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Warning! Fiscal Hurricane Approaching! Is Your Portfolio Secure? Part 2
By Dudley Baker and Lorimer Wilson
28 Mar 2006 at 08:50 AM EST
SAN ANTONIO (PreciousMetalsWarrants.com) -- In a previous article entitled “The Ominous Warnings and Dire Predictions of World’s Financial Experts” - Part 1 and Part 2, we learned what was probably in store for us short-term and in the next few years. These experts used words like ‘Economic Armageddon’, ‘Financial Apocalypse’, ‘Financial Disaster’, ‘Financial Train Wreck’, ‘Deep Funk’, ‘Great Disruption’, ‘Category 6 Fiscal Storm’, ‘Economic Earthquake’, ‘Serious Collapse’, ‘God-Awful Fiscal Storm’, ‘Debt-Driven Meltdown’, ‘Major Upheaval’, ‘Demographic Tsunami’, ‘Rude Awakening’, ‘Economic Pain’, ‘ Systemic Banking Crisis’, ‘An Accident Waiting to Happen’, etc. to describe what we are in for.
It begs the question “How should we position our assets given the dire predictions of these imminent economists and analysts who are all much of the same mind as to what may well be in store for the U.S and, indeed, the global economy very soon?” Again, we have compiled a detailed and comprehensive summary of what many of these very same individuals, and others, have to say (click here to see Part 1). It is so extensive and informative we have taken the liberty to divide it into 4 parts.
Is Your Portfolio Secure?
Charles Carlson, CEO of Horizon Investment Services and author of a number of books including ‘Eight Steps to Seven Figures,’ ‘Buying Stocks Without a Broker’ and ‘No-Load Stocks’ offers hands-on advice on how to survive – and thrive – in a wildly fluctuating market in his latest book ‘The Smart Investor’s Survival Guide.’ As he says “The storm’s eye is an excellent metaphor for what investors must do during stormy market periods. Find the eye. Get to the calm. Play in the space where you won’t get hurt.”
What Kind of Investments?
Liquid investments: During uncertain market times investors usually migrate toward the most liquid investments because liquidity provides flexibility; the flexibility to respond quickly to changes in opinions about certain investments; the flexibility to raise cash quickly if need be. Such liquid investments include large cap stocks, larger corporate bond issuers and also cash which always works well in volatile markets.
Dividends and Interest: During volatile markets, when certainty of returns is an especially prized commodity, investors will migrate to those investments offering at least some modicum of income via dividends and interest. Stocks with high dividend yields, and particularly considerable dividend growth, generally hold up better during down markets than stocks with low yields.
Consistent earnings: Certain industry sectors are more conducive than others for weathering volatile markets. At the top of the list is the health care sector, followed by the consumer staples sector. These groups, especially health care, have steady product demand regardless of economic conditions. That consistent demand usually leads to consistent earnings.
Low-Volatility investments: In the eye of the storm, less volatile issues will generally weather the fury better than volatile investments. Stocks and stock mutual funds have the most volatility. Cash, bonds and treasury securities have the least expected volatility. Within fixed-income investments short-term bonds are less volatile than long-term bonds and U.S. corporate bonds are less volatile than foreign bonds.
Diversified portfolio: Diversification makes perfect sense especially during turbulent market conditions. When you diversify, you buy a bit of insurance for your portfolio against catastrophes. By definition, diversification reduces risk. You don’t know with complete certainty what groups will be leading and lagging the market at any point of time. Since you don’t know where the next leaders will come from, a prudent approach is to own a bunch of investments a) within a variety of asset classes (i.e. investments with different risk/reward profiles), b) of a variety of different asset classes (i.e. investments that don’t correlate with one another), and c) that are appropriately weighted one to the other and rebalanced in relationship to each other every 12-18 months should one or more get out of whack by 5 to 10 percentage points. In that way, you’re sure to avoid owning all the groups getting killed and increase your chances of owning groups and investments that are doing well.
Proper Allocation: You need to determine the percentage weighting of assets in the total portfolio. The two biggest determinants of asset allocation are risk tolerance and investment time horizon. The more risk-adverse you are as an investor, the greater the portion of bonds/cash versus stocks you should have in your portfolio. Also, the shorter the time horizon the larger the percentage of the portfolio should be devoted to bonds/cash. A good rule of thumb for setting an allocation is to subtract your age from 100 or 110 (depending on how aggressive you are) and invest that number in stocks and split the remainder between bonds and cash. However, if you have an extremely limited investment time horizon, an extremely low tolerance for risk, or a limited need for growth given your financial position, obligations, etc., then consider allocating 15%-25% to stocks, 40%-50% to bonds (40%-45% in a short-term bond fund, 40%-45% in a total market bond fund and 10%-20% in a high-yield bond fund) and 25%-35% to cash.
You need to spread the stock component of your portfolio across various industry groups and among 25 to 35 individual stocks or a broad based mutual fund. I think an investor with a 20-or 30-year time horizon would be OK with a single stock making up 20% of a portfolio. Conversely, an investor in his or her sixties should keep individual stock weightings to 2% to 15% of the portfolio.
Timing: Smart investors take advantage of volatile markets in a number of important ways:
Smart investors step up to the plate to buy, even if everyone is shouting ‘sell.’ Even if you get nervous and move some of your cash or bonds, make sure that you are putting at least something into stocks or stock mutual funds during the rough patches and
Smart investors use volatile markets to upgrade portfolios.
Smart investors don’t miss the future by looking at the past. They take their lumps, learn their lessons, and do what they can to position their portfolios for the market’s inevitable upturn. That means smart investors use volatile markets to trim their deadwood and buy those stocks that they always wanted to own if they got cheap enough.”
Ibbotson Associates, a Chicago research firm, suggests that “adding precious metals to a portfolio of U.S. equities, bonds, and Treasury bills would modestly improve long-term returns without adding risk to a portfolio. An asset allocation of 7.1% to metals would increase the expected return on a conservative portfolio by 0.2%. A 12.5% allocation in a moderate portfolio would add 0.4% to the expected return. Indeed, the performance of an equally-weighted gold/silver/platinum portfolio is actually closer to fixed-income assets than to equities over the period from 1972 to 2004.”
James Shepherd, President of JAS MTS Inc. and editor of the Shepherd Investment Strategist, has stated that “my investment philosophy is based on one simple premise: we must be invested in areas that provide the best returns, with safety, of our core capital. Then, when other opportunities arise that give us the ability to use speculative leverage to propel our overall portfolio higher, we should avail ourselves of the opportunity with a small percentage of our capital in order to take advantage of this potential. Unfortunately for many investors, they never seem to be flexible enough to be in the right things at the right time. I recommend putting 33% of ones portfolio in 30 year U.S. Treasury bonds due to the deflationary pressures that are very much in evidence, although currently just under the surface, which will drive long-term interest rates even lower and 67% in short-term government securities or, for the more aggressive investors, placing 33% in URSA and the balance in short-term government securities..” In addition, when it is evident that a stock market crash is imminent, he intends to “utilize more aggressive means of playing the anticipated decline in long-term rates by using instruments or funds comprised of zero-coupon bonds which move higher in price relatively much faster than regular Treasuries, to take substantial positions in funds that move inversely to the major indices and perhaps even leveraged versions of these derivatives that move inversely in multiples to the underlying index. We will also be utilizing some leverage instruments such as put options. These can increase dramatically in the event of a collapsing stock market. Regarding gold I am of the opinion that if we get rampant inflation at some time in the future, we could confidently expect gold to rise very sharply to well above the $2,000/ounce level. That said, however, the most likely outcome is a deflationary environment. In that scenario gold would not do well, nor would many other ‘hard’ assets.”
Richard Benson, President of Specialty Finance Group, LLC, is of the opinion that “the financial markets are leveraged for a crash. The capital markets have become one massive casino. Very few people believe they are gambling with their own money because borrowing with other people’s money to place the bets has become so easy. Money is being made in the leveraged carry trade or in speculating on margin. Even the patriotic homeowner with a variable rate mortgage is borrowing short-term to buy stocks, and to pay bills. What happens when investors want to reduce their risk and need to sell but can’t find a buyer? They would be trapped because the markets are just not that liquid, especially when everyone wants to sell! That’s why it is important to be in cash before the crash! Short-term Treasuries, bank CD’s (but only up to $100,000 per institution), TIPS (Treasury Inflation-Protected Security), I-bonds, and gold coins are all wonderful places to sit out any potential storm. For the average investor who is risk adverse and for any investor who considers losing a dollar worse than making a dollar our advice is to get into cash and be prepared to wait. Good hunters know how to wait and good things happen to those who are patient, like buying what they like at half price!”
It is recommend investors strategically position themselves in a wide variety of assets including precious metals, mining shares and long-term warrants. Nothing like taking what the experts say to heart and investing accordingly.
© Copyright Precious Metals Warrants 2006
Ominous Warnings and Dire Predictions of Financial Experts, Part 1
By Dudley Baker and Lorimer Wilson
02 Mar 2006 at 06:29 PM EST
SAN ANTONIO (Precious Metals Warrants) -- We have assembled some interesting comments from some of the leading economists, financial analysts, economic research firms and financial commentators and what they are saying about our current economic situation and what is most likely to unfold in the months and years ahead. This is a summary of the ominous warnings, dire predictions and perceived devastating consequences as they see it.
We trust you will find this a must read to more clearly understand and appreciate the financial state of the union, the impact it will likely have on various investments, and how better to allocate ones assets. Nobody has a crystal ball, but to just ignore the following warning signs and hope that everything will turn out okay would simply be foolish. Below is Part 1 of our 6 part series of articles.
Ominous Warnings and Dire Predictions
Alan Greenspan, an ‘original gold bug’ and former Chairman of the Federal Reserve, is going to say “I told you so!” as soon as he feels at liberty to comment further on what he already warned us might/will happen to the economy. He will no doubt expand on what he saw as the:
Potential for a derivative crisis: “I would suspect there are potential disasters running into … the hundreds.”
Potential drop in asset prices: “This vast increase in the market value of asset claims [stocks, bonds, houses] is in part the indirect result of investors accepting lower compensation for risk. Such an increase in market value is too often viewed by market participants as structural and permanent. But what they perceive as newly abundant liquidity can readily disappear … history has not dealt kindly with the aftermath of protracted periods of low risk premiums.”
Housing bubble: “Nearer term, the housing boom will inevitably simmer down. As part of that process, house turnover will decline from currently historic levels, while home price increases will slow and prices could even decrease. As a consequence, home equity extraction will ease and with it some of the strength in personal consumption expenditures.”
Coming crisis in Social Security: “The imbalance in the federal budgetary situation, unless addressed soon, will pose serious long-term fiscal difficulties. Our demographics – especially the retirement of the baby-boom generation beginning in just a few years – mean that the ratio of workers to retirees will fall substantially. Without corrective action, this development will put substantial pressure on our ability in coming years to provide even minimal government services while maintaining entitlement benefits at their current level, without debilitating increases in tax rates. The longer we wait before addressing these imbalances, the more wrenching the fiscal adjustment ultimately will be.” “When you do the arithmetic of what the rising debt level implied by the deficits tells you and add interest costs to that ever-rising debt at ever-higher interest rates, the system becomes fiscally destabilizing. What you will end up with is a stagnant economic system.”
Oil supply risk: “The current situation reflects an increasing fear that existing reserves and productive crude oil capacity have become subject to potential geopolitical adversity. These anxieties are not frivolous given the stark realities evident in many areas of the world.”
Rising budget deficit: “Large deficits result in rising interest rates and ever-growing interest payments that augment deficits in future years. Unless that trend is reversed, at some point these deficits would cause the economy to stagnate or worse.” “Monetary policy, for example, cannot ignore the potential inflationary pressures inherent in our current fiscal outlook, especially those that could rise in meeting commitments to future retirees. However, I assume that these imbalances will be resolved before stark choices again confront us and that, if they are not, the Fed would resist any temptation to monetize future fiscal deficits. We had too much experience with the dangers of inflation in the 1970s to tolerate going through another bout of dispiriting stagflation. The consequences for both future workers and retirees could be daunting.”
Rising long-term interest rates: “The fiscal issues that we face pose long-term challenges, but federal budget deficits could cause difficulties even in the near term. Rising interest rates have been advertised for so long and in so many places that anyone who hasn’t appropriately hedged his position by now is desirous of losing money.”
Record-high current account deficit: “Given the already substantial accumulation of dollar-dominated debt, foreign investors, both private and official, may become less willing to absorb ever-growing claims on U.S. residents….Net claims against residents of the United States cannot continue to increase forever in international portfolios at their recent pace…Given the size of the U.S. current account deficit, a diminished appetite for adding to dollar balances must occur at some point. The trade deficit cannot continue to increase forever at the recent pace.
Excessive household debt: Debt in modest quantities does enhance the rate of growth of an economy and does create higher standards of living, but in excess, creates very serious problems.
Falling U.S. dollar: Although I doubt that the U.S. dollar will lose its status as the world’s reserve currency any time soon, there are in my judgment lessons to be learned from the experience of sterling as it faded as the world’s dominant currency.”
It is interesting to note that at one time Greenspan was an ardent gold bug and a true believer in the gold standard as his following words attest: “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. Deficit spending is simply a scheme for the ‘hidden’ confiscation of wealth. Gold stands in the way of the insidious process.”
Deep Funk
Richard Fisher, President of the Dallas Federal Reserve, noted on Feb.6, 2006 that “U.S. consumer spending could suffer if the property market cools too fast but that is unlikely because of the high number of home owners with fixed rate mortgages acting as a buffer against the small fraction of those with variable rate mortgages. It is not unreasonable to think the situation is manageable, albeit worth watching closely.”
Regarding the record U.S. current account deficit he said “those urging the United States to rein in its spending should be equally full-throated in prodding countries with excess savings and trade surpluses to create conditions for growing their domestic demand. If they fail to do so, and the U.S. suddenly becomes more virtuous on its own, the global economy could sink into a deep funk.”
Financial Disaster
Paul Volcker, a former Federal Reserve Board Chairman, is on record as saying “I think we are skating on increasingly thin ice. On the present trajectory, the deficits and imbalances will increase. At some point, the sense of confidence in capital markets that today so benignly supports the flow of funds to the United States and the growing economy could fade. Then some event, or combination of events, could come along to disturb markets, with damaging volatility in both exchange markets and interest rates. Indeed, there is a 75% chance of a major financial disaster within the next few years.”
Great Disruption
David Dodge, Governor of the Bank of Canada, earlier this month said “global imbalances, such as the record U.S. current account deficit and the ballooning surpluses in some Asian countries, are persisting and if not resolved in an orderly way, we face the threat of great disruption with periods of outright recession.”
Economic Armageddon
Stephen Roach, Managing Director, Chief Economist, and Director of Global Economic Analysis of Morgan Stanley, has stated that “America’s record trade deficit means the dollar will keep falling, interest rates will rise further and U.S. consumers, in debt up to their eyeballs, will get pounded with no better than a 10% chance of avoiding economic Armageddon.”
Financial Apocalypse
Kurt Richebacher, former Chief Economist of the Dresdner Bank, has stated that “the bubble-driven consumer-spending boom we are currently in represents artificial, unsustainable demand and further rate hikes by the Fed will prick both the carry trade bubble in bonds and the bubble in housing. A financial Apocalypse will follow. The U.S. economy will lose its chief liquidity source with disastrous effects on a wide range of asset prices.
The U.S. has such serious structural problems they preclude any possibility of a sustained economic recovery. These structural problems include a corporate profits decline, a record savings shortfall, a capital spending collapse, an unprecedented consumer borrowing and spending binge, a massive current account deficit, ravaged balance sheets and record high debt levels. Tops among them are the depression of profits and capital spending which will propel each other downward in a vicious spiral.
In addition, U.S. stocks are still overvalued. The worst part of the bear markets is still to come and it will result in the wholesale destruction of the financial wealth derived from the bubble economy.
The U.S. financial system today is a house of cards built on nothing but financial leverage, credit excess, speculation and derivatives. A recession is coming and it will prove unusually severe and long. The length and severity of recessions or depressions depend critically on the magnitude of the dislocations and imbalances that have accumulated in the economy during the preceding boom and, as such, the U.S. economy is in for a very hard landing. The excessive monetary looseness has only postponed and magnified the coming inevitable crisis.
Growing disillusionment with the U.S. economy is the trigger. The huge capital inflows have become the U.S. financial markets’ single most important pillar. Take this pillar away, and those markets will instantly collapse with devastating effects for the U.S. economy, turning quickly into a savage credit crunch. The exposure of the U.S. financial markets to foreign investors and lenders has grown to such preposterous magnitude during recent years that a controlled gradual dollar devaluation no longer appears feasible. The dangers that loom on the currency front are immense. The grossly over-leveraged U.S. financial system is hostage to a strong dollar and permanent, huge capital inflows. The U.S. trade deficit and the accumulated foreign indebtedness have reached a scale that defies any possible action by central banks. The fate of the dollar is beyond any control.”
Financial Train Wreck
Nouriel Roubini is Professor of Economics and International Business at New York University’s Stern School of Business; Chairman of Roubini Global Economics; Research Fellow at the National Bureau of Economic Research; Research Fellow of the Centre for Economic Policy Research; Member of the Bretton Woods Committee, the Council on Foreign Relation’s Roundtable on the International Economy and the Academic Advisory Committee, Fiscal Affairs Department of the International Monetary Fund; former Senior Economist for International Affairs on the Staff of the United States President’s Council of Economic Advisors; and co-author of several books on the economy.
Roubini has stated that “if the U.S. does not take policy steps to reduce its need for external financing, before it exhausts the world’s central banks willingness to keep adding to their dollar reserves then the large, growing and unsustainable fiscal deficit and U.S. current account deficit will become twin financial train wrecks for the U.S. economy and will lead to a sharp hard landing of the dollar, a sharp increase in long term interest rates, a significant increase in the inflation rate and a sharp slowdown of the U.S. and global economy.
A dollar crash/hard landing would be associated with a bond market rout and would have serious consequences on all other risky and overvalued assets (equities, housing, high-yield debt, emerging market debt).
The effects in the U.S. of higher short and long rates on the housing market, both flows of new housing and new home demand on the value of existing housing, would likely be severe.
Oil prices will skyrocket above $100 per barrel. Then we will get a U.S. and global recession that will pale compared to the one in 1980-82.
I am not being alarmist or unrealistic when you consider our reckless fiscal and public debt policies, the absence of adult policy supervision in Washington and the mediocre or nonexistent U.S. economic leadership.”
Demographic Tsunami
David Walker, Director of the U.S. General Accounting Office and Comptroller general of the United States, has stated that “our projected budget deficits are not manageable without significant changes in status quo programs, policies, processes and operations and were such action implemented it would most likely adversely affect the quality of life of every American now and in the foreseeable future. The U.S. faces a demographic tsunami that will never recede.”
We would recommend investors strategically position themselves in a wide variety of assets including precious metals, mining shares and long-term warrants. Nothing like taking what the experts say to heart and investing accordingly.
© Copyright Precious Metals Warrants 2006
Dudley Baker is the owner/editor of Precious Metals Warrants, a market data service which provides you with the details on all mining & energy companies with warrants trading on the U.S. and Canadian Exchanges Visit us soon.
German listings surprise U.S. firms
Short-selling rule may have moved trading overseas
By Michael Baron, CBS.MarketWatch.com
Last Update: 9:00 PM ET Jun 2, 2004
NEW YORK (CBS.MW) -- A new U.S. ban on a questionable stock-trading tactic appears to have pushed the practice offshore, igniting a rash of complaints from small companies that stock prices are being roiled by undesired listings on a German stock exchange.
More than 100 U.S. companies have been added to the Berlin-Bremen Stock Exchange -- which is far smaller and far less widely recognized than the major bourse in Frankfurt -- since the new rule took effect April 1. And more than 20 of them have asked to be removed, saying they were added without their knowledge or consent.
(continued on following link)
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B5836BF10-C674-42FF-B75F-CB5DAA9F903B%7D&...
sumisu
A PROFOUND DOCUMENT
I suggest that all read this report that I reviewed for another board a while back. It is sometimes referred to as the Hirsch Report with the official name: PEAKING OF WORLD OIL PRODUCTION: IMPACTS, MITIGATION, & RISK MANAGEMENT.
http://www.investorshub.com/boards/read_msg.asp?message_id=10310387
The closing of part of the our oil supply from Alaska for pipeline repairs will significantly impact us. Immediately there has been a clamor on TV to tap the Strategic Petroleum Reserve. I have no problem with this action, as it was established to counter supply disruptions. Here is a link:
http://people.howstuffworks.com/question478.htm
The irony in supply disruptions is that they get immediate attention for the immediate problem. But since Peak Oil is not yet an immediate problem, it is relegated to the back burner. Myopia seems to prevail for Peak Oil.
sumisu
johnlw,
I seem to recall that a few year's ago some companies suddenly appeared on one of the exchanges in Germany, without their permission. Do you recall that situation or is just my imagination?
Keeping an open mind on some stocks listed on Frankfurt might be a good idea. But you have me keeping my eyes opened for all my stocks listed over there. Thanks.
sumisu
BP closing Alaskan oil field because of pipeline leak
http://tinyurl.com/q9z62
Let's see the impact on coal tomorrow.
sumisu
JW,
I wouldn't be too concerned about the Frankfurt listing.
In fact, I think that it works out to West Hawk's advantage. German investors are extremely interested in natural resource investments. Plus the Fischer-Tropes coal gasification process was developed in Germany back in the 1920’s.
The Frankfurt listing is H5N.F and I check its activity everyday. Generally it mirrors West Hawk's trading patterns in Canada.
sumisu
Coal: An Energy Alternative
Report on Business Television - Friday, 8/04/06
(might be preceded by an advertisement)
http://tinyurl.com/j34gj
sumisu
August 05, 2006
A Thousand Barrels a Second
by John Mauldin
Today we take another look at the energy picture and how it will change over the next decade. Just as the world switched from whale oil to kerosene and from coal to diesel, we will see a change in how we find and use energy. That is inevitable. But the transition will not necessarily be easy or smooth. And there are some surprises along the way. The things we "know" and the assumptions we make about conservation of fuel and peak oil are probably wrong, and we need to get some key concepts down as we consider how the world will adjust to rising oil demand but at some point potentially falling production.
We are going to review a most excellent book by Peter Tertzakian called A Thousand Barrels a Second: The Coming Oil Break Point and the Challenges Facing an Energy Dependent World. It is balanced, thoughtful, and well written. Not only dealing with the present problems, Peter takes us back into history to see how humankind dealt with previous energy break points. I highly recommend his book for anyone thinking about investing in energy or for those interested in how energy will affect our lives in the next decade. You can get it at www.amazon.com.
Last March, I wrote about another book on energy called The Bottomless Well, by Peter Huber and Mark P. Mills. It is provocatively subtitled "The Twilight of Fuel, the Virtue of Waste, and Why We Will Never Run Out of Energy." Huber and Mills take a very hard look at the way we normally think about energy and turn conventional thinking on its head. I highly recommend it. You can go back and look at that e-letter here. I highly suggest you get both books when you go to Amazon.
In summary, Huber and Mills describe a bright future where we change our sources of energy and actually use more energy (a lot more!), rather than less. And I think they are spot on with much of their work. The development of electric cars and alternatives to oil, etc. will be a big driver of investment profits. But the transition as described by Tertzakian is not as smooth as one would like.
(Unless otherwise noted, all the facts and numbers below are from Tertzakian's book.)
A Thousand Barrels a Second
In 1997, the world consumed almost 74 million barrels of oil per day. By 2002 that had risen to 78 million. Sometime this year, the world will consume 86 million barrels of oil a day, or 1,000 barrels a second. The growth in demand for oil rises about 1.5 to 2 million barrels each and every year.
China accounts for 23% of that growth, with the rest of Asia adding another 18%. The US only accounts for 11%, with the rest of the world growing demand by 48%. At the current pace of growth, we could see the demand for 100 million barrels a day in less than 10 years. Can we find another new14 million barrels a day while replacing the oil in old and declining fields? What happens if we can't?
Almost half the world's oil consumption ends up in a gas tank. China sees its demand for oil rise about 90% of its growth in GDP, what Tertzakian calls a 90% dependency factor. In other words, if Chinese GDP rises 10%, then its demand for oil rises 9%. The world average is about a 40% dependency factor.
My back of the napkin estimate is that even if the world sees an economic slowdown in the next few years, over the next ten it is likely that world GDP growth will be at the long-term average of 3.5%, or 41% over ten years. If the dependency factor remains at 40, then oil demand will grow by 16%, well over 100 million barrels a day before 2016. But that's a big if.
The reality is that this level of growth in oil production is unlikely. We are pushing the limits of production today. Yes, there are significant potential new sources. Iraq and Iran could double their production. Venezuela has much more oil it could drill. Nigeria has greater reserves, as does Russia. The Steppes of Asia have vast untapped reserves. The Canadian reserves in the form of oil sands are immense. With the exception of Canada, the locations of new or larger sources of oil are not in the most desirable and stable of locales.
But putting aside the political issues, can we grow our way out of the problem? Not according to a report by the US Army Corps of Engineers called "Energy Trends and Their Implications for US Army Installations" by Donald Fournier and Eileen Westervelt.
They suggest "...a shortfall in world oil production of 1 to 2 percent during the next decade. This is a sure sign that the oil world supply picture is changing in ways that depart from 'business as usual.'"
"... In general, all nonrenewable resources follow a natural supply curve. Production increases rapidly, slows, reaches a peak, and then declines (at a rapid pace, similar to its initial increase). The major question for petroleum is not whether production will peak, but when. [Emphasis mine - JFM] There are many estimates of recoverable petroleum reserves giving rise to many estimates of when peak oil will occur and how high the peak will be. A careful review of all the estimates leads to the conclusion that world oil production may peak within a few short years, after which it will decline (Campbell and Laherrere 1998; Deffeyes 2001; Laherrere 2003).
"Once peak oil occurs, then the historic patterns of world oil demand and price cycles will cease. In recent years, the realization of price stability has depended on the effectiveness of nations belonging to the Organization of the Petroleum Exporting Countries (OPEC) to adjust for the production increases and lags of the non-OPEC nations.
"We have now entered a period where production is lagging behind demand. Presumably, potential excess capacity still resides in OPEC nations, thus allowing them to control the price of oil. The current debate is whether OPEC can in fact increase production to stabilize prices, or if the market will have to adjust demand to meet supply through price mechanisms. Saudi Arabia maintains that it has excess capacity and can increase production to meet demand. Unfortunately, Saudi Arabia has not been able to increase supply above its monthly production peak of April 2003 (EIA 2005). Iraq may also have significant excess capacity if it could be brought into production (EIA 2002). Meanwhile, domestic oil production in both the lower 48 states and Alaska continues to decline. Many non-OPEC oil producers have also passed or are currently reaching their peaks of production."
The Coming Break Point
This is leading to what Tertzakian calls a "break point."
"Although the stakes have never been greater, the history of energy shows that a time of crisis is always followed by a defining break point, after which government policies, and social and technological forces, begin to rebalance the structure of the world's vast energy complex. Break points are crucial junctures marked by dramatic changes in the way energy is used.
"During the break point and the rebalancing phase that follows (which can last for 10 to 20 years), nations struggle for answers, consumers suffer and complain, the economy adapts, and science surges with innovation and discovery. In the era that emerges, lifestyles change, businesses are born and fortunes are made." (xiii)
Change after these break points can take longer than you would think. Going from wood to coal power took 75 years. It took oil almost 100 years (1860 to 1960) to take away the bulk of coal's market share in the transportation field.
"Historically, substitutions in the energy world take a long time and there's no reason to think the next substitution is going to happen overnight. While it's likely that we may not run out of oil before a substitute is found, it will be decades or more into the future before any new solutions make a difference."
"In the history of energy break points, we have always been able to avert catastrophe, but that doesn't mean the temporary pain and uncertainty hasn't been significant to the people living through the era." (77)
But that does not mean that changes in national energy use can't happen quickly. Take South Korea as an example. In its high-growth period from 1988 to 1997, growth averaged about 7.7% a year (think China). But their dependency ratio on oil was 250%! That means for every 1% growth in GDP their demand for oil rose by 2.5%. (The US ratio was never more than 100 and today is 45.)
Slowing the Growth in Oil Demand
Then came 1997, and Korea caught Asian flu. South Korea's currency depreciated by about 50% and, since oil is priced in dollars, that meant their oil bill doubled overnight. It is an understatement to say that a break point followed. Economic demand in Korea dropped almost 7% and demand for energy dropped as well.
However, as we know, the country rebounded and economic growth since then has been over 6%. But a strange thing happened. Korea does not consume any more oil than it did in 1997. They have shifted to coal, nuclear, and natural gas. Korea is now the second largest importer of liquefied natural gas in the world.
And Korea is not the only country to grow economically without an increase in oil consumption. Japanese oil consumption has been flat for 30 years. The United Kingdom is down significantly from 1973 and has been flat for decades. The message seems to be that if a country decides to make the change, it can.
China is working on its oil dependency. Large new hydroelectric plants will be coming on line soon. Forty new nuclear plants are planned to be in production within 20 years, and they are pioneering new smaller and lower-cost nuclear reactors. They are building LNG terminals to get access to natural gas.
Can the US control its consumption? Many suggest the answer is in a more energy-efficient automobile. But Tertzakian demonstrates that is not the answer. If every American who will buy a car, SUV, or truck in the next year buys one that is 25% more fuel efficient than the current fleet average, it would still mean that total demand for oil would rise slightly. "Even if every new car and truck sale going forward were a hybrid, it would be at least a decade before our [US] national gasoline consumption would reverse its current growth trend." (195)
It will take a combination of higher prices and legislation to really eat into the growth of gasoline consumption in the US. And what politician wants to run on a platform of driving up the price for oil or SUVs?
And so, politicians will let the market do their work for them. Ever increasing world demand will put a strain on the supply, and gasoline prices will rise. A break point will follow as everyone scrambles to make changes, pass legislation, and adjust.
Ironically, a world economic slowdown caused by slower growth or a recession in the US would mean a probable drop in world oil consumption and a drop in oil prices. Since oil is priced at the margin, a serious slowdown could mean oil drops back into the $40s. Everyone would breathe a sigh of relief and assume that the lower price is now the wave of the future. It would forestall any significant change in legislation or lifestyle in the US and much of the world.
$100 Oil is the Solution
And that would be a mistake. Because as world growth comes back, and it always comes back, demand will once again rise, but traditional oil production will be peaking sometime in the next decade (if not sooner). Oil prices will rise dramatically, well beyond today's $70 range. But $100 or even $150 oil is not the problem. It is ultimately the solution.
Let's be clear. We are not going to run out of fuel for our cars. We are just going to run out of cheap fuel. When it takes $150 for a good old boy to fill up his Ford F-150, things are going to change in the US and the world.
We will start to see substitution of other fuel sources for the light sweet crude oil that we are addicted to. Ethanol, biomass fuels, tar sands, shale oil, natural gas, and gasoline from coal are all possibilities at some price. Hydrogen? It is going to take very high gasoline prices to make the economics work. But for those who long for a hydrogen world, you should be careful what you wish for. Because high prices will come.
It will not be pretty, but we will muddle through, just as we did in the '70s when we had the last break point in energy. And belatedly, we will make changes.
What should we in the US do today? We should aggressively move to nuclear power. It takes a decade to build a nuclear power plant, and the 3-4 that are going to be built under current legislation will not be enough in ten years. Nuclear also has the benefit of being environmentally friendly. Where are the environmentalists when you really need them?
We should mandate LNG (liquified natural gas) terminals strategically sited around the coasts and work with foreign suppliers for long-term contracts. LNG will be needed to produce electricity and can also serve a fuel for transportation. It also has the benefit of being environmentally friendly. The NIMBY (Not In My Back Yard) crowd must simply not be allowed to hold hostage a nation.
Yes, wind and solar power should be increased. But wind will never be a major factor and solar technology is not quite there and may not be for some time, although by the end of the next decade it could be making a major impact in some regions.
At some price, ethanol makes sense, although it is much less efficient per gallon than gasoline. Biomass fuels will start to be produced as prices rise, and cars will convert to LNG if enough is available. Coal can be converted to gas.
All of these things will happen, but the transition will be one of several decades. And during that time, price will be volatile but generally rising
That will force changes in lifestyles. Later next decade, when it costs double the currently already high price for gas, long commutes will become prohibitive for the average worker using current automobiles. We will see a shift to far more efficient smaller cars, as well as in where we live and work. Combined with more efficient communications (especially real-time realistic video, not the herky jerky cameras of today) we will see an even larger rise in those who work from home or in nearby offices.
The coming break point will be disruptive for many individuals and companies that think energy costs are going to moderate or go back down. Remember, as Huber and Mills point out, as our "tools" (cars, computers, gadgets, etc.) become more efficient, we use more energy, not less, as it becomes more affordable to use them.
I believe that you should read both The Bottomless Well and A Thousand Barrels a Second. I did not do justice to the latter, as Tertzakian tells the story of previous break points in energy usage. We tend to think that the transitions were easy. What appears to be obvious technology today was not as obvious as we developed steam, coal, kerosene, and even whale oil. The technology to convert and use whale oil for illumination developed over decades. The changeover from coal gas for lighting to electric lights took decades, even though electric lights were cheaper and less polluting.
One last point by Tertzakian: "Why was the substitution of coal over wood the fastest switch we've seen in energy? First and foremost coal is a much more compelling fuel than wood. It packs more energy per unit volume, burns hotter and doesn't rot. Less obviously, but more important, coal didn't have to overcome a large infrastructure of supply chains entrenched with standards. Edison's success in the lighting industry showed that adoption of new energy supply chains is not all about better technology. Edison made it happen only after understanding and overcoming barriers of incumbent standards and competition. Sometimes those competitive forces are formidable. Candle makers declaimed whale oil as a fuel. Edison fought [and lost!] against alternating current. When electric refrigeration emerged as a technology that could displace the ice harvest in the early twentieth century, the ice harvest industry lobbied furiously to have refrigeration banned with claims that it would poison food."
It is a mistake to think that the speed of change in the technology world will be mirrored in the energy sphere. DVDs will replace videotapes in another few years. Start to finish for DVD's reign will be about 15 years. It took longer than that to replace whale oil lamps. "The fastest substitutions of energy devices were probably diesel engines over steam engines, and jet engines over propeller engines, each of which took over 35 years."
But while there are going to be a lot of problems and hassle, for on-top-of-it investors and entrepreneurs it will be a time of opportunity.
Johnlw,
I woke up this morning with the worse summer cold, fever, sore throat, cough, and an aching body. Ironically the only thing I can do right now is type, so I’m somewhat responding to your question posed to me last week.
Much of the following is probably elementary to you, but my knowledge of the coal sector is still very limited.
The WHD website contains the following statement:
“On July 26th, 2006 at 8:00 am (pacific), a request was made to Market Regulation Services to halt the trading of the shares of West Hawk Development Corp. on the TSX Venture Exchange pending an announcement. The request was made immediately upon receiving word that the Company had signed an agreement concerning a significant acquisition. As it was anticipated that several days would be required to compose and seek all necessary approvals of the contents of the news release, it was felt that in order to maintain the integrity and fairness of trading in the shares of West Hawk, that a halt in trading was the appropriate action.”
The rumor on StockHouse is that West Hawk will resume trading on Tuesday, August 8 (Monday is a holiday in Canada). I eagerly await the announcement of this “significant acquisition.” This news will come after six plus months of my investment in West Hawk, but the story of how and why I arrived here began long ago.
The following describes my odyssey into the coal sector and particularly West Hawk. I will present the links that encouraged me to buy and believe in West Hawk.
Before I even began my DD on West Hawk, I already had a predisposition to coal for two reasons.
Firstly, my grandparents heated with coal and when I was around four, they found me in the coal bin playing in the anthracite coal (I learned an early lesson in obedience).
Secondly, I was a chauffeur in 1966 – 1967 for a multimillionaire coal owner of The Hartwell Coal Company. Mr. Swan Hartwell, then at age 94, told me “coal will always be important!” To my dismay, I did not heed his advice earlier.
A year ago I had five stocks with a little worth and I just dabbled to keep occupied in retirement. One Saturday last July I listened to Jim Puplava at the following website:
http://www.netcastdaily.com/fsnewshour.htm
I mention this site, as it launched me into reading twelve books about Peak Oil and additional books on China and its outstanding growth, and natural resource investing. I also listened to two years of archived broadcasts of Puplava’s shows because I wanted to assure myself that I was getting a complete perspective of the energy sector.
After all of this reading and listening, I concluded that with the advent of Peak Oil, mankind must turn to coal, which as you know, is getting cleaner and thus more acceptable. Further, after learning that about 60% of U.S. electric energy needs are supplied by coal powered plants, I was sold on coal’s large potential and expanding need in a transition from oil to coal and other alternatives.
Since I wanted to limit my exposure of money transferred from my 401K to an IRA, I decided to invest in the largest coal producer in the United States, Peabody Energy (BTU). I thoroughly researched BTU before I purchased it. I knew I was in a good sector, but I bought last October and then the energy market weakened in November, BTU’s price dipped, and doubts developed in my mind. When BTU and the entire energy sector rebounded with cold weather and good earnings, I was completely hooked.
An investor on I-Hub named futrcash recommended West Hawk to me. Since I knew him well for about 5 years and highly respect his recommendations, I immediately bought 10,000 shares of West Hawk on 1/11/06 @ A $.385.
I then began looking at West Hawk’s website to begin my DD. Here is the site for your review again:
http://www.westhawkdevelopment.com/
A few Internet articles influenced me to buy more shares of West Hawk.
The first was a post on this thread supplied by Arctec on 1/22/06.
http://www.investorshub.com/boards/read_msg.asp?message_id=9362171
This link was a wealth of information beginning with a company overview, discussion of coal supply and demand world wide, PCI (Pulverized Coal Injection) for injecting coal directly into blast furnaces, company preview (projects), and discussion of management. (Unfortunately the charts that accompanied this presentation did not appear in I-Hub).
At this point I was getting pretty enthused about West Hawk and BTU was also increasing in value. So, I bought more shares of West Hawk on 1/22/06 and the price was already up to A$.48.
As I continued my DD, I located another link:
http://www.321energy.com/editorials/moriarty/moriarty093005.html
A key paragraph is quoted:
“But the real eye opening news came on September 28th when West Hawk announced receiving licenses for their Groundhog Coal Project from the Coal Licensing Bureau. At the same time they released a 43-101 report showing 48 million tons of coal in the inferred category and a mind blowing 980 million tons in the speculative category.”
Not knowing what was a 43-101, I did a Google and found the following:
http://www.apgo.net/cpd/NI43101/
Had West Hawk not had a 43-101, I would have been leery of this investment and what I had invested to date. In my mind, at least, this was a good indicator.
My convictions of West Hawk grew stronger when I heard a SMARTSTOX interview by Stanlie Hunt of Michael Townsend, President & CEO, and Chris Verrico, VP (this was 1/18/06).
http://www.smartstox.com/interviews/whd.php
I liked what these gentlemen said and they seemed to have the contacts to fold significant coal properties into a company.
On December 5, 2005 Dr. Wm. Mark Hart joined West Hawk; he is mentioned in some of the above links. I have concluded that Dr. Hart’s 30 years experience, worldwide connections, education, membership in various professional organizations, and his keynote speeches, particularly centered on gasification of coal, will enable West Hawk to grow and possibly be sought as a junior venture partner in future.
This is all conjecture, but follow my logic. The world is on the cusp of Peak Oil. It will need alternative sources of energy. Gasification of coal is one such alternative. An expert in gasification must head this process.
Dr. Hart is seemingly the right person, at the right time, with the right company with huge coal reserves to make this succeed. In my opinion, his vast experience of 30 years will culminate in the success of West Hawk and be the crowning achievement of his career. Witness some of his attributes and how they fit into West Hawk’s objectives, as stated in a West Hawk news release.
“Dr. Hart's credentials and experience in high volume underground longwall and open cut coal mining are the perfect fit for exploiting the flat lying stratigraphy of the anthracite coal seams that constitute the 980,000,000 ton speculative resource at the company's flagship Groundhog Coal Fields Project, 240 km north of Smithers B.C. “
“Dr. Hart is considered an expert in Coal Mining and has considerable knowledge in Gasification Technologies having worked as a senior executive for NRG Energy, the second largest independent power producing company in the world at the time. He has since, overseen the feasibility study, mine plan, Front End Engineering and Design (FEED) for a 500 Mw IGCC Power Plant in Sardegna, Italy. Dr Hart has also been consulting on Clean Coal Technologies to some of the largest power utilities in the United States and Europe. Dr. Hart worked for American Electric Power Fuel Supply at 22 coal mining operations for AEP coal fired power plants across the U.S.”
OTHER DEVELOPMENTS
MORE COAL RESERVES
On April 4, 2006 West Hawk reported acquisition of “an additional 3.3 billion tons of thermal coal resources contained within 245,519 acres of contiguous coal holdings known as the Fosheim Peninsula property on the east banks and the May Point property on the west banks of Eureka Sound in the West Central region of Ellesmere Island Nunavut Territories.”
The complete link of this acquisition is included:
http://biz.yahoo.com/iw/060404/0121192.html
To my knowledge, this land is not yet 43-101 compliant, but there is adequate evidence of huge coal reserves. Once this is determined and put into the measured and indicated categories, West Hawk, I believe, will have the reserve potential to become a major player in the Canadian coal industry (and elsewhere).
RELATIONSHIPS
The coal to gas will be extremely important, as oil production increases in the face of vast world population increases, particularly in China and India. West Hawk's "Non-Disclosure and coal testing Agreement (NDA) with LURGI of South Africa, in order to advance negotiations on developing this historically identified coal resource" is a giant step forward. LURGI has a working relationship with Sasol (SSL), a South African organization, which is the largest in the world for gasification and I think that this NDA bodes well for West Hawk.
West Hawk’s anthracite coal is the type of coal that is vital to blast furnaces for making steel. The steel demand is enormous in China and so is the need for anthracite coal. I own BHP and they supply a great deal of coal to China. I'm hoping that West Hawk further develops its current relationship with the Lu An' Mining Group.
LOCATION
West Hawk is relatively close to the Canadian Tar Sands of Alberta. When I owned ECA, I researched natural gas and learned that the availability of natural gas needed to process the tar from the sand could eventually become limited, both by supply and government restrictions. So I believe that gasification of coal to be used in this tar sand process will someday offer great opportunities for West Hawk. Of course, this possible objective will take vast amounts of money, but I'm betting that West Hawk's proximity and coal holdings will grow in importance and will attract major companies to it. (RTK recently partnered with BTU for their gasification process, so these relationships do develop).
West Hawk’s close proximity to ports of British Columbia will contribute to accessing the Pacific Basin, where there is a great need for its coal.
AN ANALOGY
Whenever I think of two bookends, one large and one small, I think of BTU and West Hawk, differing in size, but progressive in approaches. I believe that management in both companies is visionary. This analogy might seem farfetched at this time, but West Hawk, as a startup, has exhibited to me, at least, that it has the “best athletes available” to achieve success.
FINAL THOUGHTS
When West Hawk was halted, its price was C$.80 with 24,284,921 outstanding shares. Although the company should still be considered speculative, its prospects could be considered very good (or better) based merely on its vast coal reserves. However, it is still two to four years away from mining.
No doubt West Hawk will need additional funding to achieve income-producing products. This will mean that the stock will be diluted most likely by private placements. This is what I call the “growing pain period,” but all startups must make a funding commitment sooner or later. Again, I believe that the intrinsic value of the coal and its eventual production will justify required funding and yield a higher stock price.
Next week’s acquisition news must be fully digested. It seems that many times when a small company receives what I consider to be good news, the price then drops. This pattern probably exists as there are two primary groups owning a stock, one group is the traders and the other group is the investors. If there is a pop in the stock, the traders will unload to make the fast buck, in my opinion, and drive the price down. As an investor, I will be tempted to buy more should there be a price decline.
Finally, I’m relieved that I made this coal investment. Every week I keep my on Peak Oil developments. A news article in last Wednesday’s Wall Street Journal provided an example of declining oil supply. It stated that Mexico’s largest oil field, Cantarell, which produces about 60% of its oil, fell to 1.74 million barrels a day in June from 1.92 barrels in January. This decline was earlier than expected and might portend accelerated declines over the next few years. Sort of going down the slope of the right side of a bell shape curve. If you can find this article, it will depict what might be occurring to a lot of oil fields worldwide.
I’m not happy about the prospect of Peak Oil, but I do want some financial protection in the form of energy stocks. I guess that all people on this thread share the same attitude.
Good luck and thanks for the question,
sumisu
Plexmar Resources Inc.: Border Permit Award and Acquisition
8/3/2006
SAINTE-FOY, QUEBEC, Aug 03, 2006 (MARKET WIRE via COMTEX News Network) --
Plexmar Resources Inc.(TSX VENTURE: PLE), is pleased to announce that it has received the final documented government approval, a Supreme Decree from the President of the Republic of Peru allowing its subsidiary Minera ChanChan SAC to legally operate within 50 kilometres of the border with Ecuador. This award is a major step towards obtaining the drilling permit.
The decree covers the first 8 concessions that were originally staked and optioned, which constitute the core of the Bolsa del Diablo project. The application process has already started to obtain a second Decree for the remaining 17 concessions. The process is expected to be a lot shorter this second time around
According to the constitution of Peru, within 50 kilometers of the border, foreigners cannot acquire any mining titles, land, water rights and oil & gas rights directly or indirectly when backed by foreign capital unless they are awarded a Supreme Decree by the Council of Ministers. The process is a lengthy one and requires approval by the Ministry of Mines, the Army, the Council of Ministers and then by the President of the Republic himself.
Guy Bedard, president says: "We are delighted to have been awarded the Decree in record time. This is another milestone for the project; Plexmar is now the only foreign Company in the Bolsa del Diablo sector to have full legal rights to operate. The process was started in February 2005 and was recently completed. Only a few similar Decrees have ever been awarded to foreign Companies in the past ten years."
Ground geophysics is progressing well and should be completed along with the airborne geophysics near the end of this month. Assay results are pending from the lab and are expected shortly, patience is needed as labs are extremely busy this time of the year.
In Ecuador, the due diligence is progressing well on the 900km(2) property. Geologists have visited key areas of the property and a legal team is revising the titles status. Shareholders will be informed of the results as soon as they become available.
Also, the Company has signed a contract with a local prospector to purchase 100% of the mining rights of 3 different concession blocks covering over 7,000 hectares (70 km2) located near the Bolsa del Diablo project. On block No.1, local miners who are mining high grade zinc, silver and gold ores, which is being shipped directly to Asia for process. On block No.2, the concessions surround properties already owned by our subsidiary near Sapillica. Approximately 100 informal miners are pulling out gold on a daily basis. Block No.3 is directly in line with the structural corridor of Bolsa del Diablo and is adjacent to 2 small underground mines being developed by local mining companies. Plexmar will issue a total of 2,000,000 shares to the owner and a cash payment of $50,000US.
103M shares outstanding
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
Contacts: Plexmar Resources Inc. Guy Bedard President (418) 658-6776 Paradox Public Relations 1 (866) 460-0408 1 (514) 341-0408
SOURCE: Plexmar Resources Inc.
Copyright 2006 Market Wire, All rights reserved.
Spellbound,
I wouldn't be concerned at Rentech's apparent struggle at this point in time. In my opinion, we are approaching the zone of Peak Oil and liquification of coal will, no doubt, become a major alternative fuel source. Rentech's recent alliance with BTU should be considered a major event in the progress of this company.
I exited Rentech too early, but the proceeds of this sale went into West Hawk Development (WHD.V), which also has gasification plans. I also own BTU.
Again, remember the PEAK OIL zone; it is not if, but when, and future gas shortages will indicate, imo, that Peak Oil is a fact. Some might disagree with this statement, but I'm gearing my portfolio to this epochal energy change.
Good luck,
sumisu
Plexmar Resources Inc.: Border Permit Award and Acquisition
Thursday August 3, 1:24 pm ET
SAINTE-FOY, QUEBEC--(CCNMatthews - Aug. 3, 2006) - Plexmar Resources Inc.(TSX VENTURE:PLE - News), is pleased to announce that it has received the final documented government approval, a Supreme Decree from the President of the Republic of Peru allowing its subsidiary Minera ChanChan SAC to legally operate within 50 kilometres of the border with Ecuador. This award is a major step towards obtaining the drilling permit.
The decree covers the first 8 concessions that were originally staked and optioned, which constitute the core of the Bolsa del Diablo project. The application process has already started to obtain a second Decree for the remaining 17 concessions. The process is expected to be a lot shorter this second time around
According to the constitution of Peru, within 50 kilometers of the border, foreigners cannot acquire any mining titles, land, water rights and oil & gas rights directly or indirectly when backed by foreign capital unless they are awarded a Supreme Decree by the Council of Ministers. The process is a lengthy one and requires approval by the Ministry of Mines, the Army, the Council of Ministers and then by the President of the Republic himself.
Guy Bedard, president says: "We are delighted to have been awarded the Decree in record time. This is another milestone for the project; Plexmar is now the only foreign Company in the Bolsa del Diablo sector to have full legal rights to operate. The process was started in February 2005 and was recently completed. Only a few similar Decrees have ever been awarded to foreign Companies in the past ten years."
Ground geophysics is progressing well and should be completed along with the airborne geophysics near the end of this month. Assay results are pending from the lab and are expected shortly, patience is needed as labs are extremely busy this time of the year.
In Ecuador, the due diligence is progressing well on the 900km(2) property. Geologists have visited key areas of the property and a legal team is revising the titles status. Shareholders will be informed of the results as soon as they become available.
Also, the Company has signed a contract with a local prospector to purchase 100% of the mining rights of 3 different concession blocks covering over 7,000 hectares (70 km2) located near the Bolsa del Diablo project. On block No.1, local miners who are mining high grade zinc, silver and gold ores, which is being shipped directly to Asia for process. On block No.2, the concessions surround properties already owned by our subsidiary near Sapillica. Approximately 100 informal miners are pulling out gold on a daily basis. Block No.3 is directly in line with the structural corridor of Bolsa del Diablo and is adjacent to 2 small underground mines being developed by local mining companies. Plexmar will issue a total of 2,000,000 shares to the owner and a cash payment of $50,000US.
103M shares outstanding
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
Contact:
Guy Bedard
Plexmar Resources Inc.
President
(418) 658-6776
1 (866) 460-0408
Paradox Public Relations
1 (514) 341-0408
--------------------------------------------------------------------------------
Source: Plexmar Resources Inc.
Gold Fields Ltd Q4F 2006 Results
Thursday August 3, 3:31 am ET
Operating Profit up 40 Per Cent With a Final Dividend of 110 SA Cents Per Share Declared
JOHANNESBURG, August 3 /PRNewswire-FirstCall/ -- Gold Fields Limited (NYSE & JSE: GFI) today announced June 2006 quarter net earnings of R604 million compared with R483 million in the March 2006 quarter and negative R27 million for the June quarter of 2005. In US dollar terms net earnings for the June 2006 quarter were US$95 million compared with US$76 million in the March 2006 quarter and negative US$5 million for the June quarter of 2005. Net earnings excluding gains and losses on financial instruments and foreign debt net of cash and exceptional items were R536 million (US$84 million) for the June 2006 quarter compared with R376 million (US$60 million) for the March 2006 quarter, an increase of 43 per cent.
June 2006 quarter highlights:
- Attributable gold production in line with the March quarter
at 1,018,000 ounces;
- Average gold price up 18 per cent to R128,974 per kilogram
and up 13 per cent in US dollar terms to $628 per ounce;
- Operating margin increased from 32 per cent to 38 per cent;
- Significant improvement in performance from the Kloof mine;
- Purchase of 21.3 million shares in Western Areas Limited
increases Gold Fields stake to 18.9 per cent.
Financial year highlights:
- Attributable gold produced 4.1 million ounces for the year;
- Cost saving initiatives on track and delivering results;
- Earnings increase eleven fold from R128 million to R1,389
million and from US$21 million to US$217 million;
- Acquisition of Cerro Corona and Bolivar completed;
- Construction begins at Cerro Corona;
- Norilsk Nickel disposes of its entire 20 per cent stake in
Gold Fields during the year.
Final dividend number 65 of 110 SA cents per share, giving a total dividend of 150 SA cents per share for the year.
Ian Cockerill, Chief Executive Officer of Gold Fields said:
"Gold Fields delivered a solid set of results broadly in line with guidance provided at the end of the previous quarter. We are particularly pleased that we have been able, through effective cost control, to see a significant part of the higher gold price flow through to the bottom line. Operating profit this quarter increased 40 per cent with the Group margin increasing from 32 per cent to 38 per cent and the South African margin increasing from 22 per cent to 34 per cent.
The South African operations, led by a resurgent Kloof, delivered the anticipated improvements, while the international operations declined from an unsustainably high base in the March quarter. Total cash costs were well controlled despite the high inflationary environment around the globe.
During the September quarter the focus will remain on the mining of quality volumes and tight cost control to mitigate the strong inflationary pressures and to ensure that shareholders reap the benefit of the stronger gold price."
The full results are available on the Gold Fields website:
www.goldfields.co.za
the complete gold company
--------------------------------------------------------------------------------
Source: Gold Fields Limited
Gold Fields Ltd Q4F 2006 Results
Thursday August 3, 3:31 am ET
Operating Profit up 40 Per Cent With a Final Dividend of 110 SA Cents Per Share Declared
JOHANNESBURG, August 3 /PRNewswire-FirstCall/ -- Gold Fields Limited (NYSE & JSE: GFI) today announced June 2006 quarter net earnings of R604 million compared with R483 million in the March 2006 quarter and negative R27 million for the June quarter of 2005. In US dollar terms net earnings for the June 2006 quarter were US$95 million compared with US$76 million in the March 2006 quarter and negative US$5 million for the June quarter of 2005. Net earnings excluding gains and losses on financial instruments and foreign debt net of cash and exceptional items were R536 million (US$84 million) for the June 2006 quarter compared with R376 million (US$60 million) for the March 2006 quarter, an increase of 43 per cent.
June 2006 quarter highlights:
- Attributable gold production in line with the March quarter
at 1,018,000 ounces;
- Average gold price up 18 per cent to R128,974 per kilogram
and up 13 per cent in US dollar terms to $628 per ounce;
- Operating margin increased from 32 per cent to 38 per cent;
- Significant improvement in performance from the Kloof mine;
- Purchase of 21.3 million shares in Western Areas Limited
increases Gold Fields stake to 18.9 per cent.
Financial year highlights:
- Attributable gold produced 4.1 million ounces for the year;
- Cost saving initiatives on track and delivering results;
- Earnings increase eleven fold from R128 million to R1,389
million and from US$21 million to US$217 million;
- Acquisition of Cerro Corona and Bolivar completed;
- Construction begins at Cerro Corona;
- Norilsk Nickel disposes of its entire 20 per cent stake in
Gold Fields during the year.
Final dividend number 65 of 110 SA cents per share, giving a total dividend of 150 SA cents per share for the year.
Ian Cockerill, Chief Executive Officer of Gold Fields said:
"Gold Fields delivered a solid set of results broadly in line with guidance provided at the end of the previous quarter. We are particularly pleased that we have been able, through effective cost control, to see a significant part of the higher gold price flow through to the bottom line. Operating profit this quarter increased 40 per cent with the Group margin increasing from 32 per cent to 38 per cent and the South African margin increasing from 22 per cent to 34 per cent.
The South African operations, led by a resurgent Kloof, delivered the anticipated improvements, while the international operations declined from an unsustainably high base in the March quarter. Total cash costs were well controlled despite the high inflationary environment around the globe.
During the September quarter the focus will remain on the mining of quality volumes and tight cost control to mitigate the strong inflationary pressures and to ensure that shareholders reap the benefit of the stronger gold price."
The full results are available on the Gold Fields website:
www.goldfields.co.za
the complete gold company
--------------------------------------------------------------------------------
Source: Gold Fields Limited
Northern Orion Reports Additional Mineral Reserves Extending the Mine Life at Alumbrera
Wednesday August 2, 9:00 am ET
VANCOUVER, BRITISH COLUMBIA--(MARKET WIRE)--Aug 2, 2006 -- Northern Orion Resources Inc. (TSX:NNO.TO - News)(AMEX:NTO - News) is pleased to announce an upgrade in the Mineral Reserves at Alumbrera extending the mine life by one year until at least mid-2016.
An on-going ore delineation drilling programme in the Alumbrera pit, undertaken both within the existing ore envelope and for extensions at depth, has confirmed 40 million tonnes of additional mineral reserves. The mine plan was re-optimized based on a new geological model with additional mineralization, and together with improved final pit slope angles resulted in an increase in contained metal reserves of more than 10%. This equates approximately to an additional 260 million pounds of contained copper (Northern Orion's share - 33 million pounds) and 400,000 ounces of gold (Northern Orion's share - 50,000 ounces) over the life of the mine. The additional ore was identified predominantly in the southern end of the pit, both inside and outside previous pit shell limits.
Also, progressive expansions of the Alumbrera concentrator over the previous four years will be completed by the end of 2006 and will have increased the throughput capacity of the Alumbrera concentrator by 54% to 40 million tonnes per annum.
As a consequence of the announced increase, current Mineral Reserves and Resources are (on a 100% basis, of which Northern Orion owns 12.5%):
Mineral Reserves(i) Mineral Resources(i)
------------------------- --------------------------
Proved 380 Mt @0.45%Cu Measured 400 Mt @0.45%Cu
& 0.49 gpt Au & 0.48 gpt Au
------------------------- --------------------------
Probable 24 Mt @0.42%Cu Indicated 24 Mt @0.42%Cu
& 0.43 gpt Au & 0.43 gpt Au
------------------------- --------------------------
Total 400 Mt @0.45%Cu Total 420 Mt @0.45%Cu
& 0.49 gpt Au & 0.48 gpt Au
------------------------- --------------------------
(i) The information in this press release which relates to
Mineral Resources and Reserves is based on information
verified by Alumbrera's internal lab facilities and compiled
by Mr. Luis Rivera who is a member of the Australasian
Institute of Mining and Metallurgy and who is a Qualified
Person as defined by National Instrument 43-101. Mr. Rivera
is a full-time employee of Minera Alumbrera Limited. Ore
Reserves have been calculated in accordance with the
recommendations of the Australian Institute of Mining and
Metallurgy - Joint Ore Reserve Committee (the "JORC" code),
where the Measured and Indicated Mineral Resources are
inclusive of those Mineral Resources modified to produce the
Mineral Reserves.
PRESENTATION AND CONFERENCE CALL FOR 2nd QUARTER 2006 RESULTS
Northern Orion will release its second quarter results and an update on progress at Agua Rica before the market opens on Wednesday, August 9, 2006 and will host a telephone conference call and presentation by webcast on Thursday, August 10, 2006 at 10:00 a.m. Pacific Time (1:00 p.m. Eastern) to discuss the study and the results. The conference call may be accessed by dialing 1-800-319-4610 in Canada and the United States, or 1-604-638-5340 internationally. The webcast may be accessed on Northern Orion's home page at www.northernorion.com.
David Cohen, President and CEO
Except for the statements of historical fact contained herein, certain information presented constitutes "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking statements, including but not limited to, those with respect to the price of molybdenum, gold, silver and copper, the timing and amount of estimated future production, the potential and/or projected cash flow generated from production, costs of production, reserve determination and reserve conversion rates, and the potential for further equity dilution involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievement of Northern Orion to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, risks related to international operations, risks related to joint venture operations, the actual results of current exploration activities, actual results of current reclamation activities, conclusions of economic evaluations, uncertainty in the estimation of ore reserves and mineral resources, changes in project parameters as plans continue to be refined, future prices of gold, silver and copper, economic and political instability in Argentina, environmental risks and hazards, increased infrastructure and/or operating costs, labor and employment matters, and government regulation as well as those factors discussed in the section entitled "Risk Factors" in Northern Orion's Renewal Annual Information form attached to Northern Orion's latest Form 40-F on file with the United States Securities and Exchange Commission in Washington, D.C. Although Northern Orion has attempted to identify important factors that could cause actual results to differ materially, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Northern Orion disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Accordingly, readers should not place undue reliance on forward-looking statements.
Contact:
Contacts:
Northern Orion Resources Inc.
Investor Relations
1-866-608-9970
http://www.northernorion.com
--------------------------------------------------------------------------------
Source: Northern Orion Resources Inc.
Chariot Announces Cu Drill Intercepts of 60 Metres at 1.49%; 42 Metres at 2.06%, and 42 Metres at 1.05%; Including 22 Metres at 3.16%, 10 Metres 2.46%, and 30 Metres at 2.95%
Tuesday August 1, 9:15 am ET
TORONTO, ONTARIO--(CCNMatthews - Aug. 1, 2006) - Chariot Resources Limited ("Chariot") (TSX:CHD - News) is pleased to announce further drill results from its 2006 drilling campaign at the Marcona Copper Project. These results are from three zones in which copper oxide mineralization is the most common form of mineralization.
Two of these zones lie, in part, within the ultimate pit boundary of the Mina Justa Main Pit as defined in the Scoping Study released on May 3, 2006. Based on the results released today from these two zones it is likely that the ultimate pit boundary may have to be extended. The third copper oxide zone lies about 1.0 km from the Mina Justa Main Pit.
Northern Oxide zone: This zone comprises copper oxide mineralization from surface to a depth of approximately 200 metres. This zone is also the location for the proposed starter pit operation of the Mina Justa project. The most recent drill results from the Northern Oxide zone were released on June 5, 2006.
Notable highlights from the Northern Oxide zone are
(all copper oxide mineralization):- MJV-06-154 60 metres at 1.49% Cu (106 to 166 m), including
22 metres at 3.16% Cu (138 to 160 m)- MJV-06-156 14 metres at 1.14% Cu (72 to 86 m), including
6 metres at 2.63% Cu (74 to 80 m) and
36 metres at 0.67% Cu (90 to 126 m), including
4 metres at 1.46% Cu (90 to 94 m) and
12 metres at 0.43% Cu (168 to 180 m)- MJV-06-159 12 metres at 2.01% Cu (28 to 40 m), including
6 metres at 3.56% Cu (32 to 38 m)- MJV-06-160 42 metres at 1.05% Cu (60 to 102 m), including
10 metres at 2.46% Cu (64 to 74 m)- MJV-06-161 36 metres at 0.90% Cu (84 to 120 m), including
14 metres at 1.29% Cu (90 to 104 m)
The most recent drill results from the Northern Oxide zone come from a depth of between 28 metres to 166 metres. The surface expression of this zone as presently defined is approximately 650 metres long and approximately 250 metres wide. Within this zone the results from the 2006 drilling campaign have outlined a high-grade core that measures approximately 300 metres by 75 to 100 metres that has the potential to improve the grade of the ore mined in the early years. The Northern Oxide zone is still open to the northeast and extends outside the ultimate pit boundary of the Mina Justa Main Pit as currently defined.
Western Pit Extension: This area comprises copper oxide mineralization from 30 metres to a depth of approximately 200 metres. On the surface this area is approximately 700 metres long and approximately 300 metres wide. The bulk of this zone also lies within the ultimate pit boundary of the Mina Justa Main pit; however, based on the most recent results it is likely that the pit boundary may have to be extended towards the west.
Notable highlights from the Western Pit extension area are
(all copper oxide mineralization):- MJV-06-195 40 metres at 0.91% Cu (150 to 190 m), including
10 metres at 1.34% Cu (180 to 190 m)- MJV-06-202 32 metres at 0.70% Cu (30 to 126 m)- MJV-06-212 32 metres at 0.92% Cu (96 to 128 m), including
10 metres at 1.45% Cu (104 to 114 m)- MJV-06-213 42 metres at 0.78% Cu (60 to 102 m)- MJV-06-220 44 metres at 0.96% Cu (82 to 126 m), including
4 metres at 2.78% Cu (104 to 108 m).
Magnetite Manto area: The Scoping Study has identified this area as having the potential to add value to the Mina Justa base case if additional drilling can identify a high-grade copper oxide resource that may be incorporated into the mine plan. Magnetite Manto is located approximately 1 km west of the Mina Justa Main Pit. The current drill results come from a depth of between 4 to 110 metres. The surface expression of the Magnetite Manto is approximately 350 metres long and approximately 300 metres wide. The most recent drill results from the Magnetite Manto area were released on May 10, 2006.
Notable highlights from the Magnetite Manto area are
(all copper oxide mineralization):- MJV-06-167 20 metres at 1.34% Cu (90 to 110 m), including
10 metres at 2.23% Cu (98 to 108 m)- MJV-06-179 16 metres at 1.73% Cu (4 to 20 m), including
8 metres at 2.72% Cu (4 to 12 m)- MJV-06-181 42 metres at 2.06% Cu (42 to 88 m), including
30 metres at 2.95% Cu (58 to 88 m).
All intersections were determined using a rolling 0.25% Cu cut-off and up to 2 metres of internal waste. High-grade intersections in copper oxide mineralization were calculated using a rolling 1% Cu cut-off and up to 2 metres of internal waste. Higher-grade intersections in copper sulphide mineralization were determined using a rolling 2% Cu cut-off. All intercepts are down-hole length and intersection true widths have not been calculated.
Sampling procedures for the current drilling program are the same as previously reported and in summary: All RC chips are logged at the Mina Justa project site. Holes are sampled in their entirety in two metre runs and split at the drill site. A 1/8 split or approximately 5 kilograms of a two metre sample is submitted to the on-site SGS Lakefield Research ("SGS") preparation facility where samples are crushed to 95% passing 10 mesh and riffle split from which a 250 gram sub-sample is taken. The sub-sample is submitted to SGS, in Lima, for analysis. The coarse sample prep reject is bagged and stored on site and following analysis the analytical pulp sample is returned to Chariot for on-site storage.
All samples are analyzed for copper (Cu) using sequential leach resulting in four Cu analyses per sample (Cu total, Cu soluble in sulphuric acid, Cu soluble in sodium cyanide and a Cu residual). Gold is sampled using a 30 gram Fire Assay with an AA finish. Sulphide samples are submitted for 38 element ICP analysis with aqua-regia digest. Quality control procedures include insertion of certified project standards at the drill site (1 in 30), field, crush and pulp duplicate samples (1 in 30 each), laboratory duplicates (1 in 30) and reagent blanks and reference material (1 in 30 each).
Data contained in this news release was validated and intersections calculated by John D. Kapusta, P. Geo, Vice-President Exploration and Geological Services, Chariot Resources Limited, the designated Qualified Person as defined in National Instrument 43-101.
Chariot Resources Limited (TSX:CHD - News) is developing its 70% owned Marcona Copper Project in Peru. With exceptional infrastructure, a significant resource and strong financial and commercial partners, Chariot's Marcona Copper Project is scheduled to be a mid-tier copper producer by 2009.
Additional details about Chariot can be viewed at the Company's website, www.chariotresources.com.
CHARIOT RESOURCES LIMITED
Ulli Rath, President & CEO
NOTE: To view the MJV Drillhole Locations map, please visit the following link - http://www.ccnmatthews.com/docs/chariotmap.pdf
Contact:
Toronto, Canada Office
Chariot Resources Limited
Alex Black, Chairman
+1 (416) 363-4554
Cell Phone: +1 (647) 287-4980
Toronto, Canada Office
Chariot Resources Limited
Ulli Rath, President & CEO
+1 (416) 363-4554
Cell phone: +1 (416) 270-4481
Lima, Peru Office
Chariot Resources Limited
John Kapusta, VP Exploration & Geological Services
+51-1-617 1313
--------------------------------------------------------------------------------
Source: Chariot Resources Limited
Market Regulation Services - Trading Halt - West Hawk Development - WHD
Wednesday July 26, 11:14 am ET
VANCOUVER, July 26 /CNW/ - The following issues have been halted by Market Regulation Services (RS):
Issuer Name: West Hawk Development
TSXV Ticker Symbol: WHD
Time of Halt: 11:02 EST
Reason for Halt: Pending News
UBS Starts Coverage of Silver Miners
Tuesday July 25, 3:47 pm ET
UBS Analyst Starts Coverage of Three Silver Companies at 'Buy' Rating, One at 'Neutral'
NEW YORK (AP) -- Climbing silver prices prompted UBS to begin coverage of several silver miners on Tuesday, and the analyst said the metal's recent volatility could offer lustrous returns.
Silver prices have surged from about $7 an ounce a year ago to more than $15 in May. Although prices have retreated to around $11 an ounce since then, the market's volatility could make for potential higher returns, said UBS analyst Craig West in a recent client note.
West began coverage of Silver Wheaton, Pan American Silver Corp. and Silver Standard Resources Inc. at "Buy" ratings, and Coeur d'Alene Mines Corp. at "Neutral."
"As gold's poor cousin, silver is affected by lower physical stocks than gold, resulting in higher price volatility similar to that of the base metals," said West. "This higher volatility does pose higher risk, but also the potential for higher returns."
Silver prices are about 10 percent to 15 percent more volatile than gold prices, the analyst said.
UBS has a bullish outlook on silver prices, with a target of $15 an ounce in 2007. Investment demand -- such as that from new exchange-traded funds that track silver -- combined with a weaker U.S. dollar and gold strength should continue to bolster silver prices.
West said the three "Buy" rated companies each have something to offer investors. Silver Wheaton trades with high leverage to the metal price. Pan American has a solid record of growth and aims to double production by 2009, while Silver Standard is an explorer with substantial resources.
Silver Wheaton shares rose 35 cents, or 4 percent, to $9.13 in late trading on the New York Stock Exchange. Silver Standard shares rose $1.03, or 5.5 percent, to $19.64. Nasdaq-listed Pan American Silver jumped 63 cents, or 3.8 percent, to $17.25.
Shares of Coeur d'Alene rose 9 cents, or 2 percent, to $4.62 on the NYSE.
Silver closed down 2 cents to $10.90 an ounce on the New York Mercantile Exchange.
EnCana Posts 150% Profit Gain, Sanctions Oilsands Expansion
By James Stevenson
25 Jul 2006 at 10:55 AM EDT
CALGARY (CP) -- Posting a 150% increase in second-quarter profits to $2.16 billion, EnCana Corp. [NYSE:ECA;TSX:ECA] said Tuesday that it will proceed with two expansions to its oilsands operations despite a 10% increase in costs.
EnCana, one of North America's largest natural gas producers, attributed its aggressive hedging policy, increasing gas sales and one-time gains for raising quarterly earnings to $2.55 per share, compared to 94 cents per share the previous year.
Cash flow soared 22% to $1.8 billion.
''In the second quarter of 2006, we continue to post strong financial results and our production growth is in line with our internal 2006 budget,'' chief executive Randy Eresman told analysts.
EnCana remained tight-lipped on its strategy to find new partnership and refining arrangements for its oilsands developments, saying that a decision would be made sometime in the next three months.
But the company still approved two 30,000-barrel-per-day expansions at its Foster Creek oilsands project in northeastern Alberta, designed to boost production at the facility to 120,000 barrels per day by the end of 2009.
Eresman also revealed that the expected costs for each of the Foster Creek expansions are now 10% higher since last November's estimates, to about $330 million.
Future developments at the company's less developed Christina Lake and Borealis oilsands sites would cost even more, he added.
''Those initial developments for commercial projects would be somewhat higher than that,'' Eresman said.
EnCana is the latest energy company to boost the expected price tag for developing oilsands projects, as the cost for everything from steel to labour in the overheated economy of northern Alberta continues to soar.
Earlier this month, Nexen Inc. [NYSE:NXY;TSX:NXY] said its Long Lake project would cost 10 per cent more to about $4.2 billion.
Shell Canada [TSX:SHC] is also reviewing its oilsands expansion strategy after warning the market of significantly higher costs - which partner Western Oil Sands [TSX:WTO] said could go as much as 50% higher to about C$11 billion for an extra 100,000 barrels per day.
EnCana began searching for partners for its oilsands operations last year, looking for companies with existing North American refining capacity that could upgrade its heavy oil instead of having to build expensive new infrastructure.
Eresman said Tuesday that the oilsands expansions were ''long-term projects'' that needed to proceed even before a final decision was made on a partnering strategy.
''Once you have the momentum on these projects, you just want to keep on rolling along. It is very disruptive to the staff, to the people, to the industry to be constantly changing timing of these type of projects,'' he said.
''It ends up costing you a lot more in the end.''
Eresman reiterated his belief that inflationary pressures on the oilpatch were beginning to slow, thanks in large part to a slower pace to Canadian drilling as natural gas prices continue to slide downwards.
But EnCana said Tuesday that its U.S. operations are still experiencing strong upward cost pressures.
As a result, company-wide inflation this year is expected to be between 12 and 18 percent on capital and operating costs.
During the second quarter, EnCana's natural gas sales increased five percent to 3.36 billion cubic feet per day while production at its key resource plays rose 12 percent.
The company's quarterly results were also boosted by several one-time items, including $582 million on the sale of discontinued operations. That comprised an $814-million gain on the sale of natural gas storage assets and a $232-million net loss for expected final settlement of the sale of its assets in Ecuador.
EnCana also recorded a C$457-million gain due to lower federal and provincial tax rates.
The company also continues to use proceeds from asset sales to buy back its shares. In the first half of 2006, it had re-purchased 43.7 million EnCana shares, representing 5.1% of the company.
Eresman said EnCana was not hunting for large acquisitions, including the for-sale assets of Anadarko Canada [NYSE:APC], which are estimated to fetch upwards of C$5 billion.
EnCana's name had been bandied about as a possible suitor for those properties, along with Talisman Energy [TSX:TLM].
© The Canadian Press 2006
Lateegra Gold to acquire interest in Picacho gold mine
2006-07-25 19:45 ET - News Release
Mr. Michael Townsend reports
LATEEGRA GOLD ACQUIRES PRODUCING GOLD MINE IN SIERRA MADRE GOLD BELT MEXICO
Lateegra Gold Corp. has entered into an acquisition agreement with Tara Gold Resources Corp. to acquire up to a 70-per-cent interest in the Picacho gold mine located within the Northern Sierra Madre gold belt, 120 kilometres south of the United States border, in Sonora state, Mexico.
The Picacho mine, a 3,236-hectare mining concession, is 24 kilometres by haulage road from Bacoachi, a town with a population of approximately 2,000 people serviced by the national electrical grid, a 1,200-metre airstrip and a paved highway accessing the nearby mining town of Cananea and the state capital, Hermosillo.
The previous owners have been exploiting an up to six-metre-wide vein structure for the past three years by driving in on a five-metre by five-metre ramp declining 8 per cent and extending over one kilometre in length. Production comes from several working faces averaging four to six metres in width, dipping at 700, with very competent hangingwall and roof-support conditions. Owner-reported, and company-verified, ore grades averaged five grams gold and 15 grams silver per tonne hosted within a mineralized structure comprising an 85-per-cent-silica content, creating a tailings product that is being sold as a flux agent to the local smelters for $35 (U.S.) per tonne, an amount that is estimated to generate sufficient revenues to cover current mining and milling costs. Management believes the orebody width, dip and hangingwall competency offer tremendous operational flexibility, enabling a variety of mining methodologies to ultimately optimize efficiency while minimizing pillar volumes and dilution.
Lateegra has commissioned three separate site visits to the Picacho property, with check samples being taken under the supervision of National Instrument 43-101 qualified persons, Michael Sandidge, PGeo, Jeffrey Reeder, PGeo, and James McCrea, PGeo. The samples tabulated below were random, representing both the structure and the wall rock. Results as obtained from samples are as follows.
RESULTS AS OBTAINED FROM SAMPLES
Sample Au Ag Site Sample Au Ag Site
No. (g/t) (g/t) No. (g/t) (g/t)
16476 1.315 9.3 MP 0004-06 3.86 4.5 UG
16477 0.57 3.8 MP 0005-06 0.354 6.9 DAV
16478 0.258 4.0 MP 1 0.018 1.9 UG
16479 0.451 13.9 MP 2 0.049 0.6 UG
16480 5.72 31.1 UG 3 1.31 2.9 UG
16481 7.82 22.3 UG 4 0.041 1.4 UG
16482 29.9 53.2 GF 5 1.59 11.1 UG
16483 2.42 12.0 OP 6 3.66 23.9 UG
16484 2.37 9.4 OP 7 0.258 1.6 UG
16485 3.93 12.0 OP 8 6.17 15.3 UG
0001-06 6.47 26.2 OP 9 5.85 11.4 UG
0002-06 2.56 7.6 UG 10 0.135 5.4 UG
0003-06 1.565 4.4 UG 11 7.88 43.1 UG
The samples were collected and transported by independent consultants to ALS Chemex Laboratory (Chemex) in Hermosillo, Sonora, Mexico, (a laboratory certified by ISO 9002).
The purchase of the mine includes an extensive processing facility currently capable of 250 tonnes per day of ore throughput. The mill includes a 1,500-tonne-per-day jaw crusher, a 500-tonne-per-day cone crusher, two ball mills, two floatation cells (400 tonnes per day), two caterpillar gen-sets and a large shop facility. The rolling stock consists of three Wagner ST8 scoop trams, a Gardner Denver 2 boom pneumatic jumbo, a stationary hydraulic exploration drill, two compressors, two Cat D8s and a D9 dozer, a Clarke Michigan front-end loader, one track loader, haul trucks, and all ancillary mining equipment. The equipment, being in good serviceable condition, allows the option for a continuing mining operation simultaneous to the commissioning of a scoping study to prepare recommendations, around various optimization scenarios, for plant and equipment upgrading.
The Picacho project, interpreted as a low-sulphidation epithermal gold-silver system, is hosted in a middle-upper Tertiary caldera complex of silicified andesites and andesitic tuffs intruded by nearly contemporaneous rhyodacites, diotites and andesitic breccias. This caldera complex is part of a volcanic regime covering northern Sonora and Chihuahua states of Mexico, overprinting a northwest-southeast-trending lower Tertiary porphyry-copper belt host to Mexico's largest copper deposits -- Cananea and La Caridad. The property is structurally delineated by northwest-southeast, north-south and northeast-southwest fault and fracture-trending structures traced for over five kilometres, and potentially representing a reactivation of older structures, developing an extensive vein system hosting gold, and characterized by multiphase banded quartz and sulphide stockwork veining with hydrothermal brecciation within intensely silicified andesitic volcanics.
A new zone of intense alteration comprising a vuggy silica discovered in recent workings, represents a near-surface heap-leachable gold target believed to be related to the same structure currently being mined on strike, more than two kilometres away. The new zone will be drill tested as part of a resource definition program. Low sulphidation systems of this type, under favourable conditions, have formed large bulk-tonnage gold deposits including the 42-million-ounce Lihir deposit in Papua New Guinea, the 16-million-ounce Zhao-Ye deposit in China, the five-million-ounce Kori-Kollo deposit in Bolivia and the 18-millon-ounce Cadia East deposit in Australia.
The terms of the option agreement to earn an initial 65-per-cent interest in the project are as follows. Lateegra will make staged escalating payments to the vendors totalling $7,325,000 over a five-year period plus an additional $100,000 per year on the anniversary of the agreement for the term of the joint venture. Lateegra will also commit to spending $1-million in exploration and $2-million on mine development and production plant enhancements within 18 months of the signing of the agreement, as well as issue Tara Gold 50,000 shares per month for a period of 12 months. Once Lateegra has earned the 65-per-cent interest, a joint venture will be formed and a standard dilution clause will be in effect. As a basis for the dilution clause, each party will be deemed to have invested the following amount of money in the Picacho groupings:
* Lateegra -- $10,325,000 (U.S.) (representing its 65-per-cent interest); and
* Tara -- $5.6-million (U.S.) (representing its 35-per-cent interest).
In the event a participant has been diluted down to a 10-per-cent interest, this interest will automatically convert into a 3-per-cent net smelter return and the joint venture agreement will become null and void. For a period of no longer than one year, the 3-per-cent NSR can be reduced to 1 per cent by any partner in exchange for a $2-million (U.S.) payment for each 1-per-cent increment. It is also agreed that Lateegra will have an 18-month option to increase its interest in the Picacho groupings to 70 per cent, thereby reducing Tara's interest in the Picacho groupings to 30 per cent, whereby the price for the 5 per cent will be determined based on a sliding scale of daily production averaged over three months. A finder's fee in accordance with TSX policies will be payable.
The above proposed transaction is subject to TSX Venture Exchange approval. The technical information in this news release has been reviewed by Michael Sandidge, PGeo, a qualified person as defined in National Instrument 43-101, and acknowledges that the property-specific data are historical and believed to be accurate, but should not be relied on.
The company has also granted incentive stock options to the officers, consultants and employees under its stock option plan, for the purchase of up to 130,000 common shares of the company for a period of two years at a price of 80 cents per share.
Lateegra Gold to acquire interest in Picacho gold mine
2006-07-25 19:45 ET - News Release
Mr. Michael Townsend reports
LATEEGRA GOLD ACQUIRES PRODUCING GOLD MINE IN SIERRA MADRE GOLD BELT MEXICO
Lateegra Gold Corp. has entered into an acquisition agreement with Tara Gold Resources Corp. to acquire up to a 70-per-cent interest in the Picacho gold mine located within the Northern Sierra Madre gold belt, 120 kilometres south of the United States border, in Sonora state, Mexico.
The Picacho mine, a 3,236-hectare mining concession, is 24 kilometres by haulage road from Bacoachi, a town with a population of approximately 2,000 people serviced by the national electrical grid, a 1,200-metre airstrip and a paved highway accessing the nearby mining town of Cananea and the state capital, Hermosillo.
The previous owners have been exploiting an up to six-metre-wide vein structure for the past three years by driving in on a five-metre by five-metre ramp declining 8 per cent and extending over one kilometre in length. Production comes from several working faces averaging four to six metres in width, dipping at 700, with very competent hangingwall and roof-support conditions. Owner-reported, and company-verified, ore grades averaged five grams gold and 15 grams silver per tonne hosted within a mineralized structure comprising an 85-per-cent-silica content, creating a tailings product that is being sold as a flux agent to the local smelters for $35 (U.S.) per tonne, an amount that is estimated to generate sufficient revenues to cover current mining and milling costs. Management believes the orebody width, dip and hangingwall competency offer tremendous operational flexibility, enabling a variety of mining methodologies to ultimately optimize efficiency while minimizing pillar volumes and dilution.
Lateegra has commissioned three separate site visits to the Picacho property, with check samples being taken under the supervision of National Instrument 43-101 qualified persons, Michael Sandidge, PGeo, Jeffrey Reeder, PGeo, and James McCrea, PGeo. The samples tabulated below were random, representing both the structure and the wall rock. Results as obtained from samples are as follows.
RESULTS AS OBTAINED FROM SAMPLES
Sample Au Ag Site Sample Au Ag Site
No. (g/t) (g/t) No. (g/t) (g/t)
16476 1.315 9.3 MP 0004-06 3.86 4.5 UG
16477 0.57 3.8 MP 0005-06 0.354 6.9 DAV
16478 0.258 4.0 MP 1 0.018 1.9 UG
16479 0.451 13.9 MP 2 0.049 0.6 UG
16480 5.72 31.1 UG 3 1.31 2.9 UG
16481 7.82 22.3 UG 4 0.041 1.4 UG
16482 29.9 53.2 GF 5 1.59 11.1 UG
16483 2.42 12.0 OP 6 3.66 23.9 UG
16484 2.37 9.4 OP 7 0.258 1.6 UG
16485 3.93 12.0 OP 8 6.17 15.3 UG
0001-06 6.47 26.2 OP 9 5.85 11.4 UG
0002-06 2.56 7.6 UG 10 0.135 5.4 UG
0003-06 1.565 4.4 UG 11 7.88 43.1 UG
The samples were collected and transported by independent consultants to ALS Chemex Laboratory (Chemex) in Hermosillo, Sonora, Mexico, (a laboratory certified by ISO 9002).
The purchase of the mine includes an extensive processing facility currently capable of 250 tonnes per day of ore throughput. The mill includes a 1,500-tonne-per-day jaw crusher, a 500-tonne-per-day cone crusher, two ball mills, two floatation cells (400 tonnes per day), two caterpillar gen-sets and a large shop facility. The rolling stock consists of three Wagner ST8 scoop trams, a Gardner Denver 2 boom pneumatic jumbo, a stationary hydraulic exploration drill, two compressors, two Cat D8s and a D9 dozer, a Clarke Michigan front-end loader, one track loader, haul trucks, and all ancillary mining equipment. The equipment, being in good serviceable condition, allows the option for a continuing mining operation simultaneous to the commissioning of a scoping study to prepare recommendations, around various optimization scenarios, for plant and equipment upgrading.
The Picacho project, interpreted as a low-sulphidation epithermal gold-silver system, is hosted in a middle-upper Tertiary caldera complex of silicified andesites and andesitic tuffs intruded by nearly contemporaneous rhyodacites, diotites and andesitic breccias. This caldera complex is part of a volcanic regime covering northern Sonora and Chihuahua states of Mexico, overprinting a northwest-southeast-trending lower Tertiary porphyry-copper belt host to Mexico's largest copper deposits -- Cananea and La Caridad. The property is structurally delineated by northwest-southeast, north-south and northeast-southwest fault and fracture-trending structures traced for over five kilometres, and potentially representing a reactivation of older structures, developing an extensive vein system hosting gold, and characterized by multiphase banded quartz and sulphide stockwork veining with hydrothermal brecciation within intensely silicified andesitic volcanics.
A new zone of intense alteration comprising a vuggy silica discovered in recent workings, represents a near-surface heap-leachable gold target believed to be related to the same structure currently being mined on strike, more than two kilometres away. The new zone will be drill tested as part of a resource definition program. Low sulphidation systems of this type, under favourable conditions, have formed large bulk-tonnage gold deposits including the 42-million-ounce Lihir deposit in Papua New Guinea, the 16-million-ounce Zhao-Ye deposit in China, the five-million-ounce Kori-Kollo deposit in Bolivia and the 18-millon-ounce Cadia East deposit in Australia.
The terms of the option agreement to earn an initial 65-per-cent interest in the project are as follows. Lateegra will make staged escalating payments to the vendors totalling $7,325,000 over a five-year period plus an additional $100,000 per year on the anniversary of the agreement for the term of the joint venture. Lateegra will also commit to spending $1-million in exploration and $2-million on mine development and production plant enhancements within 18 months of the signing of the agreement, as well as issue Tara Gold 50,000 shares per month for a period of 12 months. Once Lateegra has earned the 65-per-cent interest, a joint venture will be formed and a standard dilution clause will be in effect. As a basis for the dilution clause, each party will be deemed to have invested the following amount of money in the Picacho groupings:
* Lateegra -- $10,325,000 (U.S.) (representing its 65-per-cent interest); and
* Tara -- $5.6-million (U.S.) (representing its 35-per-cent interest).
In the event a participant has been diluted down to a 10-per-cent interest, this interest will automatically convert into a 3-per-cent net smelter return and the joint venture agreement will become null and void. For a period of no longer than one year, the 3-per-cent NSR can be reduced to 1 per cent by any partner in exchange for a $2-million (U.S.) payment for each 1-per-cent increment. It is also agreed that Lateegra will have an 18-month option to increase its interest in the Picacho groupings to 70 per cent, thereby reducing Tara's interest in the Picacho groupings to 30 per cent, whereby the price for the 5 per cent will be determined based on a sliding scale of daily production averaged over three months. A finder's fee in accordance with TSX policies will be payable.
The above proposed transaction is subject to TSX Venture Exchange approval. The technical information in this news release has been reviewed by Michael Sandidge, PGeo, a qualified person as defined in National Instrument 43-101, and acknowledges that the property-specific data are historical and believed to be accurate, but should not be relied on.
The company has also granted incentive stock options to the officers, consultants and employees under its stock option plan, for the purchase of up to 130,000 common shares of the company for a period of two years at a price of 80 cents per share.
Lateegra Gold to acquire interest in Picacho gold mine
2006-07-25 19:45 ET - News Release
Mr. Michael Townsend reports
LATEEGRA GOLD ACQUIRES PRODUCING GOLD MINE IN SIERRA MADRE GOLD BELT MEXICO
Lateegra Gold Corp. has entered into an acquisition agreement with Tara Gold Resources Corp. to acquire up to a 70-per-cent interest in the Picacho gold mine located within the Northern Sierra Madre gold belt, 120 kilometres south of the United States border, in Sonora state, Mexico.
The Picacho mine, a 3,236-hectare mining concession, is 24 kilometres by haulage road from Bacoachi, a town with a population of approximately 2,000 people serviced by the national electrical grid, a 1,200-metre airstrip and a paved highway accessing the nearby mining town of Cananea and the state capital, Hermosillo.
The previous owners have been exploiting an up to six-metre-wide vein structure for the past three years by driving in on a five-metre by five-metre ramp declining 8 per cent and extending over one kilometre in length. Production comes from several working faces averaging four to six metres in width, dipping at 700, with very competent hangingwall and roof-support conditions. Owner-reported, and company-verified, ore grades averaged five grams gold and 15 grams silver per tonne hosted within a mineralized structure comprising an 85-per-cent-silica content, creating a tailings product that is being sold as a flux agent to the local smelters for $35 (U.S.) per tonne, an amount that is estimated to generate sufficient revenues to cover current mining and milling costs. Management believes the orebody width, dip and hangingwall competency offer tremendous operational flexibility, enabling a variety of mining methodologies to ultimately optimize efficiency while minimizing pillar volumes and dilution.
Lateegra has commissioned three separate site visits to the Picacho property, with check samples being taken under the supervision of National Instrument 43-101 qualified persons, Michael Sandidge, PGeo, Jeffrey Reeder, PGeo, and James McCrea, PGeo. The samples tabulated below were random, representing both the structure and the wall rock. Results as obtained from samples are as follows.
RESULTS AS OBTAINED FROM SAMPLES
Sample Au Ag Site Sample Au Ag Site
No. (g/t) (g/t) No. (g/t) (g/t)
16476 1.315 9.3 MP 0004-06 3.86 4.5 UG
16477 0.57 3.8 MP 0005-06 0.354 6.9 DAV
16478 0.258 4.0 MP 1 0.018 1.9 UG
16479 0.451 13.9 MP 2 0.049 0.6 UG
16480 5.72 31.1 UG 3 1.31 2.9 UG
16481 7.82 22.3 UG 4 0.041 1.4 UG
16482 29.9 53.2 GF 5 1.59 11.1 UG
16483 2.42 12.0 OP 6 3.66 23.9 UG
16484 2.37 9.4 OP 7 0.258 1.6 UG
16485 3.93 12.0 OP 8 6.17 15.3 UG
0001-06 6.47 26.2 OP 9 5.85 11.4 UG
0002-06 2.56 7.6 UG 10 0.135 5.4 UG
0003-06 1.565 4.4 UG 11 7.88 43.1 UG
The samples were collected and transported by independent consultants to ALS Chemex Laboratory (Chemex) in Hermosillo, Sonora, Mexico, (a laboratory certified by ISO 9002).
The purchase of the mine includes an extensive processing facility currently capable of 250 tonnes per day of ore throughput. The mill includes a 1,500-tonne-per-day jaw crusher, a 500-tonne-per-day cone crusher, two ball mills, two floatation cells (400 tonnes per day), two caterpillar gen-sets and a large shop facility. The rolling stock consists of three Wagner ST8 scoop trams, a Gardner Denver 2 boom pneumatic jumbo, a stationary hydraulic exploration drill, two compressors, two Cat D8s and a D9 dozer, a Clarke Michigan front-end loader, one track loader, haul trucks, and all ancillary mining equipment. The equipment, being in good serviceable condition, allows the option for a continuing mining operation simultaneous to the commissioning of a scoping study to prepare recommendations, around various optimization scenarios, for plant and equipment upgrading.
The Picacho project, interpreted as a low-sulphidation epithermal gold-silver system, is hosted in a middle-upper Tertiary caldera complex of silicified andesites and andesitic tuffs intruded by nearly contemporaneous rhyodacites, diotites and andesitic breccias. This caldera complex is part of a volcanic regime covering northern Sonora and Chihuahua states of Mexico, overprinting a northwest-southeast-trending lower Tertiary porphyry-copper belt host to Mexico's largest copper deposits -- Cananea and La Caridad. The property is structurally delineated by northwest-southeast, north-south and northeast-southwest fault and fracture-trending structures traced for over five kilometres, and potentially representing a reactivation of older structures, developing an extensive vein system hosting gold, and characterized by multiphase banded quartz and sulphide stockwork veining with hydrothermal brecciation within intensely silicified andesitic volcanics.
A new zone of intense alteration comprising a vuggy silica discovered in recent workings, represents a near-surface heap-leachable gold target believed to be related to the same structure currently being mined on strike, more than two kilometres away. The new zone will be drill tested as part of a resource definition program. Low sulphidation systems of this type, under favourable conditions, have formed large bulk-tonnage gold deposits including the 42-million-ounce Lihir deposit in Papua New Guinea, the 16-million-ounce Zhao-Ye deposit in China, the five-million-ounce Kori-Kollo deposit in Bolivia and the 18-millon-ounce Cadia East deposit in Australia.
The terms of the option agreement to earn an initial 65-per-cent interest in the project are as follows. Lateegra will make staged escalating payments to the vendors totalling $7,325,000 over a five-year period plus an additional $100,000 per year on the anniversary of the agreement for the term of the joint venture. Lateegra will also commit to spending $1-million in exploration and $2-million on mine development and production plant enhancements within 18 months of the signing of the agreement, as well as issue Tara Gold 50,000 shares per month for a period of 12 months. Once Lateegra has earned the 65-per-cent interest, a joint venture will be formed and a standard dilution clause will be in effect. As a basis for the dilution clause, each party will be deemed to have invested the following amount of money in the Picacho groupings:
* Lateegra -- $10,325,000 (U.S.) (representing its 65-per-cent interest); and
* Tara -- $5.6-million (U.S.) (representing its 35-per-cent interest).
In the event a participant has been diluted down to a 10-per-cent interest, this interest will automatically convert into a 3-per-cent net smelter return and the joint venture agreement will become null and void. For a period of no longer than one year, the 3-per-cent NSR can be reduced to 1 per cent by any partner in exchange for a $2-million (U.S.) payment for each 1-per-cent increment. It is also agreed that Lateegra will have an 18-month option to increase its interest in the Picacho groupings to 70 per cent, thereby reducing Tara's interest in the Picacho groupings to 30 per cent, whereby the price for the 5 per cent will be determined based on a sliding scale of daily production averaged over three months. A finder's fee in accordance with TSX policies will be payable.
The above proposed transaction is subject to TSX Venture Exchange approval. The technical information in this news release has been reviewed by Michael Sandidge, PGeo, a qualified person as defined in National Instrument 43-101, and acknowledges that the property-specific data are historical and believed to be accurate, but should not be relied on.
The company has also granted incentive stock options to the officers, consultants and employees under its stock option plan, for the purchase of up to 130,000 common shares of the company for a period of two years at a price of 80 cents per share.
Lateegra Gold to acquire interest in Picacho gold mine
2006-07-25 19:45 ET - News Release
Mr. Michael Townsend reports
LATEEGRA GOLD ACQUIRES PRODUCING GOLD MINE IN SIERRA MADRE GOLD BELT MEXICO
Lateegra Gold Corp. has entered into an acquisition agreement with Tara Gold Resources Corp. to acquire up to a 70-per-cent interest in the Picacho gold mine located within the Northern Sierra Madre gold belt, 120 kilometres south of the United States border, in Sonora state, Mexico.
The Picacho mine, a 3,236-hectare mining concession, is 24 kilometres by haulage road from Bacoachi, a town with a population of approximately 2,000 people serviced by the national electrical grid, a 1,200-metre airstrip and a paved highway accessing the nearby mining town of Cananea and the state capital, Hermosillo.
The previous owners have been exploiting an up to six-metre-wide vein structure for the past three years by driving in on a five-metre by five-metre ramp declining 8 per cent and extending over one kilometre in length. Production comes from several working faces averaging four to six metres in width, dipping at 700, with very competent hangingwall and roof-support conditions. Owner-reported, and company-verified, ore grades averaged five grams gold and 15 grams silver per tonne hosted within a mineralized structure comprising an 85-per-cent-silica content, creating a tailings product that is being sold as a flux agent to the local smelters for $35 (U.S.) per tonne, an amount that is estimated to generate sufficient revenues to cover current mining and milling costs. Management believes the orebody width, dip and hangingwall competency offer tremendous operational flexibility, enabling a variety of mining methodologies to ultimately optimize efficiency while minimizing pillar volumes and dilution.
Lateegra has commissioned three separate site visits to the Picacho property, with check samples being taken under the supervision of National Instrument 43-101 qualified persons, Michael Sandidge, PGeo, Jeffrey Reeder, PGeo, and James McCrea, PGeo. The samples tabulated below were random, representing both the structure and the wall rock. Results as obtained from samples are as follows.
RESULTS AS OBTAINED FROM SAMPLES
Sample Au Ag Site Sample Au Ag Site
No. (g/t) (g/t) No. (g/t) (g/t)
16476 1.315 9.3 MP 0004-06 3.86 4.5 UG
16477 0.57 3.8 MP 0005-06 0.354 6.9 DAV
16478 0.258 4.0 MP 1 0.018 1.9 UG
16479 0.451 13.9 MP 2 0.049 0.6 UG
16480 5.72 31.1 UG 3 1.31 2.9 UG
16481 7.82 22.3 UG 4 0.041 1.4 UG
16482 29.9 53.2 GF 5 1.59 11.1 UG
16483 2.42 12.0 OP 6 3.66 23.9 UG
16484 2.37 9.4 OP 7 0.258 1.6 UG
16485 3.93 12.0 OP 8 6.17 15.3 UG
0001-06 6.47 26.2 OP 9 5.85 11.4 UG
0002-06 2.56 7.6 UG 10 0.135 5.4 UG
0003-06 1.565 4.4 UG 11 7.88 43.1 UG
The samples were collected and transported by independent consultants to ALS Chemex Laboratory (Chemex) in Hermosillo, Sonora, Mexico, (a laboratory certified by ISO 9002).
The purchase of the mine includes an extensive processing facility currently capable of 250 tonnes per day of ore throughput. The mill includes a 1,500-tonne-per-day jaw crusher, a 500-tonne-per-day cone crusher, two ball mills, two floatation cells (400 tonnes per day), two caterpillar gen-sets and a large shop facility. The rolling stock consists of three Wagner ST8 scoop trams, a Gardner Denver 2 boom pneumatic jumbo, a stationary hydraulic exploration drill, two compressors, two Cat D8s and a D9 dozer, a Clarke Michigan front-end loader, one track loader, haul trucks, and all ancillary mining equipment. The equipment, being in good serviceable condition, allows the option for a continuing mining operation simultaneous to the commissioning of a scoping study to prepare recommendations, around various optimization scenarios, for plant and equipment upgrading.
The Picacho project, interpreted as a low-sulphidation epithermal gold-silver system, is hosted in a middle-upper Tertiary caldera complex of silicified andesites and andesitic tuffs intruded by nearly contemporaneous rhyodacites, diotites and andesitic breccias. This caldera complex is part of a volcanic regime covering northern Sonora and Chihuahua states of Mexico, overprinting a northwest-southeast-trending lower Tertiary porphyry-copper belt host to Mexico's largest copper deposits -- Cananea and La Caridad. The property is structurally delineated by northwest-southeast, north-south and northeast-southwest fault and fracture-trending structures traced for over five kilometres, and potentially representing a reactivation of older structures, developing an extensive vein system hosting gold, and characterized by multiphase banded quartz and sulphide stockwork veining with hydrothermal brecciation within intensely silicified andesitic volcanics.
A new zone of intense alteration comprising a vuggy silica discovered in recent workings, represents a near-surface heap-leachable gold target believed to be related to the same structure currently being mined on strike, more than two kilometres away. The new zone will be drill tested as part of a resource definition program. Low sulphidation systems of this type, under favourable conditions, have formed large bulk-tonnage gold deposits including the 42-million-ounce Lihir deposit in Papua New Guinea, the 16-million-ounce Zhao-Ye deposit in China, the five-million-ounce Kori-Kollo deposit in Bolivia and the 18-millon-ounce Cadia East deposit in Australia.
The terms of the option agreement to earn an initial 65-per-cent interest in the project are as follows. Lateegra will make staged escalating payments to the vendors totalling $7,325,000 over a five-year period plus an additional $100,000 per year on the anniversary of the agreement for the term of the joint venture. Lateegra will also commit to spending $1-million in exploration and $2-million on mine development and production plant enhancements within 18 months of the signing of the agreement, as well as issue Tara Gold 50,000 shares per month for a period of 12 months. Once Lateegra has earned the 65-per-cent interest, a joint venture will be formed and a standard dilution clause will be in effect. As a basis for the dilution clause, each party will be deemed to have invested the following amount of money in the Picacho groupings:
* Lateegra -- $10,325,000 (U.S.) (representing its 65-per-cent interest); and
* Tara -- $5.6-million (U.S.) (representing its 35-per-cent interest).
In the event a participant has been diluted down to a 10-per-cent interest, this interest will automatically convert into a 3-per-cent net smelter return and the joint venture agreement will become null and void. For a period of no longer than one year, the 3-per-cent NSR can be reduced to 1 per cent by any partner in exchange for a $2-million (U.S.) payment for each 1-per-cent increment. It is also agreed that Lateegra will have an 18-month option to increase its interest in the Picacho groupings to 70 per cent, thereby reducing Tara's interest in the Picacho groupings to 30 per cent, whereby the price for the 5 per cent will be determined based on a sliding scale of daily production averaged over three months. A finder's fee in accordance with TSX policies will be payable.
The above proposed transaction is subject to TSX Venture Exchange approval. The technical information in this news release has been reviewed by Michael Sandidge, PGeo, a qualified person as defined in National Instrument 43-101, and acknowledges that the property-specific data are historical and believed to be accurate, but should not be relied on.
The company has also granted incentive stock options to the officers, consultants and employees under its stock option plan, for the purchase of up to 130,000 common shares of the company for a period of two years at a price of 80 cents per share.
Lateegra Gold to acquire interest in Picacho gold mine
2006-07-25 19:45 ET - News Release
Mr. Michael Townsend reports
LATEEGRA GOLD ACQUIRES PRODUCING GOLD MINE IN SIERRA MADRE GOLD BELT MEXICO
Lateegra Gold Corp. has entered into an acquisition agreement with Tara Gold Resources Corp. to acquire up to a 70-per-cent interest in the Picacho gold mine located within the Northern Sierra Madre gold belt, 120 kilometres south of the United States border, in Sonora state, Mexico.
The Picacho mine, a 3,236-hectare mining concession, is 24 kilometres by haulage road from Bacoachi, a town with a population of approximately 2,000 people serviced by the national electrical grid, a 1,200-metre airstrip and a paved highway accessing the nearby mining town of Cananea and the state capital, Hermosillo.
The previous owners have been exploiting an up to six-metre-wide vein structure for the past three years by driving in on a five-metre by five-metre ramp declining 8 per cent and extending over one kilometre in length. Production comes from several working faces averaging four to six metres in width, dipping at 700, with very competent hangingwall and roof-support conditions. Owner-reported, and company-verified, ore grades averaged five grams gold and 15 grams silver per tonne hosted within a mineralized structure comprising an 85-per-cent-silica content, creating a tailings product that is being sold as a flux agent to the local smelters for $35 (U.S.) per tonne, an amount that is estimated to generate sufficient revenues to cover current mining and milling costs. Management believes the orebody width, dip and hangingwall competency offer tremendous operational flexibility, enabling a variety of mining methodologies to ultimately optimize efficiency while minimizing pillar volumes and dilution.
Lateegra has commissioned three separate site visits to the Picacho property, with check samples being taken under the supervision of National Instrument 43-101 qualified persons, Michael Sandidge, PGeo, Jeffrey Reeder, PGeo, and James McCrea, PGeo. The samples tabulated below were random, representing both the structure and the wall rock. Results as obtained from samples are as follows.
RESULTS AS OBTAINED FROM SAMPLES
Sample Au Ag Site Sample Au Ag Site
No. (g/t) (g/t) No. (g/t) (g/t)
16476 1.315 9.3 MP 0004-06 3.86 4.5 UG
16477 0.57 3.8 MP 0005-06 0.354 6.9 DAV
16478 0.258 4.0 MP 1 0.018 1.9 UG
16479 0.451 13.9 MP 2 0.049 0.6 UG
16480 5.72 31.1 UG 3 1.31 2.9 UG
16481 7.82 22.3 UG 4 0.041 1.4 UG
16482 29.9 53.2 GF 5 1.59 11.1 UG
16483 2.42 12.0 OP 6 3.66 23.9 UG
16484 2.37 9.4 OP 7 0.258 1.6 UG
16485 3.93 12.0 OP 8 6.17 15.3 UG
0001-06 6.47 26.2 OP 9 5.85 11.4 UG
0002-06 2.56 7.6 UG 10 0.135 5.4 UG
0003-06 1.565 4.4 UG 11 7.88 43.1 UG
The samples were collected and transported by independent consultants to ALS Chemex Laboratory (Chemex) in Hermosillo, Sonora, Mexico, (a laboratory certified by ISO 9002).
The purchase of the mine includes an extensive processing facility currently capable of 250 tonnes per day of ore throughput. The mill includes a 1,500-tonne-per-day jaw crusher, a 500-tonne-per-day cone crusher, two ball mills, two floatation cells (400 tonnes per day), two caterpillar gen-sets and a large shop facility. The rolling stock consists of three Wagner ST8 scoop trams, a Gardner Denver 2 boom pneumatic jumbo, a stationary hydraulic exploration drill, two compressors, two Cat D8s and a D9 dozer, a Clarke Michigan front-end loader, one track loader, haul trucks, and all ancillary mining equipment. The equipment, being in good serviceable condition, allows the option for a continuing mining operation simultaneous to the commissioning of a scoping study to prepare recommendations, around various optimization scenarios, for plant and equipment upgrading.
The Picacho project, interpreted as a low-sulphidation epithermal gold-silver system, is hosted in a middle-upper Tertiary caldera complex of silicified andesites and andesitic tuffs intruded by nearly contemporaneous rhyodacites, diotites and andesitic breccias. This caldera complex is part of a volcanic regime covering northern Sonora and Chihuahua states of Mexico, overprinting a northwest-southeast-trending lower Tertiary porphyry-copper belt host to Mexico's largest copper deposits -- Cananea and La Caridad. The property is structurally delineated by northwest-southeast, north-south and northeast-southwest fault and fracture-trending structures traced for over five kilometres, and potentially representing a reactivation of older structures, developing an extensive vein system hosting gold, and characterized by multiphase banded quartz and sulphide stockwork veining with hydrothermal brecciation within intensely silicified andesitic volcanics.
A new zone of intense alteration comprising a vuggy silica discovered in recent workings, represents a near-surface heap-leachable gold target believed to be related to the same structure currently being mined on strike, more than two kilometres away. The new zone will be drill tested as part of a resource definition program. Low sulphidation systems of this type, under favourable conditions, have formed large bulk-tonnage gold deposits including the 42-million-ounce Lihir deposit in Papua New Guinea, the 16-million-ounce Zhao-Ye deposit in China, the five-million-ounce Kori-Kollo deposit in Bolivia and the 18-millon-ounce Cadia East deposit in Australia.
The terms of the option agreement to earn an initial 65-per-cent interest in the project are as follows. Lateegra will make staged escalating payments to the vendors totalling $7,325,000 over a five-year period plus an additional $100,000 per year on the anniversary of the agreement for the term of the joint venture. Lateegra will also commit to spending $1-million in exploration and $2-million on mine development and production plant enhancements within 18 months of the signing of the agreement, as well as issue Tara Gold 50,000 shares per month for a period of 12 months. Once Lateegra has earned the 65-per-cent interest, a joint venture will be formed and a standard dilution clause will be in effect. As a basis for the dilution clause, each party will be deemed to have invested the following amount of money in the Picacho groupings:
* Lateegra -- $10,325,000 (U.S.) (representing its 65-per-cent interest); and
* Tara -- $5.6-million (U.S.) (representing its 35-per-cent interest).
In the event a participant has been diluted down to a 10-per-cent interest, this interest will automatically convert into a 3-per-cent net smelter return and the joint venture agreement will become null and void. For a period of no longer than one year, the 3-per-cent NSR can be reduced to 1 per cent by any partner in exchange for a $2-million (U.S.) payment for each 1-per-cent increment. It is also agreed that Lateegra will have an 18-month option to increase its interest in the Picacho groupings to 70 per cent, thereby reducing Tara's interest in the Picacho groupings to 30 per cent, whereby the price for the 5 per cent will be determined based on a sliding scale of daily production averaged over three months. A finder's fee in accordance with TSX policies will be payable.
The above proposed transaction is subject to TSX Venture Exchange approval. The technical information in this news release has been reviewed by Michael Sandidge, PGeo, a qualified person as defined in National Instrument 43-101, and acknowledges that the property-specific data are historical and believed to be accurate, but should not be relied on.
The company has also granted incentive stock options to the officers, consultants and employees under its stock option plan, for the purchase of up to 130,000 common shares of the company for a period of two years at a price of 80 cents per share.
Posting From Stockhouse Board
WEEKLY COMMENT FOR July 24, 2006
COAL
The commodity price spiral experienced over the past 12-18 months has had a dramatic effect not only on investors but also on explorers, developers, producers, fabricators, processors, and end-users. Almost every commodity you can think of has participated.
The world is fixated with high energy prices. Will oil go to US$100 per barrel, and by when? Will natural gas prices rebound? How high will uranium prices trend?
One fuel source that received brief investor attention and then tailed off is coal. Coal is the cheapest, most abundant, and most wide-spread commodity on the planet.
The largest producers and consumers in the world are the United States, China, Australia, India, South Africa, and Russia. Current world-wide coal production is 3.0 - 3.5 billion tonnes.
In Canada, coal contributes approximately $5 billion to our economy, and employs some 55,000 - 60,000 people. It is Canada's largest single export item to Japan. The recent growth in our coal industry has resulted in major improvements to our railroads and ports.
Coal has been in use as a fuel source for more than 4,000 years, and it fostered the Industrial Revolution in Europe in the 1700s and 1800s, producing steam for engines that powered factories, trains, and ships.
Coal is the world's most abundant fossil fuel. World-wide reserves are estimated at more than one trillion tonnes, enough to last about 220 years. In contrast, at current usage, reserves of oil are estimated at 40-50 years, and natural gas at about 70 years.
As a world energy source, coal is second only to oil. Coal production usage:
(1) 70% is used to generate 40% of the world's electricity;
(2) 12% is used to make coke to produce 70% of the world's steel; and
(3) 18% is used for other industrial and domestic uses.
In Canada, approximately 20% of our electricity is generated by coal. It is being used increasingly by new electricity power plants. When the price of natural gas soared last year to over US$15 per mcf, the price of coal, the legitimate substitute, also rose dramatically, from around US$20 per ton to over US$120 per ton. Both natural gas and coal prices have declined from the highs, natural gas particularly but, even so, the cost advantage to coal is still intact. We anticipate it will remain so for the foreseeable future.
Coal stocks participated in the commodity rally with mind-boggling increases but, over the past 3-6 months, most have been clobbered and now sit at or near their 52-week lows. There have been declines of 92%, 85%, 58%, 49%, 46%, and 42% in representative Canadian coal company stocks. U.S. stocks have fared only slightly better, with stock declines of 43%, 41%, and 23% being experienced.
Is there a rebound ahead? We believe the performance of coal stocks will go hand-in-hand with those of natural gas stocks. With expectations for a narrowing of the differential between oil and natural gas, with gas going up, not oil going down, we expect there could, indeed, be a recovery in coal company stocks.
The coal industry has done much over the past 20-30 years to "clean up" its image. Dirty or inefficient coal plants have been shuttered, marginal pits have been closed, and other fossil fuels have replaced coal around the globe. But the fact remains: coal is largely holding its own. The introduction of emission reduction technology and improved environmental management have done much to improve its image. Coupled with abundant reserves, wide-spread availability, and mining cost efficiencies, coal will continue to be a significant energy source.
We are always interested in your views or comments. You can send them to suggestions@eresearch.ca
Bob Weir
Director of Research
Holy Truck!
by Joel Bowman
A Behemothic banana, a mammoth macadamia nut, gargantuan
gumboots and a tremendously towering Tasmanian
devil...welcome to a land utterly infatuated with all
things BIG.
So enamored are Australians with erecting giant monuments
to all things important (and many decidedly unimportant)
that we have gone about building some 146 monuments across
our continent. Enthusiastic Aussies have covered everything
from a giant avocado in Tweed Heads, Queensland, to one
whopper of a worm in Bass, Victoria.
Why on earth would we want to carpenter such an array of
ridiculously oversized objects? Well, some are easier to
explain than others...
For example: How else would you expect to excavate,
transport and export the world's largest reserves of coal
without the help of some of the world's largest trucks?
Earlier this week I received an interesting email from a
mate of mine back home, Dwade. He and his business partner
had ventured out into the great Aussie Outback to meet with
clients and present a property management workshop.
Dwade excitedly recalled the events to me in his email:
"Everything is big out there. Big guys, big girls, big
holes in the ground and big trucks (very big trucks). In
fact the wheels on the trucks are three times the height of
me and the trucks themselves are more than 7 meters wide
and 6 meters tall. It's a whole new world and one far
removed of that of our own."
The sheer magnitude of the measurements used when referring
to the Australian coal industry is mind-boggling. In 2004,
the world coal production stood at around 755 million
tones. Sooty Australian workers were responsible for just
shy of 220 million of those tones –more than twice the
output of Indonesia, it's nearest rival.
Fast forward to the 2005 season and the "old new" energy
source was bringing in a staggering $22 billion dollars – a
65% increase from the previous year's profit takings. Iron
ore, oil and petrol and liquid natural gas were also major
percentage gainers.
The trucks Dwade referred to rumble along a rather sizable
patch of earth in the Queensland outback...some unbearable
distance west of a place called Dingo. "These mines produce
enough coal to fill 160 coal trains per week. Each train
has 100 carts and each cart can carry 104 tonnes of coal.
This means that each one of the 160 trains carry more than
10,000 tonne each," notes an astonished Dwade.
Motley Fool
Coal'ed Comfort
Thursday July 20, 4:20 pm ET
By Stephen D. Simpson, CFA
Coal may keep a lot of folks warm during the winter, but it's getting a decidedly chilly reception today.
Coal shares have been weak recently, on fears that pricing will come under pressure from growing production and larger utility stockpiles following a warm winter. Top that off with guidance today from Peabody (NYSE: BTU - News), the biggest shareholder-owned company in the business, about a tough third quarter, and the sector is skidding again.
Not surprisingly, Peabody's latest quarter was pretty good. Revenue rose 19%, as the volume of coal sold rose a bit more than 5%. Pricing was certainly stronger than in the year-ago period, and though costs are rising as well, the company nevertheless saw operating income grow 36% and operating margins improve.
As I mentioned, though, the company lowered guidance for the third quarter, and though it actually lifted the bottom end of the full-year range, folks are selling the stock pretty aggressively today. I can understand the worries about pricing -- coal prices have trended down lately -- but I must admit that I have to laugh when I hear that utilities are seeing reduced power demand while temperatures are hitting triple digits in many places around the country.
I've done a fair bit of work lately on energy stocks, and it's interesting to see how little investors value the reserves of coal companies relative to oil and gas companies. For instance, if you convert the reserves held into oil energy equivalents, no coal company that I follow is valued at even $1 in enterprise value per barrel of oil. Yet fine energy companies like Apache (NYSE: APA - News) and Canadian Natural (NYSE: CNQ - News) are valued in the teens-per-barrel.
Now, I realize you can't just take a ton of coal from Peabody or Arch (NYSE: ACI - News) or Foundation (NYSE: FCL - News), crumble it up, and run your car. But I can't help thinking that the spread in value-per-BTU between coal and oil/gas is likely to shrink as better coal-to-gas and coal-to-liquid technologies come available. So while I'm not sure even I have the fortitude to step in front of sentiment and buy Peabody or Foundation shares, the thought is appealing on a longer-term basis.
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
Peabody Profit Up 61 Pct on Coal Demand
Thursday July 20, 5:06 pm ET
By Jim Salter, AP Business Writer
Peabody Profit Surges 61 Percent on Coal Demand, but Stock Price Drops
ST. LOUIS (AP) -- Global demand for coal spurred a 61 percent jump in Peabody Energy Corp.'s second-quarter earnings, reported Thursday. But shares in the world's largest coal company sank 10 percent on what one analyst called concerns about potential softening in coal industry prices.
The St. Louis-based company earned $153.4 million, or 57 cents a share, for the period ending June 30, up from $95.3 million, or 36 cents a share, last year. Revenue surged 18.7 percent to $1.32 billion from $1.11 billion in the prior-year period, as the company increased coal sales by 3.1 million tons.
Analysts polled by Thomson Financial expected profit of 56 cents a share on revenue of $1.4 billion.
Despite the strong showing, shares of Peabody fell $5.56 to close at $47.79 on the New York Stock Exchange, where they have traded in a 52-week range of $29.475 to $76.29.
Mark Reichman, an analyst with A.G. Edwards & Sons Inc. in St. Louis, said the decline in the stock price reflected concern about the coal industry, which has generally been strong in recent years.
"We're a little concerned about what we perceive as a deterioration in the near term in coal industry fundamentals," Reichman said. "The supply-demand imbalance that drove coal prices higher over the last three years seems to have narrowed.
"If you have economic growth slowing, we think near-term coal prices could soften further, and I think the market has become increasingly concerned about this."
Peabody President and Chief Executive Officer Gregory H. Boyce said the company strengthened its operating base through major equipment installations and the startup of two new mines during the quarter. It also purchased Excel Coal, a $1.34 billion deal expected to close in the fourth quarter.
And on Tuesday, Peabody announced a partnership with Rentech Inc. of Denver to consider building two U.S. plants that could transform coal into liquid fuels.
The company saw a per ton price increase of more than 6 percent at U.S. operations and 31 percent in Australia. Sales volume rose 5 percent to 60.8 million tons.
"Coal demand continues to set records in the United States and globally, and the long-term coal outlook continues to strengthen," Boyce said.
Additional coal-based power plants worldwide now under construction represent an additional 175 million tons of use annually.
For the first six months of 2006, Peabody's earnings per share rose 91 percent to $1.05 on net income of $284 million.
Still, the company said it expects to earn 35 cents to 55 cents per share in the third quarter, short of analyst predictions of 63 cents per share.
For the full year, Peabody predicted a profit of $2 to $2.43, up from its prior outlook of $1.87 to $2.43 per share. Wall Street projects earnings of $2.37 per share for the year.
Peabody operates more than 30 mines and processing facilities in the U.S. and Australia. It produces about 240 million tons of coal a year and maintains nearly 10 billion tons in reserve.
http://www.peabodyenergy.com
West Hawk Tests Coal-to-Gas with LURGI SA (Pty) Limited
July 19, 2006 - Vancouver, B.C. West Hawk Development Corporation (WHD - TSX Venture), (H5N - Frankfurt) the "Company" is pleased to announce the advancement of both social processes and technical evaluation for its Mackenzie Valley Coal-to-Gas Project in Northwest Territories, Canada. Successful, preliminary meetings with Elders and Business Executives followed by public meetings with residents of Tulita and Norman Wells, NWT, have recently been conducted. Simultaneously, the Company has signed a Non-Disclosure and coal testing Agreement (NDA) with LURGI of South Africa, in order to advance negotiations on developing this historically identified coal resource.
Coal Testing Agreement and NDA with LURGI SA (Pty) Limited
West Hawk management is pleased to announce that it has arranged a reciprocal NDA with LURGI of South Africa, world leaders in coal gasification technology. The Company has shipped samples from the coal seams at its Tate Lake and Seagull Island properties to a South African laboratory for scaled gasification testing to evaluate suitability of the coal feedstock needed to produce pipeline quality gas.
Mark Otto, Chief Executive and Managing Director of Lurgi SA (Pty) Limited, said, "We are pleased with the developments between our two companies and look forward to the potential advancement of this North American project."
Data provided by the U.S. Department of Energy affirms that the first patent granted in gasification went to LURGI in 1887. The LURGI technology is also the most widely used in the world with over 100 gasifiers currently in operation worldwide.
Northwest Territories Coal Project introduced to Sahtu Region
Face to face talks focused on advancing a coal resource definition drill program and the development potential for this significant project are progressing well with the people of the Sahtu Region, NWT, Canada.
"The leadership delegations represented a broad societal cross section of those who reside in this remote, resource rich region", says West Hawk's CEO, Chris Verrico. "This introduction and exploratory dialogue has given management significant confidence to proceed with the company's assessments of the potential for this historically documented coal resource, the world's dominant fossil fuel source."
"In the meetings with West Hawk, good information was exchanged from both sides" said Grand Chief Frank Andrew.
West Hawk's CEO, Chris Verrico, and President, Dr. Wm. Mark Hart, have expressed tremendous appreciation for the effort it took these community members to meet with us, adding, "We believe meetings such as these are invaluable for building meaningful relationships. While this project is in its infancy, the potential for open exchange of ideas is great. Capitalizing on the knowledge and expertise that the landowners and local leaders of this region possess will be invaluable to the company as we go forward."
"The Sahtu Region has tremendous potential and this is yet another indicator of the richness and wealth of our land" said NWT Sahtu region MLA Norman Yakeleya. "As landowners of a world class coal resource, we are pleased with West Hawk's direction and the respect they have shown us".
Production Marketing Contract in Early Stages
Preliminary production volume designs are focusing on constructing four - 50 BCFY phases to a final production of 200 BCFY, (billion cubic feet per year) of pipeline quality gas. Robert Findlay, VP has been assigned responsibility to develop a 25 year off-take agreement. WHD is also diligently working to develop its CO2 sequestration plans via markets for enhanced oil recovery and other co-products.
"West Hawk's coal gasification initiative is the technology of choice for the world today and for the next several decades," said Dr. Wm. Mark Hart, Company President, "as one can make clean electricity, pipeline quality gas, and a variety of co-products such as fertilizer while at the same time ensuring environmentally sustainable operations through product cleansing and planned reclamation initiatives. Coal gasification is a process that provides clean energy while meeting the KYOTO protocol's current requirements and the projected mercury, carbon dioxide, and other heavy metal limits via its chemical cleaning process technology. Coal Gasification is also cost competitive from a capital and O&M [Operations and Maintenance] basis, and it is 5 to 10% more efficient than traditional methods of electricity energy production from Pulverized Coal production."
The Company's Tate Lake Property is adjacent to an EnCana oil pipeline and proposed Mackenzie Valley Gas Pipeline, a $7.5 billion dollar mega-project being favored by local interests for final conciliation. Compiled data from abundant coal outcrops along with the stratigraphic studies detailed within numerous historic reports released by Luscar Ltd., Utah Mines Ltd. and Techman Ltd's Pre-Feasibility study for Manalta Coal Ltd in 1979, have now been verified by the Company's geologists. Evaluation by the Company's engineers of the coal seams and overburden geology has aided development of a drill plan including early-stage mine plans with a projected potential for over 2 billion tonnes of mineable coal. The Company believes that this NWT property has potential to produce coal to gas ("syngas") for well beyond 50 years, providing one of the worlds cleanest fuel sources.
The company also wishes to report that James Petit a long standing member of the West Hawk Board of Directors has resigned to focus on other endeavors in the junior resource sector. The company thanks James for his service and wishes him the best in the future.
About the Company - West Hawk is an energy Company, building shareholder value through the exploration and development of its various properties in Western and Northern Canada.
ON BEHALF OF THE BOARD OF DIRECTORS
"Michael Townsend"
Executive Chairman
Cautionary note
The above tonnage information is historical in nature and is not to be relied upon. The historical resource does not use categories stipulated in National Instrument (NI) 43-101. The company advises that it has not done all the work necessary to verify this classification of the mineral resource. The company is not treating the historical resource estimate as an NI 43-101-defined resource or reserve verified by a qualified person. The company is not aware of any more recent estimates or available data. The company is working diligently in its effort to bring the resource into compliance with the NI 43-101 requirements.
Peabody Energy and Rentech Partner to Develop Major Coal-to-Liquids Projects
Tuesday July 18, 9:00 am ET
ST. LOUIS, July 18 /PRNewswire-FirstCall/ -- Peabody Energy (NYSE: BTU - News) and Rentech, Inc. (Amex: RTK - News) today announced that they have entered into a joint development agreement to evaluate sites in the Midwest and Montana for coal-to-liquids projects that would transform coal into diesel and jet fuel. Projects would be sited where Peabody has large reserves and would be designed using Rentech's proprietary Fischer-Tropsch coal-to-liquids process.
"We're seeing an overwhelming need for coal-to-liquids developments in the United States to offset reliance on expensive imported oil, and projects like these represent a major part of our energy solutions," said Peabody President and Chief Executive Officer Gregory H. Boyce. "Because of Peabody's leading reserves, we are uniquely positioned to capitalize on this significant emerging market for coal. We're pleased to partner with Rentech, one of the world's leading developers of Fischer-Tropsch technologies."
The U.S. Energy Information Administration projects that global energy consumption will increase by more than 70 percent by 2030, and the United States will import 62 percent of its oil. At the same time, the U.S. Department of Defense recently has issued a request for proposals for significant quantities of Fischer-Tropsch fuels.
The plants could range in size from producing 10,000 to 30,000 barrels of fuel per day (bpd). A 10,000 bpd plant would use 2 to 3 million tons of coal annually, and a 30,000 bpd plant would use 6 to 9 million tons of coal annually, based on the quality of coal. With more than 9.8 billion tons of reserves, Peabody has dozens of sites in the United States that it is evaluating for Btu Conversion projects.
"We are delighted that Peabody has selected Rentech as a partner to develop advanced clean fuels projects," said Rentech, Inc. President and Chief Executive Officer D. Hunt Ramsbottom. "This partnership reflects a major milestone in the development of clean domestic energy solutions using Rentech's coal-to-liquids technology."
Fischer-Tropsch's technology produces ultra low sulfur fuels, which will become increasingly valuable as new diesel fuel standards take effect. The technology has been in use since the 1920s, and today South Africa powers about one-quarter of its transportation fleet from coal.
Rentech is one of the world's leading developers of Fischer-Tropsch coal- to-liquids and gas-to-liquids technologies. The company has developed an advanced derivative of the well-established Fischer-Tropsch process for manufacturing ultra-clean diesel fuel, other fuel products and clean chemicals.
Peabody Energy is the world's largest private-sector coal company, with 2005 sales of 240 million tons of coal and $4.6 billion in revenues. Its coal products fuel more than 10 percent of all U.S. electricity generation and 3 percent of worldwide electricity.
Use of the worlds "Peabody," "the company" and "our" relate to Peabody, our subsidiaries and our majority-owned affiliates.
CONTACT:
Vic Svec
(314) 342-7768
--------------------------------------------------------------------------------
Source: Peabody Energy
NYBob,
Very good summary.
I ordered "The ABCs of Gold Investing" by Kosares.
I only began investing in gold last August and what a great move that turned out to be.
Basically I deduced that the precious metals are an insurance policy on my financial position. I also invested in energy for the same reason.
Thanks,
sumisu
Eastern Platinum Limited: News Release Made in Compliance with AIM Re-Admission Policy Requirements
Friday July 14, 2:00 am ET
LONDON, ENGLAND--(CCNMatthews - July 14, 2006) - Eastern Platinum Limited ("Eastplats" or the "Company") (TSX:ELR - News; AIM:ELR), the AIM and TSX listed platinum group metal explorer today announces the re-admission of its existing common shares of no par value ("Common Shares") and admission of the New Common Shares (as defined in the Admission Document addressed to shareholders of the Company ("Shareholders") dated 10 July 2006) to trading on AIM.
On 2 May 2006, Eastplats announced the completion of a transaction to acquire the entire shareholding of three private companies, the combined assets of which represent a 69% interest in Barplats Investments Limited ("Barplats"), a platinum group metals ("PGM") producing company in South Africa. Details of the acquisition were reported in news releases dated February 15, 2006, March 16, 2006, and March 29, 2006 and the transaction had been completed in accordance with the terms as set forth in the news release of February 15th, 2006.
On the closing of the transaction, Mr. Brian Bayley and Mr. Jon Harris resigned as directors of the Company and Eastplats appointed three new directors to the board; Mr. Allen Palmiere, Mr. Jeffrey Ahbe and Mr. John Hawkrigg which was previously announced on 2 May 2006.
Ian Rozier, President of Eastplats, commented:
"With the completion of the $150 million capital raising, the closing of the transaction and the new appointments to the Board of Directors, Eastplats is very well equipped to become a high profile player in the world's PGM sector."
The AIM Admission document is available on the Company's website at www.eastplats.com.
Terms of the acquisition
Consideration for the acquisition was 288,585,122 shares of Eastplats and a cash payment of Cdn$27,708,597.
About Barplats
Barplats is a mining company listed on the JSE and trades under the symbol BLP. Barplats' core business is the mining and processing of PGM in South Africa's Bushveld Igneous Complex ("the Bushveld"), the largest source of PGM in the world. Barplats' two main assets are the Crocodile River mines on the western limb of the Bushveld located near Brits in the Northern Province and the Kennedy's Vale project on the eastern limb of the Bushveld located near Steelpoort in Mpumalanga Province, which is immediately adjacent to Eastplats' Spitzkop project. Crocodile River was re-commissioned using traditional mining methods and became profitable in 2005, and includes the Maroelabult and Zandfontein mines and the Crocette deposit.
"This acquisition will establish Eastplats as a current producer and significant player in the platinum sector. We become an immediate producer with significant production growth under development with an established operations and development team at Barplats, and effect a synergistic merger of the Spitzkop and Kennedy's Vale deposits. We do not contemplate any management changes at Barplats and look forward to working with the Barplats team to become a major producer of platinum as we continue to grow the current production at Crocodile River and move the Kennedy's Vale/Spitzkop complex into production," stated Ian Rozier, President of Eastplats.
"In less than two years we have acquired a resource base comprising 86 million PGM oz contained in shallow, high grade, platinum and rhodium rich deposits. On the Western Bushveld, the Crocodile River mines will become significant producers of PGM. On the Eastern Bushveld, Kennedy's Vale and Spitzkop can be combined into a single operation that will form one of the largest underdeveloped deposits in South Africa. With this transaction we are one step closer to our corporate objective to grow Eastplats into a major PGM producer."
The enlarged group
Introduction
The Elgin Resources Inc. ("Elgin") business concept was to acquire high grade, platinum rich PGM deposits in South Africa focussing on the eastern limb of the Bushveld Complex, which management regarded as being relatively undeveloped. In acquiring such PGM deposits the intent was to develop the Company into a consolidator of similar projects in the area thereby achieving growth by acquisition rather than exploration.
Management achieved their initial goals by acquiring three PGM projects in the eastern limb. The Company's entry into the South African PGM sector was via the acquisition of the Rooikraal Platinum Project, a prospective exploration target for PGM. This was followed in February 2004 when the Company successfully bid for the Mareesburg PGM Project, which it acquired from Samancor Limited (an affiliate of BHP-Billiton Ltd). Subsequently management identified a second PGM deposit in the eastern limb of the Bushveld Complex, the Spitzkop PGM Project, in which the Company acquired a controlling interest in October 2004.
Company History
On 2 March 2005 Elgin and Jonpol Explorations Limited ("Jonpol") signed the Amalgamation Agreement which provided for the amalgamation of the two companies to create Eastplats. The principal features of the Amalgamation were that the shares of each of Elgin and Jonpol were exchanged for shares of Eastplats on the basis of one common share of Eastplats for every issued and outstanding common share of Elgin, and one common share of Eastplats for every four issued and outstanding common shares of Jonpol. The property, assets and liabilities of each of Elgin and Jonpol became those of Eastplats.
Having raised Cdn$150 million in March 2006, the Company acquired a 100 per cent. interest in each of three private companies that in aggregate own 210,000,000 common shares of Barplats, representing a 69 per cent. interest in Barplats. Such acquisition was approved by the Company's shareholders by way of written consent. Barplats was incorporated as a public company in South Africa on 5 October 1987 and listed on the JSE in 1987. Barplats is a PGM producing company whose two main assets are the CRM Project and the Kennedy's Vale Project.
Overview of the South African Platinum industry
There are only four known PGM provinces in the world. By far the largest is the Bushveld Complex in South Africa, which covers a surface area of 60,000 sq.km with outcrop extremities of approximately 450km east west and 300km north south.
Overview of the Projects
The Spitzkop PGM Project
The Spitzkop PGM Project is a shallow platinum-rich PGM deposit located in the Steelpoort Valley approximately 15km southwest of the town of Steelpoort, which is rapidly developing into a major mining district with platinum and chrome mining currently underway and a number of possible new platinum mines being investigated and developed. The majority of these platinum mines are planning to mine the UG2 chromitite horizon in the area adjacent to the Spitzkop PGM Project.
Mareesburg PGM Project
The 2,129-hectare Mareesburg property lies in the southern part of the eastern limb of the Bushveld Complex, approximately 50km west of Lydenburg. Like the Spitzkop PGM Project, the Mareesburg PGM Project is adjacent to both Angloplats' proposed new platinum mine at Der Brochen, and the Aquarius Platinum Limited Everest North project.
Eastplats owns the rights to a 50 per cent. interest in the Mareesburg PGM Project, acquired in February 2004 from Samancor Limited, by way of a 50:50 joint venture with Lion's Head Platinum Pty Ltd. ("LHP"). Two other agreements enabled Eastplats to purchase a 51 per cent. interest in LHP, which holds a 50 per cent. interest in the project, thus increasing the Company's interest in the Mareesburg Platinum Project to 75.5 per cent.
CRM Project
The CRM Project is situated on the eastern portion of the western limb of the Bushveld Complex, in the North West Province, covering an area of 1,077 hectares. As a result of the Acquisition, Eastplats holds a 69 per cent. interest in Barplats which owns the CRM Project. The CRM Project was re-commissioned using traditional mining methods and became profitable in 2005, and includes the Maroelabult and Zandfontein sections and other near surface deposits including the Crocette deposit.
Kennedy's Vale Project
The Kennedy's Vale Project is situated on the eastern limb of the Bushveld Complex, in Mpumalanga Province, covering an area of 2,003 hectares. As a result of the Acquisition, Eastplats holds a 69 per cent. interest in Barplats which owns the Kennedy's Vale Project. As the Kennedy's Vale Project is adjacent to the Spitzkop project it is anticipated that there will be synergies from merging the Spitzkop and Kennedy's Vale deposits into a single operation.
Current and Proposed Development
A JORC-code compliant feasibility study will be undertaken on the Spitzkop and Kennedy's Vale PGM Projects. Phase 1 work will involve pre-feasibility technical work that was scheduled to commence in late 2005 early 2006. A regional office along with core storage and secure sample preparation facilities was acquired in January 2006 and rock core drilled by previous operations (Anglo and Impala) will be stored there, along with drill core recovered from the 2006 drilling program. This work will comprise confirmatory drilling to be conducted using large diameter diamond core for the purposes of recovering samples for confirmatory assay analysis and metallurgical test work, as well as for geotechnical/rock mechanics work and for the placement of hydrogeological monitoring instrumentation wells for ongoing environmental purposes. Metallurgical test work is required to confirm the anticipated high recovery factors as indicated from metallurgical data previously reported by Impala. The drilling will also be aimed at conducting further geological studies with respect to estimated geological losses prior to the re-estimation of Resources/Reserves. Much of the required environmental monitoring work and base-line studies for the project area are available as public documents produced by other operators in the immediate vicinity to Spitzkop. Phase 2 full feasibility work is anticipated to commence in the latter half of 2006 and will be based on the results of the pre-feasibility test work. There will be a certain amount of overlap of Phase 1 and 2 technical work. Phase 2 will also include mine permitting aspects as well as surface infrastructure and socio-economic studies for the proposed mine at Spitzkop. The Company anticipates that this technical work on the Spitzkop/Kennedy's Vale PGM Project will be completed in the middle of 2006 and progress into full feasibility to be complete in 2007. All work on the project will be conducted by reputable consulting engineering companies in their respective fields of expertise. With the synergies of the Spitzkop and Kennedy's Vale Project, this study will become an integrated study in order to optimize the economic benefits of the potential development of the two projects concurrently or as one combined operation.
A JORC-Code compliant feasibility study is currently being undertaken on the Mareesburg PGM Project by SRK Consultants, who are supervising all quality analysis and quality control requirements to meet these standards and have also been engaged to undertake the orebody modelling, geotechnical, hydrogeological, environmental and mine design (open pit and underground) aspects. This work is already well advanced and preliminary reports are being completed with the data from 33 diamond drill holes (approximately 3300 m) being input into the feasibility study. This drill sampling will provide core samples for assaying, geotechnical testing and metallurgical tests to determine the design parameters from pilot plant trials on bulk samples. In addition, the Company is also conducting aeromagnetic surveying and detailed Digital Terrain Modeling ("DTM") data for open pit modeling and mine design purposes.
The Company anticipated that an interim report on the Mareesburg PGM Project would be completed in the latter half of 2005 and progress into full feasibility. SRK, the Company's consultants in South Africa are currently preparing the feasibility study and as of 1 May 2006 are applying metal prices to the economic model. Several mining options are being evaluated, as well as toll treatment of mine product by third parties.
Current Trading and Prospects
In the period to 31 December 2005, Barplats has processed 577,559 tonnes of raw materials, more than double the 210,403 tonnes treated in the six month period ended June 2005. A total of 1,167 kg 5PGE+Au were sold in the period, generating revenues of R167.3 million and giving a net loss of R395.5m. Net assets for the period to 31 December 2005 were R270.6m. Rising dollar metal prices over the period boosted revenues generated in the six month period, which were some 400 per cent. higher than the total revenue for the year ended June 2005. Unit costs have decreased from R302,564/kg in the period ended June 2005 to R128,850/kg sold in the period to 31 December 2005.
The Management Team
Ian Terry Rozier, M.Sc., B.Sc. Hons, P.Eng.
President and Executive Director (appointed as Director of Elgin on 5 September 2003 and as President of Elgin on 9 January 2004).
Mr. Rozier is a professional geologist with over 25 years experience in the mining industry. Formerly with Goldfields of South Africa and a partner of Golder Associates he worked for, or was a consultant to, several major mining companies until 1987. He has several years underground mining experience in South Africa and has been involved in the exploration and development of PGM deposits in Canada, South Africa and the Philippines. He has been involved in many capital raisings in Canada and Europe for mining projects in Australia, the Far East, South America as well as South Africa and is well known in the Canadian mining industry.
David William Cohen, MBA, B.Sc., (Chem. Eng.) PR.Eng.
Non-Executive Director and Chairman (appointed as Director of Elgin 29 October 2003 and as Chairman of Eastplats on 28 April 2006).
Mr. Cohen, has over 20 years experience in the mining industry. Formerly with Fluor Engineers, he worked in South Africa as Director, Sales & Marketing and as Director of Business Development in the United States. Mr. Cohen is President and CEO of Northern Orion Resources (TSX:NNO - News) and largely responsible for the dramatic turn-around in the company's fortune, with major resource acquisitions, capital raisings and excellent performance in 2002-2006. Through his work with Northern Orion, David Cohen is well known in the North American and European capital markets.
Gordon Bruce Keep, MBA, B. Sc., (Geological Sciences) P Geo.
Non-Executive Director (appointed as Director of Jonpol on 5 November 2003).
Mr. Keep's career in corporate finance has spanned over 20 years, where his responsibilities have included financings, mergers and acquisitions and public company administration. Currently he is Managing Director Corporate Finance of Endeavour Financial Ltd. and previously, he held positions as Senior Vice President of Lions Gate Entertainment Corp. and Vice President of Corporate Finance with Yorkton Securities Inc.
Allen Joseph Palmiere, B.Comm, CA.
Chief Executive Officer and Executive Director (appointed as Director and CEO on 28 April 2006).
Mr. Palmiere is currently Executive Chairman of Barplats and Chairman of HudBay Minerals Inc, a fully integrated zinc and copper company. Mr. Palmiere has over 20 years experience and was formerly Chief Financial Officer of Zenex Corporation, a TSX and NYSE listed company, and CEO and CFO of Breakwater Resources. Mr. Palmiere has a Bachelor of Commerce degree and is a member of the British Columbia Institute of Chartered Accountants.
Mr. Palmiere has a letter of appointment dated 29 April 2006 which provides for him to act as Director of the Company for a fee determined by the compensation committee of the Company's board of Directors from time to time.
Jeffrey Belton Ahbe, B.Sc M.Sc,
Non-Executive Director (appointed as Director on 28 April 2006).
Mr. Ahbe is President of Ahbe Capital Investment Group Inc., has over 25 years experience in the energy and resource sector and was formerly Executive V.P. of Union Pacific Resources in Calgary, Alberta, Canada, a $3.5 billion oil and gas business. He has worked extensively with the international financial and investment banking community, and in various regulatory jurisdictions. Mr. Ahbe has Bachelors and Masters Degrees from Purdue University.
Mr. Ahbe has a letter of appointment dated 29 April 2006 which provides for him to act as Non-Executive Director of the Company for a fee determined by the compensation committee of the Company's board of Directors from time to time.
John Richard Hawkrigg, B.A.,
Non-Executive Director (appointed as Director on 28 April 2006).
Mr. Hawkrigg is a Managing Partner of HKMB International Insurance Brokers, Canada's largest privately owned commercial insurance brokerage, and has over 20 years experience in the insurance industry. He holds a B.A. from McMaster University in Ontario, Canada.
Mr. Ahbe has a letter of appointment dated 29 April 2006 which provides for him to act as Non-Executive Director of the Company for a fee determined by the compensation committee of the Company's board of Directors from time to time.
Officer
Barbara Eileen Dunfield, MBA B.Ed.,
Chief Financial Officer (appointed as CFO of Elgin on 26 May 2004).
Ms. Dunfield, has over 20 years experience in capital markets, business development, and corporate governance of public companies and is currently the director of several public companies in the resource sector. Ms. Dunfield's MBA thesis at Simon Fraser University was entitled "A Strategic Analysis of the PGM Industry" (2001).
Transaction StatisticsNumber of Common Shares is issue (undiluted) 513,228,821
Number of Share Options in issue 17,180,000
Number of Warrants in issue 87,999,374
Number of Common Shares in issue (fully diluted) 618,408,195Expected TimetableAdmission and dealings in the Common Shares
expected to commence on AIM 14 July 2006
This announcement does not constitute an offer to sell or the solicitation of an offer to buy these securities in any jurisdiction.
The foregoing information may contain forward-looking statements relating to the future performance of Eastern Platinum Limited. Forward-looking statements, specifically those concerning future performance, are subject to certain risks and uncertainties, and actual results may differ materially. These risks and uncertainties are detailed from time to time in the Corporation's filings with the appropriate securities regulatory authorities in Canada, which filings are available on SEDAR at www.sedar.com.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction. The Common Shares will not and have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.
This announcement has been issued by the Company and is the sole responsibility of the Company. Canaccord is regulated in the United Kingdom by the Financial Services Authority and is acting solely for the Company in connection with the Admission and no one else. Canaccord has been appointed as nominated adviser and broker to the Company. Canaccord will not regard any other person as its client or be responsible to any other person for providing the protections afforded to clients of Canaccord nor for providing advice in relation to the Admission.
Canaccord is not making any representation or warranty, express or implied, as to the contents of this announcement. Canaccord accepts no liability whatsoever for the accuracy of any information or opinions expressed in this announcement or for the omission of any information.
Contact:
Mr. Ian Rozier
Eastern Platinum Limited
President and Executive Director
(604) 685-6851
(604) 685-6493 (FAX)
www.eastplats.com
Mike Jones / Robin Birchall / Clayton Bush
Canaccord Adams Limited
+44 20 7518 2777
--------------------------------------------------------------------------------
Source: Eastern Platinum Limited
Eastern Platinum Limited: News Release Made in Compliance with AIM Re-Admission Policy Requirements
Friday July 14, 2:00 am ET
LONDON, ENGLAND--(CCNMatthews - July 14, 2006) - Eastern Platinum Limited ("Eastplats" or the "Company") (TSX:ELR - News; AIM:ELR), the AIM and TSX listed platinum group metal explorer today announces the re-admission of its existing common shares of no par value ("Common Shares") and admission of the New Common Shares (as defined in the Admission Document addressed to shareholders of the Company ("Shareholders") dated 10 July 2006) to trading on AIM.
On 2 May 2006, Eastplats announced the completion of a transaction to acquire the entire shareholding of three private companies, the combined assets of which represent a 69% interest in Barplats Investments Limited ("Barplats"), a platinum group metals ("PGM") producing company in South Africa. Details of the acquisition were reported in news releases dated February 15, 2006, March 16, 2006, and March 29, 2006 and the transaction had been completed in accordance with the terms as set forth in the news release of February 15th, 2006.
On the closing of the transaction, Mr. Brian Bayley and Mr. Jon Harris resigned as directors of the Company and Eastplats appointed three new directors to the board; Mr. Allen Palmiere, Mr. Jeffrey Ahbe and Mr. John Hawkrigg which was previously announced on 2 May 2006.
Ian Rozier, President of Eastplats, commented:
"With the completion of the $150 million capital raising, the closing of the transaction and the new appointments to the Board of Directors, Eastplats is very well equipped to become a high profile player in the world's PGM sector."
The AIM Admission document is available on the Company's website at www.eastplats.com.
Terms of the acquisition
Consideration for the acquisition was 288,585,122 shares of Eastplats and a cash payment of Cdn$27,708,597.
About Barplats
Barplats is a mining company listed on the JSE and trades under the symbol BLP. Barplats' core business is the mining and processing of PGM in South Africa's Bushveld Igneous Complex ("the Bushveld"), the largest source of PGM in the world. Barplats' two main assets are the Crocodile River mines on the western limb of the Bushveld located near Brits in the Northern Province and the Kennedy's Vale project on the eastern limb of the Bushveld located near Steelpoort in Mpumalanga Province, which is immediately adjacent to Eastplats' Spitzkop project. Crocodile River was re-commissioned using traditional mining methods and became profitable in 2005, and includes the Maroelabult and Zandfontein mines and the Crocette deposit.
"This acquisition will establish Eastplats as a current producer and significant player in the platinum sector. We become an immediate producer with significant production growth under development with an established operations and development team at Barplats, and effect a synergistic merger of the Spitzkop and Kennedy's Vale deposits. We do not contemplate any management changes at Barplats and look forward to working with the Barplats team to become a major producer of platinum as we continue to grow the current production at Crocodile River and move the Kennedy's Vale/Spitzkop complex into production," stated Ian Rozier, President of Eastplats.
"In less than two years we have acquired a resource base comprising 86 million PGM oz contained in shallow, high grade, platinum and rhodium rich deposits. On the Western Bushveld, the Crocodile River mines will become significant producers of PGM. On the Eastern Bushveld, Kennedy's Vale and Spitzkop can be combined into a single operation that will form one of the largest underdeveloped deposits in South Africa. With this transaction we are one step closer to our corporate objective to grow Eastplats into a major PGM producer."
The enlarged group
Introduction
The Elgin Resources Inc. ("Elgin") business concept was to acquire high grade, platinum rich PGM deposits in South Africa focussing on the eastern limb of the Bushveld Complex, which management regarded as being relatively undeveloped. In acquiring such PGM deposits the intent was to develop the Company into a consolidator of similar projects in the area thereby achieving growth by acquisition rather than exploration.
Management achieved their initial goals by acquiring three PGM projects in the eastern limb. The Company's entry into the South African PGM sector was via the acquisition of the Rooikraal Platinum Project, a prospective exploration target for PGM. This was followed in February 2004 when the Company successfully bid for the Mareesburg PGM Project, which it acquired from Samancor Limited (an affiliate of BHP-Billiton Ltd). Subsequently management identified a second PGM deposit in the eastern limb of the Bushveld Complex, the Spitzkop PGM Project, in which the Company acquired a controlling interest in October 2004.
Company History
On 2 March 2005 Elgin and Jonpol Explorations Limited ("Jonpol") signed the Amalgamation Agreement which provided for the amalgamation of the two companies to create Eastplats. The principal features of the Amalgamation were that the shares of each of Elgin and Jonpol were exchanged for shares of Eastplats on the basis of one common share of Eastplats for every issued and outstanding common share of Elgin, and one common share of Eastplats for every four issued and outstanding common shares of Jonpol. The property, assets and liabilities of each of Elgin and Jonpol became those of Eastplats.
Having raised Cdn$150 million in March 2006, the Company acquired a 100 per cent. interest in each of three private companies that in aggregate own 210,000,000 common shares of Barplats, representing a 69 per cent. interest in Barplats. Such acquisition was approved by the Company's shareholders by way of written consent. Barplats was incorporated as a public company in South Africa on 5 October 1987 and listed on the JSE in 1987. Barplats is a PGM producing company whose two main assets are the CRM Project and the Kennedy's Vale Project.
Overview of the South African Platinum industry
There are only four known PGM provinces in the world. By far the largest is the Bushveld Complex in South Africa, which covers a surface area of 60,000 sq.km with outcrop extremities of approximately 450km east west and 300km north south.
Overview of the Projects
The Spitzkop PGM Project
The Spitzkop PGM Project is a shallow platinum-rich PGM deposit located in the Steelpoort Valley approximately 15km southwest of the town of Steelpoort, which is rapidly developing into a major mining district with platinum and chrome mining currently underway and a number of possible new platinum mines being investigated and developed. The majority of these platinum mines are planning to mine the UG2 chromitite horizon in the area adjacent to the Spitzkop PGM Project.
Mareesburg PGM Project
The 2,129-hectare Mareesburg property lies in the southern part of the eastern limb of the Bushveld Complex, approximately 50km west of Lydenburg. Like the Spitzkop PGM Project, the Mareesburg PGM Project is adjacent to both Angloplats' proposed new platinum mine at Der Brochen, and the Aquarius Platinum Limited Everest North project.
Eastplats owns the rights to a 50 per cent. interest in the Mareesburg PGM Project, acquired in February 2004 from Samancor Limited, by way of a 50:50 joint venture with Lion's Head Platinum Pty Ltd. ("LHP"). Two other agreements enabled Eastplats to purchase a 51 per cent. interest in LHP, which holds a 50 per cent. interest in the project, thus increasing the Company's interest in the Mareesburg Platinum Project to 75.5 per cent.
CRM Project
The CRM Project is situated on the eastern portion of the western limb of the Bushveld Complex, in the North West Province, covering an area of 1,077 hectares. As a result of the Acquisition, Eastplats holds a 69 per cent. interest in Barplats which owns the CRM Project. The CRM Project was re-commissioned using traditional mining methods and became profitable in 2005, and includes the Maroelabult and Zandfontein sections and other near surface deposits including the Crocette deposit.
Kennedy's Vale Project
The Kennedy's Vale Project is situated on the eastern limb of the Bushveld Complex, in Mpumalanga Province, covering an area of 2,003 hectares. As a result of the Acquisition, Eastplats holds a 69 per cent. interest in Barplats which owns the Kennedy's Vale Project. As the Kennedy's Vale Project is adjacent to the Spitzkop project it is anticipated that there will be synergies from merging the Spitzkop and Kennedy's Vale deposits into a single operation.
Current and Proposed Development
A JORC-code compliant feasibility study will be undertaken on the Spitzkop and Kennedy's Vale PGM Projects. Phase 1 work will involve pre-feasibility technical work that was scheduled to commence in late 2005 early 2006. A regional office along with core storage and secure sample preparation facilities was acquired in January 2006 and rock core drilled by previous operations (Anglo and Impala) will be stored there, along with drill core recovered from the 2006 drilling program. This work will comprise confirmatory drilling to be conducted using large diameter diamond core for the purposes of recovering samples for confirmatory assay analysis and metallurgical test work, as well as for geotechnical/rock mechanics work and for the placement of hydrogeological monitoring instrumentation wells for ongoing environmental purposes. Metallurgical test work is required to confirm the anticipated high recovery factors as indicated from metallurgical data previously reported by Impala. The drilling will also be aimed at conducting further geological studies with respect to estimated geological losses prior to the re-estimation of Resources/Reserves. Much of the required environmental monitoring work and base-line studies for the project area are available as public documents produced by other operators in the immediate vicinity to Spitzkop. Phase 2 full feasibility work is anticipated to commence in the latter half of 2006 and will be based on the results of the pre-feasibility test work. There will be a certain amount of overlap of Phase 1 and 2 technical work. Phase 2 will also include mine permitting aspects as well as surface infrastructure and socio-economic studies for the proposed mine at Spitzkop. The Company anticipates that this technical work on the Spitzkop/Kennedy's Vale PGM Project will be completed in the middle of 2006 and progress into full feasibility to be complete in 2007. All work on the project will be conducted by reputable consulting engineering companies in their respective fields of expertise. With the synergies of the Spitzkop and Kennedy's Vale Project, this study will become an integrated study in order to optimize the economic benefits of the potential development of the two projects concurrently or as one combined operation.
A JORC-Code compliant feasibility study is currently being undertaken on the Mareesburg PGM Project by SRK Consultants, who are supervising all quality analysis and quality control requirements to meet these standards and have also been engaged to undertake the orebody modelling, geotechnical, hydrogeological, environmental and mine design (open pit and underground) aspects. This work is already well advanced and preliminary reports are being completed with the data from 33 diamond drill holes (approximately 3300 m) being input into the feasibility study. This drill sampling will provide core samples for assaying, geotechnical testing and metallurgical tests to determine the design parameters from pilot plant trials on bulk samples. In addition, the Company is also conducting aeromagnetic surveying and detailed Digital Terrain Modeling ("DTM") data for open pit modeling and mine design purposes.
The Company anticipated that an interim report on the Mareesburg PGM Project would be completed in the latter half of 2005 and progress into full feasibility. SRK, the Company's consultants in South Africa are currently preparing the feasibility study and as of 1 May 2006 are applying metal prices to the economic model. Several mining options are being evaluated, as well as toll treatment of mine product by third parties.
Current Trading and Prospects
In the period to 31 December 2005, Barplats has processed 577,559 tonnes of raw materials, more than double the 210,403 tonnes treated in the six month period ended June 2005. A total of 1,167 kg 5PGE+Au were sold in the period, generating revenues of R167.3 million and giving a net loss of R395.5m. Net assets for the period to 31 December 2005 were R270.6m. Rising dollar metal prices over the period boosted revenues generated in the six month period, which were some 400 per cent. higher than the total revenue for the year ended June 2005. Unit costs have decreased from R302,564/kg in the period ended June 2005 to R128,850/kg sold in the period to 31 December 2005.
The Management Team
Ian Terry Rozier, M.Sc., B.Sc. Hons, P.Eng.
President and Executive Director (appointed as Director of Elgin on 5 September 2003 and as President of Elgin on 9 January 2004).
Mr. Rozier is a professional geologist with over 25 years experience in the mining industry. Formerly with Goldfields of South Africa and a partner of Golder Associates he worked for, or was a consultant to, several major mining companies until 1987. He has several years underground mining experience in South Africa and has been involved in the exploration and development of PGM deposits in Canada, South Africa and the Philippines. He has been involved in many capital raisings in Canada and Europe for mining projects in Australia, the Far East, South America as well as South Africa and is well known in the Canadian mining industry.
David William Cohen, MBA, B.Sc., (Chem. Eng.) PR.Eng.
Non-Executive Director and Chairman (appointed as Director of Elgin 29 October 2003 and as Chairman of Eastplats on 28 April 2006).
Mr. Cohen, has over 20 years experience in the mining industry. Formerly with Fluor Engineers, he worked in South Africa as Director, Sales & Marketing and as Director of Business Development in the United States. Mr. Cohen is President and CEO of Northern Orion Resources (TSX:NNO - News) and largely responsible for the dramatic turn-around in the company's fortune, with major resource acquisitions, capital raisings and excellent performance in 2002-2006. Through his work with Northern Orion, David Cohen is well known in the North American and European capital markets.
Gordon Bruce Keep, MBA, B. Sc., (Geological Sciences) P Geo.
Non-Executive Director (appointed as Director of Jonpol on 5 November 2003).
Mr. Keep's career in corporate finance has spanned over 20 years, where his responsibilities have included financings, mergers and acquisitions and public company administration. Currently he is Managing Director Corporate Finance of Endeavour Financial Ltd. and previously, he held positions as Senior Vice President of Lions Gate Entertainment Corp. and Vice President of Corporate Finance with Yorkton Securities Inc.
Allen Joseph Palmiere, B.Comm, CA.
Chief Executive Officer and Executive Director (appointed as Director and CEO on 28 April 2006).
Mr. Palmiere is currently Executive Chairman of Barplats and Chairman of HudBay Minerals Inc, a fully integrated zinc and copper company. Mr. Palmiere has over 20 years experience and was formerly Chief Financial Officer of Zenex Corporation, a TSX and NYSE listed company, and CEO and CFO of Breakwater Resources. Mr. Palmiere has a Bachelor of Commerce degree and is a member of the British Columbia Institute of Chartered Accountants.
Mr. Palmiere has a letter of appointment dated 29 April 2006 which provides for him to act as Director of the Company for a fee determined by the compensation committee of the Company's board of Directors from time to time.
Jeffrey Belton Ahbe, B.Sc M.Sc,
Non-Executive Director (appointed as Director on 28 April 2006).
Mr. Ahbe is President of Ahbe Capital Investment Group Inc., has over 25 years experience in the energy and resource sector and was formerly Executive V.P. of Union Pacific Resources in Calgary, Alberta, Canada, a $3.5 billion oil and gas business. He has worked extensively with the international financial and investment banking community, and in various regulatory jurisdictions. Mr. Ahbe has Bachelors and Masters Degrees from Purdue University.
Mr. Ahbe has a letter of appointment dated 29 April 2006 which provides for him to act as Non-Executive Director of the Company for a fee determined by the compensation committee of the Company's board of Directors from time to time.
John Richard Hawkrigg, B.A.,
Non-Executive Director (appointed as Director on 28 April 2006).
Mr. Hawkrigg is a Managing Partner of HKMB International Insurance Brokers, Canada's largest privately owned commercial insurance brokerage, and has over 20 years experience in the insurance industry. He holds a B.A. from McMaster University in Ontario, Canada.
Mr. Ahbe has a letter of appointment dated 29 April 2006 which provides for him to act as Non-Executive Director of the Company for a fee determined by the compensation committee of the Company's board of Directors from time to time.
Officer
Barbara Eileen Dunfield, MBA B.Ed.,
Chief Financial Officer (appointed as CFO of Elgin on 26 May 2004).
Ms. Dunfield, has over 20 years experience in capital markets, business development, and corporate governance of public companies and is currently the director of several public companies in the resource sector. Ms. Dunfield's MBA thesis at Simon Fraser University was entitled "A Strategic Analysis of the PGM Industry" (2001).
Transaction StatisticsNumber of Common Shares is issue (undiluted) 513,228,821
Number of Share Options in issue 17,180,000
Number of Warrants in issue 87,999,374
Number of Common Shares in issue (fully diluted) 618,408,195Expected TimetableAdmission and dealings in the Common Shares
expected to commence on AIM 14 July 2006
This announcement does not constitute an offer to sell or the solicitation of an offer to buy these securities in any jurisdiction.
The foregoing information may contain forward-looking statements relating to the future performance of Eastern Platinum Limited. Forward-looking statements, specifically those concerning future performance, are subject to certain risks and uncertainties, and actual results may differ materially. These risks and uncertainties are detailed from time to time in the Corporation's filings with the appropriate securities regulatory authorities in Canada, which filings are available on SEDAR at www.sedar.com.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction. The Common Shares will not and have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.
This announcement has been issued by the Company and is the sole responsibility of the Company. Canaccord is regulated in the United Kingdom by the Financial Services Authority and is acting solely for the Company in connection with the Admission and no one else. Canaccord has been appointed as nominated adviser and broker to the Company. Canaccord will not regard any other person as its client or be responsible to any other person for providing the protections afforded to clients of Canaccord nor for providing advice in relation to the Admission.
Canaccord is not making any representation or warranty, express or implied, as to the contents of this announcement. Canaccord accepts no liability whatsoever for the accuracy of any information or opinions expressed in this announcement or for the omission of any information.
Contact:
Mr. Ian Rozier
Eastern Platinum Limited
President and Executive Director
(604) 685-6851
(604) 685-6493 (FAX)
www.eastplats.com
Mike Jones / Robin Birchall / Clayton Bush
Canaccord Adams Limited
+44 20 7518 2777
--------------------------------------------------------------------------------
Source: Eastern Platinum Limited
Eastern Platinum Limited: News Release Made in Compliance with AIM Re-Admission Policy Requirements
Friday July 14, 2:00 am ET
LONDON, ENGLAND--(CCNMatthews - July 14, 2006) - Eastern Platinum Limited ("Eastplats" or the "Company") (TSX:ELR - News; AIM:ELR), the AIM and TSX listed platinum group metal explorer today announces the re-admission of its existing common shares of no par value ("Common Shares") and admission of the New Common Shares (as defined in the Admission Document addressed to shareholders of the Company ("Shareholders") dated 10 July 2006) to trading on AIM.
On 2 May 2006, Eastplats announced the completion of a transaction to acquire the entire shareholding of three private companies, the combined assets of which represent a 69% interest in Barplats Investments Limited ("Barplats"), a platinum group metals ("PGM") producing company in South Africa. Details of the acquisition were reported in news releases dated February 15, 2006, March 16, 2006, and March 29, 2006 and the transaction had been completed in accordance with the terms as set forth in the news release of February 15th, 2006.
On the closing of the transaction, Mr. Brian Bayley and Mr. Jon Harris resigned as directors of the Company and Eastplats appointed three new directors to the board; Mr. Allen Palmiere, Mr. Jeffrey Ahbe and Mr. John Hawkrigg which was previously announced on 2 May 2006.
Ian Rozier, President of Eastplats, commented:
"With the completion of the $150 million capital raising, the closing of the transaction and the new appointments to the Board of Directors, Eastplats is very well equipped to become a high profile player in the world's PGM sector."
The AIM Admission document is available on the Company's website at www.eastplats.com.
Terms of the acquisition
Consideration for the acquisition was 288,585,122 shares of Eastplats and a cash payment of Cdn$27,708,597.
About Barplats
Barplats is a mining company listed on the JSE and trades under the symbol BLP. Barplats' core business is the mining and processing of PGM in South Africa's Bushveld Igneous Complex ("the Bushveld"), the largest source of PGM in the world. Barplats' two main assets are the Crocodile River mines on the western limb of the Bushveld located near Brits in the Northern Province and the Kennedy's Vale project on the eastern limb of the Bushveld located near Steelpoort in Mpumalanga Province, which is immediately adjacent to Eastplats' Spitzkop project. Crocodile River was re-commissioned using traditional mining methods and became profitable in 2005, and includes the Maroelabult and Zandfontein mines and the Crocette deposit.
"This acquisition will establish Eastplats as a current producer and significant player in the platinum sector. We become an immediate producer with significant production growth under development with an established operations and development team at Barplats, and effect a synergistic merger of the Spitzkop and Kennedy's Vale deposits. We do not contemplate any management changes at Barplats and look forward to working with the Barplats team to become a major producer of platinum as we continue to grow the current production at Crocodile River and move the Kennedy's Vale/Spitzkop complex into production," stated Ian Rozier, President of Eastplats.
"In less than two years we have acquired a resource base comprising 86 million PGM oz contained in shallow, high grade, platinum and rhodium rich deposits. On the Western Bushveld, the Crocodile River mines will become significant producers of PGM. On the Eastern Bushveld, Kennedy's Vale and Spitzkop can be combined into a single operation that will form one of the largest underdeveloped deposits in South Africa. With this transaction we are one step closer to our corporate objective to grow Eastplats into a major PGM producer."
The enlarged group
Introduction
The Elgin Resources Inc. ("Elgin") business concept was to acquire high grade, platinum rich PGM deposits in South Africa focussing on the eastern limb of the Bushveld Complex, which management regarded as being relatively undeveloped. In acquiring such PGM deposits the intent was to develop the Company into a consolidator of similar projects in the area thereby achieving growth by acquisition rather than exploration.
Management achieved their initial goals by acquiring three PGM projects in the eastern limb. The Company's entry into the South African PGM sector was via the acquisition of the Rooikraal Platinum Project, a prospective exploration target for PGM. This was followed in February 2004 when the Company successfully bid for the Mareesburg PGM Project, which it acquired from Samancor Limited (an affiliate of BHP-Billiton Ltd). Subsequently management identified a second PGM deposit in the eastern limb of the Bushveld Complex, the Spitzkop PGM Project, in which the Company acquired a controlling interest in October 2004.
Company History
On 2 March 2005 Elgin and Jonpol Explorations Limited ("Jonpol") signed the Amalgamation Agreement which provided for the amalgamation of the two companies to create Eastplats. The principal features of the Amalgamation were that the shares of each of Elgin and Jonpol were exchanged for shares of Eastplats on the basis of one common share of Eastplats for every issued and outstanding common share of Elgin, and one common share of Eastplats for every four issued and outstanding common shares of Jonpol. The property, assets and liabilities of each of Elgin and Jonpol became those of Eastplats.
Having raised Cdn$150 million in March 2006, the Company acquired a 100 per cent. interest in each of three private companies that in aggregate own 210,000,000 common shares of Barplats, representing a 69 per cent. interest in Barplats. Such acquisition was approved by the Company's shareholders by way of written consent. Barplats was incorporated as a public company in South Africa on 5 October 1987 and listed on the JSE in 1987. Barplats is a PGM producing company whose two main assets are the CRM Project and the Kennedy's Vale Project.
Overview of the South African Platinum industry
There are only four known PGM provinces in the world. By far the largest is the Bushveld Complex in South Africa, which covers a surface area of 60,000 sq.km with outcrop extremities of approximately 450km east west and 300km north south.
Overview of the Projects
The Spitzkop PGM Project
The Spitzkop PGM Project is a shallow platinum-rich PGM deposit located in the Steelpoort Valley approximately 15km southwest of the town of Steelpoort, which is rapidly developing into a major mining district with platinum and chrome mining currently underway and a number of possible new platinum mines being investigated and developed. The majority of these platinum mines are planning to mine the UG2 chromitite horizon in the area adjacent to the Spitzkop PGM Project.
Mareesburg PGM Project
The 2,129-hectare Mareesburg property lies in the southern part of the eastern limb of the Bushveld Complex, approximately 50km west of Lydenburg. Like the Spitzkop PGM Project, the Mareesburg PGM Project is adjacent to both Angloplats' proposed new platinum mine at Der Brochen, and the Aquarius Platinum Limited Everest North project.
Eastplats owns the rights to a 50 per cent. interest in the Mareesburg PGM Project, acquired in February 2004 from Samancor Limited, by way of a 50:50 joint venture with Lion's Head Platinum Pty Ltd. ("LHP"). Two other agreements enabled Eastplats to purchase a 51 per cent. interest in LHP, which holds a 50 per cent. interest in the project, thus increasing the Company's interest in the Mareesburg Platinum Project to 75.5 per cent.
CRM Project
The CRM Project is situated on the eastern portion of the western limb of the Bushveld Complex, in the North West Province, covering an area of 1,077 hectares. As a result of the Acquisition, Eastplats holds a 69 per cent. interest in Barplats which owns the CRM Project. The CRM Project was re-commissioned using traditional mining methods and became profitable in 2005, and includes the Maroelabult and Zandfontein sections and other near surface deposits including the Crocette deposit.
Kennedy's Vale Project
The Kennedy's Vale Project is situated on the eastern limb of the Bushveld Complex, in Mpumalanga Province, covering an area of 2,003 hectares. As a result of the Acquisition, Eastplats holds a 69 per cent. interest in Barplats which owns the Kennedy's Vale Project. As the Kennedy's Vale Project is adjacent to the Spitzkop project it is anticipated that there will be synergies from merging the Spitzkop and Kennedy's Vale deposits into a single operation.
Current and Proposed Development
A JORC-code compliant feasibility study will be undertaken on the Spitzkop and Kennedy's Vale PGM Projects. Phase 1 work will involve pre-feasibility technical work that was scheduled to commence in late 2005 early 2006. A regional office along with core storage and secure sample preparation facilities was acquired in January 2006 and rock core drilled by previous operations (Anglo and Impala) will be stored there, along with drill core recovered from the 2006 drilling program. This work will comprise confirmatory drilling to be conducted using large diameter diamond core for the purposes of recovering samples for confirmatory assay analysis and metallurgical test work, as well as for geotechnical/rock mechanics work and for the placement of hydrogeological monitoring instrumentation wells for ongoing environmental purposes. Metallurgical test work is required to confirm the anticipated high recovery factors as indicated from metallurgical data previously reported by Impala. The drilling will also be aimed at conducting further geological studies with respect to estimated geological losses prior to the re-estimation of Resources/Reserves. Much of the required environmental monitoring work and base-line studies for the project area are available as public documents produced by other operators in the immediate vicinity to Spitzkop. Phase 2 full feasibility work is anticipated to commence in the latter half of 2006 and will be based on the results of the pre-feasibility test work. There will be a certain amount of overlap of Phase 1 and 2 technical work. Phase 2 will also include mine permitting aspects as well as surface infrastructure and socio-economic studies for the proposed mine at Spitzkop. The Company anticipates that this technical work on the Spitzkop/Kennedy's Vale PGM Project will be completed in the middle of 2006 and progress into full feasibility to be complete in 2007. All work on the project will be conducted by reputable consulting engineering companies in their respective fields of expertise. With the synergies of the Spitzkop and Kennedy's Vale Project, this study will become an integrated study in order to optimize the economic benefits of the potential development of the two projects concurrently or as one combined operation.
A JORC-Code compliant feasibility study is currently being undertaken on the Mareesburg PGM Project by SRK Consultants, who are supervising all quality analysis and quality control requirements to meet these standards and have also been engaged to undertake the orebody modelling, geotechnical, hydrogeological, environmental and mine design (open pit and underground) aspects. This work is already well advanced and preliminary reports are being completed with the data from 33 diamond drill holes (approximately 3300 m) being input into the feasibility study. This drill sampling will provide core samples for assaying, geotechnical testing and metallurgical tests to determine the design parameters from pilot plant trials on bulk samples. In addition, the Company is also conducting aeromagnetic surveying and detailed Digital Terrain Modeling ("DTM") data for open pit modeling and mine design purposes.
The Company anticipated that an interim report on the Mareesburg PGM Project would be completed in the latter half of 2005 and progress into full feasibility. SRK, the Company's consultants in South Africa are currently preparing the feasibility study and as of 1 May 2006 are applying metal prices to the economic model. Several mining options are being evaluated, as well as toll treatment of mine product by third parties.
Current Trading and Prospects
In the period to 31 December 2005, Barplats has processed 577,559 tonnes of raw materials, more than double the 210,403 tonnes treated in the six month period ended June 2005. A total of 1,167 kg 5PGE+Au were sold in the period, generating revenues of R167.3 million and giving a net loss of R395.5m. Net assets for the period to 31 December 2005 were R270.6m. Rising dollar metal prices over the period boosted revenues generated in the six month period, which were some 400 per cent. higher than the total revenue for the year ended June 2005. Unit costs have decreased from R302,564/kg in the period ended June 2005 to R128,850/kg sold in the period to 31 December 2005.
The Management Team
Ian Terry Rozier, M.Sc., B.Sc. Hons, P.Eng.
President and Executive Director (appointed as Director of Elgin on 5 September 2003 and as President of Elgin on 9 January 2004).
Mr. Rozier is a professional geologist with over 25 years experience in the mining industry. Formerly with Goldfields of South Africa and a partner of Golder Associates he worked for, or was a consultant to, several major mining companies until 1987. He has several years underground mining experience in South Africa and has been involved in the exploration and development of PGM deposits in Canada, South Africa and the Philippines. He has been involved in many capital raisings in Canada and Europe for mining projects in Australia, the Far East, South America as well as South Africa and is well known in the Canadian mining industry.
David William Cohen, MBA, B.Sc., (Chem. Eng.) PR.Eng.
Non-Executive Director and Chairman (appointed as Director of Elgin 29 October 2003 and as Chairman of Eastplats on 28 April 2006).
Mr. Cohen, has over 20 years experience in the mining industry. Formerly with Fluor Engineers, he worked in South Africa as Director, Sales & Marketing and as Director of Business Development in the United States. Mr. Cohen is President and CEO of Northern Orion Resources (TSX:NNO - News) and largely responsible for the dramatic turn-around in the company's fortune, with major resource acquisitions, capital raisings and excellent performance in 2002-2006. Through his work with Northern Orion, David Cohen is well known in the North American and European capital markets.
Gordon Bruce Keep, MBA, B. Sc., (Geological Sciences) P Geo.
Non-Executive Director (appointed as Director of Jonpol on 5 November 2003).
Mr. Keep's career in corporate finance has spanned over 20 years, where his responsibilities have included financings, mergers and acquisitions and public company administration. Currently he is Managing Director Corporate Finance of Endeavour Financial Ltd. and previously, he held positions as Senior Vice President of Lions Gate Entertainment Corp. and Vice President of Corporate Finance with Yorkton Securities Inc.
Allen Joseph Palmiere, B.Comm, CA.
Chief Executive Officer and Executive Director (appointed as Director and CEO on 28 April 2006).
Mr. Palmiere is currently Executive Chairman of Barplats and Chairman of HudBay Minerals Inc, a fully integrated zinc and copper company. Mr. Palmiere has over 20 years experience and was formerly Chief Financial Officer of Zenex Corporation, a TSX and NYSE listed company, and CEO and CFO of Breakwater Resources. Mr. Palmiere has a Bachelor of Commerce degree and is a member of the British Columbia Institute of Chartered Accountants.
Mr. Palmiere has a letter of appointment dated 29 April 2006 which provides for him to act as Director of the Company for a fee determined by the compensation committee of the Company's board of Directors from time to time.
Jeffrey Belton Ahbe, B.Sc M.Sc,
Non-Executive Director (appointed as Director on 28 April 2006).
Mr. Ahbe is President of Ahbe Capital Investment Group Inc., has over 25 years experience in the energy and resource sector and was formerly Executive V.P. of Union Pacific Resources in Calgary, Alberta, Canada, a $3.5 billion oil and gas business. He has worked extensively with the international financial and investment banking community, and in various regulatory jurisdictions. Mr. Ahbe has Bachelors and Masters Degrees from Purdue University.
Mr. Ahbe has a letter of appointment dated 29 April 2006 which provides for him to act as Non-Executive Director of the Company for a fee determined by the compensation committee of the Company's board of Directors from time to time.
John Richard Hawkrigg, B.A.,
Non-Executive Director (appointed as Director on 28 April 2006).
Mr. Hawkrigg is a Managing Partner of HKMB International Insurance Brokers, Canada's largest privately owned commercial insurance brokerage, and has over 20 years experience in the insurance industry. He holds a B.A. from McMaster University in Ontario, Canada.
Mr. Ahbe has a letter of appointment dated 29 April 2006 which provides for him to act as Non-Executive Director of the Company for a fee determined by the compensation committee of the Company's board of Directors from time to time.
Officer
Barbara Eileen Dunfield, MBA B.Ed.,
Chief Financial Officer (appointed as CFO of Elgin on 26 May 2004).
Ms. Dunfield, has over 20 years experience in capital markets, business development, and corporate governance of public companies and is currently the director of several public companies in the resource sector. Ms. Dunfield's MBA thesis at Simon Fraser University was entitled "A Strategic Analysis of the PGM Industry" (2001).
Transaction StatisticsNumber of Common Shares is issue (undiluted) 513,228,821
Number of Share Options in issue 17,180,000
Number of Warrants in issue 87,999,374
Number of Common Shares in issue (fully diluted) 618,408,195Expected TimetableAdmission and dealings in the Common Shares
expected to commence on AIM 14 July 2006
This announcement does not constitute an offer to sell or the solicitation of an offer to buy these securities in any jurisdiction.
The foregoing information may contain forward-looking statements relating to the future performance of Eastern Platinum Limited. Forward-looking statements, specifically those concerning future performance, are subject to certain risks and uncertainties, and actual results may differ materially. These risks and uncertainties are detailed from time to time in the Corporation's filings with the appropriate securities regulatory authorities in Canada, which filings are available on SEDAR at www.sedar.com.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in any jurisdiction. The Common Shares will not and have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.
This announcement has been issued by the Company and is the sole responsibility of the Company. Canaccord is regulated in the United Kingdom by the Financial Services Authority and is acting solely for the Company in connection with the Admission and no one else. Canaccord has been appointed as nominated adviser and broker to the Company. Canaccord will not regard any other person as its client or be responsible to any other person for providing the protections afforded to clients of Canaccord nor for providing advice in relation to the Admission.
Canaccord is not making any representation or warranty, express or implied, as to the contents of this announcement. Canaccord accepts no liability whatsoever for the accuracy of any information or opinions expressed in this announcement or for the omission of any information.
Contact:
Mr. Ian Rozier
Eastern Platinum Limited
President and Executive Director
(604) 685-6851
(604) 685-6493 (FAX)
www.eastplats.com
Mike Jones / Robin Birchall / Clayton Bush
Canaccord Adams Limited
+44 20 7518 2777
--------------------------------------------------------------------------------
Source: Eastern Platinum Limited
Lateegra Gold Acquires Gold Anomaly within Aurelian Resource's Condor Project
Thursday July 13, 1:15 pm ET
VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - July 13, 2006) - Lateegra Gold Corp. (the "Company") (TSX VENTURE:LRG - News; FWB:LTG) announces that it has acquired the "El Condor" property in South Eastern Equador. The property consists of two hundred and forty two (242) hectares of mineral rights within 4000 meters south east of Aurelian Resources Inc (TSX VENTURE:ARU - News)'s recent Fruta del Norte ("FDN") high grade gold discovery and just south and sharing Aurelian's El Tigre gold anomaly at it's Condor Project, South East Ecuador.
The Condor Property was purchased from Ing Freddy Salazar, an Ecuadorian Geologist who spent ten years working as an in-country geologist for Newmont Gold and more recently Aurelian Resources. Mr. Salazar was instrumental in the identification of the land package known as the Condor Project held by Aurelian Resources Inc. For map, please refer to:
http://www.lateegra.com/pdf/lrg-map-lacondor.pdf
The Condor property was held by Ing. Salazar prior to the assembling of Aurelian's "Condor Project" land package and is within the same geologic unit as Aurelian's Fruta del Norte discovery.
This concession is fully covered by strongly altered and oxidized intrusive rocks with presence of limonite veins and some fully brecciated sections with sericitic alteration, angular alluvial gold in placers covers 70% of the area. The property is underlain by strongly altered intermediate porphyritic intrusive rocks containing weathered sericitic/chloritic alteration. Veins up to 4m in wide of tectonically brecciated crystalline quartz with iron oxides have been intersected in nearby trenches by Aurelian Resources. Additionally, 1m float boulders discovered in the area have assayed up to 6.62g/t Au, with angular alluvial gold covering 70% of the area.
Details of the of the 100% purchase agreement are as follows: The company has paid a US$10,000.00 deposit with a balance of US$90,000.00 and 300,000 shares of the Company's capital stock due upon TSX Venture Exchange approval.
The company is also engaged in advanced negotiations on two additional precious metal projects either currently in production or at a near term state of production readiness. The Company has also granted incentive stock options to it's directors, officers, consultants and employees, under its Stock Option Plan, for the purchase of up to 240,000 common shares of the Company for a period of 2 years at a price of $0.75 per share.
Lateegra Gold Corp. is a mineral exploration and development company with a mandate to build a significant portfolio of advanced exploration and near production properties with world class potential in Latin America.
ON BEHALF OF THE BOARD OF DIRECTORS
Michael Townsend, President and CEO
This news release contains certain "Forward-Looking Statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included herein are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed in the Company's documents filed from time to time with the British Columbia Securities Commission and the United States Securities & Exchange Commission.
The TSX Venture Exchange has not yet reviewed and does not take responsibility for the adequacy or accuracy of the content of this news release.
Contact:
Michael Townsend
Lateegra Gold Corp.
President and CEO
(604) 669-9330 or Toll Free: 1-866-669-9377
(604) 669-9335 (FAX)
info@lateegra.com
www.lateegra.com
--------------------------------------------------------------------------------
Source: Lateegra Gold Corp.
Lateegra Gold Acquires Gold Anomaly within Aurelian Resource's Condor Project
Thursday July 13, 1:15 pm ET
VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - July 13, 2006) - Lateegra Gold Corp. (the "Company") (TSX VENTURE:LRG - News; FWB:LTG) announces that it has acquired the "El Condor" property in South Eastern Equador. The property consists of two hundred and forty two (242) hectares of mineral rights within 4000 meters south east of Aurelian Resources Inc (TSX VENTURE:ARU - News)'s recent Fruta del Norte ("FDN") high grade gold discovery and just south and sharing Aurelian's El Tigre gold anomaly at it's Condor Project, South East Ecuador.
The Condor Property was purchased from Ing Freddy Salazar, an Ecuadorian Geologist who spent ten years working as an in-country geologist for Newmont Gold and more recently Aurelian Resources. Mr. Salazar was instrumental in the identification of the land package known as the Condor Project held by Aurelian Resources Inc. For map, please refer to:
http://www.lateegra.com/pdf/lrg-map-lacondor.pdf
The Condor property was held by Ing. Salazar prior to the assembling of Aurelian's "Condor Project" land package and is within the same geologic unit as Aurelian's Fruta del Norte discovery.
This concession is fully covered by strongly altered and oxidized intrusive rocks with presence of limonite veins and some fully brecciated sections with sericitic alteration, angular alluvial gold in placers covers 70% of the area. The property is underlain by strongly altered intermediate porphyritic intrusive rocks containing weathered sericitic/chloritic alteration. Veins up to 4m in wide of tectonically brecciated crystalline quartz with iron oxides have been intersected in nearby trenches by Aurelian Resources. Additionally, 1m float boulders discovered in the area have assayed up to 6.62g/t Au, with angular alluvial gold covering 70% of the area.
Details of the of the 100% purchase agreement are as follows: The company has paid a US$10,000.00 deposit with a balance of US$90,000.00 and 300,000 shares of the Company's capital stock due upon TSX Venture Exchange approval.
The company is also engaged in advanced negotiations on two additional precious metal projects either currently in production or at a near term state of production readiness. The Company has also granted incentive stock options to it's directors, officers, consultants and employees, under its Stock Option Plan, for the purchase of up to 240,000 common shares of the Company for a period of 2 years at a price of $0.75 per share.
Lateegra Gold Corp. is a mineral exploration and development company with a mandate to build a significant portfolio of advanced exploration and near production properties with world class potential in Latin America.
ON BEHALF OF THE BOARD OF DIRECTORS
Michael Townsend, President and CEO
This news release contains certain "Forward-Looking Statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included herein are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed in the Company's documents filed from time to time with the British Columbia Securities Commission and the United States Securities & Exchange Commission.
The TSX Venture Exchange has not yet reviewed and does not take responsibility for the adequacy or accuracy of the content of this news release.
Contact:
Michael Townsend
Lateegra Gold Corp.
President and CEO
(604) 669-9330 or Toll Free: 1-866-669-9377
(604) 669-9335 (FAX)
info@lateegra.com
www.lateegra.com
--------------------------------------------------------------------------------
Source: Lateegra Gold Corp.
Lateegra Gold Acquires Gold Anomaly within Aurelian Resource's Condor Project
Thursday July 13, 1:15 pm ET
VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - July 13, 2006) - Lateegra Gold Corp. (the "Company") (TSX VENTURE:LRG - News; FWB:LTG) announces that it has acquired the "El Condor" property in South Eastern Equador. The property consists of two hundred and forty two (242) hectares of mineral rights within 4000 meters south east of Aurelian Resources Inc (TSX VENTURE:ARU - News)'s recent Fruta del Norte ("FDN") high grade gold discovery and just south and sharing Aurelian's El Tigre gold anomaly at it's Condor Project, South East Ecuador.
The Condor Property was purchased from Ing Freddy Salazar, an Ecuadorian Geologist who spent ten years working as an in-country geologist for Newmont Gold and more recently Aurelian Resources. Mr. Salazar was instrumental in the identification of the land package known as the Condor Project held by Aurelian Resources Inc. For map, please refer to:
http://www.lateegra.com/pdf/lrg-map-lacondor.pdf
The Condor property was held by Ing. Salazar prior to the assembling of Aurelian's "Condor Project" land package and is within the same geologic unit as Aurelian's Fruta del Norte discovery.
This concession is fully covered by strongly altered and oxidized intrusive rocks with presence of limonite veins and some fully brecciated sections with sericitic alteration, angular alluvial gold in placers covers 70% of the area. The property is underlain by strongly altered intermediate porphyritic intrusive rocks containing weathered sericitic/chloritic alteration. Veins up to 4m in wide of tectonically brecciated crystalline quartz with iron oxides have been intersected in nearby trenches by Aurelian Resources. Additionally, 1m float boulders discovered in the area have assayed up to 6.62g/t Au, with angular alluvial gold covering 70% of the area.
Details of the of the 100% purchase agreement are as follows: The company has paid a US$10,000.00 deposit with a balance of US$90,000.00 and 300,000 shares of the Company's capital stock due upon TSX Venture Exchange approval.
The company is also engaged in advanced negotiations on two additional precious metal projects either currently in production or at a near term state of production readiness. The Company has also granted incentive stock options to it's directors, officers, consultants and employees, under its Stock Option Plan, for the purchase of up to 240,000 common shares of the Company for a period of 2 years at a price of $0.75 per share.
Lateegra Gold Corp. is a mineral exploration and development company with a mandate to build a significant portfolio of advanced exploration and near production properties with world class potential in Latin America.
ON BEHALF OF THE BOARD OF DIRECTORS
Michael Townsend, President and CEO
This news release contains certain "Forward-Looking Statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included herein are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed in the Company's documents filed from time to time with the British Columbia Securities Commission and the United States Securities & Exchange Commission.
The TSX Venture Exchange has not yet reviewed and does not take responsibility for the adequacy or accuracy of the content of this news release.
Contact:
Michael Townsend
Lateegra Gold Corp.
President and CEO
(604) 669-9330 or Toll Free: 1-866-669-9377
(604) 669-9335 (FAX)
info@lateegra.com
www.lateegra.com
--------------------------------------------------------------------------------
Source: Lateegra Gold Corp.
Lateegra Gold Acquires Gold Anomaly within Aurelian Resource's Condor Project
Thursday July 13, 1:15 pm ET
VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - July 13, 2006) - Lateegra Gold Corp. (the "Company") (TSX VENTURE:LRG - News; FWB:LTG) announces that it has acquired the "El Condor" property in South Eastern Equador. The property consists of two hundred and forty two (242) hectares of mineral rights within 4000 meters south east of Aurelian Resources Inc (TSX VENTURE:ARU - News)'s recent Fruta del Norte ("FDN") high grade gold discovery and just south and sharing Aurelian's El Tigre gold anomaly at it's Condor Project, South East Ecuador.
The Condor Property was purchased from Ing Freddy Salazar, an Ecuadorian Geologist who spent ten years working as an in-country geologist for Newmont Gold and more recently Aurelian Resources. Mr. Salazar was instrumental in the identification of the land package known as the Condor Project held by Aurelian Resources Inc. For map, please refer to:
http://www.lateegra.com/pdf/lrg-map-lacondor.pdf
The Condor property was held by Ing. Salazar prior to the assembling of Aurelian's "Condor Project" land package and is within the same geologic unit as Aurelian's Fruta del Norte discovery.
This concession is fully covered by strongly altered and oxidized intrusive rocks with presence of limonite veins and some fully brecciated sections with sericitic alteration, angular alluvial gold in placers covers 70% of the area. The property is underlain by strongly altered intermediate porphyritic intrusive rocks containing weathered sericitic/chloritic alteration. Veins up to 4m in wide of tectonically brecciated crystalline quartz with iron oxides have been intersected in nearby trenches by Aurelian Resources. Additionally, 1m float boulders discovered in the area have assayed up to 6.62g/t Au, with angular alluvial gold covering 70% of the area.
Details of the of the 100% purchase agreement are as follows: The company has paid a US$10,000.00 deposit with a balance of US$90,000.00 and 300,000 shares of the Company's capital stock due upon TSX Venture Exchange approval.
The company is also engaged in advanced negotiations on two additional precious metal projects either currently in production or at a near term state of production readiness. The Company has also granted incentive stock options to it's directors, officers, consultants and employees, under its Stock Option Plan, for the purchase of up to 240,000 common shares of the Company for a period of 2 years at a price of $0.75 per share.
Lateegra Gold Corp. is a mineral exploration and development company with a mandate to build a significant portfolio of advanced exploration and near production properties with world class potential in Latin America.
ON BEHALF OF THE BOARD OF DIRECTORS
Michael Townsend, President and CEO
This news release contains certain "Forward-Looking Statements" within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included herein are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company's expectations are disclosed in the Company's documents filed from time to time with the British Columbia Securities Commission and the United States Securities & Exchange Commission.
The TSX Venture Exchange has not yet reviewed and does not take responsibility for the adequacy or accuracy of the content of this news release.
Contact:
Michael Townsend
Lateegra Gold Corp.
President and CEO
(604) 669-9330 or Toll Free: 1-866-669-9377
(604) 669-9335 (FAX)
info@lateegra.com
www.lateegra.com
--------------------------------------------------------------------------------
Source: Lateegra Gold Corp.
San Francisco Gold Show, 2005
Jim Puplava interviews Peter Marrone, Yamana
JIM: One of the countries we’ve been talking about here on the FSO Gold Show this weekend has been Brazil. We had talked to John Doody of Gold Stock Analyst. And joining me on the program is Peter Marrone, he’s President of Yamana, which has a considerable stake out in Brazil.
Peter, good to have you back on the program. Why don’t you give us an update and first of all let’s talk about Brazil itself, because a lot of investors are thinking of North America, Canada, Mexico, Africa. There are a lot of great things going down in South America, why don’t you fill us in?
PETER MARRONE: Let me begin by saying good to see you again Jim, and good to be back on your program.
Yup, Brazil’s a great country. It’s difficult for me to start any discussion about our operations without talking about Brazil. This is a country that is among the 10 largest economies of the world. It’s a country that is industrialized. It is a country that has exceptional infrastructure. With to boot, a country that is mining friendly. It has a mining culture. We don’t have to deal with expatriates coming into the country. This is a country that has been doing mining as long as Canada, and the United States, Australia, and other parts of the world. It’s a country that has well established mining laws, that deal with everything from the environment to mining plans. Finally, with 175 million people it’s a country that has – despite the infrastructure and industrialization – a cost basis that is the equivalent of developing nations. So, I’d summarize it by saying, all the benefits of a developed nation with many of the benefits of a developing nation. [16:50]
JIM: The other thing that Brazil has, Peter, which I think is going to be key even to anybody getting into the mining industry is energy. They’ve been farming sugar, they are using ethanol, and that’s got to be a key to any company getting into mining is energy as a cost factor.
PETER MARRONE: Again, another very fair observation. One of the unique things about Brazil is that this is a country that is self-sufficient in terms of its petroleum, and in terms of energy. It’s a country that subsidizes diesel. For a mining company that’s important. The country does not do that for the mining industry, [but] we benefit from it. Diesel is subsidized largely because of the trucking. The overland transport business which I would describe as subsistence, it’s not the way Europeans and North Americans understand it with large trucking companies, these are Mom and Pop type operations with one truck, two trucks, maybe five trucks. So, diesel is subsidized. We as a mining company get the benefit of the subsidized diesel cost which is roughly 2/3 to 70% of the world price. In addition to that, we also have power coming from hydroelectric sources. All of our projects connect to the national grid. 95% of power in Brazil is hydroelectric power. So it’s relatively inexpensive by comparison to many other parts of the world. [18:04]
JIM: You mention 2 things that are very key to mining companies. You’ve got to have the power, you have to have the transportation system, and you have to have the energy. Mining is a very energy intensive business, and we’ve all heard about companies that maybe have a great gold discovery but they don’t have the power or the infrastructure around the mine. And you can’t grow a mining project without all those things in place.
PETER MARRONE: The best example I can give is our São Francisco project which is our third mine which has just started production. We’ve just completed construction and started production as we’d undertaken to do by the end of this year. That project is just about in the center of South America on the Brazilian side of the Brazilian-Bolivian border. If you imagine a map of South America, it’s right at the center of South America. Remote, but even there there are paved road ways, and we connect to a national grid. There are several communities that are anywhere from 25,000 people to 75,000 people. Our Chapada copper gold project – our largest project – has exceptional infrastructure. It will be among the third or fourth largest mines in Brazil when it’s built, but this is a project that will cost us roughly $200 million. You could not build it in another part of the world without the industrialization that comes from Brazil, and without the fact that the infrastructure around this project is already built: towns that are within 50 km; that are 50,000 people to 500,000 people. 300km from the capital of the country, Brazilia, there are paved roadways that are two lane and four lane roadways on a national grid. So, experienced labor with infrastructure, that’s what’s unique about this country. [19:40]
JIM: I want to go back to this energy because a lot of the mining companies have seen their cost structures go up considerably – the cost of steel is going up, the cost of labor is going up – and you even have companies like Pierre Lassonde’s Newmont which is hedging by buying investments in the Canadian tar sands to hedge its energy costs. So, being in a country where you have access to energy as the cost of oil and natural gas goes up, and the fact that you have hydroelectric power, I couldn’t emphasize that [enough] to investors how key that’s going to be in terms of return on investment going into production.
PETER MARRONE: There’s no question that costs are going up everywhere, but again it’s a question of relative cost increases and how we compare to peers. And because diesel is subsidized and there’s an abundance of hydroelectric power – and by abundance [I mean] there is a significant inversion between supply and demand in Brazil on power – roughly 80,000 MW of capacity and 60,000MW of demand. So this is a country that went through an energy crisis about 7 years ago –six years ago – and has done a systemic change about how it approaches energy. Things that we in North America will likely have to do in due course. And so, here’s a situation where you’ve got an abundance of relatively inexpensive power, and that’s why this is a country that’s unique to be operating in.
In addition to that there are some of the other things you mentioned: labor. Laborers in Brazil that work in the mining industry and collateral industries are paid very, very well but by world standards it’s lower that one would pay if one paid an expatriate to work in the jurisdiction. That’s just ordinary course. And in addition to that it has an industry that is tailored to mining and so when we buy our equipment, when we buy our trucking fleet, when we buy our mills, we are buying locally manufactured Brazilian made product, which is world standard but at a fraction of the cost. Steel [is] another excellent example. While steel prices have gone up all over the world, Brazil has amongst the best iron ore in the world, very modern steel mills and, as you know Jim, the cost of steel is largely a function of what the distance is between the iron ore mines and the plants in transportation. So, this is a situation where the distance between the mills and the mines is relatively short, and so you have steel that is produced at a lower cost than it would be produced in other parts of the world. [21:58]
JIM: This is also amazing too because people traditionally think of mining as being a very polluting type of industry, but if you take a look at Brazil you’ve got environmental people that are working with the mining companies. They recognize the economic role that mining plays in any industrialized economy. Whether you’re trying to produce steel, they have CRBD down there which is one of the largest iron ore producers. The Chinese have a definite interest in doing business there. So, you’ve got all the cost structure and infrastructure that you need.
I want to move on, Peter, and talk about this gold bull market. One of the things that we’ve seen is a big movement in the majors, their prices have moved up. Your stock has been doing nicely lately, but this market in this bull phase – I think a lot of investors are looking at $500 gold and I’m just judging by looking at the conference here, it’s the same type of people – I’m not seeing a lot of new investors coming here, the guy that’s buying Google, I’m not seeing him at the show yet. A passer-by was talking about he had mentioned to somebody that had lost money in the stock market and he said gold and he looked kind of starry-eyed. So this story of this gold bull market has not caught on with investors I don’t think.
PETER MARRONE: I would absolutely agree with that. I think like all bull markets the generalists will come in at some point in the market and then I think the overwhelming masses will come in at some point in the market as well. It’s very typical for other markets that we’ve seen and I think it’s going to be the case here. I believe that gold is sustainably above $500. In a radio interview last year – it may have been yours, Jim – I think that in a weakened moment I don’t normally predict the commodity price but someone asked where did I think it would be by the end of the year and I thought probably better than $500. We are almost there. I believe it’s sustainably above $500 and I believe that next year we may see gold that is significantly below about $500 [sic]. I can’t predict where it would be, and if I could I’d probably be doing something else. But I’m comfortable saying it’s at least $500 and it will go to significantly higher than $500 within the next few years.
What’s different in this industry in my view to others is this is an industry that is relatively small in comparison to other industries. If you take the market capitalization of every mining company out there it is less than one of the average-sized telecom companies. So it’s a relatively small industry, and when it does catch on with the generalist funds and with the overall masses it becomes, as I describe it, the Niagara Falls –the volume of water of the Niagara Falls – through a garden hose. It becomes a situation where you’ve got this massive inflow of money and massive inflow of investment into a relatively small industry, and that’s going to be very, very good for stock prices and companies in the industry. [24:48]
JIM: Yeah, because one thing that we’ve seen in this market and certainly since the downturn that came about in the Spring of 2004, a lot of investors – and I’m talking about the fund managers, the big money – they’ve come back into the market. But they’re going into the Barricks, they’re going into the Newmont’s, because they know if there’s a correction or if there’s an exit they can get out.
It hasn’t spilled over for the rest of the industry. You still have a lot of juniors that aren’t selling at the premiums that the majors or the intermediates are. And the thing that attracts me to this industry right now there are a lot of good companies out there that investors are totally ignoring and if you look at if this market catches on as I believe it will – as the price of gold stays to $500 and moves to higher levels – there isn’t a lot of selection. Everybody is focusing on the big cap stocks and I think this market needs to broaden. There needs to be more participation, there needs to be higher stock prices because that is what attracts institutions and attracts investors. Do you see that happening next year?
PETER MARRONE: I do. And I couldn’t predict if it would be the next 3 months, but I certainly think within the next year, and I don’t think it will be longer than a year but I think we will start to see that more general flow of funds into this industry, and into the smaller cap companies. We’re somewhat unique as you know in that we have a growth profile that is by our estimation, and by the estimation of many, unparalleled. A growth profile that takes us to 260,000 ounces next year, more than 400,000 the year after, with a stated objective that we’re going to be at 750,000 oz before 2008, with a cost structure that will be below $200 per oz. So, from that perspective we are unique but there are lots of interesting stories in the marketplace –lots of interesting companies in the marketplace – that with a sustained gold price of more than $500 will do remarkably well from a cash flow point of view, from a growth point of view, and also from a profit point of view. And so I think once the focus starts to be paid, once there’s attention on those types of companies and what’s taking place I think that we’ll see the generalists, I think we’ll see the bigger population, coming into these investments. And I think it is a matter of time, but it’s not a long time, say within the next year in my view. [27:03]
JIM: You’ve brought up something that’s real important too. As the price of gold moves up one of the ways to capture that is of course by being a producer, and number two, if you’re also increasing production. Tell us a little bit about Yamana, where you’ve come from, where you are today, and where you see the future going?
PETER MARRONE: I’d be happy to do that. We put this company together – we took this company public by a classic reverse takeover. That was July of 2003. In July of 2003 we started with a market capitalization of roughly $90 million, where today at an enterprise value a market cap that exceeds a billion dollars. What we’ve done is take a company with one producing gold mine, our only underground mine, with roughly 90,000 oz of production per year, we took that to a second mine early this year but we declared commercial production early this Spring, and that production rate is now 125,000 oz.
Our third mine has just started operations, that’s our largest gold mine, São Francisco. And with São Francisco in a full year of production next year we will be at more than 260,000 oz of production.
And then Chapada, our copper-gold project will come into production in October of 2006, 5 months ahead of schedule. We announced that a couple of months ago, we are ahead of schedule. A mine that was supposed to be completed at the end of the first quarter 2007, we’re completing by October of 2006. With a full year of production in 07 we expect to be at a production rate of more than 400,000 oz of gold, and another 100 million pounds of copper. And that will then increase to 500,000 oz of gold in 08 and roughly 140 million pounds of copper.
So it’s a significant growth profile, and this is not a growth profile that takes us from zero to 400,000. It’s progressive, it’s about 50% per year over the course of a 3 year period, and what we announced about a month and a half ago was 3 new potential mines. We have an exploration program that is about $13 million per year, and that program is on roughly 700,000 ha. of mineral concessions, it’s within the 4 largest land positions in Brazil. We started spending it in January of this year, and by 10 months, and so about a month to two months ago, we came to the point where we had 3 projects that were at the advanced stage where we declared that we will be taking them to feasibility by the middle of next year. With those 3 projects and our existing mines, we should be at a production level that is more than 600,000 oz per year, starting in 2007 and extending in 2008, and that will take us into 2015. [29:36]
JIM: What do you see for the future profile of your company. You’re talking about production right now growing about 50% per year. You’ve got a lot of things in the pipeline at the development stage. Do you become a million ounce company?
PETER MARRONE: We put out – my memory is being tested in terms of the timing – in the last six weeks we put out what I describe as a strategic plan, or a strategic vision press release. In that press release we said this is where we are, this is where we expect to be. 2 ½ years ago we said this is what we would do, and by and large we’ve executed on that plan. Now what we are saying to our shareholders and others is what we intend to do in the next 2 to 3 years. And in that press release we publicly said we expected to be at 750,000 oz – sustainably 750,000 – from internal growth and from acquisitions. So clearly, ¾ of a million is a number that we think is achievable, and we think that we can probably can get better than ¾ million oz of gold by 2007, 2008. [30:33]
JIM: Youre growth in production is rather substantial. If you take a look at some of the intermediate companies, you look at Glamis now at 400,000, if you take a look at Agnico at close to 300,000, there’s a group of companies in that category. So by next year Yamana will be in that same category of what we call intermediate producers in moving forward just with existing projects.
PETER MARRONE: Very much. In 2006 – so we’re now at the tail end of 2005 – within the span of the next couple of months with 3 mines in full production we will be at 260,000 oz of gold, with a fourth mine that will start to produce in the last quarter of 2006. So, not even including the production that comes from that copper-gold project, we expect to be at 260,000 oz of gold production. That’s squarely in the intermediate ranks.
And as you know, Jim, and your listeners probably know the seniors that you described earlier, the senior companies are normally attracting good multiples – very good multiples – that then migrates down to the intermediates, and then to the juniors. And the juniors are usually trading at multiples that are lower than the intermediates, and lower than the seniors. As we’re migrating to an intermediate stage company which we expect to be within the next few months with 3 mines as I mentioned, I should expect, and we should all expect, that we will be getting the same type of multiple that a Glamis or an Agnico – and the companies that you mentioned – would get. But that means the stock price that is roughly trading at the $5.50 (Canadian) on the Toronto Stock Exchange should be seeing prices that are higher than that. [32.11]
JIM: You know, Peter, that’s one of the things that are kind of unique in this gold market. If you go back to the last one that occurred in the 70s, a million oz producer was rare. You had the South African companies but producing a million oz, or 5 million oz, just didn’t exist in that kind of market. And if we take a look at where the majors are today, I have a hard time – even with all of the money that has gone into exploration – we are not finding Cortez Hills every year, and so you kind of wonder where the majors are going to be going in terms of growth versus somebody, let’s say, the size of your company, a Meridian, or a Glamis that has a chance of becoming a million oz producer, or 750,000. I see you guys as the growth play in this kind of bull market, because you’re going to get good value with Newmont – you’re going to do well in a gold bull market – but you’re not going to be growing your ounces. And if you want to make a lot of money in my opinion [it takes a company with] a rising gold price and also rising production. You’re selling more product, it’s just like any other industry.
PETER MARRONE: I share that view. I believe we will be going through a consolidation phase in addition to all of that. You’re right a million oz producer is not as rare today as it was 20 years ago, or even as much as 10 years ago. But you cannot get the growth from a major that you would get from a junior mining company, and an intermediate mining company. But again, I think we’re at the early stages of this. On the exploration side, we’re only now starting to see the benefit of that money that has been spent in the ground for the last 3 years. What we all recognize is that it’s a cycle. It takes a period of time to put money in the ground for exploration and then take a drill point to where it’s actually at feasibility and then to construction. So, we’re going through that cycle the money that was raised 3 years ago is now starting to bear fruit today in terms of some of the exploration companies, and in terms of some of the junior companies migrating to intermediate companies, including ourselves.
Where I think we are uniquely positioned is that we not only have that growth profile that I described but we also have this incredible exploration package. So, if I were to say can you find a company or are there other companies where there is the growth profile I described to you, where we have exposure to gold and some exposure to another metal – copper – and where we have an exploration program that is the size of ours, it is very unusual. So, from that perspective we are unique, but on the other hand there are a lot of companies out there that are just at that point – that inflection point – where they are going start to produce uniquely, and start to grow their production. And those companies I think will do very, very well. And you mentioned some of them, and there are many others that are in that market place. But in addition to that I think we’re also going to see some consolidation in the industry. I’ve been saying it for a year, and I think we’re starting to see it now. The majors, to become larger, will have to buy other companies, but I think we are going to start to see some consolidation among the juniors and intermediates as well. And we are positioning ourselves to be buyers of some of these assets and some of these companies. [35:14]
JIM: That’s my next question. You have 3 mines in production...
PETER MARRONE: Yes
JIM: You have a big exploration program going on in Brazil. Do you see Yamana as a one country company? Are the resources so vast that there’s enough to keep you satisfied there for say the next decade, or do you see Yamana going beyond the Brazilian borders?
PETER MARRONE: We certainly could see ourselves satisfied for the next decade in Brazil, but as we look at it, and what people have seen in terms of our public disclosure, our focus is not Brazil, our focus is Latin America. Clearly, the initial platform is Brazil, but Latin America is our broader focus. That is what we understand. So we won’t only limit ourselves to Brazil but will limit ourselves to the Latin American area of the world. Now, Latin America is a broad area everything from Mexico down through Central America, and down to the tip of South America. It’s a broad area but we understand it, we understand the culture there, the terrain and the geology - the mining approaches to those parts of the world – so we’ll focus on those.
I think that as a company grows you have to outgrow a company specific platform. You have to go to a broader platform than that, and we will start to evaluate that over the course of the next year, perhaps sooner than that, to get to a point where we have Latin American operations not only Brazilian operations. [36:33]
JIM: Fantastic. Peter, if you were speaking to a group of investors, and you were to ask them to invest in your stock why don’t you give us 3 reasons to invest in Yamana?
PETER MARRONE: Clearly, growth. First and foremost is growth. We have a growth profile that is significant. Second is value, we’ve been at the stock price it is trading today – you mentioned some of these other companies – they’re still trading at a price – if you compare it to net asset value, our cash flow, our profitability – that is higher than ours. So, even independently of growth based on where we are today based on our current platform of production to where these companies are, we are trading at a discount to these companies. And so there is an immediate benefit to investing in Yamana today. So, value. And the third is it’s a mix and a match of the country that we’re in, with the reasons I described before, and also the exploration potential that comes from what we have in the company presently. Growth, value and an exceptional infrastructure, an exceptional place to be doing business from a mining perspective, and from an exploration perspective. [37:39]
JIM: Alright. Well, Peter, thank you very much for joining us on the Financial Sense Newshour, all the best to you, Sir.
PETER MARRONE: Happy to be here.