Our next stop was the gold exploration projects of Premium Exploration Inc. [PEM-TSXV] near Elk City in central Idaho. The company is in a unique position with two gold projects situated along the Orogrande Shear Zone which hosted 13 past-producing mines and numerous gold occurrences over 16 miles of strike length.

At the northern end of the shear zone, Premium’s Buffalo Gulch Project has a non-NI 43-101 historic resource of 100,000 ounces of gold hosted in 4.5 million tonnes grading about 1 gram gold/tonne. Viewed as an open pit, heap leach operation, all production permits were obtained by former operator Bema Gold. A pre-feasibility study has been completed. Capital costs are estimated at $10.2 million and Del Steiner, President, forecasts production to start in about two years. The oxide ore from surface to about 250 feet deep is soft, making blasting and milling unnecessary. The deposit remains open along strike and to depth. It is unknown what the grades will be in the underlying sulphide mineralization and this will be investigated in the future. For the oxide mining operation,
the strip ratio will be a favourable 1:1 (waste:ore) with cash costs estimated to be US $360/oz. for a projected production rate of 25,000 – 35,000 ounces of gold per year.

Revenue from the Buffalo Gulch Mine will be used to finance further exploration at the southern end of the Orogrande Shear Zone, namely the Friday-Petsite Project which hosts a NI 43-101 compliant inferred resource of 531,890 ounces of gold along a strike length of about 1,000 feet (15.17 million tonnes grading 1.087 grams gold/tonne). Premium hopes to expand gold resources and advance the resource towards the 2 to 5 million ounces targeted by former operator Kinross Gold.

To this end, the company has planned a Phase II 12,000-foot drill program of 20-26 drill holes, part of a 40,000-foot program. The deposit remains open to the north and south along strike and to depth below 800 feet from surface of the known mineralization. Recent drilling results from Friday-Petsite have been encouraging. The assays confirm the continuity of the high-grade gold mineralization and extend the strike length by 50% from 350 to 525 metres, which will expand the mineralized zone. Highlights included 5.02 grams gold/tonne over 17.92 metres, including 13.78 grams/tonne over 5.73 metres and 35.55 grams/tonne over 1.58 metres. A large portion of the high-grade zone is on patented ground and could be mined underground, with proper funding and perhaps a bit more drilling, as early at Q1 2010. Mineralization is at surface and, therefore, could be open pitted as well. The 4,000 feet of geochem anomalies extending to the south leaves a zone four times the size of the current resource open for exploration. It is thought to be a continuation of the zone, therefore demonstrating multi-million ounce potential, Steiner says. In total, 199 drill holes have been completed on Premium’s Orogrande Shear Zone project.
In between the Buffalo Gulch and Friday-Petsite projects lie the Deadwood claims for which a drilling program is planned. Premium’s 110-claim Deadwood Project hosts a historic 50,000-ounce gold resource and geological conditions are favourable for developing further economic gold resources along the prospective Orogrande Shear Zone.

Premium also holds a promising platinum/chromium project across the border in Montana near the Stillwater Mining Complex and a past-producing silver project in Mexico.