground. This is the Company’s primary long term goal. CMX's review of the historical data has led us to conclude that the potential upside is much greater than we initially thought. Our geologist, Rick Walker's analysis has shown the potential for proving up substantial ore reserves. Very little exploration has been carried out previously on the Clayton Silver Property. Resources available from previous work include drilling for mining purposes on the North Ore Body at the 1100 foot level and deeper drilling several hundred feet below the old workings to the 1500 foot depth. Significant potential is demonstrated in hole 1501-A, drilled in the mid-1960's, which penetrated the mineralized zone at 1,425 feet. At that depth, the hole intercepted 22 feet of 4.07 oz Ag/t, 5.75% lead and 5.37% zinc (note: true width is unknown). There is also potential for resources to exist at shallower depths below and adjacent to the South Ore Body. All of this points to the possibility of finding resources that are many times more than what has been mined previously.  ​ 

Clayton Property Description and Location

The Clayton Exploration Project is located approximately 1.5 miles from the town of Clayton in Custer County, in central Idaho in parts of Sections 11, 12, 13, 14, 23, 24, and 25, T. 11 N., R. 17 E. The mine is located in Section 13, T. 11 N., R. 17 E, within the U.S.G.S. 7.5 minute Clayton topographic quadrangle map (the "Clayton Silver Mine"). The 1,134 acre Clayton Property is located along Kinnikinic Creek, a tributary to the Salmon River.  The Clayton Property encompasses private land as well as patented lode claims within lands under the jurisdiction of the U.S. Bureau of Land Management ("BLM"). The Clayton Exploration Project consists of 29 patented mining claims, 2 patented mill sites and 28 lode mining claims on federal U.S. Bureau of Land Management land. 

Main rock types in the immediate vicinity of the Clayton Silver Mine consist of Paleozoic age (Cambrian-Ordovician) sedimentary rocks including the Kinnikinic Quartzite, Ella Dolomite and the Clayton Mine Quartzite. The Ella Dolomite is the host rock for the mineralization at the Clayton Silver Mine and the adjacent Rob Roy property to the north of the Clayton Silver Mine. Rocks of the Cretaceous Idaho batholith are exposed to the west and the youngest rocks that cover the Paleozoic sedimentary rocks and the Idaho batholith are Eocene Challis volcanic rocks which are poorly exposed in the ridges to the west of the mine. The Paleozoic rocks are deformed into a northwest trending asymmetric anticline (the "Clayton Anticline"). Ore deposits appear to be restricted to the east flank of this fold and are associated with shear zones that parallel bedding in the Ella Dolomite.  Regional thrust faults, high angle normal and reverse longitudinal faults, and transverse strike slip faults have been identified in the region. The latter faults cut the form structures and the anticline.                                               

Deposit Types

Economic minerals mined in the Bayhorse Mining District occur in mineralized shear zones or as replacement lenses in calcareous rocks. The host rocks from most of the mines in the district are the Ramshorn Slate and the Bayhorse Dolomite. Some of the deposits are associated with granitic intrusive rocks. Sulfides, such as galena, sphalerite, pyrite, tetrahedrite and chalcopyrite are found in the deposits. Both the galena and tetrahedrite are argentiferous. Fluorspar deposits have also been exploited in some of the mines. At the Clayton Silver Mine, Pb-Zn-Cu-Ag mineralization occurs in replacement and open space filling deposits, which show both structural and stratigraphic controls. The tabular mineralized zones are associated with shear zones that are parallel to the bedding of a quartz-rich horizon within the Ella Dolomite. Folding and faulting have altered the original nature of the mineralization. The mineralized shoots are characterized by galena, pyrite, sphalerite, tetrahedrite, chalcopyrite, pyrargyrite, and arsenopyrite, which are developed in a siderite gangue. During the 50 or so years of operations, several mineralized areas have been developed within the Clayton Silver Mine.