Metallic shows how shareholders can be treated
By: Tim Wood
Posted: 2003/11/24 Mon 06:41 ZE2 / © Mineweb 1997-2003
SAN FRANCISCO -- It’s hard to find mining companies able to resist the temptation of doing everything on the shareholder dime. Toronto listed Metallic Ventures [MVG] (not to be confused with compatriot Metallica Resources [MR] which is another stock we especially like) breaks that mould very emphatically.
Principals Jeffrey Ward and Richard McNeely sank $9 million of their own wealth into Metallic, assembling a Nevada property portfolio during the gold market’s nuclear winter. Drilled since 2000, the projects are now on the verge of delivering returns and positioning Metallic as an emerging mid-tier player with the added benefit of US dollar parity in operating costs and gold price leverage.
Publicly traded since late 2002, the company has exchanged scrip worth $33 million to develop three gold projects that it bought for a paltry $457,000, the most advanced of which is Esmeralda.
McNeely estimates that the company has spent about $12 million so far refurbishing the mill at Esmeralda which is capable of processing 350 tonnes of ore per day, as well as bringing the other infrastructure up to operating standard. Further capital investment of $2 million should bring the mine back into production in the first quarter of 2004 with an annual output of 60,000 to 80,000 ounces of gold a year, at total cash costs in a broad estimated range of $125-180 per ounce.
Two declines are being completed for mining from underground as well as to facilitate deeper exploration that should substantially bulk up Metallic’s mineral resource base. Esmeralda’s historical underground gold grades are spectacular and anything approaching what has been reported will fully justify the tremendous wealth creation that has already taken place.
The company’s Goldfield and Converse properties, also in Nevada, still require feasibility work to be completed, but are very likely production prospects at current gold prices. Goldfield has considerable district potential with Metallic controlling more than 18,000 acres.
Metallic is presently preparing a new resource calculation based on its recent drilling activities and that is expected to show a sharp improvement from the current 3.2 million ounces of measured and indicated gold resources that prices Metallic at a heady $80 per resource ounce – that’s a valuation companies with substantial reserves could only dream of.
Great projects are not enough without management who can execute the engineering and generate wealth. Ward and McNeely offer that in spades after many years of success as a team which is why they could not only afford to personally fund their latest venture, but are also likely to produce another generous surplus for their shareholders.
Metallic is a model that should be emulated, not just traded.
AI
