Sable has the Mill, Now It Must Prove the Silver and Gold to Feed It
By Kevin Michael Grace
Mel Rahal sold 10 dore bricks on Tuesday. Three percent gold and 97% silver. Total revenue: $580,000. Not bad for a day’s work. That’s the advantage you get from owning your own mill, and the President and CEO of Sable Resources Ltd is one of the very few in British Columbia who does.
Sable has other advantages: positive cash flow and 58 square kilometres with considerable known mineralization. Its disadvantages are that the company estimates it currently has just one year’s worth of mill feed; Hydro power is 25 miles away; equipment and workers must be flown in; and thus it spends $1.4 million annually on fuel.
These are challenges that would tax any company’s management. For years Sable had been pretty much a one man show. However, recently, Rahal has brought more depth to his bench.
Rahal has a proprietorial attitude toward Sable, but he comes by it honestly. He explains that when he took over the company 20 years ago, “I put up 600 grand, and my buddy ran off with the money.” To this day, he explains, “A lot of the money that’s gone into this has come from me.”
It’s hard for any man to wear so many hats, even one as experienced and competent as Rahal. He reports, “Normally when I come down to the office in the morning I’m dealing with problems.” Last month, for instance, production was severely impacted when the mine’s 3.5-yard scoop broke. “Nobody thought to order the parts, and they had to come from Sweden. So there was two weeks gone. Meanwhile, we had a two-yard scoop trying to feed a 250-tonne a day mill and couldn’t do it.” And he interjects during our interview, “I’m going to have to get off this call, and we’re going to have to buy another pump.”
Rahal confesses that his preoccupation with day-to-day operations “precludes me from doing the other part of the business: promotion and getting the facts out.” Sable does produce silver and gold, but news is thin on the ground. It published 10 press releases in 2006, nine in 2007, three in 2008, five in 2009 and only four so far in 2010. This dearth of information has left Sable a largely unknown quantity—it is not uncommon for no shares to trade on any given day, and its stock price has yo-yoed between $0.085 and $0.415 in the last year. Its market cap, as of November 25, was $9.48 million.
Sable’s Baker Mill commenced rehab and development in 2008. Since then, Rahal has continually upgraded it, determined to “have another piece of equipment that can do the job if the first one goes down.” Baker produced $925,000 of gold equivalent in October, and $900,000 in September; operational costs are $600,000 monthly. Sable has a cash position of $700,000.
Rahal thinks Sable’s share price is “ridiculous.” He argues, “If you had to build that mill now, it would cost you $80 million, and it would take you five years to get approvals.” If you could get them, given the level of opposition from environmentalists and Indian bands to mining operations in the Duncan Lake area. In 2007, Northgate Minerals Corporation wrote off its seven-year, $32-million Kemess North project, 30 kilometres south of Sable, in anticipation of the government refusal that followed in 2008.
If you had to build our mill now, it would cost you $80 million - Mel Rahal
So Sable remains as one of only two producers in the region, and it faces a crisis and an opportunity. The crisis is the “abuse” Rahal admits he has suffered for Sable’s share price. The opportunity is the “window that has been opened with the price of silver and gold.” Rahal says he is committed to action. “We’ve got to hire somebody to assist me here in the office,” he admits. In September, he hired an investor relations company and promises the market can expect regular press releases.
Sable does not have a 43-101 resource estimate. Since 1990, 257 holes have been drilled. Assays from the Creek Zone have run as high as .0197 gold oz/t and 15 silver oz/t. “The potential for the area is quite large,” Rahal summarizes.
Since September 2010 the company has been press releasing monthly production totals. Rahal seems confident enough. He promises “a major exploration program next year” and says just watch us.”