 
THE STEWART PROJECT
British Columbia, Canada
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SUMMARY
The Stewart Property is a middle stage exploration property owned by Emgold Mining Corporation (Emgold). It is located in a region of historic mining activity, and is part of a large geologic trend of tungsten, molybdenum and gold mineralization. This trend includes Emgold's Rozan Property, Valterra Resource Corporation's Toughnut and Star Properties, Anglo-Swiss Resources Incorporated's Nelson Property, and Sultan Minerals Corporation's Kena Property (see map of Rozan and Stewart Properties, British Columbia).
The Stewart Property contains a number of gold, molybdenum, tungsten and silver-lead-zinc prospects. The property has been assessed by various operators since 1967, each exploring for a different type of mineral deposit. Much data is available from those programs to use in future exploration.
Exploration, which has included geological mapping, geochemical sampling, geophysics, and drilling, indicates that Stewart has the potential for high-grade or disseminated mineralization. Future exploration should attempt to further define the gold, tungsten and molybdenum deposits on this property.
Emgold would like to option the Stewart Property to another company to continue the advancement of exploration and development.
LOCATION AND OWNERSHIP
The Stewart Property is located seven kilometers north of Salmo and west of Ymir in southeastern British Columbia. The location is shown on the Stewart Property Location Map. Access to the property is either via the Erie Creek Road, 4 kilometers west of Salmo on Highway 3, or by the Stewart Creek Road, four kilometers north of Ymir on Highway 6.
The Stewart Property is situated within the Nelson Mining Division and consists of 103 units and 5787 hectares, as shown on the Stewart Property Claim Map.
HISTORY
The companies that explored the Stewart Property were seeking specific metals. In general most of the work was focused on exploring for tungsten and base metals from the 1940's through the 1960's. A relatively minor amount of gold exploration was completed in the late 1980's and 1990's. Emgold's assessments considered all of those metals. The following is a summary of those exploration programs. Please refer to the Stewart Property Drill Hole Location Map that shows where different companies conducted drilling programs and the years that they worked on the property.
Premier Gold Mining Company (1942) conducted the initial exploration of Stewart on the Arrow Tungsten prospect. Tungsten mineralization was identified along a 300 meter strike length, with samples up to a few feet wide showing grades of over one percent WO3. This was the first recorded work on the Stewart Property, but Emgold has no reports from it.
Copper Horn Mining Limited (1967) explored for molybdenum. They staked claims, mapped geology, conducted reconnaissance soil geochemistry sampling, and completed magnetometer geophysical surveys. Copper Horn wrote assessment report No. 1083 in 1967.
In 1969, Quintana Minerals Corporation conducted geological and geochemical investigations that resulted in the definition of two copper-molybdenum zones. They summarized their work in 1970 assessment report No. 2301.
Union Carbide acquired and explored the Arrow tungsten area in 1977 and wrote assessment report No. 6654 in 1978. They did geochemical surveying for tungsten, molybdenum, copper and zinc.
Asamera Oil Corporation (1979-1980) carried out a geochemical exploration program on the Bobbi claims on the eastern part of the Stewart property for molybdenum. They concluded that further testing of the anomalous areas was warranted and summarized their findings in a report.
In 1979 through 1981, Shell Canada Resources Ltd. optioned the property and carried out a detailed evaluation over large areas of the property that included geological mapping, magnetometer and impulse EM geophysics, soil geochemistry and diamond drilling. Much of this work (including extensive drilling) was focused on the Stewart Moly and Breccia Summit areas, with the results being that a molybdenum-bearing porphyry system might exist on the property. Shell defined a small resource (which is described below) and compared Stewart to the Henderson deposit. The company described results of their work in two internal reports (1979, 1980) plus a 1981 assessment report.
Cominco Limited (1980) conducted geophysical surveys for porphyry molybdenum deposits on an eastern section of the Stewart property known as the Bobbi claims. They ran 8.8 kilometers of induced polarization and field magnetic lines and summarized the findings in a report that year. Several anomalies were detected, but no other field work was done to investigate the anomalies.
Selco Inc. (1982-1984), a division of BP Exploration Canada Limited, conducted extensive exploration on the property for metals, primarily molybdenum. In 1982 Selco did airborne EM and magnetics surveys and rock chip sampling, and in 1983 they continued with geological evaluations, further geochemical sampling, ground geophysics, and drilling (1677.3 meters of NQ core). Much of their work was on the Stewart Moly Project. Selco concluded that Stewart contained many showings of base and precious metals. While they thought that the potential would be too small for Selco or BP, they stated that the "property does, however, contain potential for lode deposits which would be amenable to mining by a junior sized mining company..." Selco wrote assessment reports in years 1983 (report No. 12251) and in 1984 (report No. 13166), and those reports included several volumes of data in appendices.
Lacana Mining Corporation conducted geochemical sampling in 1987 and summarized the results in a 1988 report. They concentrated on the Rest Creek area, but failed to find targets for further testing.
Minnova Incorporated (1989-1990) explored the northwest part of the Stewart property in the Craigtown Creek area for gold with soil geochemistry sampling. They also split and re-assayed old drill core, with the best results being 2,150 ppb gold. Minnova wrote a report in 1991.
Cameco Corporation focused on the Craigtown Creek area with programs in years 1992 and 1993. The 1992 program included geological mapping, soil and rock sampling, and backhoe trenching. In 1993 Cameco drilled four core holes (448 meters total) and found anomalous gold up to 24,854 ppb in a quartz-sulphide vein. Cameco also ran induced polarization and magnetics geophysics surveys. Company progress reports were written in both 1992 and 1993.
Kaufman conducted geological evaluations of the property in 1995 and again in 1998, which included writing assessment reports during those years. In addition to geological interpretations, he also examined prior geochemical anomalies, and concluded that potential exists for significant gold mineralization. In 2001 and 2007 he did additional interpretations and summarized them in a short report.
In 1995, Orvana Minerals acquired the Stewart Property to "characterize potentially economic mineralization known to occur on the property" and to develop exploration drilling targets. Their focus was primarily on gold and copper. In 1996-1997, Orvana Minerals conducted geologic mapping, rock, soil and moss mat geochemical sampling, and a ground magnetic and VLF-EM survey, emphasizing the Craigtown Creek area. Orvana described the results of their field work in detail in two reports dated 1997 and 1998, and the conclusions/recommendations in those reports outlined favorable exploration targets to be evaluated during the next field season.
Emgold Mining Corporation (2001 to present) acquired the Stewart Property from Jack and Eric Denny in the year 2001. Emgold originally optioned the property for its gold potential but eventually conducted exploration for any previously discovered metals. In the year 2001 Emgold conducted soil geochemistry sampling to verify prior historic work, and in 2003 Emgold added airborne geophysics (magnetics, resistivity, and electromagnetics). In 2005 Emgold completed a 6-hole diamond drill program totaling 404.47 meters of NQ size core and in 2006 five more holes were drilled. That program included rock and soil sampling and the results indicated that further work on the property was warranted and that other areas of the property were deemed to have potential for tungsten, and silver-lead-zinc mineralization.
In 2007, Emgold Mining Corporation conducted a trenching and diamond drill program over several areas of the property. A total of 28 trenches and 30 diamond drill holes (3,338 meters or 10,950 feet of drilling) were completed on the property, and 339 trench samples along with 1,285 BTW size core samples were obtained and shipped to a laboratory in Vancouver B. C. for analysis. The results of this program further defined the presence of gold and tungsten-molybdenum mineralization on the property, and produced more evidence that Stewart has significant potential. The results of Emgold's exploration are summarized in the Assessment Reports for years 2005 and 2007, and illustrated on the Stewart Property Drillhole Location Map.
GEOLOGY AND MINERALIZATION
The Stewart Property is located in a region of much historic mining activity, with the Ymir, Erie, Sheep Creek and Nelson districts being sites of extensive exploration and production for over 100 years. The property is also close to the large Gold Mountain Zone gold discovery on the Kena property held by Sultan Minerals Inc., and north of a prior mining operation by Teck Cominco.
Geology and mineralization of the Stewart Property is well understood following the various exploration programs that have been undertaken over the years, including Emgold's work. Refer to the Stewart Property Geology Map.
Regional Geology
The oldest rocks in the region are clastic sedimentary rocks of the Proterozoic Aldridge (Belt) Supergroup, which outcrop in the eastern part of the region. The main bedrock units consist of Paleozoic clastic and carbonate sedimentary rocks of the Kootenay Terrane, also situated in the eastern part of the region, and Mesozoic volcanic rocks of the Quesnel Terrane to the west. The stratigraphic units of both the Kootenay and Quesnel Terranes have been folded and faulted along an east-west compressional axis. They are intruded by felsic volcanic rocks that range in age from Jurassic to Tertiary. Small coeval dioritic intrusions are common in the mafic andesitic volcanic rocks of the Jurassic Rossland Group. Extensive late Mesozoic intrusive activity produced the widely distributed Nelson Group of intrusives of granitic to dioritic compositions. Monzonite intrusive rocks of the Eocene-age Coryell Group, are also widely distributed in the region. Young (Tertiary) dikes and sills of rhyolite and felsite are common, and some small, more mafic intrusives are present.
Property Geology
The Stewart Property is underlain primarily by sedimentary and volcanic rocks of the Jurassic Rossland Group, along with intrusive rocks of various younger ages. These rocks have been structurally deformed and faulted, and mineralization appears to be structurally controlled.
Rossland Group
Rocks of the Rossland Group are the Elise Formation, composed of volcanic lithologies, and the Hall Formation, consisting of clastic sedimentary rocks.
The Jurassic age Elise Formation is mostly of basaltic to andesitic composition, but range from andesite to gabbro. The formation includes flows, breccias, pyroclastics, and sub-volcanic intrusives. Diorite intrusives occur in the andesite pile and make up a significant part of the formation. These rocks range from very weakly to moderately magnetic. The volcanics underlie a large portion of the Craigtown Creek area, and host a significant part of the known mineralization. They strike generally north-south and dip moderately to steeply east.
Overlying the Elise Formation on the east is the Hall Formation. Rocks of the Hall Formation are mostly siliceous argillite, siltstone, fine-grained sandstone, conglomerate, and tuffaceous rocks. These rocks strike north-south and dip steeply. Mineralization of these rocks on the Stewart property seems to be restricted to the contact aureole around the "West Moly Intrusion", to the east. This mineralization is limited to disseminated pyrite/pyrrhotite and minor small quartz-sulphide veins. Alteration in this aureole includes silicification and hornfels.
Intrusives
The Cretaceous Nelson intrusive suite consists mostly of quartz monzonite, monzonite, granite and diorite. The intrusive masses tend to be large, and outcrop most extensively in the northern portion of the property, in the Stewart and Craigtown Creek drainages. Smaller stocks occur in the western portion of the property. The rocks exhibit weak to fairly strong magnetism and propylitically altered near contacts with country rocks. These rocks are important because the porphyry molybdenum mineralization on the property is thought to be related to these intrusives.
Younger intrusives of the Coryell Suite (Eocene or later?) are also monzonitic, but tend to be a little more quartz-poor and alkaline than the Nelson rocks. They occur in both the east central and west central portions of the property.
Younger igneous rocks include intrusive breccias that show several cross-cutting relationships. They are altered and mineralized, and are associated with anomalous Au and Cu geochemistry in both soils and rocks. Several percent magnetite is a common component, both as fine to medium-grained disseminations and as stockwork veinlets, with or without quartz. Potassium feldspar and quartz veining and flooding are present in places.
The youngest intrusives are rhyolite, latite and minor basalt sills/dikes that intrude the older Rossland rocks and both Nelson and Coryell intrusives. They are also probably Tertiary age, as they intrude the Rossland Group and the diorite and monzonite intrusives. They generally strike north-south and dip near vertically. The dikes are a few meters in width and have strikes that range from northwest to northeast with steep dips. They are usually not altered or mineralized, however, a small plug of a trachytic latite and quartz latite porphyry with quartz veinlet stockwork and anomalous Au (>1 g/t) outcrops in the Craigtown Creek area.
Rhyolite, lamprophyre, porphyritic basaltic dikes and small plugs occur on the Stewart Property. Some of them contain disseminated pyrite and some earlier workers concluded that they are the source of the Au soil geochemical anomalies at Craigtown Creek. They also intrude the Rossland Group and the diorite and monzonite intrusives. They are probably late and unrelated to mineralization.
Structures
The dominant structural grain on the property is north-south. The Rossland Group stratigraphy generally strikes north-south, and the Elise and Hall Formations were folded into a broad north-south trending syncline (Hall Creek Syncline) that runs through the property and extends both north and south over a 20 kilometer strike length. Northwest and northeast-trending faults and shear zones exist on the property and appear to be significant controls to mineralization. The younger rhyolite dikes and sills also strike north-south and dip steeply.
Alteration
Various types of alteration have been observed on the Stewart Property. In the area of the porphyry molybdenum occurrences phyllic and potassic alterations were reported by earlier workers. Silicification is common in various rock types. Propylitic alteration of intrusive and volcanic rocks is widespread on the property. In the Craigtown Creek area propylitic, silicification, carbonate, potassic and skarn alterations are present.
Propolylitic alteration, silicification and carbonate alteration are present within the Elise Formation andesite near Craigtown Creek. The silicification is usually accompanied by disseminated pyrite or pyrrhotite and is coincident with gold-copper-arsenic anomalous soil and rock geochemistry in places. Most of the carbonate appears to be a late alteration product.
Potassic alteration is present in places in brecciated and veined fine-grained felsic monzonite intrusive rocks along the Bonnington Pluton/Elise Formation contact. Quartz +/- magnetite veinlets are commonly associated with this alteration.
MINERALIZATION
Mineralization on the property is widespread and varied, as shown on the Stewart Property Soil Geochemistry Map. Included are porphyry molybdenum within intrusive breccia (Stewart Moly Zone), contact/skarn related molybdenum and tungsten (Arrow Tungsten Zone), porphyry stockwork gold/copper (Craigtown Creek Area), stratabound sediment hosted gold-rich sulphides (Arlington Mine, Gold Hill), quartz-pyrite-arsenopyrite stockwork in sediments (Trixi V), sediment hosted silver-zinc-lead (Free Silver Zone), and quartz-pyrite veins with gold (Craigtown Creek).
Molybdenum
The most extensive zone of molybdenite mineralization found on the property thus far, located in the Stewart Moly Zone, is within intrusive breccia and forms a podiform, vertically dipping zone. Mineralization is primarily fine grained disseminations of molybdenite within the matrix but it also occurs as selvages associated with quartz veinlets transecting fragments, and as fracture fillings.
Between1980 and 1983, Shell Minerals and Selco drilled 23 diamond core holes in the Stewart Moly Zone, and within this breccia zone Shell Resources delineated a resource containing 204,000 tonnes of 0.37% MoS2. Shell concluded that mineralization was in breccia pipes. This historic resource calculation is not NI 43-101 compliant and must not be relied upon for investment purposes. However, it can be used as a guide for future exploration. Emgold's exploration drilling of the Stewart Moly Zone further defined that area to be a steep dipping elliptical-shaped (pipe-like) breccia body (see Stewart Moly Zone Map). Significant drill assays included 0.313% MoS2 over a length of 75 meters (not true thickness). Selco suggested the possibility of porphyry style molybdenum mineralization occurring adjacent to this breccia zone.
Gold
Several areas have shown indications of gold. Rock chip sampling of surface outcrops has detected gold in several areas. Surface rock sampling of the Arrow Tungsten Zone has shown spotty gold assays plus visible gold in vuggy quartz. Emgold's exploration of the Stewart Moly Zone also detected gold. Trenching assay results included a three meter wide chip sample that assayed 1,445 ppb gold.
In the Craigtown Creek area, six types of mineralization are known. These include: 1) disseminated and fracture filling pyrite and/or pyrrhotite, +/- chalcopyrite, 2) quartz-magnetite veinlets, 3) quartz veinlet stockwork, 4) pyrite veinlets, 5) quartz-carbonate veins, and 6) quartz-sulphide veins. The Stewart Property Soil Geochemistry Map shows historic gold anomalies.
Pyrite and pyrrhotite as disseminated grains and fracture fillings is common in the Craigtown Creek area. This type of sulphide is also very common in feldspar porphyry. In one area disseminated and fracture-filling pyrite and pyrrhotite in andesite tuff consistently assayed 1-2 g/t gold in rock samples.
Quartz-magnetite veinlets are common in the north-northwest trending contact zone between the felsic monzonite intrusives and the Elise volcanics. This zone has strongly anomalous Au and Cu in soils. Where sampled on the surface, rocks containing this type of mineralization contain anomalous Au (100 to 300 ppb range) and Cu (200 to 500ppm range).
Quartz and quartz-pyrite veinlet stockwork was observed in feldspar porphyry float in several places and in a small latite plug. Several samples have returned Au values >1 g/t.
Pyrite veinlets in mafic andesite-basalt contain highly anomalous Au values in a portion of the area explored by Minnova east of Craigtown Creek. Samples of veinlets have run in the 8 to10 g/t Au range.
Quartz-carbonate veinlets are present in both the Bonnington Pluton monzonite-diorite intrusive rocks and the Elise volcanics. Samples of these rocks have weakly anomalous Au and Cu.
Quartz-calcite-sulphide veins in Elise volcanic rocks were intersected in one of the 1994 Cameco drill holes. One of these veins contains 24,854 ppb Au. It is possible that gold-in-soil anomalies located north of Craigtown Creek are related to this type of mineralization.
Tungsten
Tungsten mineralization occurs as scheelite and is primarily found in skarny sections of metasedimentary rocks, and located in the Arrow Tungsten Zone. Trenching of the Arrow Tungsten Zone has shown tungsten mineralization with values of 1.171% tungsten over widths of two meters and 0.594% over five meters. Diamond drilling results from the Arrow Tungsten Zone included nine meters of 0.274% W and 1.58 meters of 0.759% W. Significant intercepts occurred to the west of any known tungsten mineralization, which may represent a parallel zone that has not yet been evaluated.
Sampling of the Bobbi claims also showed the presence of molybdenum, tungsten and zinc mineralization.
Silver, Lead, Zinc
The Free Silver Zone contains shear-hosted, narrow-vein mineralization within or close to the margins of a granitic stock in contact with sedimentary rocks. Both sphalerite and galena are present. Trenching results in 2007 showed elevated silver values up to 46.027 grams per tonne and corresponding lead (5.9%) and zinc (2.7%) in one intercept 0.2 meters wide, along with other lead assays of 0.69% (2 meter width) and zinc values of up to 1.09% over a 2.5 meter width.
EXPLORATION
Modern exploration of the Stewart Property has included geochemistry, geophysics, trenching and drilling, resulting in the drilling of 72 diamond core holes for a total of 8,712 meters. This included 27 historic drillholes (Shell, Selco, and Cominco) for molybdenum, 35 holes (Emgold) in the moly-tungsten areas, and 10 holes (6 Emgold, 4 Cameco) completed in the Craigtown Creek gold area. The Stewart Property Drillhole Location Map shows all the sites where drilling has been conducted. Emgold has explored several of parts of the property, primarily the Stewart Moly Zone, the Free Silver Zone, the Arrow Tungsten Zone, and the Craigtown Creek gold area.
Although much data has been developed, questions still remain as to the nature of mineralization (polymetallic, breccia pipes, veins, overprints of different styles and ages of mineralization). The property has interesting exploration possibilities for several different metals, and may be part of a broader zone that warrants review of existing historic data and large-scale deep exploration to further understand it.
RESOURCES
The Stewart Property is a middle stage exploration property, and no NI 43-101 compliant resources exist at this time.
MINING
Exploration would target veins and disseminated deposits suitable for mining by either surface or underground methods. Most historic exploration appears to have been searching for deposits that could be mined by surface methods.
METALLURGY
Selection of a metallurgical process would be determined following additional exploration activity, metallurgical test work, and economic studies.
CONCLUSIONS
The Stewart Property lies within a regional geologic trend of mineralization and hosts a variety of mineral occurrences. To date, work on the property has defined significant zones of molybdenum, tungsten and gold mineralization. Results from most of the exploration programs undertaken on different parts of the property have shown the presence of mineralization. In addition, much data is available from those programs to use in future exploration.
Although many reconnaissance exploration programs have been conducted at Stewart over the years, most of the work has been conducted near-surface and would be considered middle stage exploration. The various exploration programs have focused on specific metals and/or types of deposits, and in certain locations, so it appears that there has not been an in-depth search for one metal type over all the claims. Drilling has been localized, and very little deep drilling has been done. As a result, the overall potential of Stewart may not yet be known for gold, tungsten or molybdenum.
Emgold believes that the Stewart Property has very good potential to host a large mineral deposit, but a large-scale exploration program will be required to adequately make this assessment. This program would require deep drilling to test for mineralization at depths greater than previously assessed, and might require more geochemistry or geophysics to define exploration targets.
For these reasons, Emgold is seeking opportunities to advance its Stewart Property through a lease, joint venture or other means. Emgold is encouraged by the results of prior exploration but feels that future exploration should consider the whole property.
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