cgfi_corresp.htm

CORRESP

June 23, 2014

VIA ELECTRONIC EDGAR FILING

John Reynolds, Assistant Director

George Schuler, Mining Engineer

Securities and Exchange Commission

100 F. Street, N.E.

Washington, D.C. 20549

Re: Colorado Goldfields Inc.

Form 10-K for Fiscal Year Ended August 31, 2013

Filed December 16, 2013

File No. 000-51718

Dear Mr. Reynolds:

We received your comment letter of May 27, 2014 in which you requested additional information, or a statement of when we will provide the requested response. Additionally, you requested an explanation describing how the comments may or may not apply to our current facts and circumstances and whether an amendment would be appropriate.

Following is our response. We trust you shall deem the contents of this transmittal letter responsive to your comment letter.

Comment 1.

We note your response to comment 1 in which you propose to respond prospectively prior to your company’s next annual filing on or before August 31, 2014. We re-issue comment 1. Please provide draft disclosure of your proposed changes to the appropriate paragraphs, sections, and/or pages or amend your filing, within the time frame specified above.

Response 1.

Form 10-K for Fiscal Year Ending August 31, 2013 filed December 16, 2013

As stated in prior correspondence, the Company’s contracts to purchase the Champion and Silver Wing Mines are expired. However, negotiations are continuing for both the mineral properties and project-level financing. Successful completion of those acquisition contracts are necessarily dependent upon concurrent successful completion of a project-level funding transaction.

Therefore, the attached Exhibit A draft Item 2 disclosure is in anticipation of a completed transaction and should in no way be viewed as a description of an asset currently owned by the Company at this time.

Finally, we acknowledge the following:

●	the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

●	staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and

●	the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Please do not hesitate to contact us if you have any further questions or comments.

Sincerely,

COLORADO GOLDFIELDS INC.

/s/ Lee R. Rice		/s/ C. Stephen Guyer
Lee R. Rice, President & CEO		C. Stephen Guyer, CFO

Exhibit A – DRAFT Disclosure Item 2. Properties

The Champion Mine Project

Summary

The Champion Mine is a precious and base metal production project located on private land holdings in one of the richest and most prolific metallogenic provinces on earth, the Colorado Mineral Belt. Metal production in the area has been more or less continuous since initial discoveries in 1874 and the mining boom that followed. Deposits locally are part of an enormous system of veins associated with the Silverton Caldera and covering an area greater than 230 square miles (601 square kilometers).

In June 2013, the Company completed a Preliminary Technical Report for the Champion Mine Project (Sultan Mountain Mine) located in San Juan County, Colorado. The report was prepared by Mr. Lee R. Rice, who is President and CEO of Colorado Goldfields Inc. The report was prepared in accordance with SEC Guideline 7 criteria.

Terms, Conditions, Royalties and Nature of Ownership

Should the contracts to purchase the Silver Wing and Champion Mines be renegotiated, additional final details shall be added here.

Property Location

The property lies within the Silverton topographic quadrangle (USGS 7½-minutetopographic map series, 37107-G6-TF-024, 1955) occupying the east and northeast flanks of Sultan Mountain (maximum elevation 13,368 ft., 4,075m). The Champion Mine property is adjacent to the town limits of Silverton and extends southward for 1.3 miles (2.09 km). U.S. Highway 550 crosses the property from Silverton southward along the route of the Animas River. See figure 1.

Property Description

Sixty-nine patented land parcels, both lode and mill site claims, make up the Champion Mine Project. A total area of 580.842 acres (0.908 sq. mi., 235.059 ha.) of subsurface and mineral rights is included in the property. Of this amount, 349.005 acres (0.545 sq. mi., 141.238 ha.) of surface rights is included. Following is a list of claims and associated rights.

Mineral and Surface Rights:

Claim Name	US Survey No.		Patent No.		Acres
Belle Conklin		899		7431		10.330
Chicago		16046		39721		6.680
Florence R		18291		47075		0.900
Indiana		14696		35280		10.000
Keystone		19674		817450		10.304
Last Chance		16610		40216		3.934
Little Maud		498		23826		7.900
Overlook		19674		817450		3.512
Sam E		19674		817450		5.661
Sultan		15154		38486		6.806
Thunder		19674		817450		5.650
Aletha		670		14433		6.000
Blue Jay		14322		35422		1.698
Bryan		19674		817450		4.182
Champion		14696		35280		10.000
Champion No. 2		14696		35280		10.000
Cocktail		446		6021		7.000
Emblem		487		6165		10.000
Empire		647 - A		6336		10.000
Empire M.S.		647 - B		6336		5.000
Empire Tunnel		14806 - A		36113		10.300
Excelsior		13757 - A		33980		10.312
Fairview		19674		817450		10.282
Florence R Fraction		18291		47075		13.858
Fraction		14328		36053		3.505
Great Central		650		10757		4.200
Great Republic		649 - A		28836		8.200
Great Republic M.S.		649 - B		28836		5.000
Hawkeye		486		6030		8.700
Hercules		648 - A		6337		7.700
Hercules M.S.		648 - B		6337		5.000
Ida The Maid		1807		11163		7.640
Jennie Parker		207		3793		6.100
Justice		19674		817450		3.679
Little Dora		981		7636		7.500
Little Mollie		17833		45022		8.906
Melville M.S.		652 - B		6348		5.000
Neglected		18291		47075		10.310
Oregon		14696		35280		10.000
Seal		488		7574		10.300
Silverton Park		14806 - A		36113		10.300
Silverton Park M. S.		14806 - B		36113		3.973
Smith		17849 - A		45020		10.331
Smith M. S. (less surface rights)		17849 - B		45020		4.522
Stadaconda		2624		23275		0.631
State Street		13757		33980		10.331
Victoria		1051 - A		8345		7.300
Victoria M. S.		1051 - B		8345		5.000
Water Witch		651		5.816		4.100
Whitman M.S.		1051 - B		36007		4.990
Total Acres						353.527

Mineral rights only:

Claim Name	US Survey No.		Patent No.		Acres
Arlington		1777		11306		10.331
Eunice		8532		24683		10.331
North Star No. 2		734		7482		10.33
Protection		5048		20377		7.275
Wheal Alfred		5046		18677		6.282
Tuscarora		14323		36051		10.321
Merrimac		18713		96575		8.61
Monitor		18713		96575		8.61
Blanche Placer		2260		16574		63.59
Winthrop		1776		11035		10.33
Avalanche		663		8186		8.67
Chief		692		19102		10.33
Cook		17848 - A		45021		8.189
Crown Point		5047		18678		5.654
Gladstone		19695		611472		8.118
North Star		271		24221		10.3
PI		15529		37353		10.124
President		2229		23278		10.33
Teller		1852		24215		9.59
Total Acres						227.315

Figure 2 following show the locations of the claims.1

1 Page 6 of Preliminary Technical Report, Champion Mine Project (Sultan Mountain Mine), San Juan County, Colorado, by Lee R. Rice, PE, Lakewood, Colorado, June 24, 2013

Accessibility, Climate, Infrastructure

The Champion Mine property is accessed from U.S. Highway 550 (the Million Dollar Highway) which crosses several of the Champion Mine land parcels. This all-weather road connects Silverton to Durango to the south (45.5 miles, 73.2 km) and to Ouray to the west and north (48 miles, 77 km).

The property is immediately southwest of Silverton, Colorado at an elevation substantially the same as that of the town, 9,305 ft. (2,836 m) and therefore will experience similar temperatures and snowfall. On the average, freezing temperatures are not experienced daily only in July and August and that during these months the average daily high temperature is only about 70°F (21°C). Annual snowfall averages 154.8 in. (3,932 mm) and only the months of May through September are generally snow free. Snow slides are common in the Animas River Valley north of Silverton and in the Mineral Creek valley west of Silverton, but Highway 550 is kept open year ‘round.

Existing infrastructure at Silverton consists of the narrow gauge railway and the paved all-weather highway (Hwy. 550). Electrical power is supplied by a substation in Silverton, and industrial power (25kV) is available within 1 mile (1.6 km) of the project site. Cellular communication and landline communication facilities are available in Silverton. Water is available from the Animas River and from the City of Silverton or from shallow wells in the valley floor. Mine workings in the hillsides produce moderate to large quantities of water, sometimes of very poor quality due to the mineralization encountered in the mine workings. No treated water supply is available at the Champion Mine site and no sewerage treatment facilities are present there.

History2

The Champion Mine is a consolidation of seven previously operated mining properties established over the first 60 years of the district. It includes the Alletha, Champion, Gladstone, Hercules, Jennie Parker, Little Dora, and North Star mines.

The Jennie Parker Mine, located on the Jennie Parker vein, was developed in the late 1870's through the Jennie Parker shaft and later through the Jennie Parker tunnel. After 1900, the Jennie Parker vein was mined through the Empire tunnel located near the base of Sultan Mountain as part of the Hercules Consolidated Mining Company. The mine ceased operations during the financial panic of 1907.

The Alletha Mine is located on the Alletha vein and was initially mined in the1880's through the Alletha tunnel and an internal winze. It was re-opened in the1930's and was mined through the Thunder tunnel located lower on Sultan Mountain in Deadwood Gulch. Ore was transported over an aerial tramway to an ore bin on a rail siding beside the Animas River. The Alletha was closed by the Gold Mine Closure Act of 1942.

The Hercules Mine, located on the Hercules vein, was developed in the 1880'sthrough the Ricker shaft and later through the Ricker tunnel. In the 1890's, the Boston tunnel was driven lower on Sultan Mountain to access ore below the Ricker tunnel level. The Hercules Mill was constructed at the base of the mountain and received ore through an inclined surface tramway. Another lower tunnel, the Empire tunnel, was driven in the early 1900's to access ore in the Hercules vein.

The Little Dora Mine, located on the Little Dora vein, was initially developed through the Blue Jay shaft, the Hawkeye shaft, and the Little Dora shaft in the 1880's.It was then mined through the Boston tunnel and still later through the Empire tunnel and below the Empire tunnel level through the Little Dora winze. The Little Dora Mine was closed during the financial panic of 1907, but was operated for a time on a limited basis in the 1950's.

The Champion Mine was originally developed in 1900 in conjunction with a copper-silver smelter located on the north side of Silverton, the Kendrick-Gelder Smelter. Ore from the Champion vein was transported by aerial tramway that connected the No. 4Level of the Champion Mine to an ore bin located on a rail siding next to the Animas River.

2 Page 15 of Preliminary Technical Report, Champion Mine Project (Sultan Mountain Mine), San Juan County, Colorado, by Lee R. Rice, PE, Lakewood, Colorado, June 24, 2013

In 1907, the Pittsburgh tunnel was completed at the base of Sultan Mountain and was connected through a 500-foot raise to the No. 4 Level. Both the mine and the smelter were shut down during the financial panic of 1907.

The Gladstone Mine was located in the 1880's with initial access and production through the Gladstone Tunnel located high on the northern slope of Sultan Mountain at an elevation of approximately 9,967 ft. (3,038 m). The cost and difficulty of hoisting ore from below this level caused the operators to drive the Sultan Tunnel elevation9,608 ft., 2,928 m) in 1900. Production from the Gladstone Vein (an extension of the Jennie Parker-Hercules veins) continued to the Sultan Tunnel level.

The North Star Mine was located in 1876 and was initially developed by adits high in Belcher Gulch at an elevation of approximately 9,927 ft. (3,025 m). The development of crosscut adits from the Mineral Creek drainage on the north slope of Sultan Mountain permitted extensive production from the North Star Vein and by 1881, the North Star Mine became the most productive mine in San Juan County. The lowest adit, the No. 7 Level crosscut was completed in 1890 and permitted production from the North Star Vein down to that level, approximately 9,390 ft. (2,862 m). Increased costs due to hoisting ore from below the 9,390-ft. level and of pumping water from lower levels of the mine in conjunction with decreased silver prices forced the mine to cease operations in 1899.

Production from the Crown Point-Wheal Alfred Vein, a structure nearly parallel to the North Star Vein and from the Dalsant Stope was carried out from 1892 until 1927.

Geological Setting and Mineralization

Silverton and the Champion property lie within a zone of prominent Laramide uplift constituting the San Juan Mountains. Tertiary-Paleocene period volcanism on the Uncompahgre and San Juan uplifts gave rise to an extensive range of mountains known as the San Juan volcanic field. The type of volcanism that created the San Juan volcanic field created a number of large to very large calderas.

The Champion property is situated on the south rim of the Silverton Caldera in an Oligocene age quartz monzonite intrusive, the Sultan Mountain Stock. Extensive fracturing of the intrusive stock occurred at a later time along with pervasive propylitic alteration by hydrothermal fluids and the emplacement of vein mineralization. South of the Sultan Mountain Stock and peripheral to the land parcels, Precambrian, Paleozoic, and Mesozoic metamorphic and sedimentary rocks are exposed. These rocks also have been extensively fractured and altered and contain mineralized vein structures.

The veins of the Sultan Mountain Stock and south of the Sultan Mountain Stock consist of base metal sulfides and arsenosulfides with accompanying minor precious metals in a quartz and minor carbonate mineral gangue. The predominant base metal in these veins is lead.

Surface and groundwater disturbances or contamination issues due to historical mining activities

The Champion mine has several historic adit sites that created surface mine waste piles containing varying amounts of sulfide minerals that could contribute to water quality degradation of surface water from stormwater run-off. Only five adit sites are of sufficient size to contribute measurable water quality impacts to the Animas River and its tributaries. These issues will need to be addressed through the Stormwater Discharge Permit process and by final site reclamation as defined by the Mined Land Reclamation Permit.

The Champion, Little Dora and North Star #7 adits discharge varying flows of water from underground sources. These discharges will require a Water Quality Discharge Permit and may require on-going treatment to meet water quality discharge standards.

Exploration

A summary of past exploration at the property includes:3

The Champion, Hercules, Jennie Parker, and Little Dora mines were closed in1907, approximately six years before the introduction of core drilling in the mining industry in 1913. Some work was completed in the Little Dora Mine in the 1950's, but records of that work and any exploration results from that effort have not been recovered.

Many of the properties in the area were gradually consolidated by Warren Prosser in the 1940's and 1950's and were purchased by Sultan Mountain LLC in 1974. P & G Mining, Inc., conducted an extensive effort from 1983 to 1987 to map and sample all of the properties now constituting the Champion including the Gladstone and North Star Veins as well. P & G re-entered the workings and refurbished some of the workings and facilities during the period from 1983 to 1987. Much of the information has been derived from the surviving maps and plans of this work effort.

The access to older workings and the drifting performed in this work program provided excellent measurements and vein material assays, but P & G did not perform any exploration drilling to test for additional vein structures west of the Champion Vein or southwest of the Jennie Parker - Hercules - Gladstone Vein and no exploration drilling was performed to determine the extent of the known vein systems below the Pittsburgh Tunnel level.

A detailed exploration plan has not been developed at this time.

Mineral Resource Estimates

Table 12 contains a listing of the three resource categories for all of the production zones of the Champion Mine Project.4

Measured Resource	Ore		Metal Content
	Tonnage		Gold		Silver		Lead		Copper		Zinc
Ore Source	(tons)		(ounces)		(ounces)		(pounds)		(pounds)		(pounds)
Alletha Vein		7,891.6		402.5		30,619.2		104,168.5		69,445.6		66,289.0
Champion Vein		6,275.9		295.0		14,622.8		123,007.7		61,503.8		52,717.6
Gladstone Vein		---		---		---		---		---		---
Hercules Vein		---		---		---		---		---		---
Jennie Parker Vein		---		---		---		---		---		---
Little Dora Vein		---		---		---		---		---		---
North Star Vein		---		---		---		---		---		---
Totals		14,167.5		697.4		45,242.1		227,176.1		130,949.5		119,006.6

Indicated Resource	Ore		Metal Content
	Tonnage		Gold		Silver		Lead		Copper		Zinc
Ore Source	(tons)		(ounces)		(ounces)		(pounds)		(pounds)		(pounds)
Alletha Vein		10,528.7		2,181.6		64,736.1		140,658.6		234,037.8		114,113.3
Champion Vein		46,572.6		2,486.2		148,412.0		568,596.3		478,862.2		1,004,030.0
Gladstone Vein		40,105.5		4,211.1		222,384.7		786,066.9		393,033.4		336,885.8
Hercules Vein		95,229.3		9,999.1		528,046.5		1,866,494.4		933,247.2		799,926.2
Jennie Parker Vein		34,326.1		3,629.4		210,760.5		672,791.3		336,395.6		288,339.1
Little Dora Vein		180,996.8		47,507.8		1,903,343.4		3,547,536.3		1,773,768.2		1,520,372.7
North Star Vein		174,990.6		48,475.5		922,708.1		3,561,906.3		1,335,677.9		1,333,568.5
Totals		582,749.5		118,490.8		4,000,391.5		11,144,050.0		5,485,022.3		5,397,235.7

3 Page 32 of Preliminary Technical Report, Champion Mine Project (Sultan Mountain Mine), San Juan County, Colorado, by Lee R. Rice, PE, Lakewood, Colorado, June 24, 2013

4 Page 54-55 of Preliminary Technical Report, Champion Mine Project (Sultan Mountain Mine), San Juan County, Colorado, by Lee R. Rice, PE, Lakewood, Colorado, June 24, 2013

Inferred Resource	Ore		Metal Content
	Tonnage		Gold		Silver		Lead		Copper		Zinc
Ore Source	(tons)		(ounces)		(ounces)		(pounds)		(pounds)		(pounds)
Alletha Vein		20,331.8		1,490.4		68,891.6		207,619.0		168,216.5		150,597.0
Champion Vein		19,950.1		2,606.0		54,825.6		314,638.3		221,642.3		368,590.7
Gladstone Vein		80,293.0		8,430.8		445,224.7		1,573,742.9		786,871.4		674,461.2
Hercules Vein		146,614.9		15,394.6		812,979.9		2,873,653.0		1,436,826.5		1,231,565.6
Jennie Parker Vein		94,909.5		16,971.5		774,941.3		1,860,226.4		930,113.2		797,239.9
Little Dora Vein		306,367.1		71,689.9		3,691,111.3		6,004,795.9		3,002,397.9		2,573,483.9
North Star Vein		312,231.3		75,662.1		1,927,257.8		6,303,244.0		2,533,015.3		2,433,313.3
Totals		980,697.8		192,245.3		7,775,232.2		19,137,919.5		9,079,083.2		8,229,251.7

Mineral Reserve Estimates

The amount of information available at this stage of mine development is insufficient to prepare a reserve estimate for the property.

Project Infrastructure

The Champion property is located approximately one mile (1.6 km) south of the town of Silverton, Colorado, and is accessed by San Juan County Road 31. The mine workings will be accessed through the Little Dora Adit located adjacent to Silverton and through the Pittsburgh Adit located south of town. Both adits are adjacent to CR 31 and are connected underground via prior development drifts.

Initially, ore will be shipped from the Pittsburgh Adit on CR 31 to Colorado Route110 in Silverton and then on San Juan County Road 2 to Howardsville and the Pride of the West Mill, a distance of 6.42 miles (10.3 km). Mill tailings for backfill in the mine will be trucked over the return route. As development proceeds, ore will ship from the Little Dora Adit instead of the Pittsburgh Adit.

Concentrates from the Pride of the West Mill will be trucked via CR 2 and Route 110 to Silverton and then over US Highway 550 (Million Dollar Highway)approximately 60 miles (97 km) to the rail head at Montrose where the materials will be shipped by rail to the appropriate smelter.

This area is served by a cooperative electric utility the San Miguel Power Association, Inc. Industrial power (25 kV) is available within ¼ mile (400 m) of the Little Dora Adit. An electrical substation is planned for the mine site converting the25 kV transmission line power to 4,160 V/480 V secondary electrical service for the mine. All underground electrical needs of the property will be supplied from a single 4,160 V distribution line run underground through the Little Dora Adit. Substations providing 480 V underground will be located as needed. The Little Dora substation will power an electrical air compressor located in an existing building next to the county road and the Little Dora Adit. Compressed air will be piped underground from this location. Phone service will be extended via land line to the facilities adjacent to the Little Dora Adit. Cell phone coverage is available on the surface at both the Little Dora and the Pittsburgh adits.

Mine offices and a change room facility will be constructed adjacent to the Little Dora Adit. A mechanical shop and warehousing space will be located in the existing building that will house the air compressor. Some refurbishment and improvement of this building will be required. Maintenance support facilities also will be provided by the main maintenance shop located at the Pride of the West Mill.

Environmental Studies, Permitting and Social or Community Impact

All mining activities and construction or refurbishment of surface facilities will be conducted on private land that has historically been used for mining purposes. No environmental studies are required. Water sampling on a daily or weekly basis for quality monitoring of the Animas River both upstream of the property and downstream from the operations is recommended.

Permitting

A number of permits will be required pursuant to the reopening of the Champion Mine and the conduct of mining operations:

Air Quality Permit – Colorado Department of Public Health and Environment, Air Quality Control Division. Fugitive dust emissions from mining operations including ventilation fan discharges from the mine are covered by this permit. Dust from truck haulage on the public highway is not considered in this permit.

Land Use Permit – San Juan County - A land use permit issued by San Juan County is required. Mining is a “Use-by-Right” in the county. Permit issues will address the use and maintenance of public roads and mitigation of natural hazards. Due to the proximity of the Champion property to Silverton, it lies within anoint town-county interest zone and will require comment from both Silverton and County for approval. Additional issues to be addressed will be traffic patterns, noise, and visual impact. The proposed mining plan will address these issues.

Mined Land Reclamation Permit – Colorado Division of Reclamation, Mining and Safety. The Mined Land Reclamation Permit (MLRP) covers the life of the mine and requires approval of the basic overall mine operating plan and a reclamation plan. It includes a site-specific financial warranty for reclamation and eventual closure of the mine.

Notice of Intent – Colorado Division of Reclamation, Mining and Safety. The Notice of Intent (NOI) to conduct prospecting activities is needed to conduct the work necessary to re-enter the Champion Mine, to conduct initial mapping and sampling, to assess underground conditions, and to conduct drilling operations. This permit requires a reclamation bond which can be combined with the final Mined Land Reclamation Permit bonding requirement. This permit allows initial work to be conducted while the Mined Land Reclamation Permit is pending. It includes a site-specific financial warranty for work to be conducted under the NOI.

NPDES Mine Water Discharge Permit – Colorado Department of Public Health and Environment, Water Quality Control Division. An NPDES discharge permit may be required for a small (approximately 30gallons per minute) historic discharge from the main adit. Existing maps of the workings indicate that a single fracture beyond the ore zone may be responsible. Initial work underground will investigate the possibility of grouting this source thereby eliminating the need for this permit.

Stormwater Discharge Permit – Colorado Department of Public Health and Environment, Water Quality Control Division. A Stormwater Discharge Permit will be required. The permit will address stormwater runoff and associated management facilities from the active mining areas at the Pittsburgh and Little Dora adits. The permit will be updated from time to time for compliance with changes in site conditions.

Capital and Operating Cost Estimates

The Company has developed the following capital and operating cost estimates.

Should the contracts to purchase the Silver Wing and Champion Mines and project-level funding be completed, additional funding details shall be added here.

Capital Cost

The physical plant at the Champion property requires refurbishment of the existing mine workings and surface structures and the construction of some new facilities at the mine site. It also requires the purchase of equipment to accomplish the refurbishment, new construction, and conduct of mining operations.

The capital cost estimate is based on the minimum amount of labor and equipment necessary to achieve the initial production goal of 5,000 tons per month and to sustain that production rate during the first two years of operation. Additional capital expenditures will be required to maintain production beyond that initial period, but these additional expenditures will be financed through cash flows resulting from initial production.

Surface Facilities

Refurbishment of surface facilities will include rehabilitating existing buildings on site and the construction of new buildings to provide warehousing, change facilities and mine offices. Additionally, facilities for communications equipment and a water treatment plant and ore bin will have to be constructed. Site cleanup to remove debris from former operations and access and haulage road as well as waste dump construction also will be required. An estimate of surface refurbishment items and costs is listed below.

Item	Est. Cost
Communications equipment	$	5,000
Office, warehouse, change room		10,000
Re-open Pittsburgh Tunnel		50,000
Repair existing buildings		20,000
Repair ore bin at Pittsburgh		20,000
Road and track construction		10,000
Waste Dump construction		20,000
Water treatment plant		150,000
	$	285,000

Mine Workings Refurbishment

Mine workings refurbishment will consist of rehabilitating the underground openings and existing crosscuts and stope openings, installation of air and water piping and ventilation ducting, construction of explosives magazines, and installation of electrical power lines underground. The estimated capital cost of these items is listed below.

Item	Est. Cost
Explosives magazines	$	15,000
Air and water piping		35,000
Track		35,000
Underground power line		35,000
Refurbish Little Dora Adit		15,000
Refurbish Pittsburgh Adit		15,000
Refurbish to Champion No. 4		10,000
	$	160,000

Mining Equipment

Equipment required to establish and conduct mining operations on the site is listed below.

Item	Quantity		Est. Cost
Air Compressor		1	$	120,000
Air line		9,500		74,955
Backfill Equipment	1 lot			270,000
Battery Charger (4 ton)		1		15,000
Battery Charger (6 Tom)		1		18,000
Battery Locomotive (4 ton)		1		56,000
Battery Locomotive (6 Ton)		1		90,000
Dozer		1		120,000
Electrical substation 1		1		75,000
Electrical substation 2		1		-
Electrical substation 3		1		30,000
Electrical switchgear, cables	1 lot			75,000
Flat Car		2		8,000
Hoist		1		-
Hoist, Min rider		2		59,000
Jackleg Drill		5		35,000
Loader		1		90,000
Mine Fan, primary		1		30,000
Mine Fans, small		4		20,000
Mine Light Charger, 50		1		7,500
Mine lights		20		5,000
Mucker		1		40,000
Ore Car		8		60,000
Rail, 30-lb		8,000		40,000
Raise climber		1		300,000
Slusher		3		60,000
Stoper drill		8		56,000
Substation		1		-
Ties		2,500		25,000
Truck, Flatbed		1		-
Truck, Pickup		3		90,000
Tugger, air		4		18,000
Water line		4,000		20,000
Water pump		3		22,500
			$	1,929,955

The total capital cost of site rehabilitation is $445,000 with mine equipment costs of about $1,930,000. An estimated $2,375,000 investment in equipment and site improvements is required to bring the Champion into operation.

Operating Cost Estimate

The costs of mining, milling, concentrate shipment, and smelting all enter into the determination of profitability for the project. These costs have been estimated for mine operation and production of 5,000 tons per month. Milling costs have been estimated for a total mill throughput of 10,000 tons per month and the production of 1,000 tons of concentrates per month (approximately 10:1concentration ratio). Although concentrate shipment costs involve a truck haulage component (mill to rail head) and a ton-mile rail haulage rate that will have to be negotiated with the railroad, an overall average shipping cost per ton has been compiled and included.

Based on an assumption of 12,000 tons annual production of concentrates from mine production of 60,000 tons of ore and smelting costs of approximately $200 per ton of concentrate. These component costs all have been reduced to a “per ton” basis and are listed below.

Component	Cost per Ton ($)		Annual Cost ($)
Mine Operating Costs
Mine Labor	$	34.24	$	2,054,400
Materials and Supplies		21.56		1,293,600
Truck Haulage (Mine to Mill)		5.50		330,000
Electrical Power		9.03		541,800
Mine Maintenance		4.67		280,200
Sub total	$	75.00	$	4,500,000

Mill Operating Costs
Mill Labor	$	13.76	$	825,600
Tailings Disposal		6.12		367,200
Water Treatment and Recycling		5.00		300,000
Reagents		4.05		243,000
Electrical Power		3.85		231,000
Grinding Media		3.37		202,200
Maintenance Supplies		2.70		162,000
Maintenance Labor		2.50		150,000
Heating Fuel		0.45		27,000
Sub Total	$	41.80	$	2,508,000

Transportation
Concentrate trucking and rail shipment	$	3.20	$	192,000

Smelting and Refining Costs
Concentrate Refining and Metal Recovery	$	40.00	$	2,400,000

Other Costs
Regulatory and Environmental Costs	$	5.00	$	300,000

Total	$	165.00	$	9,900,000

Adjacent Properties

Property adjacent to the Champion property is public land administered by the U.S. Bureau of Land Management. There exist some inholdings of patented lands previously used for mining but currently inactive. These nearby properties occupy potentially viable mineral vein deposits and may be future acquisition targets because of access provided by the Pittsburgh, Little Dora, and North Star adits.

Silver Wing Mine Project

Summary

The Silver Wing Mine Project is a polymetallic mine production project located on private land holdings in one of the richest and most prolific metallogenic provinces on earth, the Colorado Mineral Belt. Metal production in the area has been more or less continuous since the initial deposit discoveries in 1874 and the mining boom that followed. Deposits locally are part of an enormous system of veins associated with the Silverton Caldera and covering an area greater than 230 square miles (601 square kilometers).

In December 2012, the Company completed a Preliminary Technical Report for the Silver Wing Project located in San Juan County, Colorado. The report was prepared by Mr. Lee R. Rice, who is President and CEO of Colorado Goldfields Inc. The report was prepared in accordance with SEC Guideline 7 criteria.

Terms, Conditions, Royalties and Nature of Ownership

Should the contracts to purchase the Silver Wing and Champion Mines be renegotiated, additional final details shall be added here.

Property Location

The Silver Wing property is located in the San Juan Mountains in the Eureka Mining District, San Juan County, Colorado (Figure 1.). It lies within the Handies Peak topographic quadrangle (USGS 7½-minute topographic map series, 37107-H5-TF-024, 1955) on the western flank of Niagara Peak in the valley of the Animas River, approximately 200 meters (650 ft.) south of Burns Gulch.

Figure 1. – Location of the Silver Wing property, San Juan County, Colorado.

The property is 3.8 km (2.4 mi.) south-southeast of the abandoned townsite of Animas Forks and 3.1 km (2.0 mi.) north-northeast of the abandoned townsite of Eureka. It is 15.7 km (9.8 mi.) northeast of Silverton along County Road 2. See figure 2.

Property Description

The Silver Wing property consists of 10 patented claims. These include all surface and mineral rights with the exception of the Silver Wing claim which does not include the surface rights. The claims constituting this property are shown shaded in Figure 2 along with adjacent and overlapping properties. A shaded relief and topographic map of the property area is shown in Figure 3.5

5 Page 5 and 6 of Preliminary Technical Report, Silver Wing Project, San Juan County, Colorado, by Lee R. Rice, PE, Lakewood, Colorado, December 24, 2012.

Figure 2 – Silver Wing land parcel outlines (shaded) on aerial photograph.

Silver Wing land parcel outline (shaded) on shaded relief topographic map.

Individual claim descriptions are listed below showing their mineral survey number and the approximate size of the parcel in acres.

Silver Wing land parcels.

Parcel Name	USMS Survey No.		Area (acres)
Byron Mill Site Claim		419-B		2.6
Cynic Lode Mining Claim		126		10.3
Denver Belle Lode Claim		132		6.31
Edward Lode Claim		210		10.33
La Plata Lode Claim		19003		5.116
Manitou Lode Mining Claim		125		9.00
Rob Roy Lode Claim		499		6.5
Rocky Mountain Chief Lode Claim		131		2.8
Silver Wing Lode Claim – mineral rights only		70		9.97
Whale Lode Mining Claim		127		8.28
				71.206

Accessibility, Climate, Infrastructure

Accessibility

The Silver Wing property is accessed by San Juan County Road 2. The road is unpaved from a few miles north of Silverton, but is maintained by county crews. Due to the lack of activity in the area, the road is only kept open as far as the Eureka townsite during the winter months. A narrow-gauge rail line runs from Durango to Silverton providing some freight service, but it is primarily a tourist facility and provides only irregular service during winter months. The nearest full service rail facility is located in Montrose, 91.6 km (56.9 miles) from Silverton via highway 550. Although the segment of the Million Dollar Highway (550) connecting Silverton to Durango is only 73.2 km (45.5 miles) in length, there is no railhead connecting with the nation’s railways in Durango.

Climate

The property is located 15.7 km (9.8 mi.) Northeast of Silverton, Colorado at an elevation of approximately 3,210 m (10,500 ft.) and therefore will have lower temperatures, more snowfall, and longer snow duration than Silverton. Records show that on the average, freezing temperatures are not experienced daily only in July and August and that during these months the average daily high temperature is only about 70°F (21°C). Annual snowfall averages 154.8 in. (3,932 mm) in Silverton and only the months of May through September are generally snow free. Snow slides are common in the Animas River Valley north of Silverton often blocking County Road 2. Blockages may last for only a few hours when access is needed.

Infrastructure

Existing infrastructure in the Animas River Valley northeast of Silverton consists only of the county-maintained road. Transportation is solely by unpaved county road. Electrical power is supplied by a substation in Silverton, and industrial power (25 kV) extends as far as the former townsite of Eureka, but is operated as only a single phase.. Household power (110 v AC) extends further north for local residents and summer homes, but power lines do not extend into the Silver Wing area. Communication lines parallel the extent of electrical power availability. Cell tower coverage is available only within a few miles of Silverton. Water is available from the Animas River or from shallow wells in the valley floor. Mine workings in the hillsides produce moderate to large quantities of water, sometimes of very poor quality due to the mineralization encountered in the mine workings. No treated water supply is available at the and no sewerage treatment facilities are present there.

History

The table below summarizes the history of operations at the Silver Wing property.6

Date	Production (Tons of Ore)	Description of Operation
1875	unknown amount	Initial production from upper workings, start Silver Wing Tunnel
1895	unknown amount	Completion of the Silver Wing Tunnel
1898	unknown amount	Construction of the Silver Wing Mill
1899	unknown amount	Mill completed, operation unsuccessful
1906-07	4000 tons	shipped to smelter
1909		Mine ceased operations pending outcome of lawsuit
1917		Property leased to Silver Bell (no production)
1941		Exploration program planned and approved but not executed
1945		Purchase of the property by E. T. Chase
1957		Leased by Kirk-Hudson Mines, Ltd.
1959		Dale Carlson reopens Silver Wing Tunnel
1962		Silver Wing Mining Corporation reopens mine
1963	376.7 tons	shipped to smelter
1964	12,529.1 tons	shipped to smelter
1965	6,251.4 tons	shipped to smelter
1966	723.5 tons	shipped to smelter, operations suspended
1967		I.M.E. exploration sampling and drilling, property idled
1982		Tax sale of property
1992		Acquisition of property by Silver Wing Company, Inc.

Geological Setting and Mineralization

Silverton, Colorado and the Silver Wing mine lie within a zone of prominent Laramide uplift constituting the San Juan Mountains. Tertiary-Paleocene period volcanism on the Uncompahgre and San Juan uplifts gave rise to an extensive range of mountains known as the San Juan volcanic field. The type of volcanism that created the San Juan volcanic field created a number of large to very large calderas.

The Silver Wing mine is situated on the southeast rim of the Silverton Caldera in rocks of the Silverton Volcanics. Extensive fracturing of the volcanics occurred at a later time along with pervasive propylitic alteration by hydrothermal fluids and the emplacement of vein mineralization.

The extensive network of veins peripheral to the Silverton Caldera in the area of the Silver Wing consist of silver-bearing base metals and/or gold-bearing pyrite and chalcopyrite occurring in quartz, barite, and carbonate mineral gangues. The ore bodies at the Silver Wing are polymetallic base metal sulfide veins with minor precious metal and some rare metal content. These veins are long, often connecting with other veins of differing strike and generally are almost vertical.

Surface and groundwater disturbances or contamination issues due to historical mining activities

The Silver Wing mine has several historic adit sites that created surface mine waste piles containing varying amounts of sulfide minerals that could contribute to water quality degradation of surface water from stormwater run-off. Only the main Silver Wing adit is of sufficient size to contribute measurable water quality impacts to the Animas River. These issues will need to be addressed through the Stormwater Discharge Permit process and by final site reclamation as defined by the Mined Land Reclamation Permit.

6 Page 18-19 of Preliminary Technical Report, Silver Wing Project, San Juan County, Colorado, by Lee R. Rice, PE, Lakewood, Colorado, December 24, 2012.

The main Silver Wing mine adit discharges approximately 20 gallons per minute of water from underground sources. This discharge will require a Water Quality Discharge Permit and may require on-going treatment to meet water quality discharge standards.

Exploration

A summary of past exploration includes:7

Following the purchase of the Silver Wing-Frederico group of claims by E. T. Chase and sons in the mid 1940's, some diamond drilling was performed at the Silver Wing mine and good copper ore was reported encountered; however, operations ceased in the early 1950's and no record of the exploration work is available.

Kirk-Hudson Mines Ltd. of Ontario, Canada, leased the property in 1957 and reopened the Silver Wing Tunnel. They completed six core holes across the entire vein system before closing their U.S. operations.

In 1959 Dale Carlson and a group of Albuquerque businessmen founded Silver Wing Mining Corporation and performed extensive mapping and sampling of the workings.

Exploration activities at the mine were continued under contract by International Mineral Engineers in 1967. Channel sampling was undertaken and all of the underground workings were mapped; several hundred feet of diamond drill holes and percussion drill long holes were completed and an ore reserve estimate was prepared.

A detailed exploration plan has not been developed at this time.

Mineral Resource Estimate

The total of all tonnages and metal content included in the Silver Wing primary production area is shown in Table 12.8

Mineral Reserve Estimates

The amount of information available at this stage of mine development is insufficient to prepare a reserve estimate for the Silver Wing.

7 Page 37 of Preliminary Technical Report, Silver Wing Project, San Juan County, Colorado, by Lee R. Rice, PE, Lakewood, Colorado, December 24, 2012.

8 Page 57 of Preliminary Technical Report, Silver Wing Project, San Juan County, Colorado, by Lee R. Rice, PE, Lakewood, Colorado, December 24, 2012.

Project Infrastructure

The Silver Wing Mine is located approximately 10 miles (16 km) from Silverton on County Road 2. This highway is a two-lane all weather road; it is paved for about 2 miles (3.2 km) outside of Silverton and then proceeds as a good quality unsurfaced road suitable for haul trucks for the remainder of its length up the Animas Valley. The road to the Silver Wing property leaves County Road 2 at an elevation of approximately 10,429 feet (3,179 m) and parallels County Road 2 for 780 feet (240 m) and then turns east, crossing the Animas River on the Silver Wing’s highway bridge and then heading south, ending at the load out a total distance of 1,210 feet (368 m) from County Road 2. Ore will be hauled by truck from the Silver Wing load out along County Road 2 a total of 5.7 miles (9.1 km) to the Pride of the West Mill. Seven avalanche chutes cross County Road 2 in the interval from the Silver Wing to the Pride of the West Mill. An avalanche control plan will be utilized to maintain safety and minimize haulage interruptions due to avalanches. Concentrates from the Pride of the West Mill will be trucked via County Road 2 to Silverton and then over US Highway 550 (Million Dollar Highway) approximately 60 miles (97 km) to the rail head in Montrose where they will be shipped to the appropriate smelter by rail.

Electrical power is not available at the mine site and will have to be supplied initially by a 150 kW generator. This area is served by a cooperative electric utility, the San Miguel Power Association, Inc. The project plan includes extending an existing 25 kV line from its present terminus at the abandoned townsite of Eureka two miles (3.2 km) to the Silver Wing Mine. An electrical substation is planned for the mine site converting the 25 kV transmission line power to 4,160 V/480 V secondary electrical service for the mine. A cost estimate for this transmission line extension has been provided by the electric utility.

Electrical power at the mine site will be supplied by the substation. All underground electrical power needs of the Silver Wing Mine will be supplied by a 4,160 V line to be extended underground from the substation through the mine adit. Electrical substations (4,160 V/480 V) will be situated underground as needed. Compressed air will be piped into the Silver Wing Mine through the Silver Wing Tunnel portal from an electrically-powered compressor located in a new building on the mine site. Phone service will be extended via land line to the mine site and will be supplied to each building on the site.

Environmental Studies and Permitting

Environmental Studies

Permitting

A number of permits will be required pursuant to the reopening of the Silver Wing Mine and the conduct of mining operations:

Air Quality Permit – Colorado Department of Public Health and Environment, Air Quality Control Division Fugitive dust emissions from mining operations including ventilation fan discharges from the mine are covered by this permit. Dust from truck haulage on the public highway is not considered in this permit.

2.	Land Use Permit – San Juan County A land use permit issued by San Juan County is required. Mining is a “Use-by-Right” in the county. Permit issues will address the use and maintenance of public roads and mitigation of natural hazards.

Mined Land Reclamation Permit – Colorado Division of Reclamation, Mining and Safety The Mined Land Reclamation Permit (MLRP) covers the life of the mine and requires approval of the basic overall mine operating plan and a reclamation plan. It includes a bond for reclamation and eventual closure of the mine.

Notice of Intent – Colorado Division of Reclamation, Mining and Safety The Notice of Intent (NOI) to conduct prospecting activities is needed to conduct the work necessary to re-enter the Silver Wing Mine, to conduct initial mapping and sampling, to assess underground conditions, and to conduct drilling operations. This permit requires a reclamation bond which can be combined with the final Mined Land Reclamation Permit bonding requirement. This permit allows initial work to be conducted while the Mined Land Reclamation Permit is pending. It includes a site-specific financial warranty for work to be conducted under the NOI.

NPDES Mine Water Discharge Permit – Colorado Department of Public Health and Environment, Water Quality Control Division An NPDES discharge permit may be required for a small (approximately 30 gallons per minute) historic discharge from the main adit. Existing maps of the workings indicate that a single fracture beyond the ore zone may be responsible. Initial work underground will investigate the possibility of grouting this source thereby eliminating the need for this permit.

6.	Stormwater Discharge Permit – Colorado Department of Public Health and Environment, Water Quality Control Division the Silver Wing Mine has an existing Stormwater Discharge Permit in effect. This permit will be updated from time to time to adjust for changes in conditions at the mine site.

Capital and Operating Cost Estimates

The Company has developed the following capital and operating cost estimates.

Should the contracts to purchase the Silver Wing and Champion Mines and project-level funding be completed, additional funding details shall be added here.

Capital Costs

The physical plant at the Silver Wing requires refurbishment of the existing mine workings and surface structures and the construction of some new facilities at the mine site. It also requires the purchase of equipment to accomplish the refurbishment, new construction, and conduct of mining operations.

Surface Facilities

Item	Est. Cost
Repair existing buildings	$	10,000
Office, warehouse, change room		70,000
Air compressor and generator building		15,000
Communications equipment building		10,000
Bride repair and roads		35,000
Ore bin construction		20,000
Waste dump construction		15,000
Water treatment plant		100,000
	$	275,000

Mine Workings Refurbishment

Item	Est. Cost
Cleanup main crosscut adit	$	10,000
Construct explosives magazines		15,000
Repair raise to sublevel		10,000
Repair and replace track		15,000
Air and water piping		20,000
Ventilation ducting		10,000
Underground power line		15,000
	$	95,000

Mining Equipment

Equipment to establish and conduct mining operations on the site is listed below.

Item	Quantity		Est. Cost
Air Compressor		1	$	120,000
Air Tugger		2		9,000
Backfill Equipment	1 lot			140,000
Battery Charger (4 ton)		2		30,000
Battery Charger (6 Tom)		1		18,000
Battery Locomotive (4 ton)		2		112,600
Battery Locomotive (6 Ton)		1		90,000
Electrical Switchgear	1 lot			10,000
Flat Car		2		8,000
Fuel Storage Tank		1		1,000
Generator		1		30,000
Jackleg Drill		6		42,000
Loader		1		90,000
Main Rider Hoist		3		90,000
Mine Fan No. 1		1		3,750
Mine Fan Primary		1		30,000
Mine Fans (small)		2		10,000
Mine Light Charger, 50		1		1,950
Mine Lights		20		5,000
Mucker		1		40,000
Ore Car		10		75,000
Power Transmission Line and Substation		1		250,000
Slusher		3		60,000
Stoper Drill		6		42,000
Substation		1		30,000
Switchgear (used)		1		8,700
Transformer 480V/120V		1		1,000
Truck, Flatbed		1		30,000
Truck, Pickup		3		90,000
Water Pump		1		2,000
			$	1,470,000

Operating Costs

A number of different costs must be considered in determining an operating cost for the Silver Wing. The costs of mining, milling, concentrate shipment, and smelting all enter into the determination of profitability for the project. These costs have been estimated for mine operation and production of 5,000 tons per month. Milling costs have been estimated for a total mill throughput of 10,000 tons per month and the production of 1,000 tons of concentrates per month approximately 10:1 concentration ratio). Although concentrate shipment costs involve a truck haulage component (mill to rail head) and a ton-mile rail haulage rate that will have to be negotiated with the railroad, an overall average shipping cost per ton has been compiled and included. Smelting costs will vary with the type of concentrate and the selected refiner, but have been based on an assumption of 12,000 tons annual production of concentrates from mine production of 60,000 tons and smelting costs of approximately $200 per ton of concentrate. These component costs all have been reduced to a “per ton” basis and are listed below.

Component	Cost per Ton ($)		Annual Cost ($)
Mine Operating Costs
Mine Labor	$	16.67	$	1,000,200
Materials and Supplies		10.50		630,000
Truck Haulage (Mine to Mill)		5.50		330,000
Electrical Power		4.83		289,800
Mine Maintenance		2.50		150,000
Sub total	$	40.00	$	2,400,000

Mill Operating Costs
Mill Labor	$	13.76	$	825,600
Tailings Disposal		6.12		367,200
Water Treatment and Recycling		5.00		300,000
Reagents		4.05		243,000
Electrical Power		3.85		231,000
Grinding Media		3.37		202,200
Maintenance Supplies		2.70		162,000
Maintenance Labor		2.50		150,000
Heating Fuel		0.45		27,000
Sub Total	$	41.80	$	2,508,000

Transportation
Concentrate trucking and rail shipment	$	3.20	$	192,000

Smelting and Refining Costs
Concentrate Refining and Metal Recovery	$	40.00	$	2,400,000

Other Costs
Regulatory and Environmental Costs	$	5.00	$	300,000

Total	$	130.00	$	7,800,000

Adjacent Properties

Property adjacent to the Silver Wing is public land administered by the U.S. Bureau of Land Management. There exist numerous inholdings of patented lands previously used for mining but currently inactive. No adjacent or nearby private lands are in mineral production at this time.