Cannon Exploration Inc. (fka CNEX)

[Stock Girl]

Hi Guys,

I have recently invested in this stock in the beginning of the week. This is the first mine/ natural resource type stock I have invested in. For the most part I usually try to avoid them because if anything happens to the price of the gold ( or whatever natural resource it is) that could affect the company and the price tremendously. This time around I couldn’t resist, because the graphs look great for this stock and gold has increased tremendously in value. However, I still have some questions for the board bc I’m not that familiar with gold mining. If anybody could fill in any blanks here or provide better estimates or at the very least more about the dimensions of the mine that would be very helpful.

So what I understand so far: from reading the boards and the PR ( a little summary). If anything is inaccurate please correct me.

1.) The Queen Alexandra mine is located just outside of Dryden in northern Ontario, Canada. The Queen Alexandra mine consists of one shaft and one exploration pit, 65 metres apart, and seven trenches.

2.) Price of gold has gone up tremendously since 2009. In October 2009 gold was below $750 per ounce. Today gold is $1,212.37 USD per ounce. Gold is projected to go up tremendously in the next 6 months. This will have a huge impact on this stock.

3.) In the 1900s in the Queen Alexandra an English mining syndicate sunk a shaft 85 feet, and milled 18 tons of ore, producing 16.6 ounces of gold out of vein #2. (Carter 1905; Thomson 1933). This definitely proves there is gold there.

4.) Ontario Geological Society Assessment Office (OGS) made recommendations that :
a.) the Queen Alexandra Mine and its location are within areas that would be favorable to placement of gold.
b.) the Queen Alexandra has a history of gold showings, and has produced gold in
the past.
c.) Kenora district of Ontario (where the Queen Alexandra is located) is favorable for discovery
of gold bc the area “hosts gold mineralization”
d.) the report on this at http://www.geologyontario.mndm.gov.on.ca on the CNEX website too

5.) CNEX agrees with OGS recommendations and adds “the best place to explore for gold is where it has already been found.” as birdman has stated in one of his recent posts.

6.) Since gold was extracted from this mine (the Queen Alexandra) before, there has to be still gold in it.

7.) CNEX has already done tests on the mine to measure how much gold is in the Queen Alexandra. The original test results that CNEX found on the gold were…. Sample results varied and included values that returned 1.34 Au g/t (#709256), 4.66 Au g/t (#709255) and 14.47 Au g/t (#709258).These results confirm that there is gold on the property.

8.) To further understand what these number mean, it is important to understand the dimensions of the veins to be able to calculate a rough estimate of how much more gold there is in the mine beyond the original 16.6 ounces of gold that was mined earlier in the 1900s. So far we know that 85 feet were dug to obtain 16 ounces of gold and from that we could make an rough rough approximation. The better scenario would be to get all the accurate dimension of the veins in the mine and make calculations from there.

PLEASE SEE BELOW FOR ROUGH ESTIMATE

9.) At the time in which the gold was extracted the first time around, the older technology was only able to extract that gold that was visible. Now, in this day in age, technology has improved to the point at which gold that is not visible can be extracted from mines. The ultimate conclusion being that there has to be gold in this mine.

10.) Since gold has gone up in value, this has enabled Cnex and other companies to spend more money, and use higher cost technologies to obtain the gold because with the higher gold prices, their revenues will still exceed higher costs.

11.) The latest PR has stated that at this point in time “the company’s newly hired geologist” will be going to the mine to take measurements of the gold to validate the original test results.

12.) Once results are verified by the company’s new geologist, a report will be submitted to the OGS so CNEX and the property will be given credit so CNEX can continue exploration and development of the mine.

13.) When results are verified CNEX will announce the results.

14.) Once results are verified, planned for August CNEX will be able to start its new projects on the mine.

15.) Unlike, inaccurate reports that people have been putting out in the last couple of days, CNEX has not halted work on the Queen Alexandra and the crew commenced work on the Queen Alexandra on May 25.


INTERPRETING INITIAL RESULTS FURTHER

So I found this website --Interpreting Drill Results 101 --might be good for all of you to read because it is exactly for someone who wants to invest in a gold stock. (http://news.goldseek.com/GoldSeek/1242751631.php)

So I used the equations from this website to find out exactly what kind of approximations of gold we could come up with from this site. Now please read this site to get all the short comings of these approximations. There are a ton of short comings and this is the most rough estimate ever given with all these shortcomings. There are just certain things about the drilling holes that will have to be determined by geologist and we should be looking for in the full report when it comes out. Also the website clearly states that you should probably confirm results with someone from the company because they would understand better what exactly the results they put out mean. Also, I do not have specific dimensions of any of the veins of the mine. Find out some from the company and I will gladly make the calculations.

So I am assuming the results that were presented were for three separate veins/ locations. Also I don’t know which number goes with which dimensions so until more information is given I can’t figure out good estimations. Given my lower knowledge of gold mining maybe one of you would know this better. Anyway there are three numbers CNEX provided us.
#709256: 1.34 Au gram per ton
#709255: 4.66 Au gram per ton
#709258: 14.47 Au gram per ton

This is what I will say. For my approximation I am going to use 14.7 gold per ton (given to us by CNEX) and use the dimension of 85 ft that was already dug in the mine . With that , the dimensions of that vein are 85 ft in length and 85 feet in width by 85 feet in height. If you don’t get any of these calculations refer to the website. (http://news.goldseek.com/GoldSeek/1242751631.php)

85 feet (length) X 85 feet (width) X 85 (height)== 614125 cubic feet of materialized material

Assume 10 cubic feet per ton for weight (as website did) So 614125 / 10== 61412.5 tons


31.1 gram== 1 troy ounce
14.47 (AU grams per ton) ==.465 ounces
.465 ounces X 61412.5 tons= 28,573.59 ounces of gold TOTAL
Now if we plug in the price of gold per ounce--- $1,212.37 USD X 28,573.59 ounces ==$34,641,772.12


Things to consider with my projection.

-I did not account for the 16 ounces of gold that were already pulled from the mine.
-I just calculated one vein. There might be three or more veins/ locations and we don’t know exact dimension of any vein so this could be over projected for all I know.
-I am not sure what the exact dimensions are of each vein. I used the dimensions of the largest vein that was mentioned on the website. And I also used the largest amount of gold per ton that was given as a measurement by the company. Therefore, without confirming the dimensions this definitely goes beyond rough estimate. Once we have the exact measurements of these three veins we could make reasonable rough estimates that could really make this stock fly.
-Remember price of gold are projected to go up from today’s price. So this will increase whatever the final value is.
-Also, I used calculations that were on a website. (http://news.goldseek.com/GoldSeek/1242751631.php). I don’t know how accurate this website is. I do know that he proved his projections predicting how much a stock would go up according to this interpretation. That to me was enough to make it a good enough estimate for this stock.
-Unlike the website, I was not able to calculate the true width because I did not have that info. Usually the true width is a smaller percentage of the size of the whole.
-Also, I am not a geologist, and that website clearly states that it is a rough estimate and there are aspects of the actual mine and vein that could change the estimate completely.
-Also, CNEX has to get the numbers validated by a geologist so the numbers might change even after we confirm dimensions of each vein with CNEX.
-Also, there are other natural resources in the mine, that are not taken into consideration in the projection. I believe one PR said something about diamonds.


All I’m saying is this is a good start. But if we really want to figure out all this information we could get to a good approximation of how much this mine is really worth. Also, from the DD I did here I think this stock is really something.

Let me know what everybody thinks.