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should be to the southeast where documented gold shows are
concentrated;14 and (3) the onsite sample preparation and
assaying methods should be carefully evaluated. As a result of
Mr. Cruson’s recommendations, petitioner abandoned the claims
covered by the Tinnell Prospect. Thereafter, petitioner devoted
his attention to the Quartette Mine.
E. Quartette Mine
From 1991 through March 1996, petitioner pursued the
development and exploration of the Quartette Mine near
Searchlight, Nevada. The Quartette Mine was owned by the Miller
family.15 The Millers were interested in having petitioner lease
their mine so that petitioner could transport rock from the
Quartette Mine to his mill site where it would be crushed and
processed.16
Petitioner hired Mr. Cruson to evaluate the Quartette Mine.
Mr. Cruson prepared a report, dated December 10, 1993, containing
six conclusions and five recommendations. Significantly, Mr.
14This area was located near petitioner’s mill site (also
known as the Roman mine site) and represents the bulk of
petitioner’s claim area.
15L.R. Tinnell was married to one of the Millers. They were
divorced by 1993 but remained relatively close.
16In November 1993, petitioner formed Complex Resources
Development (CRD) to take advantage of the development of the
Quartette Mine and petitioner’s claims. CRD was intended to be
the operating company of a future joint venture controlling the
Quartette mining operations. CRD never became active and never
filed a Federal income tax return.
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