4.1 Locatable Minerals

Nevada was the leading US gold, barite, and gypsum producer in 2005 and the second largest producer of silver. The prospects for sustaining production rates for these three minerals in the short run are excellent and in the long run (15-20 years) also quite likely. Nevada Exploration Survey, 2004, indicated the 75 percent of responding mineral companies are optimist about domestic exploration (Driesner and Coyner, 2005). Commodity prices are currently high, as is demand for these products.

4.1.2 Precious Metals

Gold — The cumulative production of gold from Nevada since 1859 is estimated at about 149.5 million ounces of which 84% has been produced since mining began in the Carlin trend in 1965 and 52% of which has been produced in the last decade.

The price of gold has increased over the last few years from an average of $310/ounce in 2002 to $365/ounce in 2003, $460/ounce in August of 2005, and stands at over $600/ ounce today (June, 2007). This increase in gold price has initiated a shift in precious metal exploration from high grade, vein type targets to low grade, large tonnage deposit targets. Company dollars spent for exploration have been increasing since 2001 and were about $79.7 million in 2004 and are estimated to be about $111.9 million in 2005 (Driesner and Coyner, 2005).

Because of Nevada's favorable geologic setting, its stringent but predictable regulatory climate and the political stability of the US, Nevada continues to receive a very large portion of worldwide exploration expenditures (Price and Meeuwig, 2006). Estimated gold reserves in the immediate vicinity of currently active mines at the end of 2003 were about 80.3 million troy ounces. Under current production rates this reserve would account for about 11 years of sustained gold production.

Reserves associated with major metal deposits are tabulated in a report by individual mining property (Tingley, 2004). In addition to new discoveries, the price of gold and the cost of production are the main reasons for fluctuations between reserves and sub-economic resources.

Based on mining industry projections it appears that market conditions for gold will remain relatively consistent, with gold priced in the $400 to $600/ounce range. It is anticipated that mining and exploration activity would also gradually increase. Within the next 10 years it is anticipated that 2-3 currently active mines will go into closure and be reclaimed. These mine closures would likely be offset with either new projects being developed and placed into production, or expansion of existing mines. Based on these estimates and projections, permitting demands for both hard rock exploration and mining would likely increase over time.

In Eureka County specifically, Barrick Gold Corporation is conducting further exploration in the vicinity of the company's existing mines, and reports on the company website that it is "confident that the property will continue to yield new discoveries in the future."

Barrick is developing the East Archimedes Mine at the old Ruby Hill Mine site near Eureka. The company website reports that "the project will be an open-pit, heap leach operation exploiting the East Archimedes deposit, a deeper continuation of the ore mined previously at Ruby Hill. Permitting has been secured and the two-year, approximately $75-million construction phase is underway. The project is expected to enter production in mid-2007 and has reserves of 1.0 million ounces at December 31, 2005."

Barrick also is a partner with Kennecott Minerals in the Cortez Joint Venture in Lander County close to Crescent Valley. This operation is described on the company website: "The Pipeline and South Pipeline deposits are being mined by conventional open-pit methods in nine stages.

The first three stages of mining occurred in the Pipeline deposit over a period of ten years (1996 - 2005) and then mining of Pipeline/South Pipeline stages four through nine plus South GAP and Crossroads are scheduled to continue through 2018. All requisite permits for the development of the entire Pipeline/South Pipeline deposit have been issued."

Overall, it appears that with high and rising gold prices, gold production and exploration in Eureka County will continue to be important over at least the next ten to twenty years.

Silver — Most of Nevada's silver production in recent years was produced as a byproduct of gold mining. Like gold, the price of silver is gradually increasing. This may affect the expansion potential of the existing silver mines, would likely increase exploration activities for new silver deposits in other areas, and encourage greater recovery of silver produced as a byproduct of gold mining.

4.2 Saleable Minerals

Saleable mineral extraction and use will increase along with increasing mining activity, commercial development, recreation activities, and private property development, especially along the Interstate 80 and U.S. Highway 50 corridor within Eureka County. Saleable mineral sites with a priority for use will likely include sand, gravel, and rock quarries located along State, County, and BLM managed roads.

There is good potential for development of aggregate deposits in Eureka County. Virtually all of the basins/valleys in Eureka County have potential aggregate deposits. However, because the market value for sand and gravel is not very high and transportation costs are high, those deposits adjacent to their end uses or good transportation corridors will have the greatest development potential.

High transportation cost and abundant resources also result in the dominance of small-scale local operations in the sand and gravel market. If local demand exists, small scale operations would not have to sustain large transportation costs, thereby creating an economically feasible and desirable situation for Eureka County's sand and gravel development. If there is no local demand, only the larger quarries, particularly those near major transportation corridors and urban centers will be economically beneficial.

4.3 Leasable Minerals

4.3.1 Geothermal Resources

Geothermal resource exploration and development operations are on the rise and are expected to increase in the future. Department of Energy and State of Nevada grants, tax incentives, and renewable portfolio standards are encouraging companies to develop geothermal and other renewable energy resources. In 2006, Beowawe Power, LLC signed a 29-year contract with Sierra Pacific Power Company. It is anticipated that this geothermal resource area will continue to be developed.

4.3.2 Oil and Gas

Eureka County's Pine Valley is the second largest producer of oil in Nevada. Pine Valley is the area in Eureka County known at this time to have the largest future potential for additional oil production. With increase usage of oil in the United States and rising prices of oil, continued exploration and future additional development will be likely in Eureka County.

Over the past 25 years, oil prices have been highly volatile and it is expected that price volatility will remain into the future, due to unforeseen natural, political, and economic circumstances (EIA, 2007). For example, circumstances in the Middle East could create significant disruptions of normal oil production and trading patterns. Conversely, high oil prices may not be sustainable due to decreased consumption and creation of significant competition from marginal (and large) sources of oil and other energy supplies. Low oil prices would have the opposite effect.

Growth in global oil demand has outstripped supply in recent years, decreasing spare production and refining capacities. In addition, prices remain elevated due to surging demand in developing Asia and the situation in Iraq (EIA, 2007).

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