Replies to post #254209 on Zeev's Turnips Patch-No Politics (ZEEV)

[basserdan]

*** Gold related post (WHT et al)

Dan, Looks like it is a pretty good time for IMG or someone else (GG would be nice) to up the ante for WHT
===============================================================

Hi ml,
You faked me out there using IAG's Canadian symbol (IMG.TO). <G>

I read somewhere over the weekend that GG's McEwen is on record as not wanting WHT, and like it or not, the IAG/WHT voting is tomorrow unless the Canadian courts rule that GSS isn't bound by the old non-disclosure agreement twixt GSS and IAG and orders a delay in the voting process to allow GSS time to put forth an unfriendly bid for IAG.
I hope they get the delay as I think this flurry of M&A action is healthy for the miners as a whole.

[basserdan]

*** Stephen Roach (6-10-04) ***


Global: First to Go?

Stephen Roach (from Cap d'Antibes)
June 10, 2004

I continue to see the world economy as a two-engine story — the Chinese producer on the supply side and the American consumer on the demand side. While there are signs that growth is now picking up elsewhere in the global economy, I maintain my view that most of these spillover effects are traceable either to the US or China. With both of the world’s growth engines having gone to excess, a downshift in global momentum is a distinct possibility — especially in light of recent (China) and prospective (America) policy actions. Who will be the first to go?

China gets my vote. Unlike America’s Federal Reserve, which at this point is still all talk, the Chinese authorities have moved forcefully to rein in an overheated economy. The monetary tightening campaign of the People’s Bank of China began in earnest in late August 2003, with an adjustment in reserve requirements. Since then, the PBOC has made two additional modifications to banking system reserve ratios — one in March and another in April. More recently, the State Council — the functional equivalent of the Cabinet in the Chinese government — has entered the fray with a series of administrative actions: First, in late April, capital requirements were imposed on investment activity in several overheated industries — steel, aluminum, cement, and real estate; then came a temporary moratorium on all bank lending; those actions were subsequently followed in early May by targeted price controls at the provincial and local levels of jurisdiction.

This flurry of activity speaks of a two-pronged campaign of policy restraint in China: The central bank is relying on traditional instruments of macro stabilization policy (i.e., reserve requirements), whereas the central government is implementing a series of micro measures targeted at those sectors that have overheated the most. This blended strategy is very much in keeping with the mixed character of the Chinese economy — a combination of state-owned enterprises, newly privatized entities, and an increasing number of homegrown private companies. This approach is also tailor-made for a highly fragmented Chinese economy. Beijing can only do so much at the top — provincial and local officials still have great autonomy to march to their own beat. That’s especially the case for the banking system, where local branches gather their own deposits and build their own loan books.

By operating in both the macro and the micro realms of policy restraint, the Chinese authorities are addressing the inherent tensions between the top (i.e., Beijing) and the bottom (i.e., municipalities) of this vast economy. I heard it directly from Premier Wen last March, when at the China Development Forum he expressed a very strong determination to slow an overheated Chinese economy (see my 24 March dispatch, “China — Determined to Slow”). The actions that have since followed demonstrate the conviction of that determination. And I remain confident that they will work. We continue to have an active debate over the character of the coming slowdown in China. I remain in the soft-landing camp and Andy Xie is more worried about a hard landing. But rest assured, there will be a landing in one form or another — and sooner rather than later. For the major force on the supply side of the global economy, the coming landing in China represents a serious about-face.

I wish I could speak with equal confidence about the prognosis for the American consumer. I continue to believe that US consumption demand will turn out to be the weakest link in America’s macro chain as the Fed now embarks on its long-awaited campaign of policy normalization. The problem with this call is that it sounds like a broken record — I have been bemoaning the vulnerability of the American consumer ever since the equity bubble popped over four years ago. That’s not to say there wasn’t a meaningful post-bubble shakeout for the American consumer; after all, real consumption growth slowed to a 2.8% annual rate in the three years following the bursting of the equity bubble — more than 35% slower than the five-year growth rate of 4.4% that occurred while the bubble was expanding over the 1996 to 2000 period. But the post-bubble consumption downshift was certainly milder than I had expected, and, of course, it has since been followed by a 4.3% resurgence of real consumer demand over the most recent four-quarter interval (ending in 1Q04).

Notwithstanding the shaky fundamentals of weak labor income, low saving, and excess debt, the American consumer has continued to plow ahead. I have attributed this remarkable outcome to Washington — namely, the truly remarkable confluence of open-ended deficit spending (i.e., tax cuts) and extraordinary monetary accommodation (i.e., a negative real federal funds rate). And I believe as this policy stimulus now fades, the overly extended American consumer will no longer have the wherewithal to keep driving the demand side of the US and broader global economy. Sure, jobs are on now on the rebound and that should provide some compensation for the withdrawal of the Washington “steroid effect.” But, in my view, courtesy of unrelenting cost-cutting and the global labor arbitrage that this encourages, that compensation will be partial, at best (see my 7 June dispatch, “The Baton Pass”). Moreover, as the Fed now raises interest rates, I also worry that the big surprise could be the carnage brought about by the ever-ticking household debt bomb (see my June 5 dispatch, “The Mother of All Carry Trades”).

Yet at this point in time, the consumer downshift call is only a forecast — and one with not much credibility in this Brave New Era. Addicted to shopping and the debt it engenders, the American consumer remains unflinching in the face of adversity. Last month was a classic case in point: As oil prices surged through the ominous $40 threshold, consumers bought motor vehicles with a vengeance — sales hit their high for the year at a 17.5 million annual rate. Figure that one out? Over the past weekend, I couldn’t get into my local filling station in Connecticut — three gas-guzzling Hummers had effectively blocked the pumps simultaneously. This is America.

When the Chinese authorities want to get their way, they usually win — suggesting that the China slowdown bet is a good one. When the American consumer wants to get its way, it normally wins as well — implying that the consolidation bet is risky. Consequently, with the resilience — or should I say denial — of the American consumer hard to crack, there’s little doubt in my mind that China deserves the vote as the “first to go” in the global growth dynamic. Yet there’s an ominous feature that both of these overextended engines have in common: The recent growth excesses of the American consumer and the Chinese producer have both been driven by spending on durable goods. Durable goods consumption is now greater than 10% of US GDP — an all-time high and well in excess of the pre-equity-bubble share of around 7% in 1995. Half way around the world, Chinese fixed investment has risen to more than 40% of that nation’s GDP.

Over the long sweep of history, durable goods spending cycles have followed a very predictable pattern. Such spending is “lumpy” — it involves the accumulation of long-lived assets such as cars and trucks (America) and property, plant, equipment, and infrastructure (China). When these cycles go to excess, spending typically borrows from outlays that would have occurred in the future. The payback from what economists call the “stock adjustment effect” -- the tendency of durables goods to gravitate toward a long-term optimal, or equilibrium, stock -- is a time-honored feature of the business cycle. And there can be no mistaking the excesses of the recent spike of durables demand in both countries. Fixed investment in China spiked to a 53% Y-o-Y comparison in January and February 2004, whereas growth in US durables consumption accelerated to a 10.6% annual rate in the year ending 1Q04. In both instances, China and the US have upped the ante on their long-standing durable goods binge; the most recent burst of above-trend vigor is now flashing a warning of a looming payback effect.

Needless to say, the two-engine global economy would be in tough shape if the stock adjustment effect were to hit in both China and the US simultaneously. Yet that possibility cannot be ruled out. Such a tough combination would certainly take financial markets by great surprise. The consensus expects a slowdown of one sort or another in China, but has all but given up on the case for any capitulation by the American consumer. There’s an even more ominous twist to this tale: If US consumption slows when China is coming in for a landing, the Chinese economy could be hit by a double whammy — an investment-led slowdown to domestic demand and a US-led slowdown to external demand. Such an outcome would seal China’s fate in the eyes of investors — the hard-landing play would be on with a vengeance. And even I would then have to concede that Beijing would more than have its hands full.

An unbalanced global economy has to be very careful in staging the coming rebalancing. The odds favor the Chinese producer leading the way. The risks point to the American consumer as a wild card entrant in this realignment. Yet in a two-engine world, there may only be room for one of these slowdowns.

http://www.morganstanley.com/GEFdata/digests/20040610-thu.html

[basserdan]

*** Stephen Roach (6-14-04) ***


Global: Escape Act

Stephen Roach (New York)
June 14, 2004

We hold two major conferences each year for global investors — one in America (technically offshore) and another in Europe. I have been to most of them — nearly 20 years of the American strain and now 10 installments of the Euro effort. For me, these gatherings have become important milestones in gauging the subtleties of the investment climate — not just in identifying the common ground of a diverse group of some 45 institutional investors but also in uncovering the areas of greatest opportunity and concern.

Our just-completed European conference was one of the more fascinating efforts of the lot. You wouldn't know it from the consensus of this group. Our polling told us that the collective wisdom of these investors was based on a relatively benign macro scenario — a reversion to trend GDP growth in the developed world, a soft landing in China, single-digit earnings growth in most major markets, an inflation scare but no inflation, and the onset of a normalization in monetary policy.

The group was modestly bullish on equities and bearish on bonds. Cash was actually the favored asset class of 22% of those in the room — the highest I can ever remember at one of these conferences. Currency risk was not a concern, and this European crowd had little interest in even talking about Europe. From a global asset allocation point of view, they liked Japan and their home European markets the most, and the US the least.

As always, it was the tails of the risk distribution that shed the greatest insights into what was really on the minds of this crowd. As I saw it, concern was rife in the air for these fully invested bears. At the end of the conference, we broke the group down into several discussion groups, with an aim toward uncovering the out-of-consensus insights they thought might actually pan out. The risks were very much skewed to the downside — a bust in China, surging oil prices, and a full-blown resurgence of the US wage-price cycle were at the top of the list. The optimists focused on the possibility of a Bush landslide in the upcoming US presidential elections and the chance that the financial sector — an industry that was universally scorned in our polling — actually performs surprisingly well in a monetary tightening cycle.

As these conferences have grown in stature over the years, we have detected a certain amount of gaming in our sampling of investor sentiment. Would you give away your best idea in a room filled with your competitive peers? And, of course, these investors have long learned to play the curse of consensus thinking —whether the curse surfaces at Lyford Cay or Eden Roc. Don't get me wrong, the discussions in our plenary sessions are often electric. But in terms of actionable investment opportunities, I have long found the side conversations to be especially valuable. This year was no exception. At the end of this conference, my luncheon companion whispered out of earshot of the rest of the crowd, "I just feel it — the big pop is coming. It'll be hard to escape this extraordinary build-up of macro tensions without serious adjustments in major asset classes. It's time to take big positions ahead of time."

Of course, there's always the risk that you hear what you want to hear at conferences like this. Needless to say, I have been on this kick over mounting structural imbalances for longer than I care to remember. The idea that the time is coming when macro tensions are about to be released was music to my ears. In my framework, global rebalancing is the functional equivalent of an escape act — the means by which an unbalanced world vents its structural imbalances. For investors, the escape act goes a step further — where to hide, what to avoid, and what to take advantage of.

Over the course of this conference, we focused the discussion on two key aspects of this escape act — central bank exit strategies and the coming landing of the Chinese economy. While "house views" have never been our thing at Morgan Stanley, our macro team of strategists and economists shares the view that these are likely to be among the biggest issues in 2004. The trick is in getting the timing and degree of these two adjustments right.

For the session on central banks, we were fortunate to have the legendary Hans Tietmeyer, former president of the Deutsche Bundesbank, as a special guest participant. He didn't pull any punches. In assessing the current state of monetary policy and the complications of the exit strategy, he was quick to warn of the perils of excess stimulus. In offering advice on how to remove the unusual accommodation, he stressed two preferences — "sooner rather than later" and "gradual rather than bold." And he was quite direct in expressing the view that central banks now need to take account of developments in asset markets in setting monetary policy. On that latter count, he was very much in agreement with Ottmar Issing of the ECB, who has been the leading champion of this view in the circle of active central bankers.

Hans Tietmeyer went out of his way to venture into perhaps the most delicate and important aspect of monetary policy — political independence. Fiercely independent in his own right, he maintained that central banks should not even be located in the same city as the seat of government. The monetary authorities need to be removed totally from the political debate. In this vein, he was clearly worried about the political pressures currently bearing down on America's Federal Reserve in this election year. He framed his concerns in the context of a simple but powerful counter-factual example: He was reasonably certain that if there were not an election looming in the US, the decisions to tighten would have already been made. Some of the most difficult moments in economic history have been accompanied by the politicization of central banking. As I saw it, Hans Tietmeyer was sounding the alarm in that regard.

The Tietmeyer critique was not an exercise in abstract thinking. The US monetary policy debate has been turned inside out in recent days. Fed policy makers are now on the campaign trail to distance themselves from the previous "measured" tightening paradigm. That doesn't mean that a 50 bp move is now a done deal at the end of this month. It simply means that the US central bank is now uncomfortable with the rhetorical straightjacket of a measured normalization of monetary policy —a straightjacket, I might add, of its own design. .

More and more, this smacks of 1994 all over again. One of the savviest investors I know pulled me aside at the conference and reminded me of the great "Fed foil" at the time. A decade ago, a Fed that was eager to extricate itself from a zero real interest rate policy was quick to cite mounting inflationary concerns as justification for what turned into a 300 bp tightening in a 12-month period. The smoking gun back then was a 30% increase in commodity prices. Fast forward ten years and another 30% increase in commodity prices has suddenly gotten the Fed's attention. In a recent speech, Governor Don Kohn indicated that such pressures may have already pushed up core consumer inflation by as much as 0.5 percentage point over the past year (see "The Outlook for Inflation," June 4, 2004 posted on the Fed's website). This represents a major about-face from earlier observations of Fed Governor Ben Bernanke, who all but dismissed the impacts of commodity prices in driving underlying inflation (see "The Economic Outlook and Monetary Policy," April 22, 2004, also posted on the Fed's website).

A key lesson from 1994 looks increasingly relevant today: While the inflation scare back then turned out to be a false alarm, the Fed used the build up of inflationary fears in the markets as an excuse to normalize an overly stimulative monetary policy. With today's monetary policy stance far more accommodative than it was a decade ago — the real federal funds rate is in negative territory today rather than at zero as it was in late 1993 and early 1994 — the Fed should actually be far more eager to normalize its policy stance than it was back then.

Not surprisingly, Fed officials have gotten the message. They are now jumping all over the inflation scare in their efforts to convince markets to rethink the gradualism implied by the measured-tightening paradigm. Ironically, the case for another false alarm on the inflation front is even more compelling today than it was in 1994; that's because unit labor costs — the key determinant of inflation — are currently falling at a 1.3% annual rate rather than rising by 1.5% as they were a decade ago at the onset of the Fed tightening. My guess is that while the Fed shares this optimistic prognosis on the price front, they are so far behind the curve that they will now resort to anything in an effort to face up to the increasingly urgent imperatives of policy normalization.

Smelling such a possible Fed surprise, several investors at our just-completed European conference pushed me on how such a development might affect an unwinding of the notorious "carry trade." The concern was expressed that a 1% overnight lending rate, in conjunction with the rapid expansion of the derivatives market over the past ten years, may have led to a much larger bet on the steep yield curve than that which occurred in the early 1990s. The unprecedented bond market carnage of 1994 is ample testament to the perils of the carry trade. The investors who focused on this risk were frustrated that we didn't have better metrics of the scale and scope of such positions. So are we. But that also sounds like 1994 all over again — the big risk that no one can quantify. Over the 2004-05 interval, looming bond market perils appear to pose the most serious challenges for levered consumers and property markets — possibly even resulting in a new deflation scare.

Escaping the potential carnage of an unwinding of the carry trade was the biggest concern I detected at Eden Roc this year. Maybe that explains why cash suddenly loomed so attractive. Interestingly enough, there didn't seem to be much fear over China. The consensus of investors expressed considerable confidence in the Chinese government's ability to manage the downside in a fashion that would limit any collateral damage to the rest of Asia as well as in the broader global economy. During the course of the conference, the Chinese economic data flow — industrial output, bank lending, and investment activity — all pointed to the onset of a significant slowdown. While this is good news for China, it may well complicate the escape acts for Japan, Korea, Taiwan, and Germany — all countries that have had both a heavy dependency on Chinese export growth over the past year and a weak backstop in private domestic consumption. However, relative to investor concerns over the unwinding of the carry trade, China risks paled in comparison.

Gleaning macro insights from conferences is always tricky. But my experience tells me that European investors are among the most sophisticated macro thinkers in our business. This year at Eden Roc, there was a good deal of discussion about the accident-prone character of the global economy. At the same time, there was little indication that this assembled group of investors has done much, if anything, to prepare for such possibilities. To my thinking, that could well be emblematic of the biggest risk of all in world financial markets.

http://www.morganstanley.com/GEFdata/digests/20040614-mon.html

[basserdan]

*** Gold related post (GG) ***


Goldcorp: Update On High Grade And Sulphide Zone Intersections

Wednesday June 16, 5:20 pm ET

(All dollar amounts in United States dollars (US$))

TORONTO--(BUSINESS WIRE)--June 16, 2004-- GOLDCORP INC. (NYSE: GG - News; TSX: G - News) is pleased to announce an encouraging start to the first half of 2004 with excellent results from both operation and exploration at our Red Lake Mine, in Northwestern Ontario, Canada. Our latest exploration work has confirmed the continuity and expanded the dimensions of mineralization in all target areas. Highlights are summarized below.

OPERATIONS HIGHLIGHTS

Production at the Red Lake Mine to May 31, 2004 was 222,749 ounces of gold at an estimated cash cost of $80 per ounce. We remain on target to reach our 2004 production forecast 525,000 ounces at a cash cost of $86 per ounce.

Mine Expansion

Work continues on sinking the new shaft at the Red Lake Mine. The shaft is currently (16/6/04) at a depth of 1,100 feet (335 m). It is scheduled to be completed to its final depth of 7,150 feet (ft) (2,179 metres (m)) in the second half of 2006. To date (31/5/04), a total of $49 million has been spent on the project, with total remaining expenditures forecast to be $49 million (based on a CDN$:US$ exchange rate of 1.35).

EXPLORATION HIGHLIGHTS

* Hole 37L575 intersected 2.18 opt (74.7 gpt) over 70.0 ft (21.34 m) at a depth of 6,770 ft (2,060 m).

* Hole 37L566 intersected 7.76 opt (266.1 gpt) over 19.2 ft (5.85 m) at a vertical depth of 5,950 ft (1,810 m).

* The deepest multi-ounce occurrence in the High Grade Zone (HGZ) ever encountered: 3.54 ounces of gold per ton (opt) (121.4 grams per tonne (gpt)) over 2.0 ft (0.61m) at a vertical depth of 7,750 ft (2,360 m).

* A new hanging wall structure identified 800 ft (240 m) west of the previous western limit of the HGZ.

* High grade mineralization identified 180 ft (55 m) above the HGZ, in the up-dip projection of the Footwall Zones, with an intersection of 6.55 opt (224.6 gpt) over 4.5 ft (1.37 m).
Far East Sulphides extended further east with an intersection of 2.18 opt (74.7 gpt) over 5.0 ft (1.52 m).
The deepest intersection in the Far East Sulphides at a vertical depth of 7,660 ft (2335 m).

2004 CORPORATE FORECASTS

Goldcorp is forecasting earnings of $53 million, or $0.28 per share, based on an average gold price of $385 per ounce for the remainder of the year, compared with earnings of $99 million, or $0.54 per share in 2003. Lower earnings are forecast as a result of holding back from sale approximately one-third of 2004 gold bullion production. By comparison, Goldcorp sold 97% of its annual gold bullion production during 2003 as well as 95,882 ounces of gold bullion it held in inventory at the beginning of 2003.

Cash flow from operations is expected to be $52 million, or $0.27 per share, compared with $95 million, or $0.52 per share for last year. The reduction in cash flow is similarly related to selling fewer ounces of gold bullion production.

The financial forecasts are based on total corporate production of approximately 595,000 ounces of gold bullion and withholding one-third of this production from sale. Cash cost at the corporate level is forecast to be $109 per ounce and non-cash cost is forecast to be $43 per ounce, for a total cost of $152 per ounce.

Red Lake Mine is forecast to produce 525,000 ounces of gold bullion. Cash cost is expected to be $86 per ounce and total cost is expected to be $120 per ounce. Wharf is forecast to produce 70,000 ounces of gold bullion. Cash cost and total cost are expected to be $245 and $342 respectively.

RED LAKE EXPLORATION

The HGZ and the Sulphide Zones (SZ) are the two main targets of our exploration program. The HGZ is currently the source of all our production and the bulk of our reserves and resources. The HGZ reserves, with an average grade of 2.22 opt (76.1 gpt), will continue to be the major focus of our exploration program. The SZ is lower-grade and was the source of all mine production (3.1 million ounces) from 1948 to 1996 at an average grade of 0.42 opt (14.4 gpt). With the new shaft completed, the lower-grade sulphide mineralization will be economic to mine. More exploration will be directed towards expanding these reserves and resources.

CONTINUING EXPLORATION SUCCESS

High Grade Zone (HGZ)

Exploration of the HGZ is focused on three goals. The first, to explore the extension of known zones or new areas to increase reserves and resources. Secondly, defining and expanding the envelope of existing resources in order to increase the reserve base of the HGZ. And finally, better defining and expanding the limits of existing reserves.

Hanging Wall Zones

New Deepest Intersection

Hole 37L503AW intersected 3.54 opt (121.4 gpt) over 2.0 ft (0.61m) at a vertical depth of 7,660 ft (2,335 m) in the Hanging Wall Zones of the HGZ. This is the deepest intersection to date in the HGZ and is significant as it indicates the HGZ continues below the current resource limit. A new drill base established during the first half of 2004 will allow us to test the Hanging Wall Zones at even greater depth.

Resource Continuity Confirmed

Exploration in the resources area of the Hanging Wall Zones has been successful in establishing the continuity of the high grade nature of this mineralization over substantial thicknesses.

Hole 37L575 intersected 2.18 opt (74.7 gpt) over 70.0 ft (21.34 m) at a depth of 6,770 ft (2,060 m). This intersection, almost true width, confirms large intersections previously reported in the same area.

Delineation of Reserves

Delineation drilling in the reserves area around 6,100 ft (1,860 m) confirmed the continuity and high grade nature of the hanging wall mineralized structure.

For example, hole 37L566 intersected 7.76 opt (266.1 gpt) over 19.2 ft (5.85 m) at a vertical depth of 5,950 ft (1,810 m). In addition, hole 37L565 returned 5.26 opt (180.3 gpt) over 6.0 ft (1.83 m) at a vertical depth of 6,160 ft (1,880 m).

Footwall Zones

Extended 500 ft (150 m) Vertically

The most recent results have demonstrated that the Footwall Zones extend at least an additional 500 ft (150 m) to a new vertical depth of 7,140 ft (2175 m) below surface. Hole 34L1369 intersected 0.58 opt (19.9 gpt) over 11.8 ft (3.60 m) while hole 34L1416A intersected 0.48 opt (16.5 gpt) over 1.6 ft (0.49 m) in the same area. Those two holes are the first from a new program that will test the Footwall Zones below current resources.

New High Grade Intersections

High Grade Intercepts 800 ft (240 m) West of Hanging Wall Zones

Two holes testing for a potential faulted extension of the Hanging Wall Zones returned significant intercepts 800 ft (240 m) west of these zones. Drill hole 37L278A returned 1.04 opt (35.7 gpt) over 6.0 ft (1.83 m) at a vertical depth of 5,890 ft (1,795 m). In addition, drill hole 37L277 returned 0.87 opt (29.8 gpt) over 6.0 ft (1.83 m).

High Grade Mineralization Above 30 Level

A 26 level drill hole targeting a possible upper extension of high grade style mineralization returned an intersection of 6.55 opt (224.6 gpt) over 4.0 ft (1.22 m). That intersection is 180 ft (55 m) above the Footwall Zones trend.

Sulphide Zones (SZ)

Proving Up the Resources

Targeting the Far East

Exploration of the sulphide targets is focused on two goals. First, upgrading the resources to increase the reserve base and second, exploring new areas for mineralization in order to increase the base of resources. The latest results demonstrate that we have continued success toward both goals.

Depth Extension of Previously Mined Ore

Some 60 drill holes were completed within the currently defined resources to confirm the continuity of the SZ between 4,600 ft (1,400 m) and 6,000 ft (1,800 m).

Some of the best results include values such as 0.49 opt (16.8 gpt) over 10.4 ft (3.17 m) (hole 34L1405), 0.19 opt (6.5 gpt) over 45.9 ft (13.99 m) (hole 34L1387), up to 2.58 opt (88.5 gpt) over 16.9 ft (5.15 m) (hole 37L541).

Far East Zone

Approximately 240,000 ounces of sulphides have already been identified in the Far East Zone from the 16 level, at a depth of 2,300 ft (700 m) below surface.

Drilling from the 26 and 34 levels is directed toward identifying significant extensions of sulphide mineralization.

Hole 26L1325 returned the furthest east extension of the Far East Zone to date, on section 94+75E, with results such as 0.89 opt (30.5 gpt) over 8.0 ft (2.44 m) and 2.18 opt (74.7 gpt) over 5.0 ft (1.52 m) at a depth of 4,740 ft (1,440 m).

Deep Extension of the Far East Trend

Hole 34L1369 returned the deepest sulphide intersection to date with a value of 0.16 opt (5.5 gpt) over 22.0 ft (6.71 m) at a depth of 7,750 ft (2,360 m) or 600 ft (180 m) below the proposed new shaft. This intersection located on section 69+50E is interpreted as the possible down-dip extension of the Far East Zone identified in drill hole 26L1325.

These latest results continue to confirm the validity of our exploration model and suggest that the potential for increasing the resources in the Far East Zone is excellent.

QUALIFIED PERSON

The news release has been prepared under the guidance of Gilles Filion, Eng. (OIQ), Vice President, Exploration, who is designated as a Qualified Person with the ability and authority to verify the authenticity and validity of this data. All samples were analyzed by either ALS Chemex Laboratories Ltd. of Mississauga, Ontario, TSL Laboratories of Saskatoon, Saskatchewan, or SGS XRAL Laboratories of Toronto, Ontario.

http://biz.yahoo.com/bw/040616/165848_1.html