Dawson
Overview
Management continues to hold the view that the Dawson section of the Dawson Gold Property has the potential to support an economic, near-term, low capex, low opex underground gold mine. Subject to receiving a mining permit and securing funding, the Company intends to construct a ramp to access the Dawson gold deposit and conduct underground infill drilling to increase confidence in the inferred gold resource as well as deep drilling with the objective of expanding resources. In order to undertake this program, the Company must first obtain the mining permit among other regulatory approvals.The Company is currently completing a comprehensive 15-month groundwater and surface water monitoring program required to support the resubmission of its mining permit application. Three of the required five quarters of monitoring and sampling were successfully completed in December 2025, March 2026 and June 2026, with the remaining two quarters, in September and December, expected to be completed by the end of 2026. In parallel, the Company is updating its previous mining permit application to address updated regulatory requirements and adequacy issues identified in the previous application. These include, but are not limited to, wildlife, blasting and hydrogeological studies. Subject to additional funding, the Company currently targets resubmission of the mining permit application in January 2027.
Trench Program
The Company is evaluating the potentail for placer gold within its 100%-owned Judith Patented Placer Claim, located in the gulch that drains from the Wingy Gulch gold deposit and Windy Point gold showings. The Company intends to conduct exploratory trenching to evaluate volume, grade and distribution of gold within the gravels. This work was delayed from the first quarter of 2026 due to the availability of a key participant and recovery equipment and has not yet commenced. If the placer evaluation program identifies potentially economic gold mineralization, and subject to applicable permitting requirements, the Company may consider developing a gold recovery plan.
The Windy Gulch deposit, in particular, contains significant gold at surface that is eroding downslope into the gulch. Previous bedrock trenching conducted in 2017 at Windy Gulch returned 5.8 grams per tonne (g/t) gold over 31.7 meters, while a trench located approximately 40 meters downslope returned 7.6 g/t gold over 11.9 meters.
Windy Gulch
Dawson - Background
Dawson is comprised of 57 contiguous unpatented lode mining claims, eight patented lode mining claims and two patented placer claims covering approximately 505 hectares (1,249 acres). Dawson encompasses five contiguous gold mineralized areas over a strike length of 3.8 km which are, from east to west: Sentinel, Dawson, Copper King, Windy Gulch and the Windy Point zones. The inferred gold resources identified to date at Dawson are confined to the Dawson and Windy Gulch zones with the remaining three zones representing gold prospective areas on the geologically favourable trend. Surface rights total 301 acres and are sufficient for the current mine development plans. The 50% of the eight patented lode mining claims not held by Zephyr is leased by Zephyr through a “Mining Lease and Agreement”, and the 50% interest in the placer claim not held by Zephyr is leased through a property lease agreement, which effectively gives Zephyr 100% control of these claims. Twenty-one of the 51 unpatented claims and the eight patented lode mining claims are subject to a sliding scale Net Smelter Return (“NSR”) whereby Zephyr agrees to pay up to a 3% NSR as contemplated in the Mining Lease and Agreement.
The NI 43-101 compliant resource estimate was completed on the Dawson and Windy Gulch zones at the Dawson section in 2013. The resource estimates were disclosed in the technical reports on Dawson entitled “Resource Estimate Technical Report for the Dawson Property Fremont County, Colorado, USA” with an effective date of July 19, 2013 and “Updated National Instrument 43-101 Technical Report for the Dawson Property, Colorado, USA” with an effective date of August 26, 2015. The Dawson zone resource estimate was utilized in the completion of a Preliminary Economic Assessment in 2017 entitled “National Instrument 43-101 Technical Report for the Dawson Property, Colorado, USA” with an effective date of March 21, 2017.
The potential for increasing resources at the Dawson section is considered very good with identified drill targets below the current inferred gold resource at the Dawson zone, at the Sentinel zone to the east and the Windy Gulch and Windy Point zones to the west. If the Company is successful in obtaining the mining permit for Dawson, the next step, subject to funding, is the construction of a ramp to access the Dawson gold deposit and to establish underground drill stations from which to conduct infill drilling on the current inferred gold resource and to test deeper targets for additional gold mineralization.
The gold mineralization at Dawson was discovered by U.S. Borax Ltd. in the early 1980’s and explored by Uranerz U.S.A. Inc. in the early 1990’s. During this period a total of 142 diamond drill holes for 27,206 metres were drilled, from which several resource estimates were completed.
The qualified person for this page for the purposes of National Instrument 43-101 is Terry Coughlan, P.Geo.. He has read and approved the scientific and technical information that forms the basis for the disclosure contained herein.
