Older but good read...
Wildcat Silver Corp. Featured in Winston's Growth Stock Report
Wildcat silver (WS, TSX.V)
(EMAILWIRE.COM, July 16, 2009 ) Vancouver, BC - Highlights:
- 53.6M ounces of Silver at 5.2 Ounce per tonne
- 1.2B lbs of Manganese at 6.26%
- Market Capitalization - $44M
Last month I spoke with Chris, the CEO of Wildcat Silver. And no, we weren't talking about silver as you might assume but rather manganese, the fourth heaviest traded metal in the world. Though the manganese is in high demand there has been no way for a stock market investor to directly profit from this business. Until now that is.
The management of Wildcat is planning on proving up, developing and starting production of the only U.S. based supply of manganese sulphate that can be sold into the lucrative chemicals and agriculture market. The potential domestic buyers of the product will be the U.S. based manufacturers of lithium-ion batteries and fertilizer companies who have been importing manganese sulphate from South Africa and Australia.
To achieve their goal of becoming a profit-driven enterprise, Wildcat management has plans to fast track their Hardshell project in Arizona. This year they want to further test the deeper sulphide zone of the ore body where they have had some previous success.
For early investors, this could provide rapid capital gains as the Hardshell project moves forward.
Let's do a quick review of manganese then take a look at how Wildcat could be a profitable investment.
About Manganese
Though most investors probably have never heard of manganese, it is the fourth most traded metal in the world at 31 million tons per year following iron, aluminum and copper. The U.S. consumes 675,000 tons per year all of which is imported, mostly from Africa.
Manganese is used in steel alloys to increase many favorable characteristics such as strength, hardness and durability. In fact steel cannot be produced without manganese. There is no substitute for it and it is an essential ingredient in the manufacturing process. As consumers, numerous products we buy use manganese in its construction, from aluminum beverage cans to portable batteries.
After steel the second most important market for manganese, is for the production of portable dry batteries and fertilizers. And it is this specific market that Wildcat intends to sell its production as there is not a single source of this form of Manganese available in the United States.
Wildcat Silver – The Hardshell Deposit in Arizona
The Hardshell property is located about 80 kilometers southeast of Tucson, Arizona, approximately 13 kilometers north of the U.S. border with Mexico.
Though Wildcat is primarily a manganese play, the origins of the deposit were focused on silver as you no doubt have guessed. The Hardshell deposit was first discovered in 1879 and production began from 1896 through to 1964 generating about 35,000 tons with an average grade of about eight ounces of silver per ton. Not a bad little silver operation.
Close by, Asarco ran the Trench mine between 1939 and 1964. The Hardshell property was first used as a source of water for the Trench mill. Later Asarco did some exploration work on Hardshell including drilling from 1964 until about 1980. In total 104 percussion and core holes were drilled, with an aggregate length of 13,088 metres. A mineral inventory calculated by Asarco in 1984 estimated a resource of 9,596,000 tons with an average grade of 6.9 ounces per ton silver.
Up to 1984, the emphasis was still just on silver. The fact that the property also contained significant manganese with zinc and copper also present seemed irrelevant at the time.
Arizona Minerals, a privately held company acquired the property from Asarco in 1996. In 2006, Wildcat Silver purchased 80% of Arizona Minerals for $10 million.
However the current management team of Wildcat is focusing on a much bigger and overlooked opportunity. A 2007 report by Pincock, Allen & Holt ("PAH") cited an inferred resource of 53.6 million ounces of silver and 1.2 billion pounds of manganese. PAH outlined 10.3 million tons of ore grading 5.2 ounces per ton silver, 1% zinc, 0.05% copper and 6.26% manganese. More drilling and engineering continued over the months and in August of 2008 an updated technical report was done which showed the potential not only for silver mining but also the previously overlooked high grade manganese:
6.7 million tons grading 6.7 ounces per ton silver, 1.4% zinc, 0.08% copper, and 9 % manganese
Open pit operation
1,500 tons per day or 495,000 tons per annum
13.5 years mine life
Net present value $295 million (5% discount/pre-tax)*
Work done in 2008 also found the potential for new mineralized zones deeper down below the known mineralized manto. Exploration drill holes going down to 146.9 metres returned 5.49 metres grading 214 grams per ton silver, 10.91% zinc, 6.71% lead and 19.16 % manganese. Deeper still, another new zone was discovered starting at 183 metres returning 20.73 metres of 86 grams per ton silver, 2.14% zinc, 0.92% lead, and 6.25% manganese. Wildcat completed metallurgical test work last year which included lead recoveries of more than 80% which had not been included in previous economic evaluations.
Given the byproducts of silver, zinc, and lead; the production costs for producing manganese will very possibly be zero.
This year more drilling will be done to upgrade the resource from "inferred" status to "measured and indicated." Also the edges of the deposit will be tested to possibly expand the dimensions of the known resource and other deeper manto zones will also be tested.
Management
Given Wildcat's goal of becoming a producing mining company in a relatively short period of time, they will need a very experienced management team. Investors can be assured they have the right team in place to get the job done.
Chris Jones is the President & CEO and has more than 25 years leadership experience in surface and underground coal, precious and base metals, and oil sands operations in the US and Canada –most recently COO for AlbianSands Energy. BSc in Mine Engineering from South Dakota School of Mines, MBA from Colorado State University, RegisteredProfessional Engineer in Utah and Alberta.
Richard W. Warke (Chairman) is the founder of Augusta Resource Corporation with more than 20 years experience in corporate finance, administration and marketing in the resource sector. Also chairman of Ventana Gold (VEN-TSX) which is very well known to subscribers.
R. Stuart Angus is an Independent business advisor, past partner and head of global mining group at Fasken Martineau – board member of Ventana Gold. (VEN-TSX)
John R. Brodie is formerly a partner at KPMG LLP, elected a fellow for distinguished service to the profession by the Institute of Chartered Accountants of British Columbia. Currently provides consulting services and serves as a director in several public companies.
Donald Clark has 35 years experience in the finance industry, the majority in Canadian banking and currently sits on the Board for two other natural resource companies including Ventana Gold (VEN-TSX)
Robert Wares is a professional geologist with more 25 years experience in mineral exploration and research. He is currently Executive Vice-President and COO of Osisko Exploration Ltd.
Susan Rubin is the Chief Financial Officer and a Chartered Accountant registered with the Institute of Chartered Accountants of B.C., with more than 20 years financial, consulting and operational experience with a number of public companies in the high-tech, biotech and oil and gas industries.
Meghan Brown is the Manager, Investor Relations and has more than 15 years experience in the mining and energy sectors, working with a wide range of companies including Ventana Gold, Augusta Resource Corp, Suncor, TransCanada and Placer Dome.
Summary
Previous work done by Pincock in 2007 reported a resource of 54 million ounces of silver and 1.2 billion pounds of manganese. However there were no calculations done to include gold or lead which gives investors an interesting possibility of having zero cash costs for mining the manganese and possibly lower cash costs for mining the silver as well. In other words, greater profitability.
The company has 108 million shares outstanding with management and insiders owing 29%. Wildcat is debt free.
The surrounding area of the mine has an excellent infrastructure of roads, rail, power, water and an experienced mining workforce. The claim holding area covers 154 acres with surface and mineral rights owned outright. This area is surrounded by 147 contiguous unpatented claims totaling 2,769 acres.
This year Wildcat will work toward the final feasibility on the Hardshell project. Given the positive preliminary assessment showing a low cost of production, excellent potential for expanding the resource, a very experienced management team, and the ability to market their company to retail and institutional investors, Wildcat Silver stands to become another high potential stock for our readers.
For additional information
INVESTOR RELATIONS CONTACT:
Arlen Hansen
Kin Communications
604-684-6730
1-866-684-6730
ir@kincommunications.com
http://www.kincommunications.com/
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