Summary

New Jersey Mining Company acquired the Niagara copper-silver deposit in December of 2006. The deposit is located near the forks of Eagle Creek about 7 kilometers north of the Company's Golden Chest operation near Murray, Idaho. Access to the site is maintained through the use of a US Forest Service road. The Company’s land position consists of 39 unpatented claims covering about 775 acres which also includes an early-stage, gold-telluride prospect known as the Progress. The Niagara deposit occurs in the upper Revett formation and management considers the potential to increase the copper-silver resource by exploring the lower Revett formation excellent.

Resources
In 2008, NJMC drilled three core holes through the Niagara deposit which successfully increased the area of copper-silver mineralization. As an example, DDH08-9 intersected 19.4 meters grading 0.51% copper, 25 grams per tonne (gpt) silver, and 0.029 gpt gold. Results from the 2008 drilling program were combined with historic data to complete an updated resource calculation, the results of which are tabulated below.

Gold was not analyzed for in the historic drilling so it is not included in the resource estimate, but recent drilling indicates the gold content might average 0.1 gpt.  Open pit mining simulation studies completed by the Company show that 81.5% of the resource could be mined by open pit methods.  The pit would have a stripping ratio of 3.37 tonnes of waste per tonne of ore.  A total of 7.5 million ounces of silver and 125 million pounds of copper would be mined from the pit, and a copper price of $3 per pound would provide an acceptable economic return.

Geology

The Niagara deposit occurs in a section of mineralized upper Revett formation near the axis of a north-south striking syncline. The western limb of the syncline has been truncated by the north-south striking Murray Peak fault, a steep, west dipping reverse fault. Other faults offset the mineralized zone slightly. In the Niagara deposit, the mineralization occurs in the upper Revett Formation, which here is a light gray, massive quartzite with thin siltite interbeds. The ore horizon crops out along the East Fork Eagle Creek and is approximately 30m below the contact with the overlying St. Regis Formation. See photograph below.

Outcrop of Niagara Cu-Ag deposit (Note green copper stain near right side of photo)

The Niagara deposit is of the stratabound variety typified by the Rock Creek project (resource: 124 million tonnes at 0.72% copper and 49.7 gpt silver) and Troy Mine (pre-mining resource: 48.9 million tonnes at 0.74% copper and 48.2 gpt silver) both located in northwestern Montana. It is common to find Troy-type mineralization stacked in several horizons of the Revett and the larger deposits are typically found in the lower Revett horizon; therefore, the Niagara deposit has excellent potential for additional mineralization in the unexposed lower Revett rocks.

In 2008, NJMC located a gold-telluride prospect known as the Progress about 1.7 kilometers to the southwest of the Niagara. Soil sampling has indicated a zone of anomalous gold-in-soils that is 80 meters wide and at least 350 meters long.  Old adits and trenches have exposed gold mineralization and a sample taken from the dump of one of the adits assayed 73.7 grams per tonne (gpt) gold, 92.5 gpt silver and 54.6 gpt tellurium.  A one meter wide chip sample was obtained in one of the adits by NJMC’s field geologist and assayed 12.9 gpt gold, 11.4 gpt silver and 10.6 gpt tellurium. 

Site History

An exploration program completed by Earth Resources Company on the Niagara property in the 1970's identified the copper-silver resource.  Their exploration program included 8 drill holes and 6 trenches on the outcrop of the mineralized strata. Within the Niagara deposit, the exploration revealed a higher grade core of 2.7 million tonnes, amenable to underground mining, which grades 0.93% copper and 37.8 grams per tonne silver (1.10 ounces per ton).  Earth Resources also completed metallurgical testwork that indicated conventional flotation will achieve recoveries of 94% for copper and 90% for silver. Preliminary economic studies by Earth Resources contemplated an underground mine that mined the higher grade core (2.7 million tonnes) of the deposit at a rate of 800 tonnes per day.

It appears that the Progress prospect was discovered and worked in the 1920’s and abandoned during the 1930’s Great Depression when funding for exploration became very difficult.  Apparently, the Progress was forgotten and no work has been done on the prospect since the 1930’s.

Exploration/Development Plans

NJMC has submitted a Plan of Operations (POO) to the U.S. Forest Service for a drilling program to explore the lower Revett formation below the Niagara deposit.  The drilling will take place from the bottom of the East Fork of Eagle Creek drainage at an elevation at least 200 meters lower than the exposed outcrop.  A POO is also in process for two drilling sites on the Progress prospect.

Agreement Terms

NJMC signed an Exploration Agreement with Revett Metals Associates (RMA) that has a term of five years, beginning on December 2, 2006, and is for nine unpatented claims that cover the known copper-silver deposit. In addition, the Exploration Agreement covers an Area of Mutual Interest within ½ mile of the property excluding property valued primarily for its gold mineralization.   The Progress is excluded from this agreement.

At each anniversary of the signing, the Company has agreed to pay $3,000 and issue 30,000 shares of restricted common stock to RMA. Any time prior to the expiration of the Exploration Agreement, the Company can exercise an option to convert the Exploration Agreement to a Mining Agreement. If exercised, the Mining Agreement would have a term of 25 years, and the Company would pay a Net Smelter Royalty (NSR) to RMA of 3.0% on ores or concentrates mined on the property. Also, the Company is granted the option to purchase 90% of the NSR from RMA for $2,500,000.

Finally, Newmont Mining Corp. has an option to include the Niagara area (including the Progress) into the Toboggan Project which is a gold exploration joint venture between NJMC and Newmont.  If included into the joint venture, Newmont’s overall work commitment is increased by $1 million with a one-year extension on the work commitment schedule.

Resources
* The United States Securities and Exchange Commission permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms, such as "measured," "indicated," and "inferred resources," that the SEC guidelines strictly prohibit us from including in our filing with the SEC. U.S. investors are cautioned not to assume that any or all of measured, indicated or inferred resources are economically or legally mineable or that these resources will ever be converted into reserves. U.S. investors are urged to consider closely the disclosure in our Form 10-K and Form 10-Q.