Thunder Mountain District

The Thunder Mountain property is no longer held by the Company and the following is provided for historical context

In September 2005, Thunder Mountain Gold completed the sale of their mining claims and private property in the Thunder Mountain Mining District (District) for a total sale price of $5.5 million to Trust for Public Lands (TPL) and the U.S. Forest Service (USFS). As part of the transaction, the Company purchased Dewey Mining Company assets in the District as well as a significant amount of shares in the Company. The land and assets in the District were included in the sale to TPL and USFS.

The amount received by Thunder Mountain Gold was significantly less than the USFS appraisal of $13 million, and the difference of $7.5 million was recognized by TPL as a contribution to the organization for tax purposes. It was recognized by the Company that the sale was the most reasonable approach for the property for the following reasons:

1. permitting an open pit heap leach operation at the headwaters of the Salmon River and located essentially in the middle of the Frank Church River of No Return would have taken five to ten years and millions of dollars to complete (and then could have been tied up in court for additional years;
2. purchasing Dewey Mining and assets through proceeds of the sale eliminated potential disputes between the two companies;
3. allowed for the purchase of the shares of Thunder Mountain Gold stock that Dewey Mining affiliates owned (amounting to approximately 20% of the outstanding shares), and;
4. provided in infusion of working capital for use in exploration activities and to conduct review of potential acquisitions and mergers for the Company.

Starting in 1992, the Thunder Mountain mining district was consolidated with the formation of the Thunder Mountain Gold/Dewey Mining Company Joint Venture, in which the Company is a 50% partner in the holding of 50 patented (735 acres) and 272 unpatented (5,245 acres) lode mining claims. An overview claim map is provided for reference.

USMX/Dakota Mining expended approximately USD $5 million on exploration and development work on the joint venture claims. This program resulted in the definition of a measured mineral resource of over 5,000,000 tons at a grade of 0.047 ounces per ton (modeled at the then-prevailing gold price of $400 per ounce). This resource is located entirely on private patented lode claims.

Under favorable economic conditions, this resource is likely mineable. However, since the Thunder Mountain District is unique in its remote geographic location and senstive environmental setting, perhaps the market for public cultural and enviromental resources may determine an alternative route to shareholder value for the property.

At the close of operations in 1992, Ceour D'Alene Mines had extracted 100,000 ounces from the historic Thunder Mountain property. Consuming 400 man-years of labor, the mine was Valley County's largest taxpayer for the period of its operation.

Placer gold was first discovered in this remote area of Idaho in 1894 by pioneer prospectors. By the early 1900s, the Thunder Mountain Gold Rush was underway, and the small town of Roosevelt was built near the gold mines and prospects. At the height of the boom, it is reported that 7,000 people received mail at the Roosevelt post office. By 1907, the easy placer gold had begun to play out, and the miners began to move on. In 1908, a large mudslide dammed the creek below Roosevelt, thus forming a lake that flooded the townsite. This event essentially spelled the end of the gold boom associated with the District.

Sporadic exploration of the District occurred from 1950 through 1970. With the increase in gold prices in the 1970s, new interest was shown in the potential of the area. Companies including Homestake Mining, Neverex Ltd., Placer Amex, Superior Mining and Philips Petroleum conducted geologic sampling, mapping and exploration drilling in the District. The Sunnyside Deposit was initially defined by Placer Amex in the mid-1970s, mineralization that would ultimately be mined and heap leached by Coeur d'Alene Mines starting in 1986.

The Sunnyside Deposit, which contained reported reserves of 2.1 million tons averaging 0.09 ounces per ton (opt), was located on patented claims owned by Thunder Mountain Gold, Inc. and was mined under a net profits agreement. After production by Coeur d'Alene Mines ceased in 1990, the Property was returned to Thunder Mountain Gold, Inc. Couer d'Alene Mines conducted award winning reclamation of the disturbed site.

After the Sunnyside Deposit was mined and the agreement terminated by Coeur d'Alene Mines, the Property was leased to and explored by several other companies, including Kennecott Exploration and USMX/Dakota Mining. A joint venture agreement between Thunder Mountain Gold, Inc. and the Dewey Mining unified the mining district during this period.

USMX/Dakota Mining expended approximately $5 million to explore the district and outline a significant measured mineral resource on the Dewey property. USMX/Dakota Mining was forced into bankruptcy, and the properties were returned to the joint venture partners. Subsequently, other district claim packages have been acquire, and now the District is essentially owned by the Thunder Mountain Gold Dewey Mining Joint Venture.