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North Bay Resources Inc. (NBRI) Inks LOI To Run Material From Nearby Telegraph Mine Through Their Ruby Mill

|Includes: North Bay Resources, Inc. (NBRI)

North Bay Resources announced signing a LOI today with operator of the nearby Telegraph Mine, Lazarus Mining, LLC, to handle material from the mine using the excess capacity at the company's Ruby Mine Mill complex, where the wash plant has ample throughput capacity (1k yards a day or around 1.5k tons of material).

A symbiotic relationship here is formed via the LOI which will be of mutual beneficial to both organizations. The Telegraph Mine is just outside nearby Downieville, which is the Sierra County seat, and because of the short travel distance of only a few miles to the Ruby Mill complex, the agreement gives NBRI some nice profitability metrics ahead of the Ruby Mill going into its own full production cycle.

The mill is standing virtually idle and Lazarus doesn't have a wash plant. Telegraph is a comparable drift mine and the material is perfect for running through Ruby's processing circuit. This is a no-brainer, especially given the proximity, which makes the logistics economically viable, and Lazarus is giving NBRI a sweetheart deal here with the greater of $10/ton, or 10% of the net sales, from the Telegraph material (plus expenses) in consideration.

Ruby is all set and ready to go, everything is in top shape and from NBRI's standpoint this is better than a profitable processing contract, it's a great low impact means of testing the mill's throughput ahead of full production. The two companies are currently looking to slate a formal Toll Milling Agreement within the next 90 days and NBRI has intimated its eagerness to inform markets as soon as more news breaks on this front.

This is a smart play for NBRI ahead of the ramp up of production at their Ruby Mine, which is an underground placer and lode mine in the gorgeous Alleghany-Downieville mining district of California, just over the border to the west of Reno in the Sierra Nevada mountain range. Ruby is essentially on an extension of the historic Mother Lode system just west of the Yuba River and consists of subsurface mineral rights on 435 acres in 2 patented claims and another 1.32k acres in 30 unpatented claims. Ruby has very similar characteristics to the Telegraph placer drift mine and has around 135k oz of near-term recoverable Au according to the 2010 estimate. With operations set to commence in the middle of this year, some strong quartz gold potential in the geology and the mill capacity onsite to handle 50 tons/day of quartz, in addition to the aforementioned 1k yards/day wash plant, NBRI is chomping at the bit to run their own material.

CEO of NBRI, Perry Leopold, underscored the obvious synergies of the deal and reminded markets of the benefits of being a good neighbor in this industry. NBRI can pick up a nice chunk of change here and get the wash plant running material ahead of their own ramp up, while helping Lazarus (who would otherwise be stuck in the mud with no onsite processing capacity), allowing them to move forward instead of being stalled right out of the gate this season. Using similar material will allow NBRI to tune the plant for improved yields and will also give the company a chance to fix any kinks ahead of their own production schedule.

This LOI sets the company up nicely for their own season and helps build their reputation in the region as well. Word of such good business travels fast in the Sierra foothills even a century and a half after they pulled those jewelers-grade (as large as 201 ounce) nuggets out of the Ruby.

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