My Thoughts
There is an expression in the exploration game in the Abitibi and it goes like this: You drill for structure and you drift for grade.
What this means is this: At the Hollinger/McIntyre discovery in the early 1900's, the echelon veins were up on surface so there was never a need to rationalize a shaft because the miners high-graded the veins from surface. Once they go down to a certain level, they dropped a shaft down the "Golden Staircase" and the rest was history. They determined stucture and then drifted along cherry-picking the high-grade quartz veins and mined 19.3m ounces (Hollinger) and 10.7m ounces (McIntyre)but along a structure that was associated with a porphyry unit that carried roughly 480 m of strike. (Pearl Lake Porphyry).
Why EXS is sucking wind is because they are dropping 800m hole down from surface into a structure that is easily 4.5 times the size of the HMC structure (Pearl Lake). Despite these "long bombs", they have hit gold in 69 out of 70 holes. This carries a drawback in that the children that staff the analysts on the Street have no memory nor knowledge of the HMC, of the Dome, of the Paymaster, of the McIntyre, nor of the mighty Hollinger. They are using Rotman School of Business "models" that says that they need a 43-101 compliant resource FIRST in order to justify a shaft down to the 800m level. Once underground, they can "eyeball" the veins in the face of the drift and very effectively block off sections to bulk sample. However, in order to secure financing to get underground, they would have to drill for the next two full years and come every 90 days with a revised 43-101 report in order to have a sufficient "indicated resource". They would need a minimum of 1m ounces in order to secure the $85m required for a shaft and drift. The drift would be run from the south to the north lobe of the syncline; underground drill stations would be set up;and then the bulk sample could be taken from the juicier zones with the recovered gold serving to pay off the cost of the underground development.
Why investors are shunning EXS is that nobody knows how many more financings are going to be required in order to convince investors to pony up for the shaft. By my calculation, they should raise $100m through debt and then pay off the debt via the bulk sample.
So they can come with 50 more drill holes all running economic grade and width but it won't mean a thing if it does not result in securing a shaft. I know this and the market knows this.
So while all of the posts I read are "interesting", EXS is NOT going to advance on positive drilling results unless they pull a highly-improbable 80-100 m section of 12 g/t Au, which would be very unusual for this type of geology. What WILL make EXS charge to record highs will be an announcement that some entity or group is putting up the money to sink the shaft, thus acceleratingthe time it takes to go underground.
In my opinion, over the near term, the junior mining market is going to EXPLODE to the upside, as now the ECB has confirmed that they are buying the Italian debt which is effectively, MONETIZING the debt, or printing money. That was all that was needed in order to insulate the EEC banks and set up the Santa Claus rally of a lifetime. This rally will put a strong bid into the juniors and EXS will benefit with a rally to north of $.50, perhaps to $.75 but it will not occur on results. It will occur because on the potential associated with TPW, EXS is cheap.
Hope this helps.
The Junkster
