Kelly Creek

Project Stage

The project is an exploration stage project. There are no known mineral resources or reserves on the project at this time. There has been insufficient exploration on the project to estimate a mineral resource. It is uncertain if further exploration will result in the estimation of a mineral resource. Historical exploration has been conducted on the property. Austin Gold proposes to pursue an exploration program including additional drilling, sampling, assaying, environmental monitoring, review of historical data and related activities.

Local Resources and Infrastructure

The Kelly Creek property is situated in southeast Humboldt County, Nevada with significant resources in place to support the mining industry. Humboldt County itself is entirely rural, with one population center, Winnemucca, the county seat, located in the southeastern part of the county. Winnemucca is a historic ranching community which grew to support regional large-scale mining following the discovery of several substantial gold deposits in the 1980s.

The nearby towns of Winnemucca and Battle Mountain host the majority of the local workforce and have well developed infrastructure of stores and shops for supplies, restaurants, and motels. Contractor support, transportation, and general suppliers are all readily available in these communities as well as in Elko, which is located approximately 88 miles (142 km) east of the project area and serves as a major hub for mining operations in northern Nevada.

Property Claims and Option

The total area of the property is approximately 8.26 mi² (21.4 km²). The Kelly Creek Project comprises 99 unpatented lode mining claims covering approximately 2.77 mi² (7.16 km²) and approximately 5.49 mi² (14.2 km²) of private land leased by Pediment.

The Kelly Creek Basin is situated along the Battle Mountain-Eureka Gold Trend, and is bounded by historical producing gold deposits to the north (Twin Creeks, Getchell, Turquoise Ridge, and Pinson) and south (Lone Tree, Marigold, Trenton Canyon, Converse, Buffalo Valley, Copper Basin, and Phoenix), along the periphery of the Basin. Despite its proximity to significant mineralization, the interior of the Kelly Creek Basin has seen limited systematic exploration activity to date because its bedrock is largely covered by syn- to post-mineral volcanic units and post-mineral alluvium.

The agreement involves payments, royalties, payment of annual claim fees and landholding costs, and minimum work commitments.

Geology

The Kelly Creek Project is located to the north of the Battle Mountain Mining district on the northern margin of the Battle Mountain-Eureka trend, a long-lived structural feature that localized intrusions and ore deposits of different types and ages, within the Basin and Range physiographic province, in northcentral Nevada.

The property itself is located several miles from the nearest outcropping of bedrock and is completely covered by sand and gravel. Gravity, air magnetic, seismic, and drill data all show the sand and gravel cover can be relatively shallow, with bedrock located several hundred feet deep over large areas. Rocks exposed in the ranges surrounding the gravel-filled basin show evidence of a long lived and complex metamorphic, sedimentary, volcanic, and igneous history, and the structural history is just as long-lived and complex.

Subsurface geology at the Kelly Creek Project area is inferred from the geology of the surrounding ranges, and existing drill logs, to consist of a thick section of i) lower Paleozoic deep marine sedimentary and volcanic rocks of the Roberts Mountains allochthon (probably the Valmy Formation), and ii) possible local occurrences of stratified units of the Mississippian to Permian Antler overlap. The section of Paleozoic rocks is unconformably overlain by a succession of Cenozoic rocks that includes: a) Paleogene tuffs and lavas, b) Miocene basin deposits, c) Pliocene basaltic rocks, and d) Pleistocene to Holocene alluvial deposits of the Humboldt River.

The structural framework underlying the project area is based on projections of major zones of high-angle structures northward from exposures along the range front to the south combined with detailed gravity, CSAMT, air magnetics, seismic geophysics, and drilling over the gravel-covered project area. A pronounced, elongate NNE gravity high underlying the project area is bounded on the west by a steep gravity gradient strongly suggesting an NNE continuation of the mapped mineralized structural fabric underlying the Marigold district. The pronounced structural fabric can be traced from the range-front exposures through the project area for 12 km (8 mi). The eastern flank of the gravity high is bounded by a slightly shallower gravity gradient, but still suggestive of a broad underlying structural fault zone that may host mineralization.

Based on the geological setting, hydrothermal alteration, anomalous in Au, Ag, As, Sb, and Hg values encountered in water and drilling samples, and close spatial association with known gold deposits peripheral to the basin, the Kelly Creek property has the potential to host sedimentary rock-hosted, disseminated gold deposit of either distal disseminated silver-gold deposits or Carlin-type carbonate-hosted gold-silver deposits.

There is no surface expression of alteration or mineralization present at the Kelly Creek property. Bedrock units known to support mineralization nearby at Lone Tree and Marigold were encountered by reverse circulation and core drill holes across the project area which intersected broad areas of bleaching and argillization anomalous in Au, Ag, As, Sb, Hg, Tl +/- Trace Cu, Pb and Zn commonly associated with Carlin-type hydrothermal systems. Oxidation extends to depths as great as 300 m (1,000 ft) in several core holes.

Exploration History

Recognizing the potential to find significant gold mineralization within the Kelly Creek Basin, dozens of major and junior explorers have explored to follow the prospective geology seen in and proximal to the exposed bedrock in the surrounding mountain ranges beneath the sands and gravels covering the Basin. Within the areas controlled by Pediment, this activity has included: Santa Fe Pacific completing wide-spaced bedrock mapping drilling in the 1990s; BHP completing an extensive soil auger geochemistry program through the late 1990s; and Placer Dome completing a reconnaissance-scale reverse circulation program in the early 2000s. Other companies that either now hold or have held claims in the immediate area include Newmont, Barrick, AngloGold, Hemlo, Homestake, and Kennecott. The efforts of each company have added valuable information about the geology of the Basin; however, without a cost-effective tool to conduct basin-scale exploration beneath the valley cover, the exploration programs to date in the Kelly Creek Basin have predominantly consisted of unsystematic and uncoordinated efforts focused on relatively small areas.

Pediment has integrated the use of hydrogeochemistry with conventional exploration methods to evaluate the larger Kelly Creek Basin, and has identified a highly prospective area in the middle of the Basin along a portion of a structurally-controlled, shallow, covered bedrock high coincident with highly anomalous gold and associated trace-element chemistry in groundwater. Pediment and its exploration partners have completed major work programs, building a comprehensive exploration dataset to understand the geology beneath the Basin. This exploration dataset includes geology, geochemistry, geophysics, and drilling.

The structural framework underlying the project area is based on projections of major zones of high-angle structures northward from exposures along the range front to the south combined with detailed gravity, Controlled Source Audio-frequency Magnetotellurics (“CSAMT”) surveys, air magnetics, seismic geophysics and drilling over the gravel-covered project area. A pronounced, elongate north-northeast gravity high underlying the project area is bounded on the west by a steep gravity gradient strongly suggesting a north-north-east continuation of the mapped mineralized structural fabric underlying the Marigold district. The pronounced structural fabric can be traced from the range-front exposures through the project area for 8 mi (12 km). The eastern flank of the gravity high is bounded by a slightly shallower gravity gradient, but still suggestive of a broad underlying structural fault zone that may host mineralization. The gravel-covered fault zone can be inferred from projections of mapped exposed areas 4 mi (6 km) to the south along the entire eastern edge of the project northward for 7 mi (11 km) to connect to the interpreted structural features responsible for the Hot Pot hot springs.

Surface Geochemistry

In 2005, Pediment completed soil geochemistry surveys at the Kelly Creek Project to detect the possible vertical migration of gold and associated trace elements from the underlying bedrock. An initial report on vapor phase and orientation soil geochemistry results from the Kelly Creek Project was completed in July 2005. Follow-up soil and soil gas sampling was completed in the last quarter of 2005. Pediment collected 562 soil samples along east-west traverses at 50 meter spacing along 11 east-west sample lines in anticipation of intersecting element expression in soils along northwest and north-south structural zones.

Hydrogeochemistry

A number of reconnaissance hydrogeochemistry sampling programs have been completed across the Kelly Creek Basin to detect the possible vertical migration of gold and trace elements from the underlying bedrock into the water above.

Geophysics

Several geophysical surveys have been completed on the Project by Pediment and their previous partners.

Detailed gravity geophysics was done to provide information about the depth to bedrock across the property. Gravity data can suggest areas of strong changes in the relief or composition of the underlying bedrock, which can be indicative of underlying fault zones and alteration that often control the location of gold mineralization. The surveys successfully identified significant areas where bedrock is believed to be shallow, and delineated sharp changes in the slope of the underlying bedrock that coincided with the potential fault zones identified by seismic geophysics.

Seismic geophysics is used to identify deep-seated, steeply dipping fault zones that can be projected into the near surface environment. Major, high-angle structures are important since they provide a potential conduit or ‘plumbing’ system for potential gold-bearing, hydrothermal fluids to access near-surface areas and deposit gold. A program conducted by a previous explorer was successful in that the results show shallow bedrock, steeply dipping fault zones, clear geologic offsets along faults, and several horst and graben features. The seismic lines confirmed that the groundwater chemistry target is underlain by a structural fabric that could act as conduits for mineralization.

Drilling

Between 2005 and 2017, Pediment and JV partners drilled 93 holes on the Kelly Creek Project to explore and define mineralization. They also compiled a comprehensive database of historical and current drill hole information available in and peripheral to the Kelly Creek Basin. Drilling records and related information were used to assess: (1) depth to bedrock; (2) structures or faults in bedrock that may source potential mineralization; (3) bedrock that has been altered by hydrothermal fluids; and (4) anomalous concentrations of gold and associated trace elements in bedrock.

In 2005, Pediment completed nine widely spaced vertical reverse circulation drill holes on the Kelly Creek Project to examine the target’s underlying geology and its potential for mineralization. All nine drill holes successfully encountered hydrothermally altered bedrock containing anomalous gold and associated trace element chemistry. The widely spaced, shallow holes confirmed bedrock to range in depth from 33 m (100 ft) to 112 m (370 ft).

In 2008, Pediment completed ten shallow reverse circulation vertical holes at Kelly Creek to drill through alluvium and a short distance into bedrock to examine the property’s underlying geology and further explore the property’s potential for mineralization. All ten drill holes successfully encountered hydrothermally altered bedrock containing anomalous gold and associated trace element chemistry. Bedrock was covered by less than 83 meters (275 ft) of alluvium in seven of ten holes and less than 152 m (500 ft) in the other three.

In 2009-2010 Enexco completed twelve core drill holes totaling 3,738 meters (12,264 feet), developing stratigraphic information, and testing for mineralized structures beneath the alluvial cover. Drilling encountered weak but widespread anomalous gold values within all holes, spread across an 8.8 square kilometer portion of the Tomera Ranch property.

Pediment’s 2016-2017 Scorpion drilling program consisted of 62 holes totaling 5,864 meters (19,239 feet), with an average hole depth of 95 meters (312 feet). The results of Scorpion sampling at Kelly Creek confirm that the enriched gold in groundwater seen in earlier programs is now supported by elevated gold and related geochemistry in both alluvium and bedrock, as well as increasing concentrations of gold in groundwater at depth.

Environmental Considerations

A significant portion of the Kelly Creek Project lies within and under the Humboldt River and its floodplain, much of which is part of the National Wetlands Inventory managed by the US Fish and Wildlife Service. The full impact of this wetlands designation for this part of the Kelly Creek Project is unknown. A preliminary review of permitting issues in this area indicates that there may be some additional challenges to permit development near the Humboldt River and its associated floodplain.

Drilling

Austin Gold completed four exploration drill holes during August 2022. All holes intersected rocks that may host gold mineralization similar to the deposits at the nearby Marigold and Lone Tree mines. The highest gold values returned are 0.087 g/t and 0.056 g/t. The Company is continuing to determine its next steps at Kelly Creek.

 Exploration Program

The potential for discovery of additional mineralization in the immediate area of Kelly Creek is considered good. Previous work indicates that the components needed to host a sedimentary hosted gold deposit are present under cover at the Kelly Creek Project.