Project Darwin, LLC.

Project Darwin

Contact: Jack Stone
Project Darwin, LLC
P.O. Box 3010
200 McCullough
Tonopah, Nevada 89049
Office: (775) 482-2018   Cell: (775) 427-8373
Email: nevmachine@frontiernet.net
Website: www.nevada-machinery.com   

The information contained herein is believed to be true and correct. The reader is not to rely on any such representations expressed or implied and any potential investor or buyer is encouraged to investigate all matters concerning the statements made herein and not rely upon them. All financial operating expenses, sales and profits are "Projections" and should not be construed to be facts or relied upon to make an investment in the project. This document and all exhibits hereto attached are for information purposes only and it is recommended that any party investigating this opportunity use normal and customary due diligence to satisfy oneself before considering an investment in this business opportunity. This document and the attachments are not to be construed to be a solicitation to purchase or sale the mine or a solicitation to purchase stock or other equity.

DARWIN MINE
BUSINESS SUMMARY

The Darwin Mine, located in Inyo County, California, approximately 100 miles south of Bishop, California has over a hundred years of history, producing profitably when market prices were favorable and conversely, closing down when metal prices fell. During the late 1970’s the Chinese systematically dumped one low priced base metal after another on world market, closing down hundreds of hard rock mines across the United States. The Darwin Mine was one of these mines.

The overall project is a combination of a number of mining claims and mineral deposits. The actual Darwin mine covers an area of 1,050 acres of patented claims representing over a dozen large-scale mining operations.

Originally consolidated by Hearst/Rockefeller (Signal Oil), the mine was sold to Anaconda Mining in 1944. After Anaconda sold the mine, various mining companies, including Cypress Minerals and Blue Range Mining have owned and operated Darwin. In 1996, with the market cost of base metals still low, my now deceased partner and I purchased the property from Blue Range. When my partner passed away in 2002, my wife and I purchased the remaining shares from his estate thus taking full and complete ownership of the property.

We have invested heavily in the mine over the past 12 years including bearing the costs of maintaining water rights, right of ways, security and miscellaneous fees. We have also secured the documented work of Cypress Minerals, generated in 1991 and have compiled all geological information including engineering reports, mapping, drill cores, and re-logs totaling $28M in value. Development that at today’s cost would be worth over $320M. Additional investment value from the mine acquisition includes $7.5M in equipment, rail underground, ore cars and over $1M expended in the past two years alone in maintenance, taxes, and fees. There is over $55M of hard and soft asset value in the property.

The mineral processing of the ore concentrates that will be created underground at the mine site will be done at the Millers Mill ("Millers"). The mill is located 195 miles north east of the Darwin Mine and 15 miles west of Tonopah, Nevada. Millers Mill, with 1,173 acres of mill and mineral claims, is another important part of this project. Located on this property from this prior operation is an existing Carbon-in-Pulp Circuit capable of processing 1,200 tons per day.

Prior to the Hunt Brothers collapse of the silver market in 1984, Millers produced 1.9 ounces per ton of recoverable Silver, .02 ounces of Gold and 2.5 pounds of Tungsten. The tailings from this operation are located on this property and represent 1,850,000 tons at a value of $142,450,000. Because the tailings are now considered an environmental hazard, the state of Nevada has offered to work with the Darwin Project to fast track the operation with expedited permitting. This operation will be an additional source of income and cash flow. We estimate approximately 4 years of profitable production from these tailings and the potential of custom milling other local ore deposits using the same processing mill.

With a documented historical record of high profitability, 40 percent direct ship ore and a four to one ore to waste ratio, exploration continued. Today, bedded ore bodies and brecciated pipes and pillars, rich in base metals, have been blocked out and are ready to mine. Only a small fraction of the more than 1000 acres of the various mines making up the "Darwin Mine" have actually been mined and drilled. The various ores making up the Darwin Mine consist of a potpourri of base metals including Lead, Lead Oxide, Zinc, Copper, Silver, Cobalt, Tellurium, Bismuth, and Tungsten. Peter Hahn, the geologist for Cypress Minerals, refers to the Darwin Underground as a jewelry box just waiting to be opened.

Based on proven and probable reserves, we project a bulk ore target of fifteen million metric tons of zinc ore at 15 percent zinc indicating the potential for a 155 year mine life for this metal alone.

The mine offers over one hundred thirty eight miles of drifts, 3.2 million tons of material displaced, rail, hoists, pipe, in place water rights, and existing surface facilities. These investments make this project unique and interesting. The operation can be fast tracked to production and cash flow especially considering the Conditional Use Permit (that was issued by the State of California), allowing the mining of 350 to 500 tons or ore per day from the start.

Our processing plan is based on state-of-the-art, base metal production technologies taking full advantage of all Hydrometallurgical advancements including Ion Exchange and old fashion Floatation to produce Lead, Zinc, Copper, Silver, Cobalt, Tellurium, Bismuth, and Tungsten.

Our initial development plan to produce revenue and cash flow is to grind the ore (underground) to 20 mesh and produce two concentrates. One concentrate is Tungsten which will be direct shipped to buyers. The second concentrate will be the additional base metals. These cons will be transported to Millers in Nevada for processing to metal. Our tails from the mine will be filtered and used as back fill. With two million tons in shaft collars and pillars already blocked out and the same in bedded ore bodies, we have plenty of ore to go forward. Initial profits will allow us to drill the balance of the 1,050 acres which are untouched to date.

Using historical average production numbers documented from a recent underground project similar in nature, we estimate a total per ton cost of $179.00, with an average ore value of $572.00 per ton, leaving $393.00 per ton for debt service and profit.

We have been contacted by Remington and Winchester cartridge companies and Kenametal, located in Fallon, Nevada about the purchase of our Tungsten concentrates. We have also been recently contacted by five separate Chinese groups. These buyers, who have completed validation sampling, have verbally expressed interest to buy concentrates, allowing the project to generate cash flow prior to completion of our facility. We are now awaiting official, translated Letters of Intent to buy concentrates from the five Chinese Refiners. Also, we are awaiting an office Letter of Intent from a New Zealand buyer to purchase Tellurium concentrates.

Our preference is to process the concentrates into metal thereby commanding a high profit on the world market and a substantial return on investment. The project funding requirement is $ 100M and we are open to either debt or equity financing. Our finance plan provides for twenty-four months of debt service (interest reserve) to pay off the debt. We feel that our projected $43M net pre-tax profit per year will escalate as projected prices climb to the previous highs of 2008. In addition, our projected $14M net profit a year from the Millers tails will help insure a successful and profitable venture.

The Darwin Mine can and will become the benchmark Domestic Producer of High Grade Base Metals using low cost, high-grade selective mining while generating local jobs and profits for our company.

The Darwin Project team looks forward to providing any additional information to prospective investors and will be happy to answer any and all questions or concerns presented.

Funding requirement: $100M

The owners are open to either debt of equity financing and are negotiable as to terms.

First Phase $ 40M- Fund contract for acquisition and construction of the Hydro Metallurgical Plant, Drilling Equipment, Haulage, Support Equipment, Electrical Upgrades, Underground Concentrating Plant and the Dry compacted tails circuit.

Second Phase $ 30M- Six months from start, depending on Nevada permitting which is estimated at 180 days by State of Nevada Office of Environmental Protection. The investment will also fund additional Containment, Development, and Operational Costs.

Third Phase $ 30M- Twelve months from start. Interest Reserves, Contingencies, Operational carry over prior to return on sales.

Financial Summary: Use of Funds

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Click Here For Chart 1A

Basis of Revenue Projections and Costs:

Mine Start-Up and Initial Capital Costs include permitting (done) from Inyo County expected to be completed in July 2009, and a six (6) month utilities and equipment renovation schedule in preparation for aggressive mining of the bedded ore from the mine site. Even though significant ore reserves are readily available for mining at this time, the long-term benefits of the six-month renovation time schedule significantly outweigh the short-term economic gains associated with immediately mining the ore.

Mill Start-Up and Initial Capital Costs include executing the option to purchase the +- 1,173 acre mill site ( patented property - purchase option held by Stone) and permitting to operate the flotation facility from the State of Nevada. Permitting is expected to take 8 to 12 months. During this period of time for permitting, on-site construction will include a two-month initial engineering period and a six-month equipment renovation and site preparation period. The state’s permitting backlog will dictate the projected 8 to 12 months permitting time period. During the construction period, required site work and construction of the mill’s Oxide and Sulfide SX-EW Circuits will be completed.

Operations Headquarters includes executing the purchase sale agreements for the downtown Tonopah, Nevada buildings with renovation and possibly the leasing of a small portion of the building to a local retailer/restaurant. These buildings will house the corporate management for ongoing operations for both the mine and mill.

Mine & Mill Revenues:The primary source of revenue for the mill is processing the bedded ore from the mine.

This ore is scheduled to be mined at an average of 350 tons per day after the final permitting and mine renovations are completed. Initial revenues will be based on selling the raw, high-grade ore to interested third-party buyers for further processing.

Once the Millers mill site is permitted to allow floatation of the ore, revenues will increase to account for the sale of concentrated ore to third parties. The last phase of permitting will allow the mill to sell pure silver and zinc dory, lead and concentrated Scheelite (tungsten ore) at a market premium. This phase will represent the mine and mill operating as a fully stabilized operation.

The mill will be one of Nevada’s largest, operating 24/7 and producing a projected continuous income stream by processing the Darwin ore as well possibly contract milling of the numerous local mines as production permits. There are 100’s of small high-grade deposits available in the Tonopah area and custom milling coupled with the Darwin Cons should keep the Millers Mill productive far into the future.

Additional/Mill Revenues require permitting to be completed for the final processing circuit which will allow for the processing of significant reserves of silver, zinc, and traces of gold from over 1.8 million tons of tailings presently located at the Tonopah, Nevada mill site.

The average value of a ton of ore at Darwin at current prices is $ 572.00 per ton. For reasons of conservatism, this figure is based on historic mill feed and excludes the 40% direct ship ore. Production costs are expected to be less than $170.00 per ton.

The historical and projected Ore to waste ratio is 4 tons of ore to 1 ton of waste. There is a 10% contingency across the board in the detailed Financials. The Financials are presented as a separate file from this plan.

Ownership / Patents / Claims / Water Rights:

The Darwin Mine represents +- 1,050 acres of fee simple and patented land (not BLM leased land), with 58 patented mining claims in the world renowned Darwin District.

The patented claims span over 5 miles representing the consolidation of many well know producing mines including the Boron, Defiance, Essex, Independence, Rip Van Winkle, Thompson and Lucky Jim mines Most of these mines are interconnected by the pre-established 9,000-foot Radiore tunnel, which provides effective economical access to the Darwin Mining Project for the purpose of hauling high-grade ore to the surface.
drilling and professional geological analysis by a number of mining experts have identified large proven and targeted ore deposits which reflect major veins of ore though-out the mine’s 150 miles of drifting (tunneling).

Adequate water rights (which limit many mining operations in the area) were perfected and recorded in 1998 for the Darwin Mining Project. These water rights provide approximately 15 million gallons of water per year to support the mine. Ample electrical capacity is available at the mine at a fixed, below-market $0.0647/kWhr rate by recorded agreements.

The “Millers” Mill site represents +- 1,173 acres of fee simple land (not BLM leased land) for the processing of the mine’s high grade ore. The mill site includes a large ball mill and electrical substation with adequate capacity to allow substantial expansion and substantial water rights with three on-site operating wells producing between 4,000 and 5,000 gallons per minute.

Operation Headquarters will be based in an existing community credit union building (with a vault to store our sensitive documents) and two adjacent buildings in downtown Tonopah, Nevada. These older buildings will be renovated allowing the mine and mill operations to be centralized with minimal overhead expenses.

Mine History:

For an in-depth history of the Darwin Mine and its surrounding area, the article “The Mines and Minerals of Darwin California” was a featured article in Mineralogical Record (Jan.-Feb. 1984 Issue). This article can be found on our website.

In short, the mine was actively producing as the largest strategic metals mines in the US during World War I and II, and was owned by Anaconda Mining between 1944 and 1983. In the 1970’s, the mine was operated by several mining operations (West Hills Exploration, Mexicanus-Colorado, and Montecito Minerals) with royalties paid to Anaconda. Despite the mine’s huge proven reserves, the mine was closed down (as were most U.S. base metal mines) when China flooded the market with base metals at depressed prices cheaper than it cost U.S. mining companies to produce. Underground mining at Darwin ceased and mining opportunities were limited to processing the existing tailings (estimated to hold over $89M in base metals)

The mine was sold to Quintana Minerals in 1983, and resold to Blue Range Mining Company in 1989. Both companies abandoned their surface-based “Heap Leach” processing of the tailings.

In 1992, the mine’s equipment was sold to Stone Brothers Nevada Machinery. In 1996, the mine and patented mining claims were acquired by Project Darwin LLC owned by the current mine owners, Jack and Linda Stone.

After completing the California EPA requirements for site restorations, the Darwin Mining Project was secured and maintained, awaiting an increase in metal prices to reactivate the mine operations.




Opportunity:

Darwin mine is noted to be one of the most extensively designed, studied, technically researched and documented strategic base metal mines of its size in the U.S.

Due to expanding worldwide demand for strategic base metals similar to those proven in abundance in the Darwin Mine and China’s need to export less of these metals to the U.S., base metal prices have seen substantial increases in the past year (see Historical Base Metal Pricing Trends on the website).

These events now provide economically viable reasons for reactivating the Darwin Mine. China has aggressively begun purchasing many foreign and U.S. base metal underground mines to enhance its reserves and satisfy its own growing demands.

At the closing of the mine in 1976 by Anaconda, Mill values were reported as follows:

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Tungsten: Until recently, China provided nearly all the Tungsten to U.S. for manufacturing of carbide steel products, light bulb filaments, steel strengthener, automobile and electronic parts, used in LCD screens, etc.

For years, China has dominated international tungsten production and markets producing about 85% of the world’s output and consuming about 50% of the world’s tungsten demand. China’s demand has increased about 30% since 2005 due to its rapidly developing manufacturing capacity and the need for hardening products. This increase in demand and continued depletion of their reserves has continued to the present day.

Of significant importance, the Chinese government imposed an export quota on tungsten to decrease the domestic price of tungsten (in China), and increase the global price. As a result of this quota and the inability of global supply to keep up with global demand increases, the price of tungsten has risen from under $5/lb to over $17/lb. This price is expected to remain stable for the foreseeable future. In 2006, China privatized their mines. Exports to U.S. stopped January 1, 2007. As such, demand for Tungsten from U.S. manufacturers has become an even more significant issue.

The Darwin Mining Project, when fully reactivated, will represent the first and only large operating Tungsten mine operating in the U.S. It will be years before other large mines will be able to open due to their extensive permitting requirements and reserves. Pine Creek, the former, largest producer of Tungsten in the U.S, was dismantled and has been experiencing problems permitting.

Zinc: The world’s largest zinc mine, Xstrata (see E&MJ WOMP) has recently reported that demand for zinc worldwide will increase an average of 3.7% annually from 2007 to 2017. Many of the reports published on the Darwin Mining Project note the mine’s proven, extensive Zinc reserves (10M to 15M tons).

The Darwin Project mill site (Millers) in Tonopah, Nevada will be improved with a medium scale SX-EW metallurgical process plant. This advanced processing technology will be designed to produce Special High Grade (SHG 99.995% pure) zinc ingots. For additional information on an existing large-scale SX-EW processing plant, see “The Desert Skorpion” reference on our website.
Geological Reports / Ore Reserves:

Proven Mineral Reserve: Based upon extensive testing at the Darwin Mining Project, the explorations reflect proven reserves amounting to approximately 170,000 tons with the following composition: Does not include Copper, Cobalt, Bismuth, Tungsten or Tellurium

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Probable Mineral Reserves: According to professional drilling results at the Darwin Mining Project at depths between 100 feet and 2,200 feet, there are estimated reserves to be within a range of 2.8 million to 15.0 million tons of high grade ore. Two core samples were drilled to the 2,200 foot level and assayed. The following results reflect the higher values into the lower depths:

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Defiance/Thompson Mines: Breciated Pipes - during the past, the miners wanted every foot to pay, thus the Defiance and Thompson Winze (Shafts) were sunk in high-grade ore. The shaft Collars and Pillars hold a total of 2 million tons of high grade ore. Sinking an alternate shaft would allow us to take this ore. There is a bedded ore body of 750,000 tons open on the 400-foot level, as well as 500,000 tons in the 435 stope, which is located 27’ from the track.

Covellite: Numerous studies on the Darwin Mining Project show an intense deposit of Covellite projected to be approximately 15,000 tons, with the following values:

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Testing at the “Lucky Jim” and “Thompson” areas of the Darwin Mining Project at all levels, also indicate a high-grade tungsten / low-grade gold deposit.

To date, given the expansive size of the Darwin Mining Project, less than 5% of the patented mine claims have been drilled, sampled, tested and assayed. Therefore, additional research and drillings (core samples) are scheduled in 2010 and 2011 to validate the additional proven reserves of the Darwin Mining Project under the worldwide recognized guidelines of the Canadian National Instrument (NI) 43-101 Standard.

Internal Anaconda Minerals Documents from 1981 and 1982 summarize the results of 159 channel samples and concluded an average ore grade as follows:

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Assay Reports:

Independent Assay Reports provide an accurate summary of fire assays (high temperature crucible tests) conducted on samples of high grade ore from the Darwin Mining Project. These concise reports identify the proportion of metals in the ore, providing an accurate indication of minerals in the mine.

Assays completed on ore from the Darwin Mining Project over a number of years by several reputable companies all conclude there are economically viable reasons for reactivating the Darwin Mine. Assay results are available on our website.


Management Team:

The Darwin Mine Management team represents more than 100 years of hands-on, proven experience in the mining industry.

Jack Stone (Manager) - Represents 100% ownership in Darwin Mining Project, including both the mine and Nevada mill operations. Mr. Stone has operated his own construction business since 1982, specializing in large mills, construction and relocations, and placer plants including construction for the U.S. Military. He has worked for a majority of the mines in the state of Nevada completing over $75 million in sales, construction and demolition. Mr. Stone is both a qualified hands-on manager and an underground certified MSHA (Mine Safety and Health Administration) instructor. He consulted at the Darwin mine when previously owned by both Anaconda and Blue Range and ultimately purchased the mine in 1996. Mr. Stone has extensive mining experience with base metal underground hard rock mines.

Earl Harrison- Is the lead Mine Foreman for the Darwin Mining Project. Mr. Harrison was named Mine Manager in 2005 for Golden Phoenix Minerals with direct responsibility for the operations of the Ashdown Molybdenum Mine and Mineral Ridge Gold Mine. As Mine Manager, Earl assumes responsibility for all company-wide mine planning, permitting and operations. Earl is a 40-year veteran of the mining industry. He received his training at the Mackay School of Mines and the University of Idaho School of Mines. Earl has extensive hands on experience in both mining and milling.

In the early 70’s he operated a flotation mill for Kennecott, producing molybdenum and copper. Prior to that, he worked at Ward Mountain, driving a 10,000-foot haulage way through bad ground for Phillips Petroleum. In the late 70’s he was a member of the team working a 330-ton/day underground operation at the Gooseberry Mine, extracting gold and silver from a narrow vein structure using flotation and cyanidation.

In the early 80’s, he ran the New Savage Mine near Virginia City, Nevada, driving 6,000 feet of decline in bad ground using square-set stopeing, heavy timbering and piling. For six years, he managed the Independence Mine near Battle Mountain, Nevada working a narrow high-grade gold and silver deposit using heap leach and counter current decantation methods. Later, he managed the Mary Mine (now part of the Nevada Mineral Ridge complex) for Homestead Minerals, producing 800 tons/day of gold and silver ore, yielding profitable results. Earl has also worked overseas, directing and underground lead/zinc/gold mine in China for Orient Minerals. Since September 2004, Harrison has supervised preparatory work at the Ashdown molybdenum mine and spearheaded the permitting process for its underground operations.

Michael R. Garverich, P.E.- Is the Senior Geologist for the Darwin Mining Project. Mr. Garverich is a licensed Professional Engineer with vast experience in nearly all fields of mineral exploration, production and processing, hydrology, facility permitting, construction, environmental compliance, geotechnical, engineering, and reclamation. Mr. Gaverich’s experience ranges from being Chief Geologist for the Darwin Mine under the Previous Blue Range ownership to State Geologist for the USDA-NRCS (Montana). His vast experience and extensive knowledge of base metal underground hard rock mines (specifically the Darwin Mine) represents a strong asset to the Darwin Mine management team.

Bob Wickedon, P.E- Is the Senior Engineer for the Darwin Mining Project. Mr. Wickedon is a licensed and Registered Professional Civil Engineer in both Nevada (CE 9835), and California (RCE) 29826), and a Registered Land Surveyor (LS 4661).

Mr. Wickedon has extensive management experience through his former private engineering and land surveying practice. His background includes positions as County Road Commissioner, County Engineer, County Land Surveyor, and most recent job as Nye County Public Works Director and Land Surveyor. Mr. Wickedon’s experience and knowledge of civil engineering and close relationship with the BLM, Nevada Division of Environmental Protection Agency, and U.S. Department of Wildlife provides a strong asset to the Darwin Mine management team.

Dan Kappes- Kappes, Cassidy & Associates (KCA) is one of the most respected metallurgical engineering firms in Nevada providing process metallurgical services to the international mining industry. KCA specializes in all aspects of heap leach and cyanide processing including laboratory testing, project feasibility studies, engineering design, construction and operations. KCA is experienced with design capabilities in a wide range of metallurgical processes including a patented zinc oxide circuit, which is proposed for the Darwin Mining Project mill site near Tonopah, Nevada.

Richard Harris- Harris & Thompson is Legal Counsel for the Darwin Mining Project. Mr. Harris has extensive legal expertise in Natural Resources Law, Environmental Law, and Corporate Law. Mr. Harris, graduated from Stanford University (M.S. in Mining Law) and from the University of Nevada (B.S. in Geological Engineering, with distinction, (1969). He also received an M.S. in Environmental Science in 1995.

Mr. Harris is a member of the Washoe County and American (Member, Natural Resources Law Section) Bar Associations: State Bar of Nevada: State Bar of California (inactive): American Institute of Mining Engineers: Nevada Mining Association: Geological Society of Nevada: Nevada Landmen’s Association: Rocky Mountain Mineral Law Foundation.

Conclusion:

The Darwin Mine is currently permitted under a Conditional Use Permit. There are ore cars at the portal ready to move. Highly qualified geologists have reviewed the over $ 28M in Engineering, Mapping, and drilling and concur that the re-opening of the Darwin Mine will produce a highly profitable venture.

The remaining $2M option on the Millers Mill in Tonopah secures a Mill with a replacement cost of $10M to $15M at today’s prices with $80M in tailings value and $4M in water rights.

This project will conservatively generate over $ 195M in cumulative pre-tax profit in the first five years. This profit figure is based on current metal prices which according to projections could easily double or triple as demand and pricing increase in the future.

We look forward to working with serious investment professionals to develop the Darwin Mine into a premier, world-class, base metals mine. When in full operation, the mine will stand as one of the most profitable mining ventures in the continental United States.