Zeev's Turnips Patch-No Politics (ZEEV)

[basserdan]

*** Gold related post (GRZ) ***

Hi James,
Here's one I believe you should have in your long term portfolio. It has long been one of my favorites, but until recently has been in the shadow of KRY, with whom GRZ shares a common orebody.

Compared to it's peers, where in-ground reserves average about $160/oz, Gold Reserves multi-million ounces of in-ground reserves are being valued at an industry low of $13. Even next door neighbor Crystallex (KRY), with all it's problems to date has it's reserves valued 325% higher @ $43/oz.

I think it will be a sure four bagger within 30 months.


Gold Reserve raises its profile for Brisas

By: Dorothy Kosich
2004/03/24

RENO, NV (Mineweb.com) -- Executives of Spokane, Washington-based Gold Reserve [GRZ] are raising their profile again as permitting and a completed bankable feasibility study for the Brisas gold-copper project are concluded.

Gold Reserve President, Doug Belanger, is currently making the rounds among not only the traditional gold and pension fund circuits, but is putting the Brisas message in front of generalist funds. GRZ has already attracted investments by 14 gold funds and other institutional investors.

Brisas abuts the Las Cristinas concessions in the KM 88 Mining District of Bolivar State, Venezuela and shares a continuous ore body, according to Belanger.

Thus far, Gold Reserve has managed to sidestep the headline risk factors associated with Venezuela, and has avoided the soap-opera which befell its neighbor, Crystallex [KRY].

That has been partly attributed to putting down deep roots in the local community, principally through the work of two long-time Venezuelan employees. The company has helped fund a park and contributed to a hospital and local schools during that decade. In an interview with Mineweb, Belanger said the company managed to avoid many of the pitfalls that occurred when 300 mining and exploration companies overwhelmed the national and state Venezuelan governments. GRZ “stayed out of the politics” of Venezuela, he added. During the “nuclear freeze” of metals prices, Gold Reserve quietly advanced the Brisas property and acquired other assets.

Gold Reserve remains long-term debt free, has $23 million in cash and investments, and is busy planning to open its mine in 2006. Currently, a Cominco Engineering Services Ltd. (CESL) bulk metallurgical test is scheduled to be completed by late summer. Results from development drilling to increase reserves should be made public in May. Mine planning and scheduling will be finalized during June and July.

Gold Reserve officials aren’t worried about winning approval for the Brisas EIS because the study is based on the final and approved EIS submitted by predecessor Placer Gold when it won approval for the Las Cristinas project. Belanger said the property is “environmentally benign” and will not become an acid mine waste generator.

The infrastructure in the area “is amazing,” Belanger declared. Venezuelan authorities constructed a 400 kV transmission line and power substation which is only used by two mining companies, which includes Gold Reserve. The property is three kilometres from a paved highway.

Brisas’ location reduces the potential for a problem with the illegal small miners who work at other mining properties. The property’s private security team made up of local residents has also worked well to prevent any problem, Belanger noted. Environmental special interests groups and NGOs seem uninterested in the project, probably due to its lack of controversy.

Two full independent audits which have been submitted to the SEC and to SEDAR have conducted a reserve analysis using both the traditional smelter and the Teck Cominco Engineering Services Ltd. processes. While not yet in commercial use, CESL is considering an environmentally cleaner process to produce copper cathode on site. Gold production would comprise 78% of revenues from 362,000 ounces annually. Annual copper production would average 46 million pounds over a mine life of 13.4 years, according to a study by JE MinCorp, a Division of the Jacobs Engineering Group. MinCorp estimated an initial capital cost of $334 million and a cash operating cost of $153/oz for gold as a net of by-product copper at 90-cents per pound.

Belanger estimates that 30-40% of the gold will be recovered on site whilst another 50% will come from copper concentrates. Recovery will also include gravity circuits and flotation.

A Behre Dolbear audit confirmed proven and probable smelter reserves of 6.64 million ounces of gold and 764 million pounds of copper. Using the CESL process, the reserves increase to 7.5 million ounces of gold and 1.1 billion pounds of copper.

Belanger said the company holds both gold and copper mining titles to the property, which aren’t disputed by litigation. The Ministry of Energy and Mines issued title and is overseeing permit approvals.

The net result is that Gold Reserve remains the cheapest stock on Mineweb’s Global Gold and Silver Watchlist when priced on recoverable reserve ounces – just $12/oz.

http://trinity.mips1.net/mgjr.nsf/UNID/TWOD-5XDU92?OpenDocument

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The Mineweb Global Gold & Silver Watchlist comprises public companies with a US dollar market capitalisation (fully diluted) exceeding $95 million (+/-5%). In addition, mining and exploration companies must have proven and probable reserves. Companies with Measured & Indicated Resources may qualify provided those resources are "economic" as determined by a study that is not more than 12 months old or where a board resolution exists for mine construction / development. Non-mining companies can qualify with audited bullion holdings (e.g. gold funds).

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