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PRELIMINARY ASSESSMENT REPORT

Taurus Mining, LLC,Taurus Claims Project

November 7, 1994

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JKP ENVIRONMENTAL SERVICES

JKP ENVIRONMENTAL SERVICES

ENVIRONMENTAL PERMITTING AND COMPLIANCE CONSULTING

9973 EAST PALERMO LN.GOLD CANYON, AZ 85219

PHONE (602) 982-6993MOBILE (602) 390-0538

PROJECT UNDERSTANDING

Mr. Blech JKP Environmental Services (JKP) understands that your ability to generate revenue on theTaurus Claims is directly related to the approval of your plan of operation with the U.S. Forest Service.JKP further understands that your movement on this is tied to PCl Civil Constructors, Ir.c. of Tempe, AZ.The following observations is based on your project objectives; a review of all supplied documents and atotal of one site visit to the Taurus Claims.

PROJECT OBJECTIVES

Simply stated, the objective of this project is to secure approval of the necessary plans and or permits toallow for the evaluation and eventual production of placer gold resources using physical placer goldrecovery techniques on the Taurus Claims.

PROJECT DOCUMENTS

JKP has reviewed the following documents provided by Mr. Blech:

• Plan of Operations for Mining Activities on National Forest lands dated May 28, 1994.• Facsimile from PCl Civil Constructors regarding permitting of the Payson Project dated September 9,

1994.• A Preliminary Report on the Results of a Survey for Phase 1 of the Taurus Mining Operation Project,

Payson Ranger District, Tonto National Forest by Esther Morgan, dated September 23, 1994.

REVIEW OF PLAN OPERATIONS

A review of the Plan of Operations for Mining Activities on National Forest Lands (the plan) prepared byRaymond A. Wiest, Operations Manager, May 28, 1994 was conducted and the following items werenoted:

Processing Plant Operation

A review of this section raises some questions. A total of 170,225 cubic yards will be processed fromthe exploratory trenches, access road cuts and settling pond excavation. PCls' schedule for processingincludes no time for breakdowns, maintenance or repairs to equipment to complete processing in 10weeks.

Environmental Protection Measures

It is not judicious to allow the Tonto National Forest Service or any other state, local or federal authorityto dictate measures of environmental control. It is more advantageous for PCl to put forth a plan forsuch measures. pel repeatedly defers to the aforementioned agencies in regards to water qualitymonitoring, fish and wildlife, and cultural resource issues. The costs of mitigating these concerns ifdriven by agencies could easily make the operation economically impractical.

PCl will most likely required to submit an Emergency Response Plan to address issues related tohazardous substances, fire and medical emergencies.

The revegetation plan again puts the burden on the agencies which will prove more costly. It is moreprudent to submit a detailed plan rather than allowing the agency to dictate to PCL.

The post operation and maintenance plan commits PCl to revisiting the site and conducting minor repairsand watering of seed until it is "firmly established". This statement could lead to long term liability andcostly care taking of the site for the foreseeable future. A more close ended statement should beconsidered.

Appendix I Preliminary Assessment Report

A review of pel placer gold potential section reveals that during the initial evaluation phase that giventhat 255,000 tons at .132 oz/tons of material will be processed could potentially yield 33,660 oz./Au atcurrent gold prices (11/6/94) $383.50 oz. could yield a gross pay back of $12,885,600. Using the mostconservative estimates of Au grade, .002 oz./ton the potential yield drops to 510 oz./Au at current priceswould yield a more modest return of $195,585.

It is more likely that incorporating the given nature of placer deposits and the "nugget effect" that thegrade of the material is dependent on site specific removal of material in the four informal classificationsof the placer deposit; residual, alluvial, stream, and terrace.

The potential return provided the Taurus Claims were developed and the given volume totals supplied inthe report are accurate 14.473,330 cubic yards (21)6.68P,8&. tons) at .132 oz/ton present a depositwith the potential to yield in excess of 2.8 million ounces of gala. The gross-economic earnings could bein excess of 1 billion dollars. The above figures are of course speculative in nature and can be moreadequately ascertained following the initial testing/evaluation period. '"

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TAURUS CLAIMS SITE VISIT

Jerry Blech and I made a site visit to the Taurus Placer Mining Claims on Sunday, October 23, 1994.The purpose of the trip was to evaluate the geologic setting, environmental issues, including; air andwater.

Physical Geography:

The area visited lies within the Tonto Basin. The area is characterized by gently rounded hills covered bytypical high desert vegetation including but not limited to junipers, prickly pear cactus, sage, scrub brushand grasses.

The claims are oriented roughly north south reaching the area known as Thompson Draw to thenorthwest and as far south as Rye Creek. Historical mines are located within the boundaries of the claimblock. Most notably is the Oxbow mine. No production figures have yet been ascertained.

Water is critical to the projects evaluation since during the initial phase of testing trenching will beutilized. My visit revealed three (3) wells were drilled under the direction of project personnel. Accordingto Mr. Blech no samples or down hole geologic sections were constructed. The only information wasprovided by Beaman Drilling personnel during construction of the wells. There is some indication thatwater' can be removed from at least two of the wells at rates of approximately 20-35 gpm. Thisinformation was gathered from Mr. Blech.

It is apparent by numerous exposures in the dry washes that considerable sediments and volcanics arepresent in the area. It should be noted that due to the abbreviated nature of my first visit an extensivegeologic evaluation was not feasible. I did note similarities in geology to historic placers in Nevadaspecifically the Rochester District.

Recommendations

The review of the property revealeda number of points that should be considered as you proceed either inthe negotiation phase or as you enter into actual evaluation of the project.

• Utilize existing water source for evaluation scale downed equipment to existing water sources toexpedite your project.

• A geologist should be employed to record down hole geology and take sample splits.

• Concentrate initial phases of evaluation on those with greatest potential for success. This will giveyou the most bang for your buck!

• Solicit a third party evaluation of the property.

• PCl should determine a course of action and be clear on time frames, goals, expectations andrisk.

• Forest Service Negotiations should focus on minimal impact during initial phase operation/evaluation.It is far easier to expand your operation when and where positive results warrant.

• Further evaluation of the property will be necessary if negotiations with PCl and ForestService can accommodate progress in the formation of a mutual agreement to allow evaluation of theTaurus project.

I would like to suggest that a specific strategy meeting be conducted to develop a unified team. Thiswould include a scoping meeting and a enrollment meeting with the principals of PCl and ultimately ameeting with the U.S. Forest Service.

I welcome any comments or suggestions based on my initial assessment report.

Best Regards, .

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Jeff J. ParkerJKP Environmental Services

JKP ENVIRONMENTAL SERVICESENVIRONMENTAL PERMITTING AND COMPLIANCE CONSULTING

9973 EAST PALERMO LN.GOLD CANYON, AZ 85219

PHONE: (602) 982-6993FAX: (602) 982-6994

RESUMEJEFF J. PARKER

SELECT EXPERIENCE

PresidentJKP Environmental ServicesGold Canyon, Arizona

Mr. Parker is responsible for initiation and development of the JKP Environmental Services(JKP) in Gold Canyon, Arizona. Mr. Parker provides capable consulting services in manyenvironmental disciplines for the clients of JKP. Mr. Parker provides personalized service ina timely and cost effective manner that addresses the needs and concerns of JKP clients.

Division CoordinatorSuperior Division- Magma CopperSuperior, Arizona

Mr. Parker is responsible for all phases of environmental compliance, monitoring, training,reporting and permitting. Mr. Parker coordinated and implemented Best ManagementPractice Plan (BMP) upgrades to the Superior Division. His responsibilities include; NationalPollution Discharge Elimination System (NPDES), Closure Cost Estimates, Reclamation Plan,Aquifer Protection Permit (APP). Mr. Parker is also responsible for Resource Conservationand Recovery Act (ACRA), Comprehensive Environmental Response, Compensation andLiability Act (CERCLA), Clean Air Act (CAA), Clean Water Act (CWA), and Toxic SubstancesControl Act (TSCAI issues. He has developed Storm Water Pollution Prevention Plans(SWPPP's), Spill Pollution Control and Countermeasure Plans (SPCC) and EmergencyResponse Plans. He has also conducted Phase I Environmental Site Assessments.

Senior Environmental EngineerPinto Valley Operation - Magma CopperGlobe, Arizona

Mr. Parker was responsible for all phases of environmental compliance, monitoring, training,reporting and permitting. His responsibilities included; National Pollution DischargeElimination System (NPDES) sampling, record keeping and reporting. He was alsoresponsible for Resource Conservation and Recovery Act (RCRA)' ComprehensiveEnvironmental Response, Compensation and Liability Act (CERCLA)' Clean Air Act (CAA)'Clean Water Act (CWA), and Toxic Substances Control Act (TSCA) issues. He alsodeveloped Storm Water Pollution Prevention Plans (SWPPP's), Spill Pollution Control andCountermeasure Plans (SPCC) and Emergency Response Plans.

Environmental CoordinatorCoeur Rochester MineCoeur d'Alene Mines CorporationLovelock, Nevada

Mr. Parker was responsible for all phases of environmental compliance. monitoring, training,and reporting. Development and implementation of environmental monitoring, reclamationand recycling programs. Mr. Parker performed and directed activities regardingenvironmental disciplines including; air quality, water quality, both surface andgroundwater; reclamation, wildlife, and mining permit amendments. He also developedproactive programs to manage, dispose and recycle hazardous materials.

During his tenure he maintained a citation free record at the Rochester Mine and was part ofthe team that received the prestigious DupontlConoco Environmental Leadership Award.

EDUCATION

Bachelor of Science in Geology, 1984, Southern Oregon State College.

CONTINUING EDUCATION

• Environmental Laws Compliance Course, 1991• Reclamation in the West Conference, 1991• Successful Mine Reclamation Conference, 1992• Aquifer Protection Permit Program, 1992, 1993• Wetlands Conference, 1993• Arizona Environmental Law, 1993• Technical Writing, 1993• Conference on Chemical Preparedness, 1993• Hazardous Waste Management and Regulatory Compliance Seminar, 1993• Risk Assessment Workshop, 1994• Pollution Law: A Comprehensive Overview, 1994

CERTIFICATION

• Fundamentals of Air Quality Permitting and Compliance, Nevada/Arizona Bureau of AirQuality, 1991, 1992, 1993, 1994.

• Hazardous Materials Technician 40 Hour Course, (O.S.H.A.) 1910.120 CertificationTraining 1992, 1993, 1994.

• MSHA Approved Instructor for CFR Title 30, Part 48 Miner Training.

JKP ENVIRONMENTAL SERVICESENVIRONMENTAL PERMITTING AND COMPLIANCE CONSULTING

9973 East Palermo Ln.Gold Canyon, AZ 85219

Phone: (602) 982-6993

TO:FROM:DATE:

/3t,..cCJlfMr. Jerry 8-ktekJeff J. ParkerSeptember 22, 1994

RE: REVIEW OF FACSIMILE ON PERMITTING OF PAYSON PROJECT

COMMENTS:

JKP Environmental Services can provide ministration to meet the requests outlined in theSeptember 1, facsimile as they relate to your Operating Plan (OP).

• Mitigation alternatives for archeological locations.

• National Pollution Discharge Elimination System (NPDES) permitting.

• Development of a Storm Water Pollution Prevention Plan (SWPPP's).

• Assistance in development clean out procedures, dewatering methods, controlmethods for tailings slurry and piles.

• Aquifer Protection Permit (APP) support.