Thursday 27th October 2016

Resource Clips

August, 2011

New Milenio, New Hope

August 30th, 2011

Cream is Born Again in Mexico

By Ted Niles

The turnaround in the fortunes of Cream Minerals demonstrates that what is undesired isn’t always necessarily undesirable. In the fall of 2010 the company was in possession of a promising silver-gold asset in Mexico’s Nayarit State, but it was—in President and CEO Michael O’Connor’s words— “chronically underfunded, with about $1.8 million in debt,” making any progress there nearly impossible. So when Endeavour Silver launched a hostile takeover bid in October 2010, it is doubtful that anyone at Cream was thinking of the potential upside. But not only did enough of the moribund company’s shareholders feel they were being low-balled that the bid was withdrawn two months later, Cream’s survival resulted in a $6 million bought-deal private placement. Suddenly its debts were paid, and it had a tidy sum of cash.

Cream was then able to initiate in February 2011 a 20,000-metre drill program on its flagship Nuevo Milenio project. Located 27 kilometres from Tepic, the capital of Nayarit, it consists of 2,560 hectares and has a 2008 NI 43-101 inferred resource estimate of 41 million ounces silver at an average grade of 251.1 grams per tonne and 271,482 ounces gold at an average grade of 1.7 g/t.

Cream is Born Again in Mexico

“The objective of the current drill program,” explains O’Connor, “is to produce enough data to do another 43-101 and upgrade as much of the inferred to indicated as we can.”

O’Connor continues, “When we move from the side and down to the floor of the caldera, there are four mineralized zones that we know of [i.e. Dos Hornos 1, Dos Hornos 2, Veta Tomas and Once Bocas]. Of those four, three are good exploration targets. The fourth one comprises part of the inferred mineral resource, so we’re drilling that infill at 25-metre spacing.” Exploration drilling will consist of a minimum of 6,000 metres at 50-metre spacing, which O’Connor anticipates will be sufficient for a new inferred resource.

Infill drilling at Dos Hornos 2, reported August 18, includes assays of 103.17 g/t silver and 0.97 gold over 17.5 metres, 115.18 g/t silver and 0.73 g/t gold over 8 metres, 73.24 g/t silver and 0.68 g/t gold over 10 metres and 42.67 g/t silver and 0.21 g/t gold over 13 metres. Step-out drilling at Dos Hornos 1 returned June 21 assays of 151.4 g/t silver and 0.39 g/t gold over 4.6 metres, 105.32 g/t silver and 0.65 g/t gold over 5 metres and 140 g/t silver and 0.83 g/t gold over 5.2 metres. Of the former results, O’Connor comments, “We’re happy with them. If people were to look at these assays and the 43-101 for Dos Hornos 2 and average them out, you’re going to be pretty close to what we reported in the 43-101.”

When you get up into the 150-million-ounce and higher range, with reasonably good grades and good metallurgy, these kinds of projects become attractive to larger producers —Michael O’Connor

The current resource is contained within only 600 hectares of the property. O’Connor points out that Nuevo Milenio offers a number of other as yet untested targets over its five kilometres of mineralized strike length. “If we go a little bit further to the west, further down the caldera floor, there are two zones,” he reports. And both present “blue sky” exploration targets.

As to the timeline for an updated resource at Nuevo Milenio, O’Connor presents two scenarios: “If we’re going to do a 43-101 on just the inferred, we’re probably looking at the end of October 2011. If we decide to do a 43-101 on everything—pull in the inferred and pull in the exploration data and just have a new project-life 43-101—I think that would push us towards the end of December 2011, early January 2012.” He relates, “A couple of geologists from ACA Howe are doing a property visit. They’re going to look at the infill work and the exploration work done to date. I’ll chat with them and we’ll make a decision as to whether or not we do two [resources] or one big one. We’re probably thinking about doing one big one.”

In the event that Cream does the “big one,” O’Connor expects that the next step would be a preliminary economic analysis. “At the same time we’ll map out another 20,000 metres of drilling,” he adds. “I think it might take 50,000 metres overall to get to where we’d want to be.”

Cream is keeping its long-term options open. The company’s metallurgical work suggests very positive recovery rates, and the project has good access to infrastructure—water, power, rail and the Tepic airport all within 14 kilometres—promising low-capital costs. O’Connor enthuses, “The capital costs could be under $200 million. But when you get up into the 150-million-ounce and higher range, with reasonably good grades and good metallurgy, these kinds of projects become attractive to larger producers. There is the possibility that we could put it in play, create an auction, and see what we can get, or somebody may just show up and make an offer.”

O’Connor concludes, “When we were flat broke and carrying $1.8 million in debt, we looked at auctioning off the property for $5 million cash up front and an additional exploration commitment. We had several companies looking at the project—Minco Silver, for instance. At the same time, Endeavour Silver launched its hostile takeover bid. Logically, what all that tells me is that Nuevo Milenio is a high-potential project.”

Cream Minerals has 152.2 million shares currently trading at $0.155 for a market cap of $23.6 million.

Sabina VP Peter Manojlovic on Nunavut gold assays of 10.19 g/t over 33m

August 30th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningSabina Gold and Silver Corp TSX:SBB announced assays from its Back River Project in Nunavut. Results include 10.19 g/t gold over 33 metres (including 27.16 g/t over 9 metres), 71.3 g/t over 1.5 metres, 5.14 g/t over 16 metres (including 11.31 g/t over 7 metres) and 3.35 g/t over 14.7 metres (including 6.45 g/t over 4.5 metres).

VP Exploration Peter Manojlovic tells, “The Back River Project was acquired by Sabina in the middle of 2009 from Dundee Precious Metals, and it has a number of properties. The two most important ones are Goose and George. Goose hosts four known deposits—the Goose deposit, the Llama deposit, the Umwelt deposit and the Echo deposit. The George property has, I believe, four or five zones. Really the focus has been on the Goose property, but we have done work outside of that on the George property and also an additional area just to the west that’s called Wishbone.

“We’re quite excited about the results that we’ve released. Certainly the highlight was the hole at Umwelt that returned 13 g/t over 24 metres and, perhaps more importantly, it had just over an ounce of gold over 8.5 metres. The deposit now extends from, basically, near surface at the north down to about 650 metres at the south end, which is where that hole is. It demonstrates the incredible continuity of the deposit over 1.4 kilometres. The thickness is very consistent as well. So we’re extremely pleased with that result.

We hope to complete our drilling and get those resources and begin a PEA of the project this fall—Peter Manojlovic

“Right now we’re still drilling up there,” continues Manojlovic, “and we will be until the end of September. We have nine drills currently turning. We have five drills working on the Umwelt itself—we’re expanding that deposit. Last year we drilled about 550 metres at the top end of that deposit, brought that to a resource, and this year we’re drilling to get the additional mineralization to the south. Once we’re done at the end of September, we’ll be working on doing the resource from that 550 metres down to however deep we take it by the end of September. We would hope to get [the updated resource] out by 4Q.

“We hope to complete our drilling and get those resources and begin a PEA of the project this fall. We see that as having a high likelihood of being positive. We would progress as rapidly as we can once we reach that stage.

“We’re extremely excited about Back River. Sabina has been working on the project for about two years, and in those two years we’ve made a number of new discoveries, the most significant of which are the Umwelt deposit and the Llama deposit. We’ve increased resources there quite substantially, so we have very high confidence that we will continue to increase resources and bring the project to the mining stage.”

Regarding Sabina’s other Nunavut project, Hackett River, Manojlovic says, “Earlier in the year, in June, we completed the sale of Hackett River to Xstrata Zinc. We’re working on a release for Hackett River to come out shortly. We’re still in the process of transferring the titles to the various licences to Xstrata. So work on Hackett itself has been on a bit of a hiatus for the last two months while we complete that process. It’s fairly lengthy. Coupled with that, most of the regulators in Nunavut are enjoying summer holidays, as we all are, so it makes the process slower. But it is proceeding. We are confident that the transaction will take place.”

Manojlovic concludes, “We’ve always enjoyed working in Nunavut. Most of the senior management has spent numerous years in the north, working on various projects. In fact they were involved in permitting the Hope Bay project when they were with Miramar Mining Corporation. So we’re very comfortable working in Nunavut, and we continue to have good relations there.”

View Company Profile

Peter Manojlovic
Vice President of Exploration

by Greg Klein and Ted Niles

Southern Arc VP Rhylin Bailie on Indonesia gold assays of 4.2 g/t over 26.2m

August 25th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningSouthern Arc Minerals TSXV:SA announced results from the Pelangan Prospect of its West Lombok Project in Indonesia. Assays include 4.2 g/t gold over 26.2 metres (including 30.1 g/t over 1.3 metres), 1 g/t over 15.2 metres, 1 g/t over 15 metres, 1.1 g/t over 10.1 metres and 4.1 g/t over 1.3 metres.

VP Communications Rhylin Bailie tells, “We have four projects in Indonesia. Three of them are joint ventured with major mining companies Newcrest and Vale. West Lombok is our primary project and that’s where we’re focussing our exploration efforts this year. We own 85% of it—the rest is in partnership with Indonesian parties. We’ve got a 30,000-metre drill campaign, focussed on West Lombok. Previously it had been explored by Newmont, and they had delineated some gold and porphyry gold over a district-scale potential. So what we’re hoping to prove out is the strike length.

“We’re getting very good drill results, so we know we’ve got some good grades there. We just need to know how big it is—what’s the strike and what’s the depth. The whole property carries on for 13 kilometres, and it’s seven kilometres wide. So we’re doing a lot of drilling this year. We’ve been doing most of the drilling so far on the Pelangan property—where the results were from today—then we’re going to start up in September focussing on the Mencangahh property. Then we’re also doing a lot of mapping and other studies to see if those two deposits may actually converge.

“We’ve had some exceptionally high-grade hits, and we’ve had some good-grade hits,” Bailie continues. “This is widely-spaced drilling, so the near-term goal is to get a resource estimate completed next year. It’s probably going to be an inferred and perhaps an indicated estimate because of the spacing of the drilling.

We’ve had some exceptionally high-grade hits, and we’ve had some good-grade hits. This is widely-spaced drilling, so the near-term goal is to get a resource estimate completed next year—Rhylin Bailie

“We’re hoping to complete an NI 43-101 compliant resource estimate for both Pelangan and Mencangahh in the first half of next year. That’s our target, and that’s why we’re doing so much drilling this year.

“Production is certainly our long-term plan. But that’s a long way away at this point. Probably in a partnership, but right now we’re happy being the owner and operator of this property.

“Indonesia’s been an interesting place to work. There’s huge opportunity there; the geological potential is incredible. There are just so many deposits there—it’s home to Grasberg, which is the world’s largest open pit mine—and there are mineral deposits everywhere you go.

“We were one of the first companies to re-enter Indonesia after the issues it had historically. I think the key thing for us is that we’ve put together a team of people that have lived and worked in Indonesia for pretty much their entire careers. Mike Andrews, our President and COO, has spent his entire career focused in the Indonesia-Asian Pacific region. Hamish Campbell, our Executive VP, and who is in charge of all the exploration programs down there, has actually lived in Indonesia for about 23 years. These are guys that speak the language; they’re comfortable with the system; they have the connections and the experience and the insight into the intricacies of working there that will make this project successful.

“We didn’t just take a North American team and parachute them in,” Bailie concludes. “You’d have difficulties doing that. We have an on-the-ground team and a management team that have an incredible amount of experience. And we’ve also put together advisory boards that have decades of experience in Indonesia. I think that’s the key difference between Southern Arc and some of the other companies working down there.”

View Company Profile

Rhylin Bailie
VP of Communications/Investor Relations

by Greg Klein and Ted Niles


August 24th, 2011

Pretium Hits Bonanza Grades in BC

By Ted Niles

Gold and silver equities continue to disappoint, but Pretium Resources and its Brucejack and Snowfield gold-silver projects are a conspicuous exception. Pretium—or Pretivm as the company prefers it to be spelled, the better to evoke the word’s Latin meaning of ‘value’—made its initial public offering of $6 per share in December 2010. Eight months later, shares have risen 48%. On August 12, Casey Research’s Louis James lauded Pretium as “a clear value proposition.” On July 18, analyst Brian Quast announced that CIBC World Markets had initiated coverage of the company, commenting, “Pretium represents one of the best call options in the gold developer space.” And while Face the Analyst’s Jay Taylor can’t actually be seen swooning during his July interview with Bob Quartermain, it should be noted that the camera isn’t always on him.

How to explain Pretium’s highly auspicious rollout? Louis James gives us the first reason: Pretium has “the right people in place.” The most important being Bob Quartermain, Pretium’s President and CEO. Quartermain earned his reputation with Silver Standard Resources—a company which, when he joined as President in 1985, had a market cap of $1.5 million; this exceeded $2 billion when he retired in 2010. Most notable of his accomplishments at Silver Standard was the development of the Pirquitas Mine in Argentina. Pirquitas started commercial silver and tin production in December 2009 and ranks among the largest silver mines worldwide. Notice, too, that Quartermain’s current management team at Pretium includes many of his Silver Standard colleagues.

Pretium Hits Bonanza Grades in BC

The second reason, as you might have guessed, is the resource. Pretium acquired the Brucejack and Snowfield projects—both located 65 kilometres north of Stewart, BC—from Silver Standard with the proceeds of its December IPO, and the properties’ already impressive resources were updated by Pretium in February 2011. At a 0.3 g/t cut-off, Brucejack contains 8.18 million ounces gold and 116.2 million ounces silver measured and indicated, and 12.56 million ounces gold and 151.2 million ounces silver inferred. At the same cut-off, Snowfield contains an astonishing 25.92 million ounces gold, 75.8 million ounces silver and 2.98 billion pounds copper measured and indicated, as well as 9.03 million ounces gold, 50.9 million ounces silver and 1.1 billion pounds copper inferred.

Thus was Pretium able to IPO at the price that it did. Quartermain explains, “In consultation with our financial advisors, the suggestion was that this was a reasonable share price. It’s a function of the value we had in it. The asset, with the 40-somewhat million ounces of gold justifies the price, and the market was willing to pay for it.”

He continues, “With the Brucejack and Snowfield projects we have one of the world’s largest undeveloped gold projects—about the fifth-largest in North America. That’s what we wanted: a large project that gave our shareholders insurance in a rising gold environment. As gold prices continue to stay strong and improve there will be more recognition coming to Pretium because of the large in-ground resource we have, and the potential for the development of a small high-grade project going forward.”

Brucejack, particularly that “high-grade project” contained within it, is now the focus of Pretium’s attention. A June 2011 preliminary economic assessment of the high-grade resource estimated production of 173,200 ounces gold and 1.12 million ounces silver annually for the first 10 years, with a total mine life of 16 years. The pre-tax net present value of the resource was estimated at $662 million, with an internal rate of return of 27.1%—assuming a gold price of $1,100 per ounce and a silver price of $21 per ounce. Capital costs would be $281 million.

The importance of the high-grade aspect of the project cannot be overemphasized, as it offsets the drawbacks of Brucejack’s location. As Louis James told the Gold Report, “I had been aware of Snowfield/Brucejack when it was still in Silver Standard. We never bought because we just weren’t sure a mine would ever actually get built in this remote part of the world, especially with the low grades. But when you have really high grades, you can build a mine anyplace. Places like Eskay Creek were once very remote, but average grade was over an ounce per ton. That’s what it took to operate in that area. Grade solves a lot of problems, and Brucejack certainly has that potential.”

With the Brucejack and Snowfield projects we have one of the world’s largest undeveloped gold projects—about the fifth-largest in North America —Bob Quartermain

Pretium is undertaking a 70,000-metre drill program, consisting roughly 80% to 90% of infill drilling, which Quartermain expects to be finished no later than October. He says, “Once all that drilling is completed, we will then go through it and do a new resource calculation; both a high-grade resource calculation of the Brucejack area, as well as a resource on the bulk-tonnage, one-gram material surrounding the high grade. With those two resources, which we hope to have 4Q 2011 or 1Q 2012, we would go back and update the preliminary economic study on Brucejack.”

August 22 assays from Brucejack’s Valley of the Kings zone include 2,810 grams per tonne gold and 1,030 g/t silver over 0.5 metres and 1,094 g/t gold and 263.5 g/t silver over 2 metres. August 11 assays include 6,670 g/t gold and 3,630 g/t silver over 0.5 metres, 1,640 g/t gold and 423 g/t silver over 0.5 metres and 1,200 g/t gold and 686 g/t silver over 0.5 metres. July 27 assays included 4,060 g/t gold and 1,660 g/t silver over 0.5 metres and 1,070 g/t gold and 255 g/t silver over 0.5 metres. June 8 results included one interval of a whopping 18,755 g/t gold and 9,312 g/t silver over 0.6 metres. Quartermain remarks, “We’re very encouraged by the results. We continue to have high-grade, visible-gold hits in the Valley of the Kings. They are showing that we are getting some continuity of this high-grade mineralization, which will certainly help in supporting a high-grade underground operation at Brucejack.”

Regarding production, Quartermain admits that Snowfield would require “a much bigger partner.” But as for Brucejack, “With the management team that has come over in part from Silver Standard—and with the work we did at Silver Standard previously in building the Pirquitas mine—the construction and building of the high-grade opportunity at Brucejack is certainly something that we have the capacity to do.”

“If someone were to approach us about the opportunity of partnering up in the high-grade, we’d certainly look at that,” Quartermain says. “We’ll see how the project evolves.”

Quartermain concludes, “I’m very encouraged. I entered into negotiations with Silver Standard to buy the property in October and basically purchased it in December. We’ve been working on it a little more than six months, and during that time we’ve increased resources by 35% and have had some of the highest gold intersections on the property to date. And, fortunately, with the money we raised on the IPO and a small flow through we did in July, we have all of the cash that we need to drill the project this year and hopefully advance it almost through to feasibility next year. We don’t have to go back to the market in the near term, so we can manage shareholder solutions. In that respect, we’re protected from the volatility of the market.”

At press time, Pretium had 86.9 million shares trading at $9.85 for a market cap of $855.6 million.

Trade Winds President Ian Lambert on Ontario gold assays of 7.18 g/t over 8.9m

August 24th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningTrade Winds Ventures Inc TSXV:TWD in joint venture with Detour Gold Corp TSX:DGC announced results from their Block A Project in northeastern Ontario. Highlights include 7.18 g/t gold over 8.9 metres (including 62.5 g/t over 0.7 metres), 3.08 g/t over 20.8 metres (including 20.69 g/t over 1 metre), 11.12 g/t over 5 metres (including 49 g/t over 1 metre) and 10.34 g/t over 3.9 metres (including 39.6 g/t over 0.8 metres).

The two companies each hold a 50% interest in Block A, with Trade Winds acting as project operator. Block A has a 2010 in-pit resource estimate of 1.92 million gold ounces indicated and 762,000 gold ounces inferred for a total of 2.69 million gold ounces, at a base case of $1,000 per ounce.

Trade Winds President/CEO Ian Lambert tells, “In the first half of 2011 we drilled 30,000 metres, 75% of which was in the current pit shell and the remaining 23 to 25% outside, mostly exploring to the west, north and south of the pit area. The results we published this week include drilling to the south and the west. A total of 16 holes were outside the existing pit shell. The balance was within the pit shell. The results that we’ve received from all the assays are very consistent with the previous experience we’ve had. In other words, any time we drill a hole into the pit area in a previously undrilled section, we’re finding the same sort of mineralization that we’ve experienced in the other holes that surround the new hole. So there are no big surprises for us. It’s all very consistent; it’s all going to add new ounces to the resource total. We’ll be updating our resource estimate at the end of the year.

“We’re very encouraged by the results because they’re continuing to confirm that the mineralization is prevalent throughout the existing pit shell,” he says.

On completion of the feasibility study, Detour has an option to elect to be operator. Now that would make eminent sense to us because they’ll already be running their operation next door—Ian Lambert

“We’re embarking on a further 20,000-metre drilling program, and in addition we’re going to be processing up to 10,000 metres of core that we previously drilled that hadn’t been sampled. So we’ll be adding the 30,000 metres from the first half of the year, and the 30,000 metres from the second, to the resource update at the end of the year. That represents almost 50% of what we’ve done to date. In one year we’ve increased our data by 50%. Virtually every hole that we’ve drilled is in an area that doesn’t currently contain a resource. So we’re expecting that this will add incremental ounces in the inferred and perhaps the indicated category for most of the results.

“We hope to be able to schedule the preliminary economic assessment for early next year,” Lambert adds. “The work we’re doing should give us sufficient data for the resource update and to calculate the new pit shell based on that update. We anticipate that this will be the point where we can undertake a PEA to evaluate the strategies to put it into production.

Lambert explains, “That would mean evaluating a couple of scenarios. One possibility would be to build a standalone pit on Block A, which is the block that all this mineralization is on. Block A is a 50/50 joint venture between Trade Winds and Detour Gold, where Trade Winds serves as the operator on the exploration project.

“The other possibility would be that Detour Gold may wish to process the ore in an expanded facility that they’re already constructing to process ore from their pit directly adjacent to the east of our property. Their property will go into production by the beginning of 2013. We will evaluate whether or not we could process our ore in their facility, if they were to expand it. Otherwise we’ll build our own facility.

“We believe that 2016 production is an achievable target,” he says. “It obviously depends on a host of things—that the price of gold stays above $1,000, the permitting is available, the benefit agreements can be done with the aboriginals and so on. But 2016 is a target we believe is attainable. It gives us three years of drilling, including this year. It gives us time to do a preliminary economic assessment, a prefeasibility study the following year and the year after that a feasibility study. It then allows us a year to complete permitting and for construction. And all the time we’ll be doing the environmental impact work as well.

“On completion of the feasibility study, Detour has an option to elect to be operator. Now that would make eminent sense to us because they’ll already be running their operation next door. The majority of their staff will be mining people, and they’ll certainly have learned to mine and process ore from this region. The rock types are pretty similar between the two properties because it’s just one continuous series of zones. There’s no change of any consequence in the mineralization from one property to the next. Whatever they’ve learned about mining and processing their ore certainly can be applied to our property. So they’ll be very efficient, well staffed and completely up to speed by the time we need to operate our place,” Lambert says.

“So it would make sense for them to become the mine operator. We’re an exploration company; we want to take this to feasibility completion and then hand it over to a capable mining operator. But beyond that, everything will be 50/50 all the way, and both parties will have to pay the respective costs. I don’t think that’s going to change. By the way, nobody has any clawback rights on the other, so nobody can force the other guy to change his position.”

In conclusion, Lambert points out, “Even though the price of gold has gone to the stratosphere, the junior companies haven’t received an upgraded evaluation yet. As advanced-stage projects like ours move closer and closer to feasibility, the difference between what we’re trading at today and what it will be when we get to production is still a huge margin. That provides a lot of upside to an investor, and the downside looks pretty small. We’re so undervalued based on what we’ve already found, let alone the fact that we believe we can highly expand the number of resource ounces and increase the valuation of those ounces as we advance towards production.”

View Company Profile

Trade Winds Ventures Inc
Ian D. Lambert
or Terry McGee
Investor Relations
866.698.9187 x 228

Detour Gold Corp
Laurie Gaborit
IR Director

by Greg Klein

Bralorne COO Matt Ball on BC gold assays of 93.4 g/t over 0.6m

August 23rd, 2011

Resource Clips - essential news on junior gold mining and junior silver miningBralorne Gold Mines Ltd TSXV:BPM announced assays from its Bralorne Mine in BC. Results include 226 g/t gold over 0.3 metres, 93.4 g/t over 0.6 metres, 12.6 g/t over 1.2 metres, 4.68 g/t over 2.3 metres and 4.31 g/t over 1.3 metres.

The Bralorne Mine is located 150 miles from Vancouver. The company is re-developing the former Bralorne, Pioneer and King gold mines, which produced 4.15 million gold ounces from 1928 to 1971.

President/CEO William Kocken tells, “The Bralorne Mine of today includes the historic King, Bralorne and Pioneer mines. But we’re drilling between the King and Bralorne mines, about four kilometres that have never been explored, and also between the Bralorne and Pioneer mines, another four or five kilometres that have never been explored. We have access from the Bralorne site into King, where we drilled into the unexplored property. We’re in production right now in the BK Zone. We’re drifting to the BK North vein, where we did some drilling in 2008, and we noted it was promising. So we’ve drilled some infill holes, and that’s what we announced today. We’re going to continue drilling and see how big BK North is.

We’ll be doing more exploration drilling than had been done in the past few years, at the same time as producing from the ore bodies—and with the price of gold now, some of these ore bodies are a lot more attractive than they were in 2004—Matt Ball

“Between 2004 and 2007, we had a fair amount of problems trying to get permitting with the provincial government,” he says. “It took about two-and-a-half years to get a drill permit. There’s been a lot of improvement out there since then. We’re getting more recognition from the provincial government, and they’re helping us quite a bit.”

COO/Director Matt Ball adds, “Up to 2010 they did a lot of surface diamond drilling. There was a bulk sample in 2004 to 2005 that produced a small amount of gold. They hired consultants who recommended they stop production and continue exploration to build up the resource. But then they discovered the high-grade BK vein in 2006. They did infill drilling in 2007 and then started with mine development, which led to us producing what we’re producing right now from that one vein.

“We’re trying to keep production going at least at the scale that it’s at right now, from the resources that we have and do aggressive drilling from surface in the summer and underground in the mine during the winter. We’ll be doing more exploration drilling than had been done in the past few years, at the same time as producing from the ore bodies—and with the price of gold now, some of these ore bodies are a lot more attractive than they were in 2004.

“The resource is mostly inferred, but at the current rate of production it’s good for five years. We’re hoping to expand on that.”

Ball concludes, “The general story for Bralorne is to get it up into production as we’ve done, maintain production at the small scale that we’re at now, continue exploration and try to get back to the reserves that were left in the old Bralorne Mine when it closed.”

View Company Profile

William Kocken

by Greg Klein

Eight-fold Expansion

August 23rd, 2011

Goldgroup plans two 2013 Mexico gold mines

By Greg Klein

The metal has hit the pedal. Gold smashes record after record as it continues its 11-year run. Some analysts predict gold will surpass its 1980 historic high of an inflation-adjusted $2,300 per ounce. But are such prices enough to guarantee prosperity in the mining sector? David Fry, Corporate Development for Goldgroup Mining, doesn’t think so.

Goldgroup is in a really unique position because unlike other companies who are more senior to us, who are really taking advantage of the leverage through the price of gold, we are also creating leverage by expanding our resources—through consolidation, as well as the drill bit—and by increasing production,” he says. “Our projected increase within the next two to two-and-a half years is from 25,000 ounces per year currently to around 200,000 ounces per year.”

Goldgroup plans two 2013 Mexico gold mines

Goldgroup plans that eight-fold expansion by increasing its interest in two joint ventures and bringing them into production by late 2013. That will give the company three operating gold mines, all in Mexico.

Last week the company announced completion of a 70% earn-in on its flagship Caballo Blanco Project near the southeastern port of Veracruz. The remaining 30% is held by Almaden Minerals.

Caballo Blanco’s 2009 resource estimate shows 6.7 million tonnes grading 0.65 grams per tonne for 139,000 gold ounces indicated and 27.6 million tonnes grading 0.58 g/t for 517,000 gold ounces inferred. The resource also estimates 410,000 silver ounces grading 1.92 g/t indicated and 1.63 million silver ounces grading 1.84 g/t inferred. This resource is limited to the project’s La Paila Zone, which is open in all directions.

August 11 assays from La Paila include 0.71 g/t gold over 84.8 metres, 0.53 g/t over 94.8 metres, 0.51 g/t over 71.5 metres, 0.62 g/t over 42 metres and 0.52 g/t over 22 metres.

These assays, Fry comments, are “more of the same. They’re all around or at cut-off, which is 0.2 grams per tonne. That’s a high-sulphidation, almost totally oxidized low-grade bulk-tonnage deposit. We continue to extend the known mineralization to the south and southwest based on our recent drill results. We’re essentially just extending the ore body. The purpose of that is to revise the current 43-101 and add to the existing ounces.”

Along with the update, Goldgroup plans to begin a PEA later this year with the intention of shipping ore by the end of 2012.

It’s a fast-paced but simple project, Fry explains. “It’s run-of-mine; it’s no strip; it’s no crushing; and it’s highly oxidized ore that leaches extremely fast. It’s not expensive, and because it’s not expensive it won’t take long to get into production. We already possess open-pit heap-leach technology and experience because we have a producing mine in northern Mexico.” The new mine, he says, will add a low-cost 100,000 gold ounces a year to the company’s annual output.

It’s run-of-mine, it’s no strip, it’s no crushing, and it’s highly oxidized ore that leaches extremely fast. It’s not expensive, and because it’s not expensive it won’t take long to get into production —David Fry

Further north and close to the west coast, Goldgroup holds a 50% interest with DynaUSA in another advanced-stage gold project, San Jose de Gracia. A 2009 estimate shows an inferred resource of 3.44 million tonnes with 618,000 gold ounces grading 5.59 g/t and 1.11 million silver ounces grading 10.02 g/t.

Since then the company has drilled another 135 holes, providing data for an updated resource due 3Q 2011 with a PEA following and underground mining slated for late 2013. Goldgroup projects another 100,000 ounces a year from San Jose.

Farther north in Sonora State, Goldgroup’s 100%-owned Cerro Colorado open-pit heap-leach mine is expected to produce 25,000 gold ounces this year. The 2009 resource estimate shows 107,000 tonnes grading 0.63 g/t for 2,157 gold ounces measured, 9.6 million tonnes grading 0.54 g/t for 167,986 gold ounces indicated and 5.6 million tonnes grading 0.41 g/t for 74,177 gold ounces inferred. Cerro Colorado has been in production for seven years, with five additional years estimated. Exploration drilling continues.

The company’s only early-stage project is El Candelero, which it’s exploring under an option from its near-namesake Goldcorp. Goldgroup may earn up to 70% of this gold prospect.

Goldgroup’s team, Fry emphasizes, knows mining and knows the landscape. “[President/CEO] Keith Piggott has 14 years of experience in Mexico. He’s built two mines there already. They weren’t part of public companies, so most people don’t know about that. He has extensive experience identifying deposits and putting them into production in Australia. One of our directors, Paco [Francisco] Escandon, worked for [Vicente] Fox when he was President of Mexico. He worked for him six years; he’s an extremely well-connected guy. We have several hundred employees who work for us down there, both in the mine and at various projects. We, unlike some other companies, find operating in Mexico very good because we’ve got the track record and the history to do that.”

At press time Goldgroup had 120.3 million shares trading at $1.28, for a market cap of $156.4 million. Management owns approximately 17% of the shares, and the company has no debt and $40 million in working capital.

Another Day, another Record Gold Price

August 22nd, 2011

Resource Clips - essential news on junior gold mining and junior silver miningIn what analysts are now calling a parabolic ascent, gold reached a new record today of $1,894.80 an ounce, Bloomberg reports. “Gold is strong in any and all currency terms, and it is now entering that stage when prices go parabolic,” said economist Dennis Gartman.

Other analysts were hedging their predictions. The Financial Post quoted Dundee Wealth economist Martin Murenbeeld saying, “I suspect that there is one hell of a correction to this most recent surge in the not-too-distant future. Yet such a correction will likely depend upon policy actions that policymakers are very reluctant to take. Meanwhile the crisis is rapidly widening, indeed with a rapidity equal to the steepness of the rise in the gold price.”

Murenbeeld added that the US and European fiscal crises could push gold past $2,400 an ounce by 2013 or sooner, surpassing the inflation-adjusted record of 1980.

While gold climbed 33% this year, silver rose 41%, reaching $44.055 today. “Silver is like a beta version of gold, but I think overall the market is simply looking for alternatives,” said Dominic Schnider of UBS AG. Platinum hit a three-year high of $1,894.50 an ounce and palladium $753.

The metals’ gain resulted from currencies’ pain as the yen and Swiss franc joined the dollar in its descent. Some speculators believe Japan and Switzerland will try to boost exports by devaluing their currencies.

by Greg Klein

Gold hits $1,880 as Markets tank

August 19th, 2011

Amid increasing concerns about the global economy, gold set another record price today, Bloomberg reports. This morning’s COMEX index saw gold open at $1,854 before reaching a high of $1,880.90. It was the longest run of weekly gains since April 2007.

“Gold is the currency of the world at the moment, with the world convinced that the monetary and fiscal authorities are likely to do nothing right and everything wrong when it comes to resolving the world’s current fiscal problems,” said economist Dennis Gartman.

Job numbers and home sales in the US fell, as did stock markets across Europe and Asia, while concerns rose about sovereign debt crises.

Gold has risen 31% in 2011, its 11th year of a bull market that’s the longest since at least 1920.

“Medium term, the disorder of the global monetary system and long-term inflation threat will amplify gold’s nature as a currency and an inflation hedge,” said China International Capital Corp analyst Cai Hongyu.

A Bloomberg survey suggested gold will continue its ascent next week. But the metal has yet to reach its inflation-adjusted price of $2,300, set during the panic buying of 1980.

by Greg Klein

Knick VP Gordon Henriksen on Quebec gold assays of 14.22 g/t over 3.8m

August 18th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningKnick Exploration Inc TSXV:KNX announced results from its Trecesson Gold Property in Quebec. Highlights include 14.22 g/t gold over 3.8 metres (including 33.1 g/t over 1.5 metres), 22.69 g/t over 2 metres (including 8.13 g/t over 0.6 metres), 22.86 g/t over 1.6 metres (including 41.47 g/t over 0.9 metres) and 20.5 g/t over 1.1 metres.

VP and Director Gordon Henriksen tells, “Originally Trecesson was found by a local farmer. Noranda took a look at it in the early 1930s, and a small bulk sample was taken. There are no real results on the bulk sample; however, native free gold was reported within the vein. A number of other companies have held the ground over the years. The work was very sporadic, but they all came up with interesting free-gold values. Two of the property owners were considering going underground. The problem was that it was very difficult to assess and evaluate in terms of its actual gold potential due to the nugget effect of the native gold within the system.

“A local prospector that we’ve known for a fair number of years came by our office and showed us the property, and we decided to do our due diligence, take a property visit. He’d done some cleaning up of the old trench works from the Noranda years and pumped out the water that was in the trench. We sampled the host rock, and we sampled the vein in the trench. While we were sampling, we noticed that in one location there was a cluster—a little fleurette—of visible gold within the vein. So we took a sample of that, and it returned over three ounces per ton gold, with silver values, 9% zinc and some copper values. So that caught my interest. We did our due diligence in terms of historical work, and when we saw the original channel sampling from Noranda’s work and two other predecessors, we decided to go ahead and acquire the ground.

I’m ecstatic about this project. We’ve proven that the gold isn’t just an isolated area in terms of the system. The gold is throughout the system—Gordon Henriksen

“We’ve just completed the Phase 1 drill program,” Henriksen continues, “and we’re processing the results—doing the sections, the maps. We have a little bit more field work to do in terms of surveying in the holes; we have the accurate locations of the holes, now we want to get precise elevations because there’s a small hill in one part. The rest is relatively flat. We want to make sure our sections are correct, so we can follow the vein properly on our next phase of exploration.

“For the next phase of drilling, our ideal plan is to have two drills going, one continuing to follow the system along strike and fill in the gap between the two known areas that we’ve defined to date. The second drill would work on doing some definition drilling to shore up some tonnage for a gold resource in the ground. This will give an actual concrete dollar value to Knick’s share price.

“We did back-to-back drill programs this year—one on our East-West project for which we still haven’t posted all our results because we’ve been so busy with the second program. Once we have all the data compiled and we’re ready to go, I anticipate we should [start Phase 2] drilling about the time the snow comes. Then we’ll probably be drilling into the New Year. The snow comes here the end of October, beginning of November, so that’s the earliest I can see us drilling. If it’s not then, it will be right after Christmas.

“We are professional explorationists; we don’t plan on taking it to development,” he adds. “We will go all the way up to pre-production.

“I’m ecstatic about this project. We’ve proven that the gold isn’t just an isolated area in terms of the system. The gold is throughout the system. There’s definitely a nugget effect like the previous workers have described. We’re going to be coming out with a press release describing our metallic sieve samples; these samples will show the various fractions that were analyzed in the core, showing the actual nugget effect. This is going to be rather exciting. I don’t think too many people have done this [ie, metallic sieve sampling] in the past. I’m really keen. We’re even getting values in the host rock in some places, and there are indications that the structure opens up in several areas. So there’s potential down the line for bonanza pots.

“The most recent assays are close to surface, and most junior mining companies would love to have results like that. I’m just hoping that in the near future—in our next phase of drilling—that we do see these bonanza-style lenses within it. Geologically, there’s no reason why there shouldn’t be. We can define things over mining width at a mining grade which, in essence, is ore; you can mine it at a profit.”

Henriksen concludes, “We’ll be coming out with some more results before the end of August.”

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Jacques Brunelle

or Gordon N. Henriksen
Vice President

by Greg Klein and Ted Niles