Exploration & Development Strategy

Engineer Gold Mines Ltd. (EAU:TSX.V) (Engineer Gold) was created in 2018 with the completion of a Plan of Arrangement with its predecessor company Blind Creek Resources Ltd. (BCK:TSX.V).  Engineer Gold’s Flagship is the 100%-owned Historic Engineer Gold Mine Property, situated 32 km southwest of Atlin, B.C.  Over the past 13 years previous operators have spent >$7M at the Engineer Gold Mine with a focus on property consolidation, exploration for high-grade and bulk tonnage mineralization, test mining, bulk sampling, test milling and mineral resource development. Engineer Gold is positioned to continue exploration, resource and mine development, bulk sampling and milling at the Engineer Gold Mine.

Location & Access

• Located 32 km west of Atlin, B.C., 140 km south of Whitehorse, Yukon and situated on the east shore of the South Arm of Tagish Lake.
• Easily accessed year-round by boat / barge / float plane (summer) or ice road / ski plane (winter).

Mine History (See below for more detailed Mine history)

• 8 Level shaft (with later 5th level portal access) mine with 1,850 metres of drifts, raises and crosscuts.
• Historic high-grade gold producer (peak production mid-1920s, ceased operation in early 1930s).
• >18,000 oz gold and 9,000 oz silver officially produced at realized grades exceeding 39 g/t gold and 20 g/t silver.
• Narrow, high-grade epithermal quartz-carbonate veins (Boulder, Double Decker, Engineer) mined on 6 of 8 mine levels.

Property and Ownership

• The 100% owned Engineer Gold Mine Property consists of 6 crown grants, 5 legacy mineral claims, and 99 Mineral Titles Online "MTO cell" claims that surround and overlap the crown grants. The total contiguous Engineer Distric covers an area of approximately 29,593 hectares.
• No underlying royalties on the Historic Mine (patented crown grants) and majority of the Property. Guardsmen Resources Inc. retains a 2.5% Net Smelter Return royalty (NSR) on select claims (2,100 ha), 2% of which can be purchased by Engineer Gold at any time for $1.5M.

Resource Estimate

• Inferred Mineral Resource of 41,000 t grading 19.0 g/t gold (5 g/t gold Cut-Off) for 25,000 oz contained gold, or 14,000 t grading 52.5 g/t gold (25 g/t gold Cut-Off) for 23,600 oz contained gold, initially calculated by Snowden Mining Industry Consultants Ltd. in 2011 and restated in the 2018 NI 43-101 Technical Report.

High-Grade Gold Mineralization & Exploration Potential

• Historic production from high-grade, bonanza-style, low-sulphidation epithermal quartz-carbonate +/- roscoelite +/-gold +/- silver veins (historic gold target) that occur adjacent to a second-order semi-brittle and brittle shear zone splay of the crustal-scale Llewellyn fault.
• Gold mineralization occurs primarily as electrum in association with roscoelite (or a vanadium illite) in discrete, vertical and continuous high-grade shoots within quartz +/- calcite veins.
• >25 known veins discovered to date.
• only 4 veins (Engineer, Double Decker, Boulder, Shaft) have seen limited production / exploration.
• essentially unexplored below 200 m from surface; all veins remain open at depth.

Bulk-Tonnage Gold Exploration Potential

• Property overlays >8 km of highly prospective 2nd order shear structures known to hold significant low-grade gold-silver mineralization.
• Shear Zone "A" defined over 400 m strike length with near-surface drill intercepts up to 0.45 g/t gold over 34 m (2008).
• Shear Zone "A" remains open along strike and at depth.
• +50 m thick gold-bearing hydrothermal breccia zone traced within Shear Zone "A".
• Undrilled and open-ended >1.0 km long gold-silver-arsenic soil anomaly 0.5km east of mine spatially related to Shear A, broad resistivity and magnetic high anomalies.
• Shear Zone "B" has been defined for 2.5 km northward from the mine, trending towards the Happy Sullivan high-grade gold epithermal prospect.
• Potential for low-grade (2 - 7 g/t gold) 0.5 -- 2M oz. gold deposit* in mine area of Shear Zone "A", predicated on recent drilling and historical reference to chip sample series averaging 5.1 g/t gold taken from 45 m crosscut on the mine's deepest level (8 Level).

*Potential quantity conceptual in nature; insufficient exploration has been completed to define a Mineral Resource on Shear Zone "A". It is uncertain that further exploration will result in target being delineated as a mineral resource.

Near-Term Production Potential

• Fully functional, permitted 30 tpd gravity separation mill on the Property.
• Access and production drifts in place for 6 veins on the lowermost 4 mine levels of the 8 level mine.
• Potential for resource development and near-term small scale production from existing underground headings on Boulder, Governor, Jersey Lilly, Shaft, Double Decker and Engineer Veins.
• Potential for additional bonanza-grade vein mineralization at depth and laterally within the current workings.
• Engineer Gold is permitted to bulk sample 10,000 tonnes and dewater 3 lowest mine levels at any time.
• Sustainable small-scale production could be achieved within 2-3 years with nominal capital for exploration, mine and mill upgrades and additional permits.

Mine History and Previous Exploration & Development Programs (1899 – 2007)

The history of the Engineer Gold Mine Property dates back to 1899 when an engineer from the Yukon & White Pass Railway discovered visible gold in quartz veins on the east shore of Tagish Lake below Engineer Mountain. He later returned with associates and staked the Engineer Group of claims. After some development work, the claims were allowed to lapse in 1906 and were re-staked and sold in 1907 to Captain James Alexander and partners.

In 1912, Captain Alexander took control and systematically explored the Property. He developed the upper levels of the underground workings and built a stamp mill at what is now known as the 1-Level Entrance. He processed over 2,000 ounces of gold over several seasons. In 1918, Captain Alexander died in the sinking of the Steamship Princess Sophia off the Vanderbilt Reef in Lynn Canal near Juneau, Alaska. With 343 or more people dying in the incident, the wreck of the Princess Sophia was the worst maritime accident in the history of British Columbia and Alaska.  Captain Alexander died along with two men involved in a deal that had just been made for the sale of the Engineer Mine to the Mining Corporation of Canada. After his death, several claimants appeared with interests in the Property, and many years of litigation followed.

The Property was taken over in 1923 by a New York group and mining began in 1924 for Engineer Gold Mines Limited. Developments at this time were the most significant that the property had yet seen, including the development of the town site, the installation of a power plant on the Wann River with transmission lines to Engineer, and the concentrator and mill on the lakeshore near the 5-Level portal. Over 140 people were employed at the site at this time and development of the underground tunnels down to the 8-Level occurred at this time. The presence of visible gold was the primary method of identifying and following ore shoots in the veins.

In 1925 reports from the Engineer Gold Mine were so favourable, that the Engineer Gold Mines stock rose to US$109 per share on the New York Curb Exchange (“AMEX”). During 1925 to 1927, the reported rock milled was 15,143 tons grading 0.77 oz/ton (≈26 g/t Au) (BC Government, Ministry of Mines Reports). Extensive development work was also done. On the Engineer Vein, sinking of an internal shaft from the 5 to the 8 levels, allowed development drifting on the 6, 7 and 8 levels. On the 8 Level a crosscut was also driven to access the Double Decker Vein, which then saw substantial drifting in both directions. On the 5 Level, another long cross cut was driven through Shear Zone A, to the veins in the northeast (Boulder, Andy, Blue and Shaft) and some drifting on these was done as well. In addition to all of this, a small shaft was sunk on the Hub B with minor drifting. Incomplete production records from this period show that some production occurred from the lower mine levels. In particular, a section the Double Decker Vein just south of the crosscut on 8 Level was reported to contain 84.3 g/t Au over a 10 m distance along the drift, and 3 or 4 lifts of mined material were extracted from here.

The Property changed hands several times in the intervening years. Reginald Brook, an associate of Captain Alexander, stayed on as caretaker of the Property and selectively hand-mined parts of the mine. In 1944 a group of miners leased the Property and high-graded the veins on the underground workings until 1952.

Several exploration companies worked on the Property from the 1960's to 1980's, to varying degrees. These include: Tagish Gold Mines in the early 1960's, Nu-Energy Resources Limited in 1975 who sampled the hydrothermal breccia zone along Shear Zone A on the 5-Level, and Nu- Lady Gold Mines Ltd. in 1979. In 1987, Total Erickson Resources Limited conducted a comprehensive exploration program that included an aeromagnetic survey, detailed geological mapping and sampling and drilling.

Gentry Resources Ltd. optioned the Property from Total Erickson in 1989, and acquired title to the Property in 1990 with Winslow Gold Corp. Ampex Mining acquired an interest in the Property from Winslow in 1993, and through further transactions the Property interest was passed to Old Engineer Mining Corp. who underwent a name change to Engineer Mining Corp in 1997.

During 1991 to 1992, the portal and most of 5 Level was rehabilitated by Ampex and some original documents were acquired from Jim Brook whose grandfather Reginald had worked on the property from 1899 to the 1930's. Blasting and sampling on the No. 2, No. 3, and Double Decker veins was unsuccessful in locating new gold shoots. On the Engineer Vein, impressive samples of gold in roscoelite were collected on small remnants of an ore shoot found in pillars between surface and 2 Level, and along the 5 Level (bonanza shoot). Access to the 3 and 4 Levels was not attempted. In 1993 the northeast part of the Mine was re- habilitated. At the north end of the Boulder Vein (524 raise), approximately 150 tons of material averaged approximately 31 g/t Au and a smaller sample at the south end (523 raise) averaged 26 g/t Au. A boating accident at the end of the summer resulted in the loss of the daily records, mining journal and rock samples.

During the 1994 season, EMC secured permitting for a 30 ton per day pilot mill and a 10,000 ton bulk sample. The mill, a 150 kW generator, an enlarged camp, a dump truck, a D7 Cat and a 931 Cat loader were barged to site and assembled. A 50 ton sample from the 505-1 raise (Engineer Vein) was processed, but problems in the mill circuit prevented an accurate assessment of grade. A 30 ton sample from the 524-2 raise (Boulder Vein) was more successfully processed and yielded a grade of approximately 28.6 g/t Au. In 1995 track mining equipment was purchased and 600 m of track installed. Bulk sampling continued and a total of 945 tons of material from both surface and underground was processed with variable results.

Previous Exploration & Development Programs by Past Operators - (2007 - 2016)

• 2007 Exploration:
  • $500k program entailing surface and underground mapping and sampling on 5 Level, 3D mine modeling (VULCANTM), exploration targeting and resource estimation.
• 2008 Exploration:
  • 1,846 m diamond drill program defined Shear Zone "A" structure over 400 m strike length with near-surface drill intercepts up to 0.45 g/t Au over 34 m.
  • 600 m trench excavation completed on Boulder, Shaft, Double Decker and Shear "B" zones, all of which were either exposed or partially developed 120 m vertically below on 5 Level in the 1920s; exposed veins geologically mapped and channel sampled.
• 2010 Exploration:
  • 1,100 m underground drilling confirmed high-grade depth extensions to Engineer (129.0 g/t Au and 121.63 g/t Ag over 1.00 metre) and Double Decker (22.32 g/t Au and 17.59 g/t Ag over 0.96 metres) veins.
  • Snowden commissioned to complete NI 43-101 compliant Technical Report and Mineral Resource estimate.
• 2011 Exploration, Bulk Sampling & Test Milling:
  • $1.1M program completed based on Snowden Mining Industry Consultants Ltd.'s exploration and development recommendations to increase the Mineral Resource and take property to small scale production in near term. (see BCGold May 25, 2011 news release)
  • 30 tpd pilot mill circuit refurbished and optimized.
  • 6 bulk samples (400 tonnes) mined from Engineer and Double Decker veins. (see BCGold October 6, 2011 news release)
  • 246 tonne composite sample milled, returning average mining head grade of 16.9 g/t gold.
  • wire gold in roscoelite and/or fine gold in quartz observed in all samples.
  • 969.2 kg dry concentrates (Table, Sluice and High-Grade Gold Stream) recovered from composite sample returned weighted average grade of 2139.1 g/t gold, containing estimated 68.3 oz gold.
  • preliminary test milling averaged 51.3 % gold recovery from the on-site gravity separation mill.
  • 60% of composite sample mined outside of current Inferred Mineral Resource. (see BCGold February 27, 2012 news release)
  • new exploration target defined on high-grade "505-3" shoot discovery, within Engineer Vein and outside current Inferred Mineral Resource. (see BCGold February 29, 2012 news release)
  • 600 line km SkyTEM deep penetrating Time-Domain Electromagnetic / Magnetic airborne survey conducted over Engineer Mine and Gold Hill properties; numerous exploration targets defined for follow-up.
• 2012 Exploration & Development:
  • Completed $550,000 exploration and mine-dewatering program on Engineer Mine and Gold Hill properties.
  • geologically mapped, prospected and conducted MMI soil surveys over Shear Zone "A" and "B" bulk tonnage gold exploration targets.
  • MMI surveys detected 3 Shear Zone style, bulk-tonnage gold drill targets on Engineer and Gold Hill properties.
  • dewatered 6 and 7 Level of underground mine workings to access down-plunge extension of high-grade 505-3 and 505-5 Shoots on Engineer Vein.
  • installed air and water services to 6 and 7 Level, completed geological mapping and panel sampling.
  • underground panel sampling confirmed Engineer Vein and high grade gold shoots persist at least to 7 Level.
  • 2012 grab samples on 6 and 7 Level up to 12,720 g/t Au and 3,180 g/t Au, respectively.
  • 2012 Metallurgical Work & Concentrate Sales:
  • approximately 0.8 dry metric tones gold-rich gravity concentrate produced during 2011 bulk sampling sold to Auramet Trading, LLC at US$1608/oz for $107,000. (see BCGold June 26, 2012 news release)
  • Gekko Systems of Ballarat, Australia conducted metallurgical studies consisting of bench-scale gravity and leach amenability tests on mill feed and table concentrate from 2011 program.
• In 2014 BCGold conducted a limited soil geochemical and MMI soil survey south of the immediate Mine area.
• In 2016 BCGold conducted a follow-up MMI soil sampling survey south of the Mine, defining a number of Au-Ag-As-Sb geochemical anomalies.

Previous Exploration & Development Programs by Past Operators (2017 - 2018)

• Blind Creek acquired the Engineer Gold Mine Property from BCGold Corp. (now Pan Andean Minerals Ltd.) on April 26, 2017.
• Blind Creek subsequently increased the Engineer Gold Mine Property to 12,032 ha by staking additional contiguous mineral claims.
• On June 8th, 2017 Blind Creek was issued a water discharge permit from the British Columbia Ministry of Environment that authorizes Blind Creek to discharge groundwater from the underground workings of the Engineer Gold Mine and effluent from the Company’s 50 tonne per day gravity separation gold mill into Tagish Lake and the tailings impoundment, respectively, subject to a number of specific requirements.
• On October 5th, 2017 Blind Creek acquired the right, title, benefit and interest held by Pan Andean Minerals Ltd. in and to the 1% Net Smelter Royalty (“NSR”) over the Engineer Gold Mine Property.
• On October 13th, 2017 Blind Creek was issued an amended Mines Act Permit from the Ministry of Energy, Mines and Petroleum Resources, Mines and Mineral Resource Division, authorising the Company to conduct exploration, underground mining and on-site milling activities at the Engineer Gold Mine Property, detailed in a renewable Notice of Work and Reclamation Program (“NOW”), valid until March 31st, 2020.
• In August, 2017 Blind Creek completed a geological mapping, sampling and MMI soil survey targeting additional narrow-vein high-grade and shear-hosted bulk tonnage gold mineralization south of Engineer Gold Mine (proper) and on the southern Wann River claims.
• In August, 2017 Blind Creek commissioned an updated NI 43-101 Technical Report on the Engineer Gold Mine Property. This Technical Report included a re-stated Inferred Mineral Resource Estimate and recommendations for a significant 2-Phase exploration and test-mining / milling program at the Engineer Gold Mine Property commencing in 2018.
• On January 19, 2018 Blind Creek announced its intention to transfer the Engineer Gold Mine Property into a 100% owned subsidiary company Engineer Gold Mines Ltd., which was spun out as a separate public company from Blind Creek by a Plan of Arrangement on June 1, 2018.
• On January 30th, Blind Creek announced it had received and filed a 2018 NI 43-101 Technical Report titled “Engineer Gold Mine, British Columbia, Canada, January 2018”, authored by Darren O’Brien, P. Geo, Michael Redfearn, P. Eng. and Dr. Simon Dominy, FAusIMM(CP), FGS(CGeol), effective January 18th, 2018.  This report was subsequently amended and re-stated on May 9th, 2018 and filed on SEDAR.

Mine Condition

• Historic development includes >1,850 m of drifts, shafts, raises and stopes; 8 mine levels developed, main portal on 5 Level (with rail).
• Narrow veins and headings, ground in excellent condition.
• Lowest 3 mine levels flooded (Company permitted to dewater at any time).

Infrastructure

• All-season 20 man trailer camp on property.
• Fully functional, permitted 30 tpd gravity separation mill on site.
• Permanent, industrial dock to be utilized for loading and offloading float planes and barges.
• Main underground access provided by tracked portal on 5 Level.
• Power, air, water available to most areas of 5 Level and 6 and 7 Levels.
• Compressors, generators, electric loci and four 1-ton ore cars, as well as a mucking machine on 5 Level (all Company-owned).
• Small bulldozer and gravel truck on Property.
• Vestiges of historic hydro-electric power line from power plant on the Wann River (5 km south) evident.

Geology of the Tagish Lake Region

Two crustal scale sub-parallel, northwest trending faults transect the Engineer Mine Property area, the Nahlin Fault Zone in the eastern property area and the Llewellyn Fault Zone through the Wann River area. The faults are grossly coincident with terrane boundaries. A belt of anomalously high regional gold-arsenic and antimony geochemistry extends the length of the Tagish Lake area, coextensive with the Llewellyn fault.

The Engineer Gold Mine and Wann River claims are underlain by Carboniferous to Triassic oceanic rocks of the northern Cache Creek Terrane to the east of the Nahlin Fault Zone, Devonian to Permian metamorphic rocks of the Yukon-Tanana Terrane to the west of the Llewellyn Fault Zone and Triassic to Jurassic sedimentary strata of the Whitehorse Trough between the faults. The above lithologies are cut by Late Cretaceous to Tertiary intrusions and intruded by Eocene plugs and dykes and overlain by associated volcanic rocks and basal coarse clastic sedimentary rocks of the Sloko Group.

The Tagish Lake region hosts significant low-sulphidation epithermal gold-silver mineralization (Engineer Mine area), polymetallic veins (Ben-My-Chree), gold quartz vein (potential in Graham Creek area), copper (Whitehorse Copper) and gold skarn (TP in northern Tagish region) deposits, and possible Kuroko-style volcanogenic massive sulphide (Tulsequah Chief) deposits within Yukon-Tanana Terrane and copper-molybdenum-gold porphyry and gold-silver rich Eskay type shallow subaqueous hot spring deposits within the Whitehorse Trough.

Geology and Mineralization at the Engineer Gold Mine Property

Electrum and gold are the principle precious metals at the Engineer Gold Mine. The Mine is noted for museum class gold, electrum and “allemontite” specimens.  Allemontite is intimately associated with high-grade mineralization and, while not a valid mineral consists of interlayered and/or mixed arsenic and stibarsen, two valid minerals.  Gold grades at the Engineer Gold Mine are sporadic, ranging from trace to >50 grams per tonne gold. 

Quartz veining and gold mineralization occurs in two modes at the Engineer Gold Mine property, in brittle deformation and hydrothermal breccia zones along Shear Zone "A" and in bonanza shoots within low-sulphidation quartz-carbonate veins peripheral to the Shear Zone "A" deformation zone.

Brittle Deformation and Hydrothermal Breccia Zones

The first mode of gold mineralization at the Engineer Gold Mine Property, occurring in brittle deformation and hydrothermal breccia zones along the Shear Zone "A" deformation zone, represents a bulk tonnage gold target. This gold occurs in quartz-calcite-pyrite cemented hydrothermal breccias and quartz vein zones 50 metres along a strike length of more than 250 metres. The lateral and depth extents have not been tested. The breccia zone is focused along the north side of Shear Zone "A", in the Eocene reactivated domain. Several breccia types are recognized in core, including pyrite cemented polymict breccias, fine pale quartz-cemented breccias, dark siliceous breccias with varying clast content, and intrusive clast breccias. Overprinting, multi-stage quartz-pyrite veining relationships are also recorded in core. Gold values are highest in zones of fine quartz flooding, and high silver values are attributed to quartz-arsenopyrite-stibnite veins.

High-Grade Gold and Silver Veins

The second mode of mineralization at the Engineer Mine property is in high-grade gold and silver veins that occur outside of the Shear Zone "A" deformation zone. These quartz-calcite veins formed in pre-existing structures that were re-opened during the Eocene hydrothermal event and reactivation of Shear Zone "A". To the south of Shear Zone "A", the veins are both extensional and shear in character. They show a structural relationship to Shear Zone "A" movement. Historic production in the area was from the Engineer and Double Decker veins (view Summary Map) that extend south from the reactivated section of Shear Zone "A". These veins are less than 2 metres wide, strike northeast, and pinch and swell along strike but have good vertical continuity.

Other important gold veins that occur outside of the Shear Zone "A" deformation zone are the high-grade Shaft vein and the Boulder-Governor vein system; all are to the north of Shear Zone "A". The Shaft vein is vertical on surface but changes to moderately southwest-dipping at depth. It produces coarse free gold. A high-grade zone on the Shaft vein, 113 metres below surface on the 5 Level underground, has bands of arsenopyrite and stibnite up to 1 centimetre wide. The mineralogy is similar to the very high grade Engineer vein to the south. The nearby Bolder-Governor vein system produces free gold in quartz and carbonate concentrated in hydrothermal breccia zones up to 5 metres wide and 50 metres long at vein intersections. The veins strike northwest and southeast. Bonanza gold grades were mined in the 1990's at these vein intersections.

Host Rocks

The host rock to all the veins and breccia zones on the Engineer Gold Mine property is argillite and greywacke of the Laberge Group. Monzodiorite dykes related to the Sloko Group complex occur across the property, displaying varying degrees of quartz-carbonate-clay alteration. Some of the most altered dykes may be rhyolite dykes from the same intrusive event.

Wann River Exploration and Mineralization

Seven Minfile occurrences are documented on the southern Wann claims; the Kim (109.7 g/t Ag, 0.7 g/t Au and 4.0% Cu) and Douglas polymetallic vein showings in the southwestern property area, the Kirkland showing and Gleaner prospect covering epithermal veins near the Engineer Gold Mine, the Graham Creek placer and upstream extent in the northern property area, and the Brown polymetallic vein showing and the copper-nickel-platinum-palladium Anyox-Rodeo prospect within the Wann River area.

Previous exploration by Blind Creek Resources Limited in the Wann River area was focused on a 160° trending, 800m long by 180m wide corridor with quartz vein mineralization occurring within Devonian to Triassic Boundary Range biotite-feldspar-quartz schist in the southwest, and a faulted panel of Upper Triassic Stuhini andesite and quartz eye porphyry in the northeast.

Mineralization at the Brown showing within the corridor consists of tetrahedrite/freibergite, chalcopyrite, malachite, azurite, molybdenite, pyrite, sphalerite and galena. A sample collected from the Brown adit in 2010, returning 8.6 g/t Au and 420 g/t Ag over 0.3m, confirmed previous results by the British Columbia Geological Survey from a chip sample (assaying 8.6 g/t Au and 315.38 g/t Ag) and verified the presence of significant gold-silver values on the Wann River claims.

2010 Exploration at Wann River

Results from grab samples from the Wann River area include 263 g/t Au, 1350 g/t Ag, 2.75% Cu, 4.45% Pb and 1.36% Zn hosted by quartz from tailings in the Lum trenches, and 15.9 g/t Au, 440 g/t Ag, and 1.04% Pb from the Newfie, 17.2 g/t Au from the Trail, including 32.9 g/t Au, 1180 g/t Ag and 3.35% Cu and 3.79% Pb from float, and 126 g/t Ag from the River quartz vein showings.

A 2011 Technical Report on the Tagish Lake Project recommended a significant exploration program on the Wann River portion of the Tagish Lake Project. A program consisting of 2,000m of diamond drilling to evaluate the southeastern sector of the corridor, a ground magnetic geophysical survey to aid in geological mapping, and additional prospecting, mapping and sampling was recommended on Wann River with a budget of $950,000.