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Mineral Report on Sherette Creek
By Jim Halloran, Consulting Placer Geologist

The Nome Gold Placer Mining Company owns 562 acres of patented mining claims and 80 acres of Alaska state mining claims on Sherette Creek in the heart of the gold rich Kougarok Mining District of the Seward Peninsula about 50 miles north of Nome. The Sherette Creek property has reasonably good surface access. Most of the necessary mining equipment is already on site. This report shows that 1,444 ounces of gold have been identified on site. All that that is required to start mining in the summer of 2006 is up front capital, a medium size dozer and excavator and a cargo carrying low ground pressure all-terrain vehicle. The owner, Jon Peckenpaugh, made $200,000 worth of improvements this year in the form of modern well equipped cabins, a complete wash plant system, and three small A TVs, two 40 foot storage containers in Nome, AK, all necessary tools and auxiliary equipment necessary to run this mining operation. Other equipment in Nome, include an M548A 1 surplus military track cargo carrier, JD450B tractor and other related mining equipment.


The Seward Peninsula is well known for its vast placer gold deposits. As much as 10,000,000 ounces of gold have been mined there in the last 100+ years. Sherette Creek is between two other gold-bearing streams, Iron and American creeks and it has its headwaters in the same low mountains as these streams. The York Slate is the common formation to all the gold placers on the Seward Peninsula according to Sainsbury (1976, p. 8). In fact, he wrote, " ... every single placer of economic importance lies within areas where the York Slate forms most of the bedrock!" The York Slate is indeed outcropping in the Sherette Creek drainage and it has been shedding gold into this valley forming stream placers in the alluvium.


The Sherette Creek valley has been glaciated during the past ice ages. Typically glaciers have a destructive effect on the pre-existing placers. The glaciers most likely caused the separation of the west Sherette Creek from the east fork of Sherette Creek. The diversion happened in the general area of the Nome Gold Placer Mining Company's camp. This may explain why the old timers mined upper portions of west Sherette Creek without mining the lower portion. The richer paleo channel(s) went east beneath the saddle to join with the east fork. The gold presently in the lower west fork is stream re­worked gold from a small portion of the rich upstream channels.


The large glacier from the Pilgrim River valley introduced the many large granitic boulders to the lower reaches of the Sherette Creek valley that are not seen upstream. The ice age glaciers have resulted in extensive changes to the landscape and its landforms.


Since the glaciers have melted away, solifluction has sculpted the valleys. Solifluction is frozen colluvium that slowly slides down from higher ground into a sub-arctic valley and fills it with permafrost. Today the most obvious indication of solifluction is the similarity of the straight and gentle valley slopes. The best evidence for it is simply frozen soil extending up slope from the lower edges of the local valleys. Another manifestation of solifluction is the deeply buried valley in the saddle between the east fork and the west fork of Sherette Creek.

Bedrock is not exposed in or near the claim block. The substrate is glacial outwash which is usually finer grained gravel than the present stream gravel is. The substrate is sandy cobble gravel usually with some boulders and the occasional huge boulders. The glacial outwash gravel can be and frequently is gold bearing.


The present stream gravel (alluvium) is a boulder gravel with many boulders 2 to 4 feet in their dimension.


Mining History
Placer gold was discovered at Sherette Creek back during the turn of the last century. Both shallow and the deep gravels were mined on in those early days. The upstream portions of the valley were mined underground (drifted), while downstream they surface mined it. This indicates the paying gravel got shallower downstream. They drifted on the old abandoned channels mentioned in the previous discussion on the geology. These mined areas are immediately upstream form the block proposed for mining in this report.


This claim group was patented in 1917. Mining at that time in Alaska was much more expensive per ounce or cubic yard than today. Surface mining needed, at least, a quarter ounce per yard to be profitable to mine. Drift mining needed richer ground than this. (Efficient placer mining in Alaska today can be profitable mining only one hundredth of an ounce per yard.)


The old miners did not mine as far downstream as they apparently intended to get as evidenced by the preparatory ditches that they dug in advance of their mining. They may have constructed the ditches to dry out the alluvium, so they could mine more efficiently and comfortably. However they never mined more than the upper portions of this property. It is not known why they never mined the lower areas. This report proposes to mine some of what they prepared.


Mineral Resources and Reserves
A mineral resource is a concentration of a naturally occurring mineral(s) where the economic extraction of it is currently or potentially feasible. A reserve is defined as portion of an ore body that has been sampled and on which future plans and expenditures are based.


The mineral resource in this Sherette Creek property is all the alluvium, tailings and the abandoned placer channels. The resources and the alluvium extends from above the claims to below the claim block. All of it has some gold, but it may to be too lean to be mined at today's gold price below the reserve block. The resource of the gravel above the claims were not determined in this investigation. Much of the alluvium upstream from the claims has been mined though. The tailings in this area were sampled near their lower end, but their tenor and quantity were not considered to adequate for more testing. Nevertheless there is some gold in the tailings.


The mineral reserve is based on the sample data presented in the table below. This data comes from the investigation during the 2005 season.

Depth (ft)
Mgs of
(Toz. /bcy)
Grade **
Comments and
J1a 3-6 7.4 .9 .0026 $1.18  
J1b 7-9 5.0 .95 .0002 $0.84  
891 2.5 -5.5 305.3 1 .1202 $54.10 Wet hole on line K (11)
892 2-5.5 26.4 1 .0104 $4.68 50 ft to L.L. from 891 line K
K1a 3-4 124.5 .8 .0392 $17.65  
K1b 6 -8 46.0 .8 .0145 $6.52  
K2a 5-6 54.4 .75 .0161 $7.23  
L1.a 1 - 3 0.5 :15 .0000 $0.07  
M1a 2-4 390.5 .8 .1230 $55.36  
M1b 4-5 93.8 .75 .0277 $12.47  
M2a 2-3 79.4 .75 .0234 $10.55  
M2b 4-6 93.5 .9 .0331 $14.91  
N1a 2.5 -7 3.7 .9 .0001 $0.60 Paleo channel sample
N1b 8-9 7.4 1 .0029 $1.31 Paleo channel sample
01a 6-7 8.5 1 .0033 $1.51 1640 mg nugget
01b 6-9 2.6 1 .0010 $0.46  
02a 5-8 22.1 .75 .0087 $3.92  
02b 8 -10 1.5 1 .0006 $0.27  
Average 5.5     .0239 $10.76 Without the nugget
0-6 ft           $17.82/bcy is the grade in top
Average 3.5     .0396 $17.82 6 feet with out the nugget.


* Boulder factor is the percentage of the sample material not Incorporated into the actual sample because the rocks are too big to handle safely. Normally the rocks are boulders larger than 10" in diameter. It is figured as 1 minus the percentage of boulders not sampled. If no boulders, it is simply the number one.


**This constant calculated by fineness (.980) X (1 + swell factor (.25» X $450 I 31103.5 X 0.1 Icy = .1772.


Examining the data above, it is clear that digging deeper than about six feet usually does not produce much additional gold. In fact, as a rule, it yields less gold in this block. Since no bedrock was ever encountered, there would be no bedrock concentration expected. Assuming the top foot is low yielding soil and vegetation, then the grade of $17.82 per bank cubic yard (bey) applies to a five foot column. The area in which these samples were taken is 18,163 square yards (sy). If you allow that there is 20% more ground outside the area bounded by the test pits as being represented by these samples; then it brings the total area to 21,838 sy. Multiplying this by 5 feet (1.67 yards) equals 36A69 bey. Since the average bank cubic yard in this block contains $17.82 worth of gold, then it is reasonable to conclude that $649,886 worth of gold lies buried in this small block of ground. There will be nuggets in this block that could significantly increase the value of this reserve.


The next question should be, "Is there likely to be more ground around like this?" My answer is "Yes, look deeper." It is possible that a bedrock concentration is possible on the bedrock surface. The depth of the surface may be shallow enough to mine and yield a significant additional resource.


Additionally, there is most likely to be a rich old channel that the early day miners drifted on. It must have produced at least a quarter of a troy ounce per cubic yard. In my opinion missed segments of this rich channel still exist and they went through the saddle (see map above) to the east fork. It may be feasible to open pit mine for some distance before the overburden thickness makes too expensive to continue. These ancient abandoned placer channels hold the greatest potential for future development They could be rich and extensive, but difficult to find. I believe the buried channels veer off from west fork of Sherette Creek near the cabin.

One of the first things this property needs is magnetometer surveys done to locate the old channels, especially the channel with the rich values. It is possible that paying channels may extend upstream and downstream from this block and our sampling program missed the narrow winding channel. The surveys should go up the east side of the valley several hundred feet because the greater values seem to be on that side and the abandoned channels are the east side.

The land adjacent to these mining claims is State of Alaska and it is open for the staking of additional mining claims.

In conclusion it is my professional opinion, the 21,838 bcy and 1,444 ounce reserve of the Nome Gold Placer Mining Company property can be mined quite profitably. The cost of mining should be no more than a quarter of the revenue produced.

Jim Halloran
Consulting Placer Geologist
American Institute of Professional Geologists Certificate No. 3665 October 19, 2005

My resume is presented in the following pages.

JIM HALLORAN, Consulting Placer Geologist

My objective is to assist clients to discover gold placers through my knowledge of the geologic sciences and/or to explore the placer deposits to delineate the paystreaks.

A geologist with 37 years of diversified experience in interpreting the geology and applying it to solve mineral exploration problems. I am knowledgeable about the following:

Prospecting for placers in both the glaciated and un-glaciated regions of Alaska .

Evaluating known placer deposits and exploring for additional alluvial reserves .

            Interpreting aerial photographs, geologic reports, geophysical records, satellite imagery, topographic maps, etc. for landforms favorable to the accumulation of placer deposits .

Preparing professional quality mineral reports.

Bachelor of Science degree in geology from Texas Tech University in 1968. Adjunct Instructor (of placer prospecting), University of Alaska Anchorage. Professional Prospectors Certificate from the University of Alaska, School of Mineral Industry. Alaska Professional Geologist License No. 54. Certified Professional Geological Scientist by the American Institute of Professional Geologists, Certificate No. 3665. Certified Mineral Examiner by the U.S. Department of the Interior, Certificate No. 57. Membership in the Society of Mining Engineers, the Alaska Miners Association, and the Gold Prospectors Association of America.

1987 - 2005: Minerals Geologist, U.S. Department of the Interior, National Park Service and the Bureau of land Management, Anchorage, Alaska. Investigate and evaluate placer mining claims to determine if there has been a discovery of valuable minerals to meet the legal requirements of the federal mining laws for validity. Prepare mineral reports that discuss the economic feasibility of mining these placer claims. Worked with computer programs like Microsoft Word and Excel to prepare text and tables that were incorporated into the mineral reports. Maintain a fluent knowledge of the laws that affect placer mining in Alaska. Review the mineral reports of others.

1985 - 1986: Mining Geologist, Alaska Department of Natural Resources, Division of Mining, Anchorage. Advised the agency about geologic matters especially as they pertain to placer mining. Revised and critiqued all activities that would affect the minerals industry in Alaska. Developed a rapport with members of the mining industry by demonstrating my knowledge of prospecting, the origin of placer deposits, and mining law

1981 - 1985: Consulting Placer Geologist, Anchorage. Explored for and evaluated placer deposits for clients. Interpreted aerial photographs and geomorphic terrains for landforms favorable to the gravity concentration of placer minerals. Sampled placer deposits with the resonant drill, reverse circulation rotary, excavators, and by hand shoveling. Concentrated the samples by using the Denver Gold Saver, EZ Panner, and the gold pan. Isolated the gold, weighed it, and calculated the grade of the ground. Calculated volume and grade of reserves. Conducted geophysical surveys using a proton magnetometer and refraction seismograph. Prepared professional quality mineral reports with maps, cross sections, photographs and tables.

1977 - 1981: Minerals Geologist, U.S. Forest Service and Bureau of land Management, Anchorage. Conducted mining claim validity examinations. Worked closely with miners to get

compliance with the laws. Reviewed mining plans and assisted miners with complying with their plans. Performed as an engineering geologist by mapping soils, landforms, and rock types. Served as a team leader on a high-level mineral development environmental impact report.

1968-1977: Engineering Geologist, U.S. Department of Transportation, Federal Highway Administration, Denver. Colorado. Planned and conducted engineering geology investigations for roadways, bridges, and material sites. Drilled for data on foundation conditions, landslides. and aggregate resources. Conducted refraction seismic and resistivity geophysical surveys. Interpreted landforms for their potential for groundwater resources, and their suitability for structures. Used infrared, NASA, and ERTS imagery for environmental geology. Wrote reports for publication. Supervised a four-man field crew.

I am 62 years old, 5'9" tall, weighing 195# and in perfect health. My hobbies are: prospecting, nugget detecting, cross country skiing, photography, running, hiking, biking, and I am writing a book prospecting for placers.

REFERENCES References on request


Jim Halloran
6725 Blackberry St. Anchorage. Alaska 99502 907-248-0987 (home) 250-3726 (cell)

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