Value Microcaps Junior Miners

[Bobwins]

I talked with these guys a few years ago at a conference. They were around .10 at the time. They had a mill and rights to several old mines. The mines supposedly had pretty high grade underground vein systems (1 oz/ton). They were scrambling to upgrade the mill and get enough cash to restart mining. Apparently they got the mill working and found a good one to restart. I like the fact that they have some ore from an above ground open pit to produce gold. That can be done fairly cheaply with earth moving equipment. But of course, the key is whether they piled up dirt that has consistent quantities of gold. Guess we'll find out when they start milling it.

The underground mine is a different animal. They need higher grades to offset the higher costs of tunneling and building an underground system to get the ore to the mill. Also huge is their ability to follow the vein and know, within reason, the grade, width and depth of the vein. Ideally, you have drilled the crap out of the deposit so you know ahead of time, what to expect. I doubt that's the case here. They are operating on a shoestring so they are probably doing it the old fashioned way and just following the vein until it peters out. It worked for many years for miners but it's unpredictable and could end in a dead end.

It's romantic to think that these guys have a cheap mill and all these closed mines with untapped gold but at this small scale, it's tough. A few thousand ounces of gold is still millions of dollars in revs but they need early success to build up some cash in case their "cheap" refurbished mill blows a part or they chase a short vein that dies quickly and they don't have the money to setup a new drilling program to find the next batch of stopes.

I'm sure there are private miners that operate on a smaller scale and are still profitable but we don't know because they are private. There aren't many public miners operating at less than 10,000 oz/yr on a sustainable basis so I try to limit my search to miners with the capability to produce 100K oz/yr. That means they produce reserve reports so I know that they will have enough ore to keep operating for many years. It also means they are big enough to tempt a bigger miner to buy them out if they need more production. The bigger the potential deposit, the better, if you want to tempt the big guys with cash to buy you out.