Silver Falcon facility visit.
vdubbs, here's an update for you. By way of introduction, I hold SFMI stock by way of the 200-1 R/S from Dicut (DCUT), having been an investor there for many years.
Today (20 May 08) I flew into Boise, rented a car, and drove down to Melba to see the progress of assembly of the ore processing equipment. I spent about an hour with John Martin, the principal operator, and he said it would be alright if I posted here as long as I didn't attach any of the photos I took.
Afterwards I drove down south to see Silver City and later drove part way up the road that leads to the mines of War Eagle Mountain.
The plant itself will be ready to process the ore when the (tailings) ore is finally hauled down from the mountain. The hauling process won't take very long, but given the record snowfall this past winter, and given that the Feds have to officially certify and open the roads, I don't think the first ore will be processed until late June or early July.
The plant has an open area prepared adjacent to it where the tailings will be stockpiled. It'll be late fall before the whole pile has been processed. The process itself doesn't involve any chemical leaching, which is a definite plus, both from a regulatory and cost perspective. The whole process is quite automated, so that one man can run the whole show in the facility.
My opinion is that $5000 per day profit can be realized for the SFMI shareholders. That takes into account the 15% of gross for the operator and the 15% of gross for the owner of the land up there. Keep in mind that it is very tough to be too accurate here, since we don't know yet what the concentrations of gold/silver will be, what the price per oz will be, or what the historical reliability of the machinery will be.
The basic idea is to use the revenue from the 2008 summer processing of the tailings to reinvest in machinery for a similar process in a building that stands right next door (and that process will be roughly double the volume of the start-up building's volume). But now I'm talking about the processing of newly mined ore, and that's won't begin till over a year from now.
When the mining gets started, it'll likely be at the Illinois-Central vein initially. That work will be done by subcontractor crews, so that SFMI won't have many people in its direct employ (very little workmen's comp, scheduling issues, etc.).
The (record) snowfall on War Eagle has just about melted. I was able to drive most of the way to it with a two wheel drive rental, and the roads are in good shape, at least the roads I took. They are wide enough to accomodate large trucks, but only a single lane for a lot of that distance. The rivers are running fast and full with the snowmelt.
I'm sure I've forgotten to post a lot of other observations: the day here has been pretty long. But I'll give a shot at any questions you might have one of these days.
Good luck to you here. As a disclosure, I'm long this stock, holding just under 600K shares. My opinion is that the pps belongs at .55 to .65 based on the upcoming processing of the tailings alone, and, given that the likelihood of this project moving soon into the mining phase is high, I think that the eventual pps could be in the $5 to $8 range at some point in the next two to three years.
