Aggregate Potential

General

Golden Queen Mining Company, LLC proposes an aggregate and construction materials business that will be developed once the heap leach operation is in full production, based on the location of the Project in southern California with close proximity to major highways and railway lines.

The California Department of Transportation projects aggregate demand of approximately 13 million tons per year for the area surrounding Palmdale, Lancaster, and Rosamond and less than 27% of this demand can be met from existing permitted resources. Similarly, estimates suggests that demand from the area surrounding Bakersfield is approximately 5 million tons per year for the next 50 years, and less than 46% of this demand can be met from existing permitted resources.

California updated its analysis of permitted aggregate reserves compared with 50-year projected aggregate demand in 2012. The analysis is available at www.consrv.ca.gov/cgs/information/publications/ms/Documents/MS_52.pdf, and the accompanying map of aggregate supply and demand centers is available at www.conservation.ca.gov/cgs/information/publications/ms/Documents/MS_52_2012.pdf

Former Governor Schwarzenegger recognized the need for local sources of aggregate in California and signed Senate Bill 420 in 2006. Senate Bill 420 requires the California Department of Transportation to use recycled aggregates in State paving projects where economical. In this instance, the waste rock from the Project would constitute a recycled waste product consistent with Senate Bill 420.

Aggregate Production from Waste Rock

Research suggests that up to 1 million tons of waste rock could be sold into the southern California aggregates market annually. The source of raw materials will be quality waste rock stockpiled on a level pad east of the East Pit. The waste rock can be classified into a range of products such as riprap, crushed stone, and sand with little further processing.

Every effort will be made to proceed with processing of the waste rock as early in the life of the mine as possible and it is expected that this can proceed shortly after the start of pre-production mining. Closing reclamation of the facilities required for the processing of waste rock, including the storage pad, will remain the Company’s responsibility.

There is some history of producing aggregates from the site and from neighbouring properties. E.L. Yeager Construction Company mined waste rock on the North-west ridge in 2001/2 to obtain rip-rap for the Mojave bypass. Approximately 10,000 tons was shipped. Granite Construction Company leased the Standard Hill property immediately northeast of the Project to produce and sell aggregate for upwards of 20 years.

An Economic Advantage

There are three key elements that should create advantages for the Company as an aggregate producer:

  • The run-of-mine waste rock and sand will be produced as a by-product from a mining operation. This should give the Project an economic advantage as an aggregate producer in comparison with producers that have to mine rock or obtain sand from alluvial deposits to produce aggregate.
  • Available infrastructure on site will have an important impact on the cost of producing aggregate and shipping aggregate or final products to market.
  • It has become difficult to obtain permits for new quarry developments in southern California. The Project has its permits in place and this should be a distinct advantage for an aggregate producer that wishes to work with the Company as a sub-contractor on site or as partner in a bulk concrete products facility on site.

It is important to note that no contributions from the sale of aggregate products will be included in the cash flow projections until long-term contracts for the sales of products are secured.

✲ This is forward-looking information and includes risks and assumptions. Click here to see our statement on forward-looking information.

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