Atex 9.7.08

  • December 2019
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“La Ballena Plata” “The Silver Whale” A Mexican Silver Mining Venture Proposal By MadSar Explorations, Inc. Background of the Project It all started out as an academic inquiry to locate the old Spanish Colonial silver mines which had contributed so much to Spain and Mexico’s wealth over the last 400 years. Having an extensive professional background in mining archaeology and mining geology, I thought it would be fun and interesting to find some of these old mines and to see if applying modern technologies could recover more ore from them. Considering the crude and wasteful methods used centuries ago, there seemed a high potential to go back and “mine the mines” in a quite profitable venture and adventure. Little did I suspect at the onset where this would eventually lead.. Beginning with some historic literary works that have recently been put on internet, and combining these with satellite imaging technology, I was able to find quite a few of the old mines in Chihuahua, Mexico. Although Mexico has consistently been one of the greatest mineral producing countries in the world through time, it has also been one of the most politically unstable with mine ownership usually being the ‘spoils’ of the latest junta producing a quite erratic history of mining records. In fact, Mexico never even undertook a quasisystematic survey of its mineral resources until 2006. Nonetheless, the historic records were fairly accurate when they were combined with the satellite images. For example, a mine located six leagues to the southwest of XYZ is almost impossible to find on the ground. However, if you can see the area from above, and circumscribe a six-league radius, it comes down most of the time to locating a likely geological area that was exploitable by Spanish Colonial technologies. One highly useful indicator in this xerophitic environment is that human activity inevitably leaves trails. And these trails, in an environment almost devoid of weathering processes, can last for hundreds of years if not more. In the case of PaleoIndian archaeological sites, trails still exist for traders who also mined silver, gold, and copper to trade throughout both American hemispheres. Therefore, once you have your area generally located it’s a fairly simple thing to zoom and look for the trails left by humans and their pack animals. The mines I located fit this description every time. And the larger the mine, the more telltale the tracks. In some cases it was even possible to manipulate the zoom to see the actual mine entrance(s) (adits), extant archaeological remains of structures, and most telling of all - tailings piles of their mined waste materials.

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The satellites were also highly beneficial in studying the geomorphology of the mines’ locations from space rather than on the ground which highly limited the early discoverers’ efficiency. The Spanish - and later the Mexicans - were, all in all, very good miners but they seldom ventured from their own “glory holes” preferring to just mine their location for all it was worth and proceed on to the almost innumerous other opportunities awaiting mineral exploitation. In doing so an enormous amount of wealth has been left in the ground in Mexico which is just now being exploited - mostly because new laws have denationalized their mineral wealth as described later here. The imagery I worked with was so good that you could zoom down to earth and, for example, examine even individual bushes with great detail (although flora was not my main quest objective). The imagery also allowed manipulation to examine in detail faults, folds, and other clues exposed in the cross-sections of the mountain ranges by simply zooming in for minute closeups. Thus, there are macro and a micro applications in high resolution available for study hundreds and hundreds of miles away from their physical location without ever leaving your own desk. Discovery of “La Ballena Plata” As I was virtually “touring” an ’old’ mine one day - which over its 400-year life had equaled the production of the $500,000,000 Comstock Lode here in Nevada - I became fascinated with its quite obvious mineral-bearing geomorphology. And how the mineral-bearing features of the mountain literally jumped out at you if you knew what you were looking for (which the Spanish obviously did 400 years ago). The faults were there. The stratigraphy of hydrothermal activity events were quite obvious in the outcroppings. And the human activity to verify this was a colossal mine site was overwhelming. Never in my many years of looking at historic mine sites from Nevada to Alaska had I ever seen a site so instructional to learn from than this one. So I rounded up all the modern geology reports I could find on the site to completely understand what the Spanish had seen on the ground 400 years ago and correlate that with what I could observe with today’s satellites. It was that “textbook” site everyone always talks about. Later, after I felt comfortable with my newly-developed diagnostic skills, I cast an eye around for similar formations which might have been overlooked and never been mined. And to tell the gospel truth, I almost over looked the Silver Whale. I had been looking for human signs of trails and tailings etc.. I wasn’t looking for a whole mountain range 15 miles long by 5 miles wide literally oozing with the clues I had just learned about. I had to zoom out to an eye altitude of 17 miles to take in what I had been looking for at 1-½ miles eye altitude. The next three weeks were spent in making my brain believe what my

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eyes were seeing: A whole mountain range with all the telltale signs the ‘old’ mine had taught me. The signs were all there, though - as if the two mountains were geologic, genetic twin sisters. And then elation turned to doubt. How could I have discovered this colossal deposit and others had overlooked it?!? Of course, satellite imaging is exponentially more powerful than being on the ground, but it could not be overlooked or underestimated there had been a 400-year period of people on the ground looking, probing, blasting test holes. How could this have been overlooked?!? This is when I began the most difficult task of the whole exploration: Trying to use the Mexican government’s internet records to examine any mining activities on “my mountain”. Many more weeks were spent tracking records, interpreting from Spanish to English, corresponding with the Mexican government, and compiling a detailed overview of the location. At last, I was satisfied that the location did, indeed, (potentially) contain concentrated levels of silver and other commercial minerals. Two important things resulted from this research: 1) A survey of mining activities had been conducted by the Mexican government; and, 2) There are definitely some new mining claims on the mountain. The Nature of the Hydrothermal Metallic Deposits Before going further to the above two very important items, allow me to digress and speak of the nature of the deposits we are looking for as it has a direct bearing on how we look for them. The en situ strata which contain the minerals have been deposited like a huge, seven-layered Dagwood sandwich throughout the Sierra Madre mountains in alternating limestone (ancient seabed) and carboniferous (ancient swamp) events. Beneath all these layers is a superheated hydrothermal admixture containing the silver and other metallics which is just waiting for a tectonic fissure to release it to the surface. The carboniferous strata provide that opportunity as they make a poor contact with the limestone layers and fissures are easily shocked into them. When a tectonic event occurs caused by the Pacific plate subducting - and they have been very, very frequent throughout time in central Mexico - it provides cracks (fissures) through which the hydrothermal can travel towards the surface (much like Yellowstone‘s “Old Faithful“). When this admixture hit the limestone strata, it easily dissolved the soft material creating pockets for the mixture to cool and settle into. The liquid hydrothermals also spread out horizontally across the contact in what is referred to as “mantos“ or long horizontal layers (I.e., ‘veins‘). While in solution, the heavier metallics settle to the bottom and the lighter materials rise to the top often forming amazing crystals that are more valuable than the silver itself. Thus you‘re not likely to find rich metallic deposits near the top of a

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limestone layer. As with the ‘old’ mine, you’re going to find the metals in the deeper deposits as each event was robbed of its heavy minerals like gold, silver, lead, and zinc each time a new deposit had to pass through it fissuring to the top. Thus, what we are looking for - and what I have found by satellite which is almost invisible on the ground - is an area which displays alternating light-colored limestone and blackish carboniferous strata with hydrothermal deposits in between. The strata have also been uptilted, down tilted, folded, and faulted as a result of the many, many tectonic events. This provides us very rare, direct eyesight into the workings of the deposits, how thick the strata are, and more importantly, gives opportunities to sample the deposits with easily obtained surficial “grab“ samples. I will show you pictures of this at the end of this presentation. The 2006 Mexican Mineralogical Survey The survey was woefully deficient because it was more of a past mining inventory than a diagnostic tool of extant mineral potential. Generally speaking, previous explorations had worked around the easier fringe areas of the mountains and not really penetrated into the much more rugged inside territory. So this was all the survey covered. Only one mining attempt in the interior had been attempted and it is marked on the topographical map as “Fuera del Uso” (abandoned). My satellite data clearly showed that the real mineral wealth was up in the rugged interior where I could find no trails or other evidence man had ever been there. I could see quite well by the satellite images where the really high grade ore deposits existed along folds and faults that are difficult to see on the ground. As mentioned before, these features are identical to the geomorphology of the ‘old’ mine. Again - as with what had happened with my big mistake - the singular vision by the survey people from being too close to the ground by had not revealed the enormity of the whole area‘s mineralological potential. The survey did reveal, though, the location of some fringe area testing which had been subsequently abandoned and a valuable lesson in how not to prospect these mountains. The reports and the satellite together determined exactly why they had been abandoned in this quite rich area. I could see that the prospectors had basically followed the same unproductive vein for miles, eventually creating 17 short tunnels along a very crude road. It appears their manpower and financial resources only allowed them to blast in horizontal shafts and not explore vertically downward for the survey reports never indicated any vertical shafts in any of the test sites. Although they were exploring a strata which should contain metallics, they were only coming up with some worthless crystals (I.e., they were looking into the top of a hydrothermal manto and not the bottom as described previously above). Once

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they reached the end of the mountain, they encountered an almost vertical cliff and literally the end of their road and their project. Facing this obstacle they could no longer explore so they abandoned their efforts. However, I could peer around the corner of the cliff face and manipulate the satellite to look straight into the cross-section stratigraphy. There I could see the hydrothermal layering where the ore would be expected to be located. They were, indeed, in a rich area but they were 500 feet too high to be able to discover the rich veins that existed below them. What the survey did constructively for our purposes was confirm that the location is quite rich in minerals associated with the same type of hydrothermal deposits seen in the ‘old’ mine. I.e., the survey confirmed we had the geologic and genetic sisters here to work with I had suspected. Extant Mining Claims I have also verified, in correspondence with the CG Mineria (Bureau of Mines), there have been eight claims filed recently consisting of 2,122 hectares total (1 hectare = 2.471 acres). These range in size from seven to 837 hectares. Which indicates several things. First, the mountain has been ‘discovered’ and is being filed on. Second, it indicates those filing are most probably smaller companies because large foreign mining conglomerates in Mexico usually file their claims in thousands if not tens of thousands of hectares. Third, time is of the essence to capture the rest of the mountain in one big claim. Fourth, I don’t trust their records search in the least and will go do a search of my own before going to the mountain to obtain samples. Allow me to briefly discuss here the way Mexico now treats its claims v. ten years ago. During the 20th century and before, minerals (including oil) were the exclusive property of the people of Mexico (especially the rich or politically connected). The Mexican government dictated that foreign investors could own no more than 49% of a claim. This protectionist policy resulted in almost no exploration and development of Mexico’s vast mineral resources pretty much the same as the Spanish Colonials had done. Beginning in 1996 there were some reforms passed which allowed foreign ownership of mines but there were so many ‘strings’ attached few would venture into Mexico with the huge capital investment needed for modern exploration. In 2005, most of the ‘strings’ were removed and Mexican mining has boomed exponentially since (except for oil which remains a national monopoly) fueled at lot by the rise of silver by 400% since 2000. Once approved, mining claims are for a period of 50 years with renewals possible almost into perpetuity. Foreign corporations are allowed to own the claims outright as long as they are operating as a duly organized and recognized Mexican corporation, pay their taxes, etc., as a good citizen. Neither of these

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organizational steps are particularly difficult or prohibitively expensive but we should budget in money in case we need geological expertise. $5,000 should cover this. My estimates of the lode-bearing areas not yet claimed is roughly 3,000 hectares and could go as high as 10,000 hectares with more research which I am working on now. But for the present purposes, I am most interested in acquiring what I believe the be the highest probability areas and come back in a later phase to get the rest. The cost for this level of a filing is 34,344.01MX pesos for the first 1,000 hectares and 2.0671MX pesos for each hectare above that until you reach the 5,000 hectare price break. Thus the cost for filing on 3,000 hectares is 38,478.21 MX or $2,986.18 USD on today’s spot exchange. As far as the prerequisite Mexican incorporation goes I have already prepared the standard corporate Bylaws (in Spanish) and it is ready for a Mexican attorney to proof and file. I’d expect all fees for this not to exceed $5,000. In addition it is just very, very wise to have a Mexican business attorney on some sort of standby. Samples and Assay To finally put the horse back in front of the cart in my proposal to you, we need to know if there is actually silver and other mineral deposits that can be exploited on a commercial scale by an actual mining company (which I do not wish to become). To do that I need to (quietly) go down there and obtain a representational sample universe from which we can intelligently estimate the value of the claim. I have already laid out areas which I wish to “grab” sample from the surface. This is estimated to be about 75 samples to bring back for the assay lab to analyze. I’m estimating I can go down there and come back with the samples back for less than $3,000 which includes purchasing a desperately needed GPS; a laptop for use here and in Mexico; and a Blackberry so I can communicate where I am going with someone back in the U.S. each day in case something goes wrong while I‘m on the mountain. The timing for acquiring the samples is ASAP based on the most favorable weather conditions of the year where I will be going. While I am an experienced, long-time outdoorsman used to working in wilderness conditions, I do not take chances while I am working there. Rains can be expected in the spring and there’s not a lot of fun to be had stranded on a wet, cold mountain in a foreign country with dwindling resources so ASAP is the time to finish the field work. I expect to be in the field three to four weeks which includes trips to search records.

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The GPS will allow me to report in great detail exactly where I obtain the samples which will allow future mining companies to retrace my steps and verify the assays not to have not been exaggerated or pulled from another claim. It will also allow me to lay out the claim maps with high precision to be presented to the Mexican government . Nevada, being such a huge mining state, has many assay labs available as close as Reno where I have contacted one for pricing and assaying for the mineral contents of the samples. That figure is roughly $50 per sample to determine the presence and proportions extant and certify reports to thie findings. I would expect to budget about $3,500 for total assay work including incidentals. It is not until after this is completed that we know if we have a bonanza or not. Filing the Claim Once our assay data has been received; and it looks like the claims are as good as what we expected; and having our Mexican corporation set up; it is necessary to make an appointment and physically go to Mexico to file the claim. There is no getting around this as they want to meet and I guess evaluate the prospective owner as well as the claim data itself. The claim itself requires a lot of documentation, maps, and quite predictable Mexican red tape. I have read through the files of quite a few of these applications and the requirements are not insurmountable even by a “gringo” lay person speaking mediocre Spanish. What I can’t estimate is the length of time that will be required to finalize the procedure and fly/drive home with the claims in hand. I am therefore budgeting $5,000 for “contingencies” which sometimes grease the wheels in Mexico and make things go smoother and faster if you understand my meaning here. Attracting a Mining Corporation to Our Claim Once we have finished the preliminaries, and bought the title to the minerals, is when we try to attract a larger mining company to come on to the property and do further, more scientific and objective diagnostics other than the “grab” sample. This crude sampling technique is usually highly unsatisfactory to mining companies but quite sufficient to get the claim processed in demonstrating at least some sort of reserves to the Mexican government. Usually the mining companies will come in with big - and expensive - drill coring rigs that can penetrate deep into the substrata. From the cores and using sophisticated modeling techniques, they eventually arrive at a quite accurate estimate of the value of the reserves therein. The terms of such the usual agreement includes a large up front payment and subsequent payments to an agreed upon price at which time the mining

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company can exercise an option to buy the claim(s) outright. A ‘real good deal’ may also pay a “smelter royalty” in perpetuity on ores actually extracted and processed. However, I do not see this arrangement of a large up-front fee and very little later as an acceptable situation for me or my investors. While it is true that the mining company bears the great financial load of quantifying the deposits and their value, a true settlement for full extraction should be based upon exactly what we are selling and what they are buying (I.e., that which they have finished quantifying). The relationship between we, as the mineral owners, and they, as the mineral extractors, should be - and has to be - symbiotic instead of exploitive. Examples of ways in which we could realize further payments as the minerals are extracted, and which more accurately reflect the value at the time of extraction include a merger between our corporation and theirs, a bi-lateral stock exchange, or formation of a new corporation designed specifically for the extraction of this site alone. As an example of one of the exploitive agreements recently reached, I have seen one mine in the area in the exploratory stages sell its exploratory and developmental rights recently for only $1,300,000. Granted that if we reached the same deal, the return on an investment of $25,000 for this sum looks staggering. But put in the context of the worth of the minerals (perhaps) being in the hundreds of millions, only an idiot would take the money and run. I should also state in this comparison, I don’t feel this mine is comparable to “La Ballena Plata“. I base this mostly on the geologically inferior environment of the location and on its estimates of producing 49.7 - 134.2 ounces silver per ton. In the ‘old’ mine I keep referring to, some new (2007) assays have been conducted which reached as high as 1068 ounces silver per ton - and remember that this ‘old’ mine has been abandoned as played out. While it is impossible to accurately compare this venture with Ballena, this common business model is offered only as a example of where our venture might eventually go and how we get there. My Proposal to Investors As noted above, I am estimating the ‘seed money’ for the initial stages of this project at approximately $25,000 1. for which I am willing to sell 10% of my corporate stock in exchange. This is the maximum I will sell right now and it is nonnegotiable. I have done a lot of work on this rather complex, winding venture and will continue to be involved in every minute step along the way to bring it to fruition. 2. I will set up the venture as a standard corporation both in Nevada and Mexico and we will operate it as such with the necessary Bylaws, meetings, etc. to

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operate under Nevada and Mexican laws. 3. I would prefer this risk be equally divided among at least five entities but initial investment is on a first come - first served basis only. 4. Minimum investment is $2,500. 5. If preferred, investor anonymity will be honored. 6. I do not foresee any opportunities in the future for other investors to come in after the ’going gets good’. 7. I have no plans whatsoever to create or operate a mining company. My longterm plan is to: Sell the exploration rights and get a healthy cut of the smelter royalties and/or other arrangements in perpetuity. 8. I will draw no ‘salary’ or other compensation other than reimbursement for documented expenses directly related to the project. 9. Your investment proposal is solely for the “La Ballena Plata” project and reserves no rights of any kind in any other ventures I may start in the future. 10. Obviously I have only provided the most general of clues where the location of the project is. And for just as obvious purposes I fully plan to keep things as secretive as possible about the location until the actual claim(s) are awarded. If you can’t trust me in this way, then simply don’t buy in. Summary That’s pretty much a history of the inception of the project; where it is and what it needs now; and where it might eventually proceed to. This is a highly risky venture and should not be part of any “conservative” portfolio or anyone that might want out before completion. Selling or transferring of any stock will require a unanimous agreement by all investors. The timeline from beginning to end could easily go five years or longer before any notable return on investment is realized - if realized at all - so don‘t come in looking for a quick return. As outlined above, this project is designed to proceed in logical steps, the failure of any of which could result in abandonment of the project if we incur some unforeseen contingency - and there could be many. For example, if I get to Mexico and find out there are claims all over the mountain the Mexican government failed to tell me about, we are either shut down or have to develop a ‘Plan B’ (e.g. the old Spanish Colonial mines I have learned of). In the event this happens I will prorata refund the investors money remaining unspent less whatever direct expenses I have incurred and can document to this time. There is also the contingency that I may have way underestimated the costs above and we will need more capital to proceed. At that time I will offer more stock to the initial investors first and to outside investors second so we can proceed. Expenses Recap: 11. Initial trip to Mexico 12. Post-trip Assays

$3,000 3,500

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Timeframe Within two months Within three months

13. Mexican incorporation 14. Second trip and claim filing 15. Claim Fees 16. Geological or other “experts”

5,000 Within four months 5,000 Within four to six months 3,000 “ “ “ “ “ 5,000 “ “ “ “ “ $24,500 7. Exploration agreement with a mining company….six months to five years. Along the way - assuming we do proceed without failure - you can count on me being available at any time to discuss the project’s status. As already noted, we are a corporation and will act as dictated by our Bylaws and other applicable laws. I will provide you at least quarterly financial reports of what I have spent and the progress we have made (or not made if the case be) and will be available informally at all times. This concludes my presentation and I will be happy to answer any and all questions I have not covered. Except where the location is of course! Steve Lang 865 Tillman Gardnerville, NV 89460 775-265-1461 [email protected] Supporting Satellite Photos Let me state quite clearly here these photos are not “cherry picked” examples to exaggerate the deposits or mislead potential investors. They are rather typical of the entire area on which it is proposed to lay claim and are offered to visually demonstrate what I have been talking about and what I have seen myself. Please feel free to show these to any geological or other expert you might need to confer with.

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Photo1: Alternating limestone/carboniferous strata. For scale purposes, the total face of this slope is about 1600 feet. The lowest light-colored strata face is about 300 feet thick. There are no hydrothermal strata visible here. Whether or not they exist deeper back in the mountain can only be determined by core drilling which is something the mining companies can perform after they have purchased the exploration rights.

Photo 2: Hydrothermal deposits. For purposes of scale, the length from top to bottom is about 1,000 feet. The major white vein is about 180 feet thick. This particular vein runs for about 6,000 feet in length and varies in thickness. At least that’s all that can be seen. In a larger picture which I will not furnish at this time, other veins can be seen barely cropping out of the downslope rubble. The lighter areas in the bottom depict some smaller hydrothermals.

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Photo 3: “Mantos” In this picture you get a rare view of an open face of the mountain. The scale from top to bottom is 1,500 feet. The top manto is about 165 feet thick (Sample point 22). The next manto (Sample 21 in the shade) is about 375 feet thick. The lower manto (center bottom) is about 50 feet thick. Not seen in this photo is another manto below that 50 feet thick. Just how many mantos there further down are in indeterminable at this point. Obviously, there are areas here one man alone cannot sample but can be inferred to contain significant deposits.

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