Tonogold Resources, Inc. - Strategy

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Develop Reserves Through Exploration. With the price of gold above $1000 per ounce and the price of silver over $16 per ounce, junior exploration companies provide a strong investment opportunity. Junior exploration companies can focus on previously uneconomic or unknown precious metal deposits that have now become attractive targets. Building reserves through exploratory drilling can cost less than $5 per ounce. Market valuations of public exploration companies range from $50 to $200 per gold ounce of proven and probable reserves with an average of $140 per gold ounce (these values are subject to change depending on market conditions). Exploration is currently the most economically sound way to increase shareholder value by building reserves.

Always Be Prospecting. As a minerals exploration company we intend to find and advance new properties. In order to find new properties, we must constantly explore in the field and evaluate areas which seem likely to contain gold and silver deposits. We use the latest technology including satellite imagery, geophysics, geological information systems, computerized mapping, GPS, and current theories on the structural controls of mineralization to develop our list of prospects. Once this is done we send our highly qualified geologists out into the field to inspect the area, take samples, and create more detailed maps as they develop coherent geologic models. We start negotiations with the owner for a lease/purchase or stake open ground only for those properties which satisfy our criteria. In this way, we intend to keep our pipeline of projects full and be a "property rich" company. Also, with this approach, we take a look at the cost of acquiring versus staking new properties as well as consolidating a mix of existing claims and new claims. Then with the new asset information we develop a detailed strategy to advance the asset by further development, farm-out or sale.

Evaluate Properties for Good Logistics, Geology, Mining, Metallurgy, Engineering, Ease of Permitting, and Economics. Every potential property is evaluated on the basis of becoming an eventual producing mine. Logistics, geology, mining, metallurgy, engineering, and permitting issues all affect the prospective profitability of each property and must be considered carefully. Our management team evaluates each of these factors in concert with our Technical Advisory Board and our outside consultants. By subjecting our prospect properties to a rigorous evaluation, the results of our exploration investments can be maximized.

Focus on the Southwest and Develop Area Expertise. Nevada is home to many world-class gold and silver deposits. Most of the recent exploration effort has concentrated on northern and central Nevada. However, prior mining booms in Nevada have occurred in southern Nevada. The Tonopah area, in particular, was the location of the second major mining boom in Nevada during the 1900 through 1930 era. Other junior mining companies have prospered by putting together district level land packages and acquiring specific expertise on localize geological structures and characteristics. Southern Nevada has potential for both high grade vein deposits and disseminated bulk deposits. The Round Mountain Mine in Nye County, perhaps the premier operating gold mine in Southern Nevada has both high grade veins and a large, low grade disseminated deposit. Other prolific precious metal districts in the area include Divide (gold and silver), Silver Peak (gold) and Goldfield (gold) all of which provide numerous exploration opportunities. As we develop a strong exploration expertise in southern Nevada we can gain a competitive advantage by our thorough understanding of the local geology, local mining history, and connections with the community. Many properties are currently abandoned that were drilled out and developed in prior gold boom cycles.

Core versus Non-Core Properties. Once a property has met our initial criteria and warrants further investigation, we begin a further series of tests in order to determine whether it will be a core asset of the company, a non-core asset, or be abandoned altogether. A core asset is one that has a high probability of becoming a producing mine, is in our area of interest, or fits within our geological and operational capabilities. A non-core asset is one that has either less attractive geological characteristics, is too far from our other properties, or is beyond our current financial and technical capabilities. We only abandon properties if we believe they have no merit or if the cost of carrying them exceeds their likely value to the Company.

Move Core Properties into Production. Our eventual goal is to become a producing mining company either ourselves through mining contractors or in partnership with a larger mining company. Also, we will perform thorough research and feasibility studies in order to verify the economic and engineering assumptions underlying any potential operation.

Market Non-Core Properties. While Tonogold plans to develop its core properties with its own capital in order to maximize our ownership position, non-core properties may be farmed out to other junior mineral exploration companies. The Canadian financial markets list the majority of the junior mineral exploration companies in the world. The Canadian markets are designed to allow investors to finance and speculate on properties in all stages of development -- especially early stage properties. Only the most senior and well-financed of these companies have Nevada operations and capabilities. Tonogold will use its presence in the area and local connections to find properties with exploration or development potential that could be leased, joint ventured, or sold at a profit to these Canadian junior companies. The goal will be to generate cash flow, obtain options or stock in public companies, and jointly develop the most interesting properties without expending our own capital.

Use Senior Mining Executives. Tonogold has aligned itself with several key executives and professionals with established track records of success. We plan to expand our advisors to include additional major technical and non-technical disciplines in the mining industry. By working with senior mining executives we intend to access extensive business networks with deal sources, financial contacts, knowledge, and strategic perspectives.