Premium Exploration Inc.

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Bars of precious metals

Idaho Gold Project – Buffalo Gulch Zone

Buffalo Gulch is the northern-most zone of the Idaho Gold Project. It is located along a 12 km gold-in-soil trend that correlates with the 30 km Orogrande Shear Zone structural target identified by airborne geophysics. The 30 km geophysical anomaly links the Buffalo Gulch, Deadwood, Friday, Monday and X Zones along strike.

The target zone at Buffalo Gulch consists of 4 km of the 12 km coincident gold-in-soil, airborne and IP geophysical trend. There are numerous historic mines, adits, placer deposits and prospects throughout the zone.

Buffalo Gulch also hosts an historic 111,000 oz indicated gold resource in 4.8 Mt @ 0.8 g/t Au (0.4 g/t cutoff)* that was once fully permitted for open-pit production in 1991 by Bema Gold Inc. The deposit did not reach the production stage due to low gold prices (<$400/oz).

Previous operators focused on delineating near-surface oxide mineralization targeting gold-in-soil anomalies utilizing shallow RC drilling. The historic oxide deposit is located within 0.5 km of the 12 km gold-in-soil and geophysical trend. Potential high-grade structural mineralization at depth was not investigated and the deposit remains open along strike and depth.

Early in Phase-Four, Premium made its fourth discovery utilizing its new structural geological model and exploration strategy drilling potentially mineralized structures with coincident gold-in-soil anomalies.

Interesting to note, the discovery hole, BG2011-1, encountered similar rock type, alteration and sulphide mineralization at depth to the Friday-Petsite deposit located 20 km south along the 30 km trend.

Discovery #4:
BG2011-1 intersected 1.3 g/t Au over 4.6 m within 0.5 g/t gold over 26.2 meters

Drilling intersected an interpreted mineralized structure at depth identified by IP Dipole-Dipole geophysics and is considered to be secondary to a much larger structure nearby.

Drill hole BG2011-2 was designed to intercept the interpreted large structure nearby. Due to heavy rain and snow, access to the drill site was temporally suspended prior to the drill hole reaching the target. Premium intends to follow up in Phase-Four.

Property Maps

Buffalo Gulch Historic Metallurgical Work

Previous operators include Bema Gold in the 1990’s who left the area due to low gold prices .As part of its exploration program on this prospect, Bema Gold Corporation conducted bottle-roll and column leach testing on the resource with the latter showing 75% recovery of the gold in oxide material after 25 days. The bottle-roll tests showed recoveries of both oxidized and sulphide material to be in the range of 75% to 90%*.

Successful cyanide bottle roll and column tests culminated in two on-site heap leach tests. This program determined that agglomeration would enhance recoveries to 95%*.

Based on the positive tests from these results; economic and production analysis were conducted by the Bema Gold subsidiary “Idaho Gold Corporation” in 1990; independent engineering group MRDI in 1991; independent engineering group MRDI in 1996; and independent engineering group Golder and Associates in 2006. The analysis by Idaho Gold and MRDI were prepared prior to the introduction of NI 43-101, but were carried out in accordance with established practice at that time*.

*The prior economic analyses did not apply current parameters or assumptions, and they should not be relied on. Analyses done subsequent to the introduction of NI 43-101 were not based on a current resource estimate, as required by NI 43-101. The company previously disclosed basic economic parameters for Buffalo Gulch on its website; however, these were premature and should not be relied upon.

*The historic resources as calculated by the Bema Gold subsidiary “Idaho Gold Corporation” were prepared prior to the introduction of NI43-101, but were carried out in accordance with established practice at that time. Idaho Gold estimated “proven and probable geologic reserves” of oxide material to a depth of 220 feet as 4.839 million short tons at a grade of 0.023 ounce/ton containing 110,759 troy ounces of gold.

*The resource estimate was reviewed by Micon International in 2004, and they concluded that the Buffalo Gulch property had historical Mineral Resources of about 5 million tons averaging 0.023 oz/ton Au (4.5 million tonnes at 0.8 g/t Au), comparable to an indicated resource. No cut-off grade was provided.

*Estimates of gold resources/deposits are historical in nature, predate and are noncompliant with NI 43-101. Premium is not treating the historical estimate as current mineral resources or reserves. Premium has not undertaken any independent investigation of the resource estimates nor has it independently analyzed the results of the previous exploration work in order to verify the resources, and therefore the historical estimates should not be relied upon. The historical classes used by Idaho Gold are different from current CIM classes, however, they might be comparable to the CIM inferred or indicated resource classes.