QEE, No I didn't Basser but the timing MAY have been very appropriate. According to that ROB report Sprott thinks it was a steal but steals can get stealier. At least, at .17 there's limited downside risk. LOL
RENO--(Mineweb.com) Perhaps the most eloquent spokesman for Queenstake Resources is John Haigh, Manager of Investor Relations and the individual who could easily be considered the dean of the U.S.-based mining IR community.
A longtime former exploration geologist, Haigh is a highly respected and trustworthy Denver-based IR professional, whom even his peers rely upon for advice and counsel when navigating the often turbulent seas of junior mining companies.
A consummate gentleman and extremely loyal solider, Haigh has earned a reputation for standing by his employer through good times and bad. Therefore, when a happy and excited John Haigh took the podium at the San Francisco Gold Forum, it was a positive indication that things must be looking up at Denver-based Queenstake.
For the past several months, Queenstake has been under new management. Former Queenstake President and CEO Chris Davies had suffered a heart attack and resigned. Despite Davies' brilliance and considerable expertise, a few Queenstake managers welcomed the change at the top.
Former Executive Vice President of Exploration Dorian "Dusty" Nichol took over as President and CEO. Nichol's intelligence and charm--combined with the optimism of an explorationist and his fearlessness of the major miners who dominate Nevada's gold mining sector--has injected a fresh shot of enthusiasm into Queenstake Resources.
The Queenstake Board of Directors may also give investors renewed hope for they know the area as well as the Queenstake employees. Two former CEOs who oversaw Jerritt Canyon's development have become actively involved in the company. Queenstake Chairman Bob Zerga, who used to run Independence Mining, has been active behind the scenes. Former AngloGold North America CEO John Ellis joined the board this month. Both men bring an extensive knowledge of Jerritt Canyon to the board.
Meanwhile, Jerritt General Manager Nigel Bain has spent a hefty portion of his career managing underground mines in the Carlin Trend including several years at Jerritt.
Long-suffering investors sorely need some good news after last year's over-promising of Jerritt Canyon's production. As Haigh acknowledged before the audience of analysts, institutional investors, and mining executives who attended the San Francisco Gold Forum, Queenstake missed projected production expectations by 57,000 ounces. Haigh noted that the failure to attain this production "adversely affected unit cash operating costs and cash flow."
The company has learned several lessons including that higher production levels are required to mitigate high unit costs. Mill feed grade is the key to higher production. Haigh said the company has learned that it must keep the ore grade up to the roasting facility. Attainment of higher mill feed grade requires higher production at the reserve grade, and a smaller component from stockpile and subgrade ores. Finally, to achieve higher mine production requires advanced preparation of more stoping areas for parallel production sources.
This year's production forecast guidance is 265,000 to 280,000 ounces at a unit cost of $300 to $310 per ounce. For the first quarter of this year, Queenstake reported 53,587 ounces of gold production at a total cash cost of $373/oz, up 10% from the first quarter of 2004 when 48,632 ounces of gold were produced at a total cash cost of $388/oz.
Haigh also urged investors to have faith in a bought deal equity financing of 21,428,600 common shares for $6 million that was obtained through a syndicate of underwriters, arranged by what he called "a well known fund manager." The underwriters also confirmed the partial exercise of their option, bringing the total gross proceeds to Cdn$7.3 million. It is no secret that one of Queenstake's largest investors is gold guru John Embry, chief investment strategist at Sprott Asset Management. Another well-respected Queenstake advocate is metals analyst Catherine Gignac of Loewen, Ondaatje McCutchoen Ltd.
While Haigh did not identify who was "the well-known fund manager," he called the action "a strong vote of confidence" in the future of Queenstake. Mine development has been accelerated. By mid-August, Haigh predicted that new mines will be available for commercial production.
Meanwhile, underground exploration at the SSX, Smith and Steer Mines at Jerritt Canyon are intersecting new high-grade gold mineralization. The Mahala portion of the Smith Mine is expected to achieve commercial production in mid-August. The connection between the Steer and SSX Mines is expected to also be completed in mid-August. The result will be two new ore bodies will increase mining production by 25%, according to Haigh.
Despite its recent struggles, Queenstake remains unhedged and is the sixth largest U.S. gold producer. The company enjoys an excellent relationship with its U.S. Forest Service landlord. It is renown for an outstanding environmental reputation including a highly successful mercury emissions reduction program, which won national recognition from the EPA, and a model reclamation program, which is fully funded.
Haigh noted that 730,000 ounces of gold have been converted to proven and probable reserves in the past 18 months, a rate of 40,000 ounces a month. High grade mineralization has been discovered at Starvation Canyon while the size and grade of the Steer and Mahala deposits have been "substantially increased," he added. The company is now looking at three dozen exploration targets, he said.
Resource conversion exploration programs are underway at all four mines on the 100-square mile land package at Jerritt. The land is vast and, according to Nichol & Co., has tremendous exploration potential.
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