Brian Paes-Braga is a Vancouver financier and entrepreneur, known for his notable work in founding and developing the lithium resource company, Lithium X. The company raised roughly $50 million and just two years after going public was sold to NextView New Energy Lion Hong Kong Limited for $265 million in March 2018.

Today, Brian Paes-Braga serves as Principal, Head of Merchant Banking at SAF Group, a leading structured credit and merchant banking group which builds, invests, finances and advises high growth companies. He is also on the board of directors at Thunderbird Entertainment Group and DeepGreen Metals and an Advisory Council member of the International Crisis Group, as well as supports a range of charitable organizations through his Quiet Cove Foundation.

You’ve been a successful entrepreneur for a number of years and have worked in several industries outside of the resource sector. From your experience , what are the ingredients to successfully financing and building strong companies like Lithium X?

Brian Paes-Braga: I think it starts with people and who you hire and whether there is synergy among your team members. I know we had that at Lithium X. It’s also important to respect the share structure of the company, and that means being honest with your shareholders while you continue to raise capital. Luck plays a part and we certainly were lucky in terms of timing and lithium prices when the company went public.

On the subject of Lithium X, the company was sold just two years after going public and you managed to maximize shareholder return. Was that always the plan for Lithium X or did a buyer appear at the right time?

Brian Paes-Braga: I established this company based on the belief that we need to wean the world off fossil fuels. That was the mission of Lithium X. We were confident that the buyer, NextView New Energy, shared the same commitment to developing the lithium sector. True, the $50 million we raised to secure lithium-development projects paid off when we sold the company but that wasn’t our main objective.

You pitched business mentor and renowned Vancouver mining financier Frank Giustra on the idea of building a lithium company and you also attracted another top mining figure, Paul Matysek, who had previously served as CEO of Potash One and Lithium One. How did you manage to convince Giustra and Matysek to join the project?

Brian Paes-Braga: My background as an investment banker helping resource companies raise money for projects led me to believe that lithium had the right supply/demand outlook for getting into business. I did my research on the lithium sector and the demand for lithium-based batteries in China. I think that both Giustra and Matysek saw the potential in the lithium market and were equally excited about the project. Mentors have always been very important to me. Frank Giustra was someone I had looked up to from a very young age and I’ve learned a lot from him.

You are a believer in giving back to the community through your work with various charities and your private foundation, the Quiet Cove Foundation. Can you talk about why charitable giving is important to you?

Brian Paes-Braga: At the center of my work in the business world is the desire to remain philanthropically conscious. I have now travelled the world on various mission trips close to my heart, including working with Syrian refugees in Greece and building schools in Peru. I wanted to devote more time to philanthropy and projects I cared deeply for and that was the reason we created the Quiet Cove Foundation. It focuses on supporting innovative solutions for large scale social issues. We encourage charities to think big, take risks, and disrupt the status quo.

The following interview of CEO Brett Heath of Metalla Royalty & Streaming (CSE: MTA) / (OTCQB: MTAFF), was conducted by phone & email over the 3-day period ended January 21st.  Metalla is a well-run, rapidly growing, precious metals Royalty & Streaming company that is relatively unknown.  The Company’s tried and true business model typically commands a premium market valuation, led by industry darlings like Franco-Nevada (TSX-V: FNV) / (NYSE: FNV), Royal Gold (NYSE: RGLD) and Wheaton Precious Metals (NYSE: WPM).  

{Bios of Mr. Heath and other key executives}

Management believes its valuation is meaningfully lower than its peers.  According to YahooFinance; peers are trading at an average trailing 12 months EV/EBITDA ratio of 30.0x (25.2x excluding Osisko’s elevated 54.0x ratio), and an average EV/Revenue ratio of 17.3x.  By contrast, Metalla’s anticipated [FY 2018 ending May 31, 2018] EV/EBITDA metric is just 8.4x — a 72% discount (8.4x vs. 30.0x) to its peer group.

CEO Brett Heath commented in the interview that EBITDA for FY 2019, (ending May 31, 2019), could be ~C$8-$10 M based only on existing assets in the portfolio, meaning that the 2019 EV/EBITDA ratio might be as low as ~6.5x.  Pro forma for prospective new royalty/streaming acquisitions, Heath thinks EBITDA could be running at “well above” C$10 M by next year.  Management expects at least 4 new deals in 2018.

At some point this year, or in my opinion by early 2019 at the latest, investors will have enough demonstrated cash flow and dividend history — and visibility towards future cash flows — to warrant a higher EV/EBITDA valuation.  How much higher remains to be seen, but cutting the discount from 72% from to 40% (from and EV/EBITDA ratio of 8.4x to 18.0x) would allow for a doubling in Metalla’s share price.   

Here’s my interview with Brett. 

I received my first (monthly) dividend check in the mail…  Thanks!  What can you tell us about the dividend program moving forward this year? 

We are very excited to have accomplished this important milestone early on as a company. The power of compounding dividends over time is significant when looking at total return.  We expect to continue to raise the dividend this year until we reach 50% of after tax and G&A cash flow.  Based on our last quarter, that has the potential to get to C$0.003/month (from C$0.001/month).   

That might not sound like a lot, but it would be a 5.0% dividend yield  (all else equal, assuming no new share issuance for acquisitions) — based on the current C$0.72 share price.  That would be triple the next highest yield in the precious metals royalty & streaming sector.  NOTE:  {Wheaton Precious Metals (NYSE: WPM) is yielding 1.62%}.  

The board will meet quarterly to adjust the dividend based on silver & gold prices and the operating performance of mines that we have royalties or streams on.  We started with a low dividend rate to maintain a strong balance sheet to facilitate upcoming transactions.  

Please update readers on potential acquisitions of new royalty & streaming assets, are you close on anything?  

Yes, we are working on some very exciting deals and hope to close at least 4 transactions this year.  

Metalla’s cash flow is heavily weighted towards silver, will it remain that way, or do you expect cash flow from gold assets to even things out?

Good question.  It just so happens we are overweight silver vs. gold by virtue of executing on the best available deals at the time.  We do expect gold assets to fill in as we complete more transactions.  That being said, we will be heavily weighted towards silver over the next couple of years.  Silver often outperforms gold in bull markets, so we are very comfortable with our positioning. 

Investors have been waiting months for Metalla to be up-listed to the TSX Venture exchange.  Why is it taking so long?

We are very close.  I can assure you that it has been as frustrating for management as it has been for shareholders and prospective investors.  A lot of it has been out of our control unfortunately, but it remains a priority and we will be a tier 1 issuer.  Given the growth profile of the Company, we will be evaluating a U.S. listing as early as next year. 

In December, your team provided an update on its 2% on the NSR Joaquin project.  Tell us about Joaquin and explain the update’s significance? 

This was a great update for Metalla shareholders.  Pan American Silver is allocating $40 M to develop Joaquin with production starting in 2019.  What this means is Metalla will have another top tier counter-party in the producer category.  The mine plan is only based on one high-grade zone of the overall deposit.  This asset will most likely cash flow to Metalla for many years.  Our suspicion is that if we see higher silver prices, Pan American is likely to scale up the production profile. 

What is your team’s latest estimate of cash flow for the fiscal year ending May 31, 2018?  How should investors think about next year’s cash flow? 

We are on track to hit our goal of CAD $6 M in operating cash flow for FY 2018 (ending May 31, 2018).  First quarter (FY 2018) production was lower due to the ramp up of the Endeavor mine.  We haven’t given formal guidance on FY 2019 yet, but internal estimates are looking to be in the CAD $7M – $9M range.  That’s not including any new deals.  With the addition of new transactions, our goal is to reach an annualized rate well north of CAD $10 M within the next 12 months.

Is Metalla paying any cash taxes?  Or, are you benefiting from historical operating losses to offset earnings?

Unlike more established industry leaders like Franco-Nevada, Wheaton Precious Metals and Royal Gold, we don’t expect to pay any cash taxes for several years.  This will support our dividend paying ability. 

A slide in your corporate presentation shows how Metalla stacks up against its peers.  Can you talk about that?  

Yes, we are relatively unknown to investors, which might be why our valuation appears cheap compared to peers.  Our FY 2018 cash flow estimate, plus ~C$1 M in “G&A,” is ~C$ 7 M in EBITDA.  Our EV (market cap + debt – cash) is roughly C$ 59 M (we have ~C$ 3 M in cash & ~C$ 8.5 M of low coupon, unsecured convertible debt owned by our largest shareholder Coeur Mining).  That gives us an EV/EBITDA ratio of about 8 and a half, compared to well over 20x for our peer group. 

Admittedly, part of our valuation discount is probably warranted– we are a new company with a less proven track record, and we are under-followed, for example we don’t have any sell-side research coverage.  But, as we grow, we believe our valuation gap will close, perhaps by a lot.  

Thanks Brett.  It sounds like the story is poised to gain traction with a Tier I TSX-V listing right around the corner, new acquisitions, a rising dividend payout and a cheap valuation.  I look forward to updates on Metalla Royalty & Streaming (CSE: MTA) / (OTCQB: MTAFFin the weeks and months to come.  

Disclosures:  The content of this interview is for illustrative and informational purposes only.  Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research[ER] including but not limited to, commentary, opinions, views, assumptions, reported facts, estimates, calculations, etc. is to be considered implicit or explicit, investment advice. Further, nothing contained herein is a recommendation or solicitation to buy or sell any security.  Mr. Epstein and [ER] are not responsible for investment actions taken by the reader.  Mr. Epstein and [ER] have never been, and are not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and they do not perform market making activities. Mr. Epstein and [ER] are not directly employed by any company, group, organization, party or person. Shares of Metalla Royalty are speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they consult with their own licensed or registered financial advisors before making investment decisions.

At the time this article was posted, Peter Epstein owned shares in Metalla Royalty and the Company was an advertiser on [ER].  By virtue of ownership of the Company’s shares and it being an advertiser on [ER], Peter Epstein is biased in his views on the Company.  Readers understand and agree that they must conduct their own research, above and beyond reading this article. While the author believes he’s diligent in screening out companies that are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. Mr. Epstein & [ER] are not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article. Mr. Epstein & [ER] are not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. Mr. Epstein and [ER] are not experts in any company, industry sector or investment topic.

Mark Bailey, President & CEO of Minefinders, says "si" to silver and gold in Mexcio.

In early May silver reached a high of nearly $50 an ounce. Then it seemingly hit a psychological brick wall built by the Hunt brothers and beat a hasty retreat to $32.32. But since its sharp correction, silver has been making a slow and steady comeback and now trades at around $41.50. Eric Sprott, the founder of Sprott Asset Management, calls silver “the best recommendation anyone could make this decade” and sees silver going to $100 an ounce within the next 3 to 5 years.

Sprott’s prognostication must be music to Minefinders’ ears. Minefinders is targeting gold and silver producing assets in Mexico and, after years of hard work, the company has Proven and Probable reserves of 2.34 million ounces of gold and 119 million ounces of silver. Minefinders is unhedged and expects to produce at least 65,000 ounces of gold and 3.3 million ounces of silver in 2011.

With approximately $2.30 per share in cash and little long-term debt the company has a strong balance sheet. Minefinders’ solid performance hasn’t gone unnoticed by the financial markets, the company’s shares last closed at a record high of $17.68 valuing the company at over $1.5 billion. We connected with Mark Bailey, President and CEO of Minefinders, for an exclusive one-on-one discussion.

You position Minefinders as a precious metals mining and exploration company as opposed to a gold company, is it your strategy to expand both gold and silver production going forward?

We have always liked both metals and the diversification that focusing on both brings to our business.  At our Dolores Mine, we have excellent exposure to both gold and silver, our La Bolsa development project will be primarily a gold operation but we also have other properties that we have not drilled on since 2006 such as Planchas de Plata and Real Viejo which are silver deposits.  We plan to recommence drilling on Planchas de Plata by the end of 2011.

The Dolores Mine is your flagship property, please talk about the property and your plans for further development.

Commercial production was declared at our Dolores Mine in May 2009.  The current Reserves are about 2 million ounces of gold and 114 million ounces of silver.  In 2011 we have guided to produce 65,000 to 70,000 ounces of gold and 3.3 to 3.5 million ounces of silver at a cash cost of $450 to $500 per gold-equivalent ounce.  We are currently well on track to meet or exceed this guidance.  Now that Dolores is producing, we are currently looking at expansion plans with the addition of a mill to process high-grade open pit ore as well as the development of an underground mine.  Studies on both these projects are currently nearing completion and we expect to be able to provide more details on these projects within the next six months.

We reported the results of a draft pre-feasibility study for a 6,500 tonne per day mill in April 2010 and are finalising an optimization study for the mill with the expectation of finalising the mill size and making a construction decision within the next six month. Secondly, we expect to develop La Bolsa and have a second mine in production by the first quarter of 2013.

The development of an underground mine at Dolores will take some time.  Based on our current resource model, there are about 800,000 gold equivalent inferred ounces below the current open pit reserves, which we expect to expand and elevate to reserves through the development of the underground and further exploration, expected to take three to four years.  Successful development of the underground will lead to production sometime in 2016 which will further enhance our gold and silver production profile.

Regardless, we’re very pleased with the performance of the current heap leach operation and the addition of a mill and underground operations will only help to speed up recovery and increase our production.

The La Bolsa mine is your most advanced development project, what are some of the salient points?

Aside from our flagship Dolores property, La Bolsa is our current development project.  La Bolsa was in fact the first property Minefinders staked in Mexico in 1995 but when we realised that Dolores was going to be a much bigger deposit we put La Bolsa on hold to focus on getting Dolores into production.

La Bolsa is located in northern Sonora state in Mexico and is a gold and silver deposit but will primarily produce gold (as the silver will not leach well) and we expect to produce about 40,000 ounces of gold per annum for the life of the mine which is about five and a half years.  Logistically it is in a great location, only 32 kilometres from the town of Nogales (so close to a workforce), and is situated on a private ranch.

We filed a National Instrument 43-101 compliant pre-feasibility study in August 2010 which showed the project to be economically sound and given the current price of gold, putting La Bolsa into production looks even more attractive. With Dolores now in production and performing well we have refocused our efforts on getting La Bolsa into production and are currently finalising permitting and detailed engineering.  We expect to make a construction decision by the end of the year and could have it in production within 12 months with an expected capital expenditure of US$32 million.

You note in your presentation that Minefinders has one of the more attractive enterprise values to Proven and Probable gold-equivalent reserve ratios, please expand on this for our readers.

Our share value has typically traded at a discount to our peers.  We believe that on the basis of our Proven and Probable reserves alone, we are an attractive investment opportunity when compared to our peers.  We believe in using reserves for comparisons, because it is what is currently economically mineable and from our perspective, a more compelling case than just comparing resources, which may or may not ever be economically minable.

You have a pretty aggressive exploration program underway at the La Virgina project. How is that progressing and what major milestones are upcoming?

La Virginia is a very exciting project and the results to date have been encouraging.   The La Virginia project covers more than 32,000 hectares containing seven separate target areas, very much a grassroots project that had never been drilled before until we started our first drill program on one of the target areas in April 2010.  We recently reported 6.46 grams per tonne gold equivalent over 67 metres and have drilled around 40 holes to date.  Our plan is to continue exploring on this target area to improve our understanding and expand the mineralization to develop a resource within the next eighteen months.  We will continue with our exploration on the other six target areas and if results are encouraging consider increasing our drilling efforts on these other prospective targets.

With gold and silver trading at record levels and competition in your sector increasing, how do you planning on growing the company and expanding its resources base?

We plan to grow our company through the development of existing assets and focused exploration.  As mentioned earlier, we are currently examining the addition of a mill at our Dolores Mine as well as the development of an underground mine at Dolores.

Assuming positive construction decisions for the mill at Dolores and for the construction of a mine at La Bolsa, Minefinders expects to increase its gold equivalent production to around 300,000 ounces by 2015.  This represents an 80 to 90 percent increase from current production levels.

Finally, we will leverage our strengths as explorers and continue to explore at La Virginia Property, our other exploration projects and revisit properties such as Planchas de Plata, a silver deposit, which with the current price of silver now makes sense.

In the near-term, Minefinders has a very attractive growth profile and the experience to continue to grow its resource base through exploration.  Most importantly, we are fully funded to execute our growth plans for Dolores (for both the mill and the underground development) and la Bolsa.  We are very excited about the Company’s future.

This interview is featured in the article 10 Most Interesting Gold Stocks – Part 4 – CLICK HERE to read more.

Clive Johnosn: "We have numerous high quality exploration targets and one of the most successful exploration teams in the world."

Another Bema? If B2Gold, a company founded in 2007 by the former executives and management of Bema keeps its current pace, the second time around might be a whole lot quicker. Bema, of course, was acquired by Kinross Gold in 2007 in a friendly takeover valued at CDN$3.5 billion. Surprisingly, B2Gold actually stumbled out of the gate; shares of the company fell from over $2 immediately after going public, to a low of $0.35 during the height of the financial crisis. Since then, however, the company has rebounded and then some. B2Gold expects to produce approximately 135,000 ounces of gold in 2011 and the company’s shares are now trading at just over $4.

A quick look at their growing portfolio of properties shows that B2Gold has inherited Bema’s international flavor; Bema had producing gold mines in Russia, Chile and South Africa as well as development projects in Russia and Chile. The company operates two producing gold mines in Nicaragua and has exploration and development projects in Colombia. This diversification, coupled with the operational track record of B2Gold’s management and lower than expected production cost, led Macquarie Capital analyst Michael Gray to call B2Gold, “One of our top picks amongst mid-tier gold producers”. Gray recently gave the company an “outperform” recommendation. connected with Clive Johnson to discuss the evolution of Vancouver’s mining capital markets and the prospects for B2Gold.

You’ve been involved in minerals exploration and development for many years now having built your career in Vancouver. Please talk about the evolution of the mining finance business in Vancouver from your early days with the VSE to what is now arguably the mining finance capital of the world.

As you point out in your question, Vancouver has seen significant transformation from a penny stock exploration market in the 70s and 80s to a major force for mining and mining finance.  I think there are a few reasons for this.  Firstly, there were a number of successful companies like Bema Gold (which we ran for over 20 years) that transitioned from exploration to successful development and production and secondly there were some very successful entrepreneurs putting together Vancouver based mining companies such as the Wheaton River/GoldCorp combination.  Finally in the international world of mining a company can have its head office anywhere and Vancouver is one of the top choices for many executives.

B2Gold has a corporate mandate to grow via acquisitions, has the high price of gold affected this strategy in any way?

B2Gold’s growth strategy has always been to grow by exploration and acquisitions (as was Bema Gold’s strategy). As the gold price goes higher, quality acquisitions become harder to find.  We are one of the few producers that have a proven exploration team with an impressive track record with significant gold discoveries.  The cheapest ounces will always be the ones you find. While acquisitions are more challenging in this gold environment, B2Gold shares have outperformed most of the sector over the last 6 months, which may increase our opportunities for the acquisition of other companies.

To date all of B2Gold’s assets are within the America’s but you’ve focused on some lesser know Latin American countries like Uruguay and Nicaragua to build your portfolio – please explain the benefits of this strategy to our readers.

In the days of Bema and now B2Gold we have always looked for opportunities in countries that are in economic and/or political transition or are under explored.  In our current portfolio Nicaragua is a country that is largely unexplored and is in a stage of positive political and economic transition, while Colombia is another country that is largely unexplored and has had a dramatic transition to a safe country to explore in.  And finally, Uruguay is a very stable country with great potential that has been under explored.

The rising price of gold has resulted in a plethora of junior and intermediate gold producers now listed on the TSX Exchanges. Why should an investor select B2Gold as an investment choice over many of your counterparts?

B2Gold represents and unusual opportunity for investors because it is a combination of a company with solid profitable gold production with no gold hedging and no debt and has a portfolio of projects to grow from.  In addition we have numerous high quality exploration targets and one of the most successful exploration teams in the world.

Your Limon mine experienced a force majeure and flood in late June and underground operations have been suspended. When is the mine expected to be fully operational?

The Limon Mine is expected to be back to full-scale production in September.  In the meantime, production has continued from other open pits and stockpiles.  The company expects to meet its guidance production for Limon of between 42,000 and 46,000 ounces of gold in 2011.

How is your exploration program progressing and what is on the horizon as we head into 2012?

Exploration programs are continuing in Nicaragua at the Libertad Mine property, Limon Mine property and on the Trebol exploration project.  In Colombia, exploration and pre-feasibilty work is underway on the Gramalote property, a 51% AngloGold/49% B2Gold joint venture, and finally, exploration drilling continues on the Cebollati project in Uruguay.  B2Gold’s total 2011 exploration budget is over $40 million dollars.  The company intends to announce exploration results from its various projects in September, 2011.  We anticipate exploration on these properties to continue through 2012.

This interview is featured in the article 10 Most Interesting Gold StocksPart 3CLICK HERE to read more.

Claude Lemasson: "First commercial gold production at the Aurora Gold Project is targeted for the first quarter of 2014."

El Dorado, the “Lost City of Gold“, has fascinated and eluded explorers since the days of the Spanish Conquistadors. The story of El Dorado was born through a combination of myths and legends. Dating back to the 1500s, the story originated from the Muisca people who spoke of a golden city hidden in remote South America. The promise of an ancient city of gold enticed European explorers to search for El Dorado for more than two centuries. The geographical location of the mysterious city has morphed along with the myths and legends over the years. Gold coins, precious stones, and streets paved with gold are thought to be located somewhere in Columbia, Venzuela or Guyana.

Sir Walter Raleigh searched for the elusive city in 1595 and reportedly found it. He described El Dorado as a city on Lake Parime far up the Orinoco River in Guyana where “every stone they picked up promised either gold or silver“. The city was actually marked on English maps until its existence was disproved by Alexander von Humboldt during his Latin-America expedition in the early 1800s. Though many have searched and failed to find this city of gold, no evidence of such a place has ever been found.

One TSX listed company, Guyana Goldfields, has certainly not let the failed efforts to find El Dorado prevent them from finding gold in Guyana. The company has been successfully operating in Guyana for 15 years and now boasts a resource estimate of just over 6.6 million ounces of gold from 2 different projects. UBS analyst Dan Rollins likes the company. On July 25th Rollins wrote, “Given the company’s attractive valuation, market capitalization of less than $1 billion, near-term production potential from Aurora and exploration potential at Aranka, we believe Guyana Goldfields could be an acquisition target for an intermediate or mid-cap producer seeking to expand its presence in South America.” recently connected with Claude Lemasson, President and COO of Guyana Goldfields for an exclusive interview.

The European myth concerning the gold-paved city of El Dorato originated from the Guianas but gold was actually discovered there years later in the 1840s. Please tell our readers about your gold assets and the geology.

Guyana Goldfields has been operating in Guyana since 1996 and has established a second office in the capital of Georgetown. Throughout the years of operating in the country, we have been able to significantly grow the land position and have accumulated over 417,000 acres. Our main groups of properties are called Aurora, where the Aurora Gold Project can be found with a total measured & indicated resource of 5.34M ounces of gold, and Aranka, where we discovered our newest property called Sulphur Rose hosting an initial gold inferred resource of 460,000 oz. The Aurora Gold Project is currently in the pre-development stage with construction and development slated to begin in the first quarter of 2012. Aurora is comprised of 3 main zones called Rory’s Knoll, Mad Kiss and Aleck Hill. Rory’s Knoll has disseminated pyrite and gold mineralization associated with intense silica-fuchsite-sericite-carbonate alteration found in a tonalite intrusive while the 2 other zones are mesothermal gold veins hosted in the shear zones of metavolcanic and metasedimentary rocks.

What are the current mining policies and regulations in Guyana and what does the royalty or fee structure look like?

We are currently in discussion with Guyana’s government on developing a Mineral Agreement in order to obtain the final Mining License or Permit to operate and build the Aurora Gold Project. Earlier this year the government decreased its Corporate Tax from 35% to 30% for all large foreign mining companies to further attract investment into the country. Historically the royalty was at 5% and we are negotiating the royalty and other terms within the Mineral Agreement. We hope to conclude these discussions very shortly.

It has been reported that a new mining policy is needed in Guyana which takes into account the indigenous Amerindians which represent 7% of the population – what is your take on this situation?

This policy does not effect us as it only effects areas where indigenous Amerindians are located. We do not have any indigenous populations nearby and are developing projects where indigenous Amerindians not located.

You have an advanced project in Guyana, the Aurora project, with a NI 43-101 resource estimate of just over 6.7 million ounce of gold. When do you expect to reach production and estimated costs of production, and what additional hurdles do you have to overcome?

First commercial gold production at the Aurora Gold Project is targeted for the first quarter of 2014, producing an average of 300,000 oz/yr. The current mine plan is a combination of open pit and underground mining for the first 9 years with an average output of approximately 9,500 tpd and approximately 4,400 tpd for years 10-17 from underground feed only. Total mine life is 17 years with operating cash costs in the lower quartile of all producing gold mines at ~US$420/oz. Total planned production is over 4+ million ounces with the resource currently known to date. Exploration drilling continues on geophysic targets within the vast land package that has largely been unexplored.

You are also developing a secondary project, the Aranka project, please tell us about this project.

At the Aranka Properties, currently in advanced staged exploration, drilling of highly prospective targets is ongoing. The Company discovered a new gold zone at Sulphur Rose in early 2010 and identified an initial inferred resource of 460,000 ounces in December 2010.  A revised resource estimate will be issued in the fourth quarter of 2011 to take into effect infill drilling conducted earlier this year. We will continue to explore this region and surrounding areas within Aranka.

Have you developed any strategic partnerships to help advance your projects?

We have been partnered with The International Finance Corporation (IFC) of the World Bank Group since 2006 and are following recognized international standards. The IFC is currently the third largest shareholder at 6.3% ownership. We’ve received support from the IFC on our Environmental and Social Impact Assessment work and they have mentioned an interest in potential future financial assistance.

This interview is featured in the article 10 Most Interesting Gold Stocks – CLICK HERE – to read more.

Timmins Gold President & CEO Bruce Bragagnolo with his exploration team in Sonora, Mexico.

Last September, Timmins Gold made a non-binding proposal to the directors of Capital Gold (TSX:CGC) to merge on a negotiated basis. The proposed value of the transaction was $4.50 per share; shares of Capital Gold were, at the time, trading at $3.89. But from the get-go, Capital Gold’s board was not receptive the proposal. Enter AuRico Gold, and you set the stage for what was a contentious 7 month long take-over battle. The final price tag, AuRico’s winning bid was for $6.34 per share. $1.77 more than what was original agreed upon when Capital and AuRico signed their merger agreement.

Since losing the fight for Capital Gold, Timmins has been quiet on the M&A front but has been making noise elsewhere. The company has been continuously drilling and extending the mineralization at its flagship San Francisco gold mine located in Sonora, Mexico. And on August 11th, 2011, the company reported that it sold 17,965 gold ounces during the quarter. This represents a 59-per-cent increase in gold sales over the first quarter of the previous fiscal year. In addition to the San Franciso mine, Timmins also has a collection of interesting gold assets across Mexico. Most notably a 40,000 hectare land package in the Peňasquito area of Mexico that is contiguous to Goldcorp’s 13 million ounce Peňasquito Gold Deposit.

We caught up with Bruce Bragagnolo, President & CEO of Timmins Gold, to discuss some of the company’s past challenges and learn what’s in store for this emerging junior gold producer.

The economic crisis of 2008 caught a lot of companies off guard and Timmins Gold was no exception – the company’s shares dropped from $1.25 to $0.25. What specific challenges did you face during those difficult times.

The economic crisis caught us at the exact time that we were financing the startup at the mine. At the end of March, 2008 we came out with our initial 43-101 report which recommended the restart of the mine. After March of 2008 there was a softening of the market which we initially attributed to the usual seasonality issue of sell in May and stay away.  It turned out that March of 2008 was the precursor to a systemic crash and not just seasonal softness.  Despite the softness in the markets we managed to raise $19 million in June of 2008 and the plan was to return to the market in the Autumn and  raise an additional $20 million through a combination of debt and equity. By September the market had softened even farther and by October the debt and equity markets dried up completely during the crisis. It was only in April of 2009 that the equity markets recovered enough for us to raise additional funds and eventually the debt market returned as well.

The company’s recovery since 2009 has been nothing short of amazing and your shares are now trading close to $3.00 per share. To what do you attribute this stellar recovery?

I can attribute this to two main reasons. First, the fact that we had a very successful startup period, and second, the high price of gold has increased our operating margins.

Including your flagship San Francisco mine in Sonora, Timmins has six different properties in Mexico. Could you please outline your exploration strategy and development plans heading into 2012?

Right now we are having a lot of success around and beneath the pit at San Francisco. We can not justify moving one of our 11 rigs to go anywhere else at present. We hope this will change in 2012 when we would like to complete at least one drill program on each of our other projects.

Is the company looking at additional projects or is your plate pretty full right now?

No we’re not actively looking, our plate is full.

The price of gold has been on a long term bull trend since 2002. What is your take on the gold market and at what point do you consider hedging production?

I believe the gold market is going much higher. I think you could consider hedging production when gold gets to a price that is so incredible you can’t believe it and, at the same time, the costs of production are dropping.

This interview is featured in the article 10 Most Interesting Gold StocksCLICK HERE – to read more.

While at the helm of Formation Metals, President & CEO Mari-Ann Green has raised over $170 million.

Cobalt is classified as a strategic metal by the United States Government and a critical metal by the European Union. Highly purified cobalt, a technology metal, has applications in the aerospace industry because it is very resistant to corrosion and damage, even at high temperature. It is also used in the manufacturing of rechargeable batteries and in medicine.

Although cobalt’s use is varied, only about 76,000 tons of refined cobalt was produced globally in 2010. With cobalt trading on the London Metals Exchange for$35,000 per tonne, this represents an estimated market value of US$2.7 billion. The main source of the element is as a by-product of copper and nickel mining. The copper belt that runs across the Democratic Republic of the Congo and the Republic of Zambia yields most of the cobalt mined worldwide. But one company is looking to break tradition.

Formation Metals is well on their way to becoming North America’s next cobalt producer having raised over $170 million in equity financing. Based on a NI 43-101 technical report released by the company in 2007, the Idaho cobalt project’s projected output will be equivalent to 3.3% of global cobalt supply which translates into 14.9% of North American’s annual demand. With political issues in the Congo which have, since 1998, chronically threatened to disrupt global cobalt supply, Cobalt’s recent status as a strategic metal and proximity to local markets in the U.S., some think Formation Metals is a good bet.

Jennings Capital analyst, Ken Chernin, issued a speculative buy recommendation on May 26th, 2011 with a 12 month target of $2.60, more than double today’s current price of $1.24. Chernin sites low costs of production, few impurities, the mine’s U.S. location and the company’s hydrometallurgical facility as reasons for his recommendation. recently connected with the President & CEO of Formation Metals, Mari-Ann Green, to find out more about cobalt and the company’s progress in Idaho.

Cobalt is a minor metal, one that many of our readers may not be familiar with, could you please provide some background on pricing and production?

Cobalt is a metal that many readers may not be familiar with, but they come across it every day in items from re-chargeable batteries to jet aircraft. It is also used in a number of green energy technologies including hybrid cars, fuel cell and wind turbine technologies, and as a catalysts in oil de-sulfurization and in Gas to Liquids technologies. Because of its use in jet turbine engines, cobalt is alloyed with steel to form high strength critical components of the moving parts of these engines. The U.S. government considers cobalt a strategic metal and yet they have no domestic source. We plan on providing the U.S. with a stable domestic source of this critical metal.

The price of cobalt has averaged around $22/lb over the past couple of decades, and high purity super-alloy grade material, 99.9% purity or better, the variety that Formation plans to produce, goes for about $20/lb today. Last year in February, the London Metal Exchange started trading “Grade B” material, which ranges in purity from 99.3% – 99.8%. This “low grade” cobalt trades at around $16.00 lb at the moment.

The copper belt in the Congo and Zambia yields most of the cobalt metal mined worldwide; however, your lead project is based in Idaho in the United States. Please tell us about the project.

That’s correct. Western Africa accounts for about 65% of the world’s production. Historically, the price of cobalt has risen sharply in response to political developments in the region that led to uncertainty of future supplies. Our project, on the other hand, is located in the heartland of the United States, who accounts for 58% of the world’s consumption of superalloy grade cobalt. We also own and operate a hydrometallurgical refining facility, which will be capable of producing the high purity cobalt metal right here in the U.S. – and we will be the only company in the country doing that.

What are the key differences between your deposit and those found in Africa?

There are a number of differences. Firstly, as was pointed out already, the project is located in the United States which is a big consumer of cobalt but does not have a domestic source of the metal. Secondly, it is the only primary cobalt deposit in the country. Just as importantly, we know from metallurgical test work that it will be capable of producing high purity cobalt suitable for critical applications in the superalloy sector. Lastly, being able to refine the metal ourselves offers the great advantage of producing value added end products that meet the high standards and specifications for domestic end users.

We hear about cobalt being a “conflict metal” but cobalt production in the Congo is produced in the Katanga province, hundreds of miles away from the conflict zones in the eastern part of the country. What is your take on this status?

Cobalt from the Congo is not defined as a conflict mineral, unlike coltan from the eastern provinces where niobium and tantalum are extracted. However, cobalt produced from the Congo often ends up being comingled with ore from other areas and refined out of the country. This produces end products with uncertain supply chains. End users, like large electronic companies, are being held to task more and more about where the raw materials used in their products originate from. Being able to clearly demonstrate a continuous supply chain of ethically sourced raw materials is becoming more and more important in today’s emerging socially responsible corporate world.

Formation Metals also has gold/silver projects and uranium projects, to what degree are you focused on developing your other projects and what are your long term plans in these other areas?

Yes, we have several satellite projects that we expect to do more work on as the cobalt project nears production. We have a number of gold projects in Idaho that have been on care and maintenance while we moved the cobalt project towards construction. Strong precious metal prices has resulted in renewed interest in these projects, which are likely to see more work done on them by ourselves, or through joint venture opportunities.

In the state of Tamaulipas in Mexico, we own a high grade silver-lead zinc project where grab samples have returned silver values near 2kg/ton. We recently announced we had acquired additional central ground on the project, and we expect to do more exploration work to define drill targets in the fall and winter of this year.

Lastly, we have two uranium projects in the Athabasca basin of Northern Saskatchewan joint ventured with Cameco and AREVA. One of the projects, the Virgin River project, where Cameco is acting as operator, has discovered the Centennial Deposit, a high grade uranium deposit that has been traced for over 650 metres. Cameco has indicated they are looking for a McArthur River style deposit, the largest and highest grade deposit on the planet, and to date they have spent over $26 million dollars developing the Centennial deposit. The project has returned results as high as 8.8% U3O8 over 34 metres – that’s 8.8% over 110 feet! They are currently drilling the project with a budget of $3 million for this year. We have a vested 2% interest in the project with the first right of offer to earn up to 10%. Time will tell how that project develops, but at this stage the future looks promising with continued excellent results coming from the project.

On July 26th Formation announced that mine site earthworks construction commenced on your Idaho Cobalt Project, what does the timeline look like going forward and when do you hope to be in production?

We actually completed Stage I construction last year with timber clearing and site preparation, and this Stage II of construction will see the development of the portal bench and the construction of the mine site structures. If all goes according to plan, it is expected to take about a year to construct, so conceivably, we could be in production by this time next year.

This interview is featured in the article 5 Critical Mineral Stocks to Watch – CLICK HERE – to read more.

Northern Graphite's President & CEO Greg Bowes believes that graphite is the place to be.

Graphite is one of fourteen critical minerals that were identified by a recent report by the European Commission as being under “supply risk”.

According to the United States Geological Survey (USGS), world production of natural graphite in 2008 was 1,110 thousand tonnes (kt), of which the following major exporters are: China (800 kt), India (130 kt), Brazil (76 kt), North Korea (30 kt) and Canada (28 kt). The mineral graphite is one of the eight allotropes of carbon. The most common allotrope being diamonds. While diamonds are a girl’s best friend could graphite become an investor’s best friend? Greg Bowes, President and CEO of Northern Graphite certainly thinks so and points to graphene, a next-generation material made from graphite.

Graphene is a one-atom-thick planar sheet of carbon atoms that are densely packed in a honeycomb crystal lattice. It can be thought of as an atomic-scale chicken wire made of carbon atoms and their bonds. Scientists around the world believe that graphene is a strong candidate to replace semiconductor chips. Moore’s Law observes that the density of transistors on an integrated circuit doubles every two years. But silicon and other existing transistor materials are thought to be close to the minimum size where they can remain effective. Graphene transistors can potentially run at faster speeds and cope with higher temperatures. Graphene could be the solution that will allow computing technology to continue to grow in power whilst shrinking in size, extending the life of Moore’s law by many years.

Northern Graphite, based in Ottawa, recently closed a $4 million initial public offering at $0.50 per unit and began trading on the TSX-V Exchange on April 20th, 2011. And so far so good. The company’s shares took-off and hit a high of $1.55 in early June and have since settled back to the $1.20 range. Northern Graphite’s principal asset is the Bissett Creek graphite project located 100km east of North Bay, Ontario. The Company has completed an NI 43-101 preliminary assessment report on the project and anticipates that it will be in a position to begin construction of the mine early in 2012, subject to positive results from the bankable final feasibility study and the availability of financing. recently sat down with Northern Graphite’s top executive Greg Bowes to talk about the company’s future prospects and to learn more about the project.

To provide some context for our readers, why should an investor be looking at graphite mining as an opportunity?

Lithium and rare earths have demonstrated that it is possible to make money with minerals other than precious and base metals. Now investors are looking for other strategic minerals that are undervalued and, in our opinion, graphite is one of them. Graphite industrial demand is growing 5% per year due to the effect of growing demand in China and India for traditional steel and auto markets. Since 2005, the price of graphite has increased by almost three times. New uses like lithium ion batteries, fuel cells, nuclear and solar are all big graphite users and will create more demand as these technologies become more widely adopted. Currently, China produces 70% of the world’s graphite and its production and exports are expected to decline like in the situation of the rare earth elements.

Please tell us about your project?

Northern Graphite has a large resource, located in Canada close to infrastructure, with simple open pit mining and metallurgy. The deposit will produce high value, high growth, flake graphite. The company expects to have a bankable feasibility and permitting done and start construction in the first part of 2012.

What are some of the challenges associated with developing and mining graphite?

In our case, not many. Our project involves simple mining methodologies and metallurgy. As mentioned before, our project is close to infrastructure and with no environmental issues.

Who are the dominate players in the industry and, once mined, how is graphite bought and sold?

China, in general terms is the dominant player since they produce 70% of the world’s supply. Most other mines outside of China are owned by large private industrial companies. There are only two public companies in North America with graphite development projects. There is no spot market for graphite, prices are negotiated between buyers and sellers but it is a very large and efficient market. Prices for the most common grades are published in industrial minerals magazine.

In 2010, scientists at the University of Manchester won the Noble Prize in Physics for isolating graphene. Please tell our readers about graphene and what applications it might be used for.

Graphene is transparent in infra-red and visible light, flexible, and stronger than steel. It conducts heat 10 times faster than copper and can carry 1,000 times the density of electrical current of copper wire. Graphene is expected to be a revolutionary material that could change the technology of semiconductors and LCD touch screens and monitors, create super small transistors and super dense data storage, increase energy storage and solar cell efficiency, and will transform many other applications. According to a professor at Georgia Tech University, there are nearly 200 companies, including Intel and IBM, currently involved in graphene research. In 2010 graphene was the subject of approximately 3,000 research papers and the European Union and South Korea have each recently started $1.5 billion efforts to build industrial scale, next generation display materials using graphene.

Having just listed on the TSX-V Exchange in April of this year, what are your plans for the balance of 2011 and beyond?

We are working towards a new resource estimate for next month; and, a bankable feasibility study and hopefully a strategic partnership by the end of the year. Next year, we would like to have our permitting completed in early 2012 and construction start-up shortly thereafter.

This interview is featured in the article 5 Critical Mineral Stocks to Watch – CLICK HERE – to read more.

American Vanadium Presdient & CEO Bill Radvak is putting his mining and technology experience to work.

President Obama likes vanadium; or rather, he likes to say the word vanadium. Last February Obama joked that “Vanadium redox fuel cells is one of the coolest things I’ve ever said out loud“. Obama also said this “next generation energy storage system will help families and businesses cut down on energy waste, save money and reduce dangerous carbon emissions”. So what is vanadium and, more importantly, what is a vanadium redox fuel cell?

Vanadium is the 23 element on the periodic table and is a soft silver-grey ductile transition metal. It is primarily produced in Russia and China from steel smelter slag and in a few other countries around the world as a flue dust of heavy oil or a byproduct of uranium mining. Most vanadium, approximately 85%, is used as an alloy called ferrovanadium as an additive to improve steels. But recently its vanadium’s status as a strategic metal and its green energy applications that have people, including President Obama, talking. Although, the more correct terminology is the vanadium redox flow battery.

Vanadium redox flow batteries are distinguished from fuel cells by the fact that the chemical reaction involved is reversible meaning that they can be recharged without replacing the electroactive material. Also, an important factor in the redox flow battery is that the power and energy density of the batteries are independent of each other in contrast to rechargeable secondary batteries which avoids cross contamination. These special characteristics make the vanadium redox flow battery uniquely applicable for energy storage applications including transportation and utilities.

Although vanadium has only recently been grabbing media headlines, one TSX-V listed company decided to pursue vanadium as an emerging opportunity when they fortuitously discovered the critical element in Nevada while drilling for base metals back in November, 2007. That company was American Vanadium which, at the time, was operating as Rocky Mountain Resources.

American Vanadium recently reported they are on track at the Gibellini vanadium project in Nevada to delivery of Feasibility Study in Q3, 2011 and is looking to start of production by 2013. This will position the company to have the only vanadium mine in the US, which is by some accounts, an enviable position.

Chris Barry, an analyst at House Mountain Partners, notes in a recent report, “With its low-cost project economics, AVC presents a unique opportunity to join the ranks of vanadium producers and contribute to the growing demand for this little-known metal. This is where we think AVC can create value for shareholders, near-term production of a strategic metal in a stable geopolitical jurisdiction.” Mr. Barry went on to say that, “Vanadium is most exciting because there is an increasing potential demand for the metal in the energy storage and battery spaces.” interviewed Bill Radvak, President & CEO of American Vanadium, to get to the bottom of vanadium and to find out what’s in store for the company.

Vanadium is certainly not a house-hold name, please tell our readers about vanadium, its uses and why you were attracted to this particular transition metal.

I volunteered for this job eighteen months ago because it is was perfect mix for me as a start-up where I could use my education and experience as a mining engineer and also leverage my fifteen year stint in the technology industry. And that is what the American Vanadium opportunity is about: an advanced vanadium resource which truly gives us the capability to lead the creation of the mass storage industry in the US using vanadium flow batteries.

The street knowledge of Vanadium has jumped tremendously in the time I have been with AVC and that is only going to continue to increase due to its growing importance and new critical uses that will affect everyday life.  Historically, vanadium is all about being a premiere steel strengthener which was first used in the Model T Ford and since then has become increasingly critical to the steel industry. A great example is that on July 1 of this year, China implemented a new regulation for their rebar grade that will result in an additional 27,000 Metric tons of Vanadium consumed in China which is a 40% increase in global vanadium consumption in the next few years. As well, Vanadium is absolutely critical and irreplaceable in the production of titanium alloys for aircraft and the defense industry, catalytic converters and important chemical production.

A great statement we heard recently from the US Department of Energy was “the electric grid is the world’s largest supply chain without a warehouse”.  Their biggest urgency is to build these “warehouses” and the most advanced mass storage battery technology is the vanadium flow battery.  Essentially these are massive vats of vanadium in sulphuric acid that allow the continual storing and discharging of electrical energy.  The key is that these vanadium flow batteries are scalable to meet any needs and will last for decades and that is why there is a huge effort to commercialize these batteries worldwide.

Vanadium is on the Critical Element list in America, how might this help shape American Vanadium?

Given that the US government has recognized it is in a terrible spot trying to secure supplies of rare earth metals, it taking a very serious look at all their supply chains.  We have helped them further recognize that the US only domestically produces 5% of its raw vanadium needs as a by-product of a uranium mine while 80% of its needs are met by the Venezuela, China, Russia and South Africa.  One hundred percent of the supply for the vanadium flow battery industry will come from these same countries. And 100% of the vanadium required for their titanium alloys used in the aircraft and defense industries comes from a single source in Russia.

When key industries and national defense rely on a critical element primarily from Venezuela, China, Russian and South Africa, the US has to look for domestic supply.  And there is no other domestic US option on the table or being considered other than American Vanadium.  As we are driving fast on our timetable to begin production by the end of 2012, we are being taken seriously by the US Government agencies as the key domestic source of vanadium for current and future needs.  Importantly, this gives us tremendous leverage in partnering with vanadium flow battery companies as anyone seriously wanting to capitalize on the huge need in the US logically has to have access to our production which could easily be turned 100% to meet this premium need.

Please tell us a bit about the background of the company and, specifically, some background on your flag-ship Gibellini project in Nevada?

American Vanadium was built around the Gibellini Project which was historically drilled up by Union Carbide, Noranda and Atlas mining.  What has made this project economic is we have recognized that the unique geology enables us to use simple and cost-effective heap leach processing to extract the vanadium. Being located in the middle of Nevada, the unique sedimentary hosted deposit is essentially a ridge of exposed, heavily oxidized, crumbled rock with a strip ratio of a remarkable 0.2.

A Scoping Study was completed by AMEC in 2008 and the operation they designed had an after tax IRR of 40% with a capital cost of less than $100 million.  AMEC has been engaged to complete a Feasibility Study and we expect this to be delivered in this quarter.

The Gibellini project has a defined 43-101 resources estimate of 122 million pounds of indicated vanadium (i.e., vanadium pentoxide or V205) grading at 0.339%, where does this put American Vanadium in terms of size and grade of other known deposits?

At 3 million tons per year mined, our mining project could be considered small relative in the mining industry, but this production rate would represent about 50% of the United States annual vanadium demand or about 5% of the world supply this year.  This makes our operation very important to the vanadium industry, particularly the US consumers. We are fortunate that we are in a very friendly mining jurisdiction where we can control costs on an already inexpensive mining and processing operation.  Therefore, while our grade is relative low, we expect it to be very economic as most other mines have a magnetite that requires stages of crushing, grinding, magnetic separation and roasting.

We also have a very expandable resource potential. We focused on getting to production base on the historic drilling on the main occurrence. Now that the Feasibility Study on this occurrence is nearing completion, we are turning our immediate attention on building the resource on expanding this main occurrence and upgrading the already drilled Louie Hill that is adjacent to the Gibellini. After that there are a handful of other occurrences on the property we will be exploring as well as looking regionally.

What does the end-user market look like for Vanadium and how is Vanadium sold into that market?

The vanadium market has been in a state of oversupply for the past decade and is now transitioning into an extended period of undersupply; coincidentally, this is anticipated around the time we expect to reach production. This bodes well for the producers as the price of vanadium is forecast to climb for the next 5 – 10 years.  And this does not take into account any demand at all from the vanadium redox battery so obviously we are thrilled with market timing and the vanadium outlook.

The consumers are now becoming worried about surety of supply.  Our priority, while the vanadium flow battery market grows, is to pursue the US consumers beginning with the handful of steel companies that rely on foreign sources. We can offer a longer term, domestic supply to satisfy their surety of supply concerns.  Additionally, we will be focussing on the titanium market where vanadium sells for a premium.  While on a global scale only 4% of world vanadium is consumed in titanium alloys, in the US almost 20% of the vanadium is consumed in titanium alloys due to the significant aircraft and defense industries which rely on a sole source of vanadium from Russia.

What milestones do you hope to reach before the end of 2011?

We have a number of very important milestones we expect to deliver in the coming months including the completion of our bankable Feasibility Study by AMEC in Q3, issuing a revised NI43-101 within 45 days of the Feasibility Study and testing of our vanadium electrolyte for the mass storage industry. We will leverage these near term milestones to pursue a number of key initiatives such as joint ventures and partnerships with international leaders in the Vanadium Flow Battery space and off-takes with steel producers for our early production.  Project wise, we are going to put a lot of energy towards increasing the resource thereby extending the mine life. All in all, there is lots going on and lots to look forward to for the remainder of this year and next.

This interview is featured in the article 5 Critical Mineral Stocks to Watch – CLICK HERE – to read more.

CEO James Kenny believes the TSX was the perfect place to list Frontier Rare Earths.

The completion of an IPO earlier in late 2010 marked the arrival of a new late-stage player on the Canadian listed rare earths scene, Frontier Rare Earths. Frontier began trading on the TSX exchange on November 17th, 2010 after the completion of a $60 million unit financing at $3.40 concurrent with the company’s IPO. The unit offering consisted of 1 share and 1/2 share purchase warrant at $4.60 expiring after 2 years. Since then, the company’s shares have been trending down hitting a low of $1.86 earlier this month and are now trading at $1.97.

Frontier’s flagship project is the Zandkopsdrift rare earth element deposit in the Northern Cape province of South Africa. The company’s NI 43-101 technical report states that Zandkopsdrift is one of the largest known undeveloped rare earth deposits outside China. The independent report, prepared by South African consultants MSA Group in October, 2010, identifies an indicated resource of approximately 23 million tonnes at an average grade of 2.32 percent TREO, representing 532,000 tonnes of contained TREO. In addition, the report identifies an additional inferred resource of approximately 21 million tonnes at an average grade of 1.99 percent TREO, representing 415,000 tonnes of contained TREO. Frontier hopes to supply up to 20,000 tonnes per year of REO and is working on validating the production potential from the ongoing prefeasibility study projected to be completed towards the end of this year. The company is quick to point out that their Zandkopsdrift B Zone, which is contained within the overall Zandkopsdrift resource estimate, is the third highest grade rare earth deposit outside of China after Lynas and Molycorp.

Jacob Securities Analyst Luisa Moreno likes Frontier Rare Earths, she has a price target of $9.83 on the stock. In a report from June 8th, 2011, she states, “Although Molycorp’s grade at Mountain Pass deposit is 8.28% compared to Frontier’s with 2.16% TREO, Frontier’s critical heavy element grades (dysprosium, europium and terbium) are higher, which means that Frontier will be able to produce more of these critical materials (circa 370 tonnes) and generate higher sales for these elements than Molycorp (circa 80 tonnes) despite Molycorp’s overall production target being twice that of Frontier.”

The Prospecting Right for Zandkopsdrift is held by Sedex Minerals, a South African company that is 74% owned by Frontier while the remaining 26% of Sedex is held by South Africa’s Black Economic Empowerment (BEE) through which 21% ownership is extended to Namaqualand Empowerment Trust (NET). NET is a broad-based community trust established for the benefit of historically disadvantaged South Africans principally in the Namaqualand region of the Northern and Western Cape Provinces of South Africa. From the BEE Commission Report in 2002, the post-apartheid program is aimed at redressing the imbalances of the past by seeking to substantially and equitably transfer and confer ownership, management and control of South Africa’s financial and economic resources to the majority of the citizens. It seeks to ensure broader and meaningful participation in the economy by black people to achieve sustainable development and prosperity. An interesting approach that has proven to be somewhat successful in South Africa.

Although Frontier has a direct 74% interest in Zandkopsdrift, company Chief Executive James Kenny noted that the provisions of  Sedex’s shareholder agreement in fact gives Frontier an effective 95% economic interest in Zandkopsdrift when he connected with

Frontier recently completed an IPO on the TSX raising $60 million via a unit offering at $3.40 per unit on the strength of your rare earth project in South Africa. Could you talk about the genesis of the project prior to your IPO?

I have been involved in the natural resource earth sector for many years as have other members of my family. In 1994 I travelled to South Africa for the first time, shortly after the first democratic elections which followed Nelson’s Mandela’s release from prison. Although South Africa is a country abundant in natural resources, it had virtually no junior mining industry due to the apartheid regime. With the country opening up to foreign investment I travelled to South Africa with my brother, Philip, and my father. On an early visit we were very fortunate to meet a renowned diamond exploration geologist by the name of Hugh Jenner-Clarke who had, at that time, spent over 40 years in the diamond exploration sector in South Africa and elsewhere and had some important discoveries to his name.  On a handshake we formed a partnership with Hugh and established Firestone Diamonds plc, an emerging diamond producer now with operating diamond mines in Botswana and Lesotho. Firestone Diamonds is listed on the AIM market in UK and continues to be run by my brother Philip Kenny. In 2004 we decided to look at other mineral opportunities and identified the rare earth sector as one having very significant promise due to the now very evident trends of Chinese production dominance and the anticipated growth in demand for rare earths. We strongly believed that the west coast of South Africa and, in particular, the Namaqualand region was highly prospective for rare earths. The Zandkopsdrift Project area which hosts the Zandkopsdrift rare earth deposit which we are developing was at the time ‘open ground’ and we applied for and were granted a Prospecting Right covering 60,000 hectares in the area in 2006. Between this time and our IPO in November 2010 we advanced Zandkopsdrift to the point that the NI 43-101 report confirmed it as one of the largest, highest grade code-compliant resources in the world outside of China.

The deposit is a carbonatite complex and the rare earth mineralization is principally contained in a monazite complex. What sort of challenge do you expect to face cracking the minerals in your deposit and describe the availability of the associated technologies?

Rare earths do not occur in free form and are bound up in host minerals from which they must be cracked or liberated. Up to 200 different types of mineral can host rare earths, the very large majority of which have never had a process, let alone a commercial process, for the extraction of the contained rare earths. The two most ‘conventional’ rare earth host minerals are bastnaesite and monazite with the flow sheet for the monazite having been established for decades and is widely available. The primary host mineral at Zandkopsdrift is monazite and so the challenge for Frontier will be to adapt and optimise this established flow sheet for the recovery of rare earths from the Zandkopsdrift deposit.

Which rare earth elements, in your opinion, are key to Frontier’s economic model and why?

I think that one has to look at the ‘balance’ in any rare earth deposit as all rare earth elements will be recovered together and then sequentially separated and sold. Clearly some rare earths such as cerium and lanthanum are relatively plentiful and as such I think that the medium term price is likely to be considerably below current price levels. Similarly we believe that five of the ten heavy rare earths are of very low or limited value due to the small size of the global market. We are very fortunate in that the Zandkopsdrift deposit has elevated levels of what we call the ‘Big Five’ namely neodymium and praseodymium of the light rare earths and europium, terbium and dysprosium of the heavy rare earths. I think that these five elements exhibit the most attractive supply/demand price outlook and will be key to Frontier’s economic model

Infrastructure is always a key component when putting a mine into production, please tell our readers about what is available in the area?

Our Zandkopsdrift development is located approximately 450km north of Cape Town, just off the N7 Highway in the Namaqualand region. Namaqualand is South Africa’s oldest mining province with over 150 years of gold, copper, base metals and diamond mining history. Although certain of these mines are no longer operational, there remains very good infrastructure, qualified staff and mining support services in the area. Of particular significance is the town of Bitterfontein which lies 30km from Zandkopsdrift and is the site of the nearest railhead and Saldahna Bay some 250km to the south and which is one of Southern Africa’s deepest water ports. The most capital intensive and complex part of the rare earth recovery process will be the separation stage and Frontier plans to construct a 20,000 tonne rare earth separation plant at Saldahna Bay proximate to other comparable plants and facilities. This is expected to significantly reduce Frontier capital expenditure requirement and development lead time.

What is the environmental permitting process like in South Africa and can you speak to the environmental part of the equation?

South Africa has a well-developed exploration, development and mine permitting regime. As part of the advancement of Zandkopsdrift Frontier will be required to do extensive assessment of the impacts of our current and proposed activities on, for example, the flora, fauna, wildlife, water resources of the area. Zandkopsdrift is not an area of particular environmental or other sensitivity and Frontier expects that the findings of its environmental studies will not impede the permitting and development of Zandkopsdrift. Of particular importance in the rare earth sector is the presence of the radioactive elements, specifically, of thorium (178 ppm at Zandkopsdrift) and uranium (56ppm at Zandkopsdrift) which fortunately are considered to be at very low levels in both absolute and relative terms at Zandkopsdrift.

Having completed your IPO, now that the dust has settled, what is on the horizon for Frontier Rare Earth and what key milestones do you hope to accomplish with the money you just raised?

We have a very busy 18 month program which will involve the completion of a Preliminary Economic Assessment due at the end Q3/early Q4 2011, with a Prefeasibility Study scheduled to follow 3-4 months thereafter and a Definitive Feasibility Study in Q4 2012. This work is fully funded with the proceeds of our IPO competed late last year. In addition we expect to investigate the some 30 satellite intrusions we have identified around Zandkopsdrift as well as initiating a regional scale exploration elsewhere in the Zandkopsdrift permit area.

This interview appeared in 5 Most Interesting Rare Earth Stocks – Part 1CLICK HERE for the article.

Scott Moore views his company as an alternative to mining for investors interested in rare earth elements.

Dacha Strategic Metals is in the rare earth elements business but, interestingly enough, Dacha is not a mining company. And perhaps more interesting to Dacha’s investors, yesterday the company hit a 52 week high closing at $0.89. Dacha has effectively created the world’s first and only stockpile of rare earth elements and offers investors and industrial consumers the ability to participate in the physical ownership of these critical elements. Similar to a physical trust.

As of June 24, 2011, in addition to its metal inventory, which had an estimated fair market value of $96.1 million, Dacha’s equity investments had an estimated fair market value of approximately $2.7 million along with a cash position of approximately $4.7 million for a total of $103.5 million, or $1.39 per share, based on 74.4 million shares outstanding.

We recently discussed the value proposition of Dacha Strategic Metals with the company’s President & CEO, Scott Moore, and addressed the company’s normal course issuer bid share buy-back that was announced earlier this month.

Dacha Strategic Metals is not a mining company but operates in the rare earth element sector. Please tell our readers about your business model and the history of the company?

We have a unique, but very simple business model which provides an investment alternative for investors interested in gaining exposure to rare earth elements without the risks inherent to mining companies. Quite simply, Dacha’s objective is to achieve, long-term capital appreciation through the buying, holding and selling of rare earth elements, which are predominantly supplied by China.

Just over a year ago, anticipating that the prices of rare earth elements would begin to appreciate quite rapidly, we began working with this model and started accumulating a stockpile of the particular physical rare earth elements that we perceived had the greatest potential to gain value.

Since we began, we have acquired approximately 300 tonnes of rare earth elements from within China – most of which we acquired when Chinese export quotas were at their lowest – and have proven the liquidity of our inventory through making, selective, opportunistic sales to downstream customers. We began implementing our business model in April 2010 with an equity raise of $22 million which we deployed into an inventory of approximately $20 million, and we recently announced that as of June 24, 2011 that our inventory is worth over C$96 million. Each week we update the inventory chart on our website (CLICK HERE to view) and on a monthly basis we put out a press release announcing our Asset Value, which is inclusive of our metal inventory, marketable securities, and cash. If a substantially material change has occurred with our inventory we would also press release that change in a timely manner.

Are there comparable companies to Dacha in the marketplace or did you conceptualize this business model?

At present there are no companies in the rare earth market with a similar business model to Dacha. The majority of rare earth element companies in the market are exploration and development projects – as you mentioned earlier, we are not a mining company. In actuality, we can be more closely compared to a physically backed ETF – such as a gold bullion fund. But there are obvious differences, we trade on the TSX-V as a corporation and do not have the associated “management” or “commission” fees as a traditional fund would.  The Central Fund of Canada (TSX-CEF) and the Uranium Participation Corp. (TSX-U) are two similar companies except that Dacha has the ability to hold multiple metals and trade in and out of their positions.

Shortly after you went public you announced that Dacha acquired an operating license in the People’s Republic of China for rare earth elements through the acquisition of a trading company in China. Could you explain the nature of that license and what terms are associated with it, if any?

Our China license allows Dacha to buy, hold and sell rare earth elements within the Chinese market. It does not allow us to have export quotas but does allow us to import rare earths, such as concentrate.  However, I should note that Dacha is more tax effective outside of China and as such we are focusing our inventory to be held outside China.  As Dacha operates out of Barbados, our effective tax rate on income is 2.5%, therefore providing an investor with almost the full upside on the metal price.  This is one area where the market may be discounting us as they may not realize the tax effectiveness of the model.

Rare earth elements is a relatively new sector of the mining investment community, what are the key demand drivers that are shaping the industry and what is the price sensitivity of the marketplace?

I think that probably most of the investing public has rushed into rare earth equities without really understanding the industry – it is a complex and opaque market. Rare earths are a relatively small, but important group of minor metals that allow our modern world to function more efficiently; for instance, they make our everyday electronics smaller, faster and more efficient and make your compact fluorescent bulb work. Each element has different special properties, so demand drivers are actually different for each specific element and in most cases price is in-elastic to the finished product – such small quantities of these materials are used in most products, appreciation in pricing has very little impact on the price of the overall end product, up to a certain point, of course.  As many of these materials are un-substitutable and irreplaceable, prices can still experience an upward trend from here. Rare earths are really a specialty chemical business not a mining business as the mining part of the chain may only represent 10% of the actual costs of processing the material into a “finished” saleable commodity.

Some rare earth elements are actually not that rare and heavy rare earth elements are generally considered to be the more sought after elements for miners. Could you give our readers an overview of the sector and highlight some of the key elements that Dacha is focusing on and why?

We have chosen to focus mainly on the heavy rare earth elements (like dysprosium and terbium). This is another key factor of our model: rather unlike an exploration or mining company who is restricted to the elements of a specific deposit, our business model allows us to diversify across the spectrum, to “cherry-pick” the elements that we feel have the most potential upside as the market conditions continue to develop. Likewise, when we feel certain elements have reached their peak, we are able to liquidate those particular elements and focus on others.

When we set out to purchase our inventory we felt that the heavy rare earth elements had the most potential upside over both the short and long term – and in fact, as I mentioned previously, we have seen tremendous appreciation in our inventory over the past year and we feel that there is lots of upwards momentum still to come. Additionally, with recent announcements out of China that they intend to temporarily shut down some of their heavy rare earth operations in the south, we see lots of upside for the heavy rare earths in the short-term as well.

Conversely, we believe that with the small handful of mines set to produce the light rare earths like cerium and lanthanum in the next few years the light rare earths could see a marked decline in value as these projects move closer to production.

Dacha recently announced a normal course issuer bid, what are your corporate plans as we head into 2012?

Our plans are to keep doing what we have been doing. The next few months promise to be an active time in the rare earth market and we are going to be watching it carefully. We are expecting to see continued increases in our metal inventory which may offer potential opportunities to make opportunistic trades to realize profit from our inventory. Like I mentioned, we update our inventory and asset value regularly, and I would encourage anyone interested in the rare earth space to monitor the progress of our inventory on a regular basis. We expect to have an exciting and profitable year.

This interview appeared in 5 Most Interesting Rare Earth Stocks – Part 2 – CLICK HERE for the article.

Drilling is underway at Rare Element's Bear Lodge project in Wyoming.

Rare Element Resources is an early pioneer in their sector. The company has a 100% interest in the Bear Lodge property in Wyoming, which, according to the US Geological Survey, is one of the largest disseminated rare earth deposits in North America. Along with high grade light rare earth elements the deposit contains lesser amounts of heavy rare earths and the occurrence of gold. On June 14th Rare Element Resources reported a resource update and provided an indicated mineral resource of 4.9 million tons at 3.77% REO and an inferred mineral resources of 17.81 million tons at 3.03% REO; setting the stage for the company’s upcoming summer drill program.

In May, U.S. investment bank Dahlman Rose initiated coverage on Rare Element Resources with a buy rating and $21 price target. “We like the straightforward metallurgy that is present at the company’s Bear Lodge deposit and access to infrastructure that is present at this deposit. In fact, we believe that these aspects make the company an attractive candidate to be acquired by a producing rare earth company over the medium-term.”

But not everyone agrees with Dahlman Rose research analysts Anthony Young and Anthony Rizzuto. On June 23 it was reported that the short interest in three U.S. quoted rare earth miners, including Rare Element Resources, has continued to build since April and stands just off record highs. Will Duff Gordon, research director for Data Explorers, noted “despite the recent substantial share-price correction in all three stocks, it seems that short sellers still believe them to be overvalued.”

Whether you’re bearish or bullish on the sector expect the debate on rare earth elements to rage on and, in the meantime, the one thing that both bulls and bears can be assured of is share price volatility across the board. We connected with the company’s President Donald Ranta to get his take on the price sustainability of rare earth elements and to learn more about the Bear Lodge deposit.

Rare earth elements have really come on to the scene since after the market crash in 2008 and over the past 10 months the sector has really exploded. To what do you attribute this monumental paradigm shift?

The shift is primarily due to China and its restriction of rare-earths exports and to an insatiable and growing worldwide demand for rare-earth products. China produces approximately 96% of the rare earths worldwide, and it has been annually reducing its exports of rare-earth concentrates, oxides (REO), and metals every year since 2004. This has been a clear message to the rest of the world, that China cannot continue expanding its production to match rising world consumption of the metals.  The recognition among the rare-earth consuming companies and countries is that there is currently a real shortage of rare earths outside China and that shortage will be exacerbated as China continues to restrict its exports of the raw materials. Reports out of China since the winter of 2008-09 have been hinting that a decreasing supply of the metals will be coming from the country. A Chinese announcement in July 2010 of a drastic reduction of rare-earth exports (70% reduction in the second half of 2010) kicked off the current frenzy.  Rare-earth prices have been rising steadily ever since then.

Do you believe the price levels for rare earth elements are sustainable?

The answer is “yes” and “no”.

Yes for some elements that will continue to be in short supply, and no for other elements that will be in oversupply. With all fifteen elements occurring in every rare-earth deposit, mining for a few critical elements will lead to oversupply of others.  The rare-earth elements that are forecast to be in continuous shortage outside of China from now through 2020 include neodymium, europium, terbium, dysprosium, erbium, and possibly praseodymium and gadolinium.  Nd, Pr, Dy, and Tb are used in rare-earth magnets that constitute the most valuable end-market and the fastest growing market with a growth rate of 10-15% per year.  Prices of these elements are expected to remain at a high level for the foreseeable future.

On the other hand, the rare-earth elements forecast to be in oversupply beginning in about 2015 include cerium, lanthanum, samarium, yttrium, and the other four minor rare earths. Prices of these four elements are expected to begin coming down in late 2013 or 2014 when both Lynas and Molycorp are expected to be in full production.

Everyone is very swept-up in the fervor around rare earth elements but you were an early mover in the sector. Please tell us about the history of the company and some of the challenges you faced focusing on a niche sector, and also about your current plans.

Rare Element’s subsidiary acquired the Bear Lodge rare-earth property in 1999-2000 and explored it slowly with a few drill holes per year beginning in 2004. The Company was drilling step-off holes from four high-grade holes drilled previously by Hecla Mining Company in the later 1980s, before the prices collapsed due to Chinese over-production of rare earths. Raising funds to conduct these programs in the 2004 through 2008 period was a challenge because the value proposition of rare-earth exploration companies and the industry was not widely known. Every meeting with potential investors required an education in what they are, how they are used, and where they are found. By 2009, there was sufficient drill-hole data to conduct an inferred mineral resource estimate of 9.8 million tons averaging 4.07% REO, which was both much larger and higher grade than we expected. The size and quality of this resource caught the attention of the rare-earth industry and its followers at a time when awareness of the rare-earth shortage was rising. At about the same time, metallurgical testing produced a break-through in the mineral processing of the oxide resource of the deposit, which consists of roughly the upper half of the resource. Further drilling expanded the resource to 17.5 million tons in 2010, and now there is an indicated resource of 4.9 million tons @ 3.77% REO plus an inferred resource of 17.8 million tons @ 3.03% REO. The total tonnage of oxide zone mineralization amenable to open pit mining and a simple mineral processing method is now at 16.5 million tons. A Scoping Study (Preliminary Economic Assessment) was completed in late 2010 indicating robust economics with a 40% IRR based on conservative inputs and three-year historic average prices, before the prices soared. The current prices are nearly 700% higher than the prices used in the Scoping Study. More drilling with a goal to double the resources, planning for pilot plant testing, and conducting a preliminary feasibility study are all in progress.

On May 27th, 2011 seventeen U.S. Senators introduced the Critical Minerals Policy Act, which seeks to “revitalize the United States critical minerals supply chain and reduce the nation’s growing dependence on foreign suppliers.” What are the implications of this Act on Rare Element Resources?

The Critical Minerals Policy Act and other similar bills could be very positive for the Bear Lodge project and Rare Element Resources. We have briefed many members of Congress and administration officials that the Company has a substantial deposit of rare-earth resources located in Wyoming.  Recent communications from them demonstrate their high interest in having the next rare earths mine in the western hemisphere coming from the Bear Lodge Mountains.  The Company does not need financial help or guarantees, but we believe the environmental permitting for rare-earth mine development needs to be streamlined without shortcutting any environmental analysis to ensure that the critical need for rare earths can be alleviated from domestic sources soon. If that provision of the law is passed and implemented, then a Bear Lodge Mine should begin producing in a few years.

What other strategic or macroeconomic focuses are on the horizon that might shape your industry?

With the current emphasis on green energy technologies, rare-earth consumption could grow much more rapidly than it has in the past. Over the past five decades, rare-earth consumption has approximately doubled every ten years. There is a possibility that this could accelerate with the widespread adoption of hybrid cars, electric cars, advanced wind turbines, and other rare-earth consuming applications. Rare earths are used in nearly all high technology applications and are essential for the proper functioning of most. At this time there are few or no substitutes for the rare earths in many applications.  Further, expansion of research in many fields is producing an accelerating number of uses for products containing rare earths. In addition, there are reports that China may become a rare-earth importer by 2015 or 2016.

Rare earth elements are a broad category – can you talk about your deposits and highlight the key value propositions for our readers?

Not only do we have one of the largest deposits within our peer group but Rare Element Resources has the second highest grade rare-earth deposit in North America, and, one of the highest value-per-ton deposits in the world. The Company uses four parameters to evaluate rare-earth deposits: grade of ore, distribution of rare-earth elements, complexity of metallurgy, and status of infrastructure. The Bear Lodge project ranks very high with every parameter. Bear Lodge ranks second in North America in the grades of Ce, La, Nd, and Pr, and first in Sm, Eu, and Gd. And it has very competitive grades of Dy, Tb and Er. These eleven rare-earth elements are the most widely used. The mineral characteristics of the resource allow a very simple, low-cost metallurgical processing method to create a rare-earth carbonate concentrate that would be the first saleable product. By producing a concentrate for sale, Rare Element will be able to limit its initial capital costs, estimated at approximately $100 million (which is much less than other competitors), begin construction more quickly, and reduce the potential financial risk of the project. Approximately 26,000 tons of concentrate containing 11,400 tons of rare-earth oxides would be produced each year during the life of the mine. This would represent approximately 5% of the world rare-earths supply.

Infrastructure in northeastern Wyoming is outstanding with excellent project access roads, an Interstate highway 12 miles away, a railroad, an industrial park and towns nearby, inexpensive power (~3 cents per kwh), and a trained labor force in the region.

A few years after production begins and capital costs are paid back, plans are in place to construct a refinery for the extraction and separation of individual rare-earth oxides, which are value-added products. Processing of rare earths is often accomplished in a region where there is low-cost power and a source of reagents for processing the ores; both are readily available in Wyoming.

Off-take agreements and partnerships are typical in the resource business for junior companies focusing on niche markets. Is the company focused on developing these types of relationships in the near term?

Rare Element has been approached by a number of major companies and is considering a variety of strategic alliances and off-take agreements. More active negotiations this coming fall will be conducted upon completion of a pilot plant test that will produce samples of the first commercial product being contemplated (rare-earth carbonate concentrate).

This interview appeared in 5 Most Interesting Rare Earth Stocks – Part 2 – CLICK HERE for the article.

Neumeyer: "We were lucky enough to have secured our assets back when silver prices were much lower than what we see today."

Mexico is a country rich in history and in silver. During the European conquest of the Americas, silver was discovered in Mexico in 1546 in what is now the state of Zacatecas. Vast amounts of the shiny white metal were brought into the possession of the crowns of Europe from the area. The Fresnillo mine in Zacatecas, owned by the Mexican silver producer that bares its name, is considered to be one of the world’s largest primary silver mines and it has been in near continuous operation since 1550. And today, Mexico is the world’s #1 producer of silver.

An early mover into silver-rich Mexico has proven to be a good strategy for First Majestic Silver. The company has three producing mines in three different states including Durango, Jalisco and Coahulia. First Majestic’s soon-to-be fourth producing asset, the Del Toro Silver Mine, is located in the state of Zacatecas. But the company faced some challenges along the way. In late 2008, during the height of the financial crisis, the company’s shares traded down to a low of $0.88. But since then First Majestic’s comeback has been nothing short of amazing. The company now trades on the NYSE, and its shares are being exchanged of late for $20.00. Today, the  company has a market capitalization of over $2 billion.

On May 13th, 2011 First Majestic Silver reported revenue of $55.3 million for the first quarter of 2011, an increase of 211% compared to $17.7 million in the first quarter of 2010 and an increase of 38% or $15.2 million compared to the fourth quarter of 2010. These results were spurred on by a 95% increase in the average realized price of silver, combined with a 13% increase in production. The appreciation in the price of silver went straight to the company’s bottom line. The company, which is considered to be the purist mid-tier silver producer, generated net earnings of $23.9 million for the first quarter of 2011 compared to net earnings of $0.4 million in the first quarter of 2010 and net earnings of $13.7 million in the fourth quarter of 2010. First Majestic Silver currently reports a cash balance of $97.1 million and the company doesn’t carry any long term debt.

With an income statement that might make the most conservative accountant crack a smile and a balance sheet that could even make Jim Flaherty blush we connected with the President & CEO of First Majestic Silver, Keith Neumeyer, to find out what’s on the horizon for the company. 

First Majestic is focused entirely on Mexico. What are some of the strategic benefits of doing business in Mexico and are you looking at additional opportunities within Mexico and/or elsewhere?

Mexico has a long history of being a top producing silver country due to its abundant skilled labour workforce, politically stable environment and modern communications and transportation infrastructure. After NAFTA was signed in 1993 allowing foreign investment in Mexico, there was a surge of acquisitions by Canadian companies for exploration properties. We were lucky enough to have secured our assets back when silver prices were much lower than what we see today. However, we are always looking for additional opportunities within and outside of Mexico in order to grow our business. Management is determined to expand First Majestic’s asset base and thus continues to investigate other interesting advanced stage silver projects in Mexico.

The company has 3 operating mines and 2 development projects, what is your collective NI 43-101 resource estimate?  Also, what is your exploration budget for the next 12 months and what milestones do you hope to reach during the period?

First Majestic has a total resource of 346 million ounces silver equivalent (NI 43-101 complaint) and plans to have an updated resource estimate on all five of the assets later this year. First Majestic is investing a total of $12 million dollars on exploration drilling in 2011. Our goal is to drill 36,500 meters and continue to develop ounces in the ground. Previous exploration drilling has been within only a few kilometers from each of the mill sites so there is definately serious exploration upside. A perfect example of this exploration upside can be found at the La Parrilla silver mine where the current land package stretches across 70,000 hectares (approx. 170,000 acres) and we have allocated $2 million for regional exploration drilling within this large land package for 2011.

First majestic is operating in the black, in general terms, can you tell us about the nature of your deposits and what makes them economical?

First Majestic’s strategy from the very beginning was to focus on pure, high-grade silver deposits in Mexico.  To date, 85% of the metal defined in the ground is pure silver with average grades of over 200+ grams of silver per tonne. Focusing on pure silver deposits has enabled First Majestic to be deemed the purest silver company in the world.

You are forecasting 7.5 million ounces of silver production for 2011. What are your projected costs of production and what operational percentile does this put First Majestic in relationship to other silver produces?

In 2010, our “direct” cash costs were US$5.85/oz and “total” cash costs were $7.94/oz. We like to publish both of these numbers. The direct cash cost includes all costs associated with mining and milling activities within the gates of the operation. The total cash cost will include direct cash costs plus other costs such as smelter charges, refining charges, transportation, insurance, etc.

You might notice that some US miners publish a $0/oz, and in some cases, even a negative cash cost per ounce because production includes a large percentage of base metals of which the revenues are then added back into the costs of goods sold. This number is often misleading. Since First Majestic is the purest silver producer in the world, our mining costs are less likely to be skewed due to other sources of production. In fact in 2010, 93% of our revenue came from the sale of silver. This compares to US based Hecla at approximately 45% and Coeur d’Alene Mines at 65%.

This interview appeared in 10 Most Interesting Silver Stocks – Part 1CLICK HERE – for the article.

Revett Minerals President & CEO John Shanahan: "People want responsible development and jobs, and we have proven that we can do both."

The justice system. An endless fount of interest. On March 29th, 2010, a federal judge rejected the U.S. Forest Service’s approval of a mining operation on the edge of the Cabinet Mountains Wilderness Area in Montana. That project was the Rock Creek mine owned by Revett Minerals.

The court ruled that the Forest Service violated the National Environmental Policy Act and the Forest Service Organic Act in approving the Rock Creek Mine, which would have bored under the Cabinet Mountain Wilderness Area and into the midst of popular recreational areas and key habitat for bull trout, grizzly bears and other environmentally sensitive wildlife species.

In response to the ruling, Jim Costello of the Rock Creek Alliance said, “We’ve said all along that this mine simply cannot be built without contaminating the region’s waters and pushing the Cabinet’s fragile bull trout and grizzly bear population in Rock Creek to extinction. It’s time for the government to stop this merry-go-round and start working to protect our region’s waters, trout and bears.”

The groups that challenged the U.S. Forest Service’s permit for the Rock Creek mine include: Rock Creek Alliance, Cabinet Resource Group, Clark Fork Coalition, Earthworks, Sierra Club, Trout Unlimited, Idaho Council of Trout Unlimited, Pacific Rivers Council, Alliance for the Wild Rockies, Natural Resources Defence Council, Montana Wilderness Association, and Great Old Broads for Wilderness. These groups were represented by lawyers from Earthjustice and the Western Mining Action Project. A long list and considerable opposition. But the U.S. Forest Service continues its claim that the General Mining Law of 1872 leaves them no other choice but to permit the mine.

At the time of the judicial set-back Revett’s management team defended their plans, saying mitigation measures taken by the company would actually improve trout and bear habitat. John Shanahan, Revett Minerals President & CEO reiterated his conviction that the mine could “be an environmentally responsible operation,” adding that “we don’t want to do it any other way.” connected with Mr. Shanahan for an exclusive interview to determine the status of the Rock Creek mine and to discuss the company’s operations at the company’s Troy mine which is currently in production.

John, Revett Minerals has been involved in legal proceedings concerning the proposed Rock Creek Mine. Could you please provide us with an overview of what the company has been through and where you’re at with the current proceedings?

The process has indeed been long and complicated since our Record of Decision (final permits) was granted in 2003. The groups that are opposed to the project like to make it sound as if the project has been scrapped – but I assure you it is very much alive. If they would have accepted the Federal Courts decision and not appealed to the appellant court, we would have amended the environmental impact statement with the procedural/administrative changes requested by the judge at the time and would be gearing up to start development.

For the most part, we have successfully defended the validity of the Rock Creek project through the Forest Service appeals process, through the Federal Court system, and now as a defendant in the appellant court. We expect a ruling from the 9th Circuit Court of Appeals, hopefully sometime mid next year. Given how many times we have successfully defended the project, and with the strong support of Federal agencies such as the Forest Service and Fish & Wildlife, we are definitely coming to the end of the road.

Rock Creek is a significant asset, could you tell us about the project: the resource estimate and exploration potential?

Rock Creek is one of North America’s largest undeveloped silver projects as far as we can tell. We have an inferred resource estimate of 229 million ounces of silver and just over 2 billion pounds of copper. Historic resource estimates for adjacent claims that we also control take us up to 300 million ounces of silver and 2.5 billion pounds copper.

Further exploration potential exists throughout the entire Revett Formation, but at this stage we have enough resources in front of us at the Troy mine and Rock Creek to keep us busy for some time.

Revett has been operating the Troy mine for a number of years, could you tell us a little bit about the mine, it’s life, the anticipated production this year and the strategic benefits associated with the project?

The Troy mine, which is an underground room and pillar operation, lies around 15 air miles to the northwest of Rock Creek. We employ 192 people and are looking to produce around 1.3 million ounces of silver and 11 million pounds of copper in concentrate this year. Troy has the same deposit characteristics as Rock Creek and is probably the cleanest, least environmentally impacting mines in North America. Everything we do at Troy, from production experience to an environmental baseline is transportable to Rock Creek. We currently have a 7 year mine life, but recent exploration successes could see that extend well beyond 10 – 15 years.

The Troy mine is generating nice cash flow at the moment which enables us to continue to do our permitting and exploration work in the region. We are an important tax base in the community and receive great support from the state and counties in which we operate.

In 2008 during the economic downturn you were considering closing the Troy mine. What steps did you take to ensure the mine would continue to operate and did you hedge any of your production when metal prices recovered?

2008 and early 2009 was a very tough time for us. But looking back, it was a time period that defined what this company is all about. Employees and management came together, voluntarily took pay cuts, and worked on ways to reduce costs and increase efficiencies. We emerged a stronger and more focused company, every employee is a shareholder through our employee option program and there is a great sense of community in what we do.

We have hedged approximately 25% of our 2011 silver production at $19 an ounce and around 50% of 2011 copper at $3.55 per pound. This covers around 75% of our direct operating costs. We did this in mid 2010 when the economy wasn’t looking as strong as it is today, we wanted to make sure we weren’t in for a repeat of 2008, but also, we realize that Troy is our “bridge to Rock Creek” and so being in position to weather another potential economic downturn was very important. Looking back, we are ecstatic to see metal prices where they are today and we still get to share in the majority of these strong prices.

Let’s assume a positive outcome for Rock Creek, what would be the lead up to putting the project into production and how many ounces of silver and pounds of copper might be produced annually?

Rock Creek is to be developed in two phases. Phase 1 is an evaluation audit which will take around 2.5 years and will lead to a full bankable feasibility study. Phase 2 is the construction of the mine and will take a further 2.5 to 3 years to complete. Total development costs will be around $300 million. We expect to produce around 6 million ounces of silver and 50 million pounds of copper per year over the 25 plus years of mine life. Given our experience at the Troy mine, our confidence level is very high on available resources at Rock Creek and our ability to operate efficiently.

It’s important to note the strong and unwavering support we get from the federal agencies, state and local government. They know the Troy mine and know that Rock Creek can and will be developed to the highest standards. The “doomsday” scenarios painted by groups like the Rock Creek Alliance that are in opposition to the project are, in my opinion, unwarranted. People want responsible development and jobs, and we have proven that we can do both.

This interview appeared in 10 Most Interesting Silver Stocks – Part 2 – CLICK HERE – for the article.

Greg Johnson was appointed President & CEO of South American Silver in April, 2010.

Evo Morales, of indigenous Aymara descent, was born in Isallawi village in the province of Oruro, Bolivia.  He was one of seven children born into a poor family; only Morales and two of his siblings survived past childhood. He grew up in an adobe house with a straw roof that was three by four meters.

As a child, he traveled with his father to Argentina to work in the sugar cane harvest. As a youth, he accompanied his father in herding llamas from Oruro to the province of Independencia. At the age of 46 he became the President of Bolivia in 2005 receiving 53.7% of the popular vote.

Morales is a nationalist. During his first term in office, he improved the living standards of poor Bolivians through increased state intervention of the economy by nationalizing oil, mines, gas, and communications. Welfare provisions and old-age pensions were expanded and payments were made to mothers provided their babies are taken for health checks and that their children attend school. Evo Morales is a charismatic leader and although he continues to align himself with other Latin American socialist leaders, he has gained a reputation for being responsible towards foreign business investment. Morales’ decree, “We want partners, not bosses.” And has previously stated that, “The investor has the right to recuperate their investment and to a reasonable profit.”

Earlier this month, Evo Morales overturned certain mining, banking and investment laws in another bid to increase state control over the Bolivean economy. A new mining bill, which has yet to be sent to Congress, isn’t expected to “substantially” change contract conditions for miners.

South American Silver’s flagship project is the Malku Khota silver-indium-gallium project in Bolivia, one of the world’s largest undeveloped silver, indium and gallium deposits. On May 16th, the company updated its economic assessment and resource estimate to expand Measured and Indicated resources 60% to 230 million ounces of silver with an additional Inferred resource of 140 million ounces of silver. In addition to Malku Khota, South American Silver is also developing the Escalones copper-gold project in Chile and we joined up with the company’s President & CEO Greg Johnson to learn more about their projects and the rare element indium.

South American Silver’s flagship project is the Malku Khota Silver-Indium deposit in Bolivia. Can you give our our readers an overview of the project? And, what impact do the other metals have on the economics of the project?

Malku Khota is our most advanced project. With an NI-43-101 qualified Measured and Indicated resource of 230.3 M ounces of silver, plus an additional Inferred resource of 140 M ounces, Malku Khota is already one of the largest silver resources in the world. In addition to an abundance of silver, Malku Khota also contains one of the largest known resources of indium at 1,481 tonnes Indicated and 1,001 tonnes Inferred. Only about 30% of the 50 square kilometre property at Malku Khota has been drill tested and the deposit shows excellent potential for expansion. At this point in time, we are focusing on expansion drilling to move forward into the pre-feasibility process during the remainder of 2011 and into feasibility in 2012.

Our recently filed updated Economic Assessment showed robust economics for an open-pit heap leach operation. The study predicts that Malku Khota could be one of the world’s largest primary silver producers with annual production of some 13.2 million ounces of silver, 80 tonnes of indium, and 15 tonnes of gallium for the first five years of operation’s 15 year mine life. The additional production of several million pounds of by-product lead, copper and zinc contributes to the project’s low operating costs, which are projected to be in the lower quartile of primary silver producers.

I’m sure many of our readers are not familiar with indium – what is indium used for and, once produced, what does the market look like for the product?

Indium is a rare strategic, high-technology metal with unique electrical and optical properties. Demand for indium is being driven by applications such as touch screens, solar panels, LCD displays, and LED lights. While demand for indium is rapidly increasing, primary production and recycling levels remain low. Because indium is most commonly produced as a by-product of zinc smelting, slow growth in overall zinc production limits overall growth in indium production. Demand for indium, on the other hand, has more than doubled in the past several years and has increased more than ten-fold over the past decade. Projections indicate substantial growth in overall indium consumption that will likely need to see new primary sources of indium production developed to meet increased demand levels.

Recently, Bolivia was in the news when it was reported that officials might make changes to mining legislation, particularly regarding certain previously state owned and operated mines. South American Silver reported in May that you received assurances that these changes would not impact the company. Please expand?

Recently, the media had reported that the Bolivian Government might increase state control over certain mines. This caused quite a stir in the market, as it was initially unclear whether this was a broad change in government policy for mining. We have since received clarification that the government is considering changes to legislation from 1985 that had allowed for the privatization of the operation of some specific mines owned and operated by the Bolivian State Mining Corporation, or COMIBOL. Bolivian government officials have confirmed that these changes will only be focused on 4 specific COMIBOL-owned mines and that private investments in mining will continue to be respected.

As South American Silver’s Malku Khota project does not have government involvement and has always been a privately owned project, we have been assured that our project will not be impacted by the proposed changes for government-owned mines. In addition, government officials have made statements of support specifically on the Malku Khota project. The government has also clearly stated that it wishes to attract foreign investment in mining. Mining is a key area for economic development in Bolivia, currently representing over 40% of the country’s GDP.

What is it like working in a developing country like Bolivia?

Working in emerging countries like Bolivia has both its challenges and opportunities. The South American Silver management team has over 16 years of experience working in Bolivia and other parts of Latin America, with significant combined experience in the global mining industry.

Bolivia offers significant opportunity for resource development because of its rich endowment in silver and other metals. In fact, it is one of the largest historic producing regions for silver. We have been able to identify exceptional mineral opportunities that have the scale potential to become world-class mines, and our team has the experience and expertise in the exploration and development process to advance our projects toward feasibility and production. In addition, the management team looks for ways to further mitigate development risks. In particular, we are working closely with local communities and indigenous people to develop respectful, mutually beneficial relationships that we believe can greatly facilitate the development of our projects.

Under the Morales administration, Bolivia has experienced much positive growth. A key area of reform has also been a focus on bringing benefits from resource development to local indigenous and rural communities. As we advance the Malku Khota project through to production, we will continue to look for infrastructure development and job creation opportunities to further stimulate the local economy.

You also have a development project in Chile, what about the project captured your interest and what’s been happening there recently?

The Escalones copper-silver-gold project located in Chile shows excellent potential to become a large-scale asset. Our exploration has revealed grades and widths of mineralization that indicate the presence of a strong mineralizing copper-silver-gold porphyry system. We have completed initial geological modelling and target definition and are developing an exploration plan to include additional surface sampling, mapping, deep sensing geophysics, and diamond drilling to test the strength and scale of the mineralized system. With the exploration program underway, we are aiming for an initial copper-silver-gold NI-43-101-qualified resource estimate to be completed later this year.

You completed a $32 million financing at the end of 2010, where do you plan on spending the money?

The $32 million financing put us in a very strong financial and operational position to move forward with the rapid development of our Malku Khota silver-indium project to feasibility and to advance our Escalones copper-silver-gold project to the resource definition stage. With our current plans and budgets we have working capital for the next 18-24 months. As the company advances each of our projects through the various stages of development, we will also look to continue to build on our skilled and experienced management team and our work with our local communities to support the company’s rapid growth.

This interview appeared in 10 Most Interesting Silver Stocks – Part 3 – CLICK HERE – for the article.

President & CEO Bradford Cooke inside Endeavour's Guanajuato mine with silver ore in hand.

Mexico has enjoyed an extended period of relative political stability with the exception of a few hotly contested elections. Most recently in 2006 involving Felipe Calderón, Mexico’s current President. Calderón’s narrow victory in the July 2006 election and his ascendancy to the presidency was fraught with strife and controversy. The results were contested by his closest opponent, López Obrador, who started what he called a “pacific civil resistance” and held numerous protests. Calderon’s victory was ultimately confirmed months later on September 5, 2006 by the Federal Electoral Tribunal.

With political stability, Mexico has emerged as a power-house in the world of exploration, development and production of silver. And, Canadian mining companies have migrated like geese in search of the shiny white metal. In a political address, the former Canadian Ambassador to Mexico, Gaetan Lavertu, noted, “Well over half of the foreign mining concessions issued in Mexico are registered to Canadian companies. The bulk of these investments are from British Columbia”.

One company that has done well in Mexico is Endeavour Silver, a junior miner based in Vancouver, Canada. Endeavour has, some would say diligently, focused on the growth of its resource expansion and silver production in Mexico. Since the company’s start-up in 2004, Endeavour has methodically expanded its asset base and stable of properties. The company is now reaping the benefits from years of hard work, Endeavour reported first quarter results on April 11th; revenue was up considerable to $35.4 million, compared with $18.2 million last year as production rose 17% and silver prices increased sharply. Earnings were $14.5-million, or 18 cents per share.

The company has two operating silver mines and four development projects in Mexico. recently discussed the price of silver and Endeavour Silver’s prospects with President & CEO Bradford Cooke.

There is a “silver rush” in Mexico these days but Endeavour Silver has been operating there for some time. Please tell us about the history of the company in Mexico?

By 2002, the price of gold had clearly entered into a new secular bull market but the silver price was still flat on its back.  Given that historically, where gold goes, silver follows, I thought it might be a good time to get into the silver business so I founded Endeavour.  We started off by looking at numerous, high grade, narrow vein prospects marked by small historic Spanish diggings up in the heart of the Sierra Madre mountains.  However, we just were not seeing properties that had company-building potential so in late 2003, we changed course and started looking at operating silver mines in established mining districts with process plants that were fully built and permitted but were up for sale and about to close for lack of ore.  That led us to our first major acquisition in early 2004, the Santa Cruz mine and Guanacevi process plant located in Guanacevi, Durango, the fifth largest historic silver district in Mexico.  In 2007, we made our second major acquisition, the Guanajuato mine and Bolanitos process plant located in Guanajuato, Guanajuato, the second largest historic silver district in Mexico.  Thanks to these two key acquisitions and our successful organic expansion programs, Endeavour has grown its silver resources, production and cash-flow every year.

What differentiates Endeavour Silver from other operators in Mexico?

I think our track record for doing what we say we will do and delivering growth every year is what sets us apart from the rest of the pack of junior silver producers in Mexico.  We also offer investors some of the best leverage to silver and to growth because we timed our financings so that they were accretive rather than dilutive to shareholders.  For that reason, we have only 83 million shares issued, amongst the lowest in the silver sector.

You’ve been a “silver bug” for many years. What is your take on the recent spike in the price of silver and what is your outlook?

The recent run-up in silver since August 2010 is just a taste of what lies in the future for silver bugs.  Clearly the explosive growth of demand for silver as an investment helped fuel the latest rise.  When you look at the ugly financial condition of western economies such as the US or Europe, one has to conclude that we are nowhere close to bottom in terms of the falling value of western currencies.  Therefore, we are nowhere close to the top in terms of the rising $US price for silver.  However, nothing goes straight up forever and when silver went ballistic in March-April, it was obvious that a correction was likely.  We are now in that correction but do not be surprised if silver moves up to new highs before year-end.

Would you ever consider hedging any of your production?

The short answer is no, not in a bull market.  The purpose of a hedge is an “insurance policy” to protect your self from falling prices.  Therefore a hedge may be useful in a bear market but it can be very damaging in a bull market, as Barrick found out the hard way.

You have two mines in production right now and four exploration/development projects. Which of your projects is the most advanced and which has the best exploration potential?

Our Parral project is the most advanced, thanks to our recent drilling programs.  Endeavour almost doubled the resource at Parral last year to about three million tonnes of polymetallic mineralization grading 50 to 60 grams per tonne silver, 0.7 to 0.9 grams per tonne gold and 5 to 6% combined lead-zinc. We estimate the Parral resources have a net smelter return of about $140 USD per tonne at current metal prices, very positive for the economic development of the Parral project.  A preliminary economic assessment is now underway to advance the Parral project to a development decision.  Another exploration project we are very excited about is the San Sebastian Project in Jalisco State.  We acquired it one year ago and recently commenced drilling on the property. San Sebastian is an historic silver-mining district which stopped production during the Mexican revolution in 1910.  Virtually nothing has happened on the property since that time. We love the district, because it has all these veins where you can sample high grades on surface. And I mean a dozen veins on the San Sebastian property. It has the potential to be our next Guanacevi or Guanajuato.  Our exploration team hopes to define an initial resource by year-end.

This interview appeared in 10 Most Interesting Silver Stocks – Part 4 – CLICK HERE – for the article.

Copper Fox President & CEO Elmer Stewart believes the Northwest Power Line is a key component of the company's feasibility study.

You’ve probably heard or peak oil but have you heard of peak copper? The difference between peak oil and peak copper is that copper is recycled and reused. It has been estimated that at least 80% of all copper ever mined is still available above ground. Peak copper, in theory, is the point in time when the maximum global copper production rate is reached. Since copper is a finite resource, at some point in the future new production from the earth will diminish. When this will occur is very much a matter under dispute but, lately, the debate over peak copper has been adding fuel to the copper frenzy.  One Canadian listed company that plans on adding to the global supply of copper is Copper Fox Metals.

Copper Fox listed on the TSX Venture Exchange in June 2004 to explore the potential of the Schaft Creek deposit in Northern British Columbia, Canada. Schaft Creek deposit is an undeveloped copper-gold-molybdenum-silver that was owned by Teck-Cominico (now Teck Resources) that was optioned by Guillermo Salazar, the company’s founding president and CEO, in 2002. Pursuant to the option agreement, Copper Fox can earn a 78% interest (23.4 % of the deposit) in Liard Copper Mines Limited by completing a “positive” feasibility study. Teck maintains certain earn-back rights on receipt of a “positive” bankable feasibility study.

The recent approval of the Northwest Power Line by B.C.’s Provincial government was always considered a key component of the projects viability. BC Hydro performed technical studies on the project for years and advocated the new line would provide a reliable supply of clean power to potential industrial developments in the area. But, as is often the case with such mega-projects, environmental opponents were vocal.

Finally, on February 23rd, 2011 the BC Environmental Assessment Office announced that the Northwest Transmission Line was finally granted an Environmental Assessment Certificate. Copper Fox put out a press release applauding the decision and the company’s shares made a dramatic move from $.96 cents on February 11th to $2.70 a few months later. Shares of Copper Fox have subsequently pulled back from their April highs to the $2.00 range. connected with Copper Fox boss Elmer Stewart recently to discuss the significance of the Northwest Power Line and the company’s future.

You joined Copper Fox as Chief Executive in 2009, when you were doing your own due dilligence what was it about the Schaft Creek project that caught your attention?

I joined Copper Fox as President and CEO in July 2009.  Prior to that I was a director of the Company and non-executive Chairman of the Board.  I have always been excited about the size of the resource, its polymetallic nature, metallurgical recoveries and the general setting of the deposit.  The reported low grade nature of the Schaft Creek deposit was clearly a function of the low cut-off used to report the resource which I saw as a positive.  Using a higher cut-off grade clearly reduced the resource, but provides higher average metal grades.  The ability to balance average grades and resources is fundamental in mine development.  Another aspect was that developing mines and specifically open pit mines in mountainous terrain depends on the ability to have space for the infrastructure and waste piles associated with mine development. Schaft Creek possessed all these features.

In February the British Columbia government approved the “Northwest Transmission Line” which, when completed, will provide you with the power reguired for the project – tell us a bit about what this means to Copper Fox?

The NTL is fundamental to the development of the large copper deposits located in northern British Columbia including Schaft Creek.  Without this supply of electricity, the capital and operating costs would increase which directly impacts the economics of these deposits.  The NTL is also good for the residents of northern British Columbia in that it brings environmentally friendly energy to the region and opens the area up to development for other business enterprises as well.

The company has a relationship with Teck, Canada’s largest diversified mining company, can you explain the significance of this relationship to our readers?

Teck has an earn-back right pursuant to the Option agreement entered into in 2002.  We have been working with the senior technical people from Teck since early 2010 when we announced that we were proceeding to complete a feasibility study on Schaft Creek.  The purpose of engaging Teck early on in the process of completing the feasibility study was to have their input into the feasibility study that is required to allow Teck to make their decision as to their participation in the Schaft Creek project.  Teck’s experience in operating open pit mines of the size of that contemplated at Schaft Creek is valuable information that helps makes the feasibility study a realistic and practical study in the contexts of developing the deposit.

In terms of comparables, are there other projects in Canada that compare to the Schaft Creek project in terms of size, grade and composition?

Schaft Creek is a very large project and possibly the largest one in Canada that is undergoing a feasibility study.  The work completed in 2010 suggests that a substantial portion of the Schaft Creek deposit has not been tested by drilling.  In addition the nature of porphyry deposits suggests that there should be other similar deposits within the same general area. The two large zones of copper mineralization exposed on surface and the large untested chargeability anomaly may represent one or more deposits.  Of course exploration will need to be completed to confirm this interpretation.  At this time, we do not know what the ultimate resource could be at the Schaft Creek property so it is difficult to make a comparisson with other deposits. But given the geophysical and geological information, I suspect that Schaft Creek may be much larger than the our resource estimation completed in late 2006 suggests.

With a deposit containing copper, gold, molybdenum and silver, please comment of the econimic associated with the project?

The preliminary feasibility study completed in September 2008 showed a -$0.32 to produce a pound of copper net of the sale of the gold-molybdenum-silver credits. This was based on metal prices of $3.12/pound copper, $692/oz gold, $33.00/pound molybdenum and $13.09/ozs silver.   The current metal prices for three of the four metals are substantially higher than those used in the 2008 calculations and this increase/decrease will be included in the feasibility study currently underway.  The sale of four metals from each tonne of rock processed show the economic impact on the cost to produce a pound of copper which substantially impacts the overall economic performance of Schaft Creek.

What major milestones is Copper Fox working towards completing in 2011?

Our near term major milestones are; to complete the updated resource estimation which is expected to be completed shortly, commence the 2011 program at Schaft Creek before the end of May and complete the balance of the work required to complete the feasibility study as soon as possible.  A substantial amount of work has already been completed on the feasibility study to date.  Due to the large amount of technical data and studies that need to be performed it’s not easy for the independent contractors working on the feasibility study to give Copper Fox a specific date on which the study would be completed.  One of our main objectives at Schaft Creek in 2011 is to test the three targets identified above – any one of which we believe could be another previously undiscovered deposit.

This interview appeared in 10 Base Metal Stocks to Watch – Part 4CLICK HERE – for the article.

Copper Mountain Mining is literally about to move a mountain.

What does an experimental electronic music band from the UK called The Shamen have to do with Copper Mountain? Admittedly, that is a very difficult question. The Shamen’s first (and only) top 40 hit in the U.S. was released during the summer of 1991 and could very well be the perfect theme song for Copper Mountain. That song was “Move Any Mountain” and that’s what Copper Mountain is about to do – all the way to Japan.

The company owns 75% of the Copper Mountain mine, and their Japanese partner, Mitsubishi Materials Corporation, owns the other 25%. The 18,000 acre mine site is located 20 km south of the town of Princeton in southern British Columbia. The mine has a resource of approximately 5 billion pounds of copper and the project is fully financed and nearing completion. Pre production mining activities are underway and the mine is set to enter production next month to produce approximately 100 million pounds of copper each year. Shares of Copper Mountain have performed well over the past 12 months moving from $2.70 last May to $6.78 per share today.

The mine will utilize conventional crushing, grinding and flotation processes and equipment. Once the copper concentrate is produced, it will be shipped to one of Mitsubishi Materials’ existing copper smelters in Japan: first, by rail to the port of Vancouver, and then by ship across the Pacific Ocean. B.C. Minister of Transportation and infrastructure Shirley Bond recently stated, “This really shows how the Pacific Gateway is the best transportation route for Asian businesses.” And, “Mitsubishi Materials Corporation invests in the B.C. Copper Mountain Mine to get the copper concentrate they need, knowing that the best way to ship it is through the Port of Vancouver.” connected with Jim O’Rourke, Copper Mountain’s President & CEO and 2005 recipient of the Edgar A. Scholz Medal for Excellence In Mine Development in British Columbia and the Yukon to find out more about the company as it nears production.

After years of development you are quickly approaching your June target to have the mine in production. What does the production schedule look like?

The commissioning of processing equipment is progressing well. The primary crusher and conveyor system to the coarse ore stock pile has been tested and is also operating well. The commissioning team is currently active in the concentrator building and the start up is on schedule for production in June.

Preproduction mining is advancing well with major equipment fully operational and stock piling ore for the concentrator start up in May. We are currently mining at a rate of 100,000 tonnes per day with the planned mining rate to increase to 160,000 tonnes per day.

Once the copper concentrate is produced you plan on shipping it to your partner Mitsubishi’s smelting operations in Japan – how does one go about shipping 100s of millions of tonnes of ore half way around the world?

Copper and precious metals are contained in a concentrate which are produced at the mine for shipping to Mitsubishi. The 185,000 (annual) tonnes of concentrate is trucked to the port of Vancouver at a rate of approximately 500 tonnes per day. The concentrate is then stored at the Vancouver Port and shipped in approximately 12,000 tonne lots to the smelters in Japan.

Have you determined the costs per pound of copper associated with shipping the concentrate?

Total offside cost for moving concentrate to the smelters in Japan is approx. $110 per 1 metric tonne of concentrate which equates to about $0.18 per pound of Copper.

What are your overall costs factoring in the silver and gold net precious metal credits?

Our published cost is estimated at $1.30 per pound of copper, net of precious metal credits which vary depending on metal prices and foreign exchange rates.

In what month will Copper Mountain see cash flow from operations?

Because of our favourable agreement with Mitsubishi Materials Corporation, we expect to have a shipment in late June or early July and receive a provisional payment for 90% of the concentrate shipped.

After you put your first and only project into production, what’s next on the horizon for Copper Mountain?

We continuously take an entrepreneurial approach to evaluate other potential projects, companies, and mergers and acquisitions that may add shareholder value.

This interview appeared in 10 Base Metal Stocks to Watch- Part 3 – CLICK HERE – for the article.

Zinc, the fourth most used metal on the planet trailing only iron, aluminum and copper, has a worldwide annual production of roughly ten million tonnes. Zinc’s primary use is in the galvanizing process of steel and in making alloys including brass and bronze. Although zinc doesn’t get anywhere near the same amount of attention as its sexier cousin copper, that may begin to change. China’s refined copper imports fell 43 percent in March year over year due to high stock piles and strong international prices while their Zinc imports surged 108 percent over last year.

In November 2006, Zinc prices hit a record high of US$4,580 tonne. At the time, analysts cited that the growing demand for zinc in China could increase by 56% by 2010 which certainly helped fuel the fire. China became a net importer of zinc in 2004. With the onset of the “Great Recession” in 2008 the price of zinc declined dramatically to just above $1,000 per tonne, far below the bullish projections a few years earlier. But in the first quarter of 2009, as marginal zinc mines were being shut down all over the world, zinc began a swift and steady recovery, reaching US$2,560 per tonne by the end of the same year, just slightly higher than where it trades today.

Peeyush Varshney, President & CEO of Canada Zinc Metals.

Today, China produces about a quarter of the world’s zinc and consumes a third of it. And overall, Zinc consumption in China has tripled since 2000 – China consumes more zinc than USA, Japan, India, Germany, Italy and Belgium combined. Some analysts, however, believe this time China’s demand for zinc will continue unabated. This, coupled with demand from other emerging nations around the world is expected to push consumption to 15.5 million tonnes per year by 2020.

Peeyush Varshney, President and CEO of TSX-V listed Canada Zinc Metals is solidly in this camp. In August, 2005 Canada Zinc Metals entered an earn-in option agreement for 65% of its Akie property. A few years later, in 2007, the company acquired 100% of the Akie property and their entire claim package pursuant to a takeover. The next year the company completed its first NI 43-101 report on the Akie property. Soon after, China came calling in the form of Tongling Nonferrous Metals Group which subsequently made a substantial investment in Canada Zinc Metals. sat down with Peeyush Varshney, President & CEO of Canada Zinc Metals to find out more about the company’s Chinese shareholder and what else is in store for 2011.

Your main project is the Akie zinc-lead-silver deposit in B.C., Canada. Could you give us an overview on the region?

The Akie deposit, and in fact all of our property holdings, are located in the highly prospective Kechika Trough which is the southern-most portion of the Selwyn Basin.  This basin is host to several of the world’s largest zinc-lead deposits and is one of the most prolific zinc-lead districts on the planet.

What is the existing infrastructure in the region and how might this benefit the company down the road?

The infrastructure around our Akie deposit is relatively advanced.  Akie is situated just above B.C.’s largest lake, Williston Lake, home to the largest hydro-power plant in the province. In 2008, we completed the construction of a road to the deposit. The roads connect to the town of Mackenzie (260 km to the south) where there is an existing rail line which could be utilized to haul concentrate. From Mackenzie we could transport the concentrate to Trail, British Columbia, where Teck Resources has a zinc smelter; or, transport the concentrate to the deep sea port of Prince Rupert on the west coast of B.C.  From there, the concentrate could be loaded on to ships and transported to smelters in Asia.

You finished your NI 43-101 resource estimate in 2008, what is the resource estimate on the project and do you see further exploration upside?

Using a conservative 5% zinc cut-off grade, the deposit has an inferred resource of 23.6 million tonnes of 9.1 % combined zinc + lead  (7.6% zinc, 1.5% lead)  and 13 grams per tonne silver, this equates to 3.95 billion pounds of zinc, 780 million pounds of lead and 8.95 million ounces of silver. The resource calculation from 2008 only includes the drilling we did until the end of 2007. It does not include the drilling done in 2008 or 2010. The Akie deposit remains open in all directions so the resource could certainly be much larger than our current 43-101 calculation.

You have some notable shareholders in the company, could you tell us about them and what it means to the company?

Tongling Nonferrous Metals Group currently owns approximately 35% of the Company.  Based in Tongling, Anhui Province, Tongling is a state-owned company and one of China’s largest copper smelting companies. Tongling is involved in exploration, mining, ore processing, smelting and refining; and, processing of copper, lead, zinc, gold, silver and other non-ferrous and rare metals. We were contacted by Tongling in the summer of 2008, they visited the Akie deposit and made an investment in the Company.

Lundin Mining is also a strategic shareholder of the Company – they have participated in several of our private placements and hold approximately a 5% equity interest.

Along with the Akie deposit, our significant prospective land package in the Kechika Trough represents a potential long-term development opportunity for both Canada Zinc Metals and major mining companies. Our properties could potentially provide zinc-lead concentrate for several decades to come.

What are your plans for the remainder of 2011?

Our primary objective this year is to continue doing the work required to advance the project to the completion of a preliminary economic assessment and pre-feasibility study. Currently, a geotechnical drilling program is taking place on the Akie property. From this information, we will submit an application to the government to allow us to proceed with an underground exploration program. We also anticipate a new surface drill program to test some very high priority targets elsewhere on the Akie property.

On a corporate level, we are continuing discussions with several large base metal mining companies that have shown interest in our Company and our extensive property holdings.

This interview was featured in 10 Base Metal Stocks to Watch – Part 1 – CLICK HERE for the article.

Disclosure: at publication Canada Zinc Metals is a client of

Are we on the cusp of a zinc shortage? Around the world, almost 2.4 million tonnes per year of zinc mine production will close between 2011 and 2016. The Skorpion mine in Namibia, the Tara and Lisheen mines in Ireland, the Perseverance and Brunswick mines in Canada and the Cerro Lindo operation in Peru, and several others, are soon to be exhausted and closed. With increasing demand projected by many industry experts, some think the zinc market profile may become very tight, particularly from 2012-2016.

Hunter Dickinson (HDI), the largest private mining group in Canada, shares that opinion. HDI, based in Vancouver, is a diverse operation with experience around the world. Over its quarter-century of existence the group has explored for mines, developed them, and has gained expertise in project engineering, project financing and partnering.

In 2007 HDI subtly shifted its corporate development strategy. The new strategy focused on building and maintaining a value-added interest in a portfolio of mineral companies. After the briefest of pauses during the economic downturn, the strategy was fully implemented last year. From the top down, Hunter Dickinson is bullish on base metals. HDI President & CEO Ronald Thiessen recently noted, “While many continue to temper optimistic views on the global economy with a sense of caution, it is hard to argue that copper and other base metal commodity prices are strengthening at a surprisingly fast rate – exceeding predictions of pundits and investors alike.”

Rathdowney President & CEO John Barry (left) on site in Ireland.

HDI now has five companies under management, including a 30% interest in Heatherdale Resources (TSXV: HTR); a 23% interest in Curis Resources (TSXV: CUV); a 41% interest in Northcliff Resources (private); a 41% interest in Constantia Resources (private); and, an 11% interest in Rathdowney Resources. In 2007 Hunter Dickinson invested $7 million privately in Rathdowney which, at the time, had secured a large prospective lead-zinc land package in Ireland.

When the economic crisis hit in 2008, Rathdowney’s management team realized that a pure exploration play would likely not attract much attention from the investment community. Instead, the company set out to secure a more senior project. Already established in Europe, Rathdowney turned its attention to Poland, and its well know Upper Silesian lead-zinc bearing zone. The company was able to secure in mid-2010, after considerable effort over a two year period, the concessions for an advanced stage project with substantial historical resources of lead and zinc from the Polish government.

On March 17, 2011 Rathdowney completed its reverse takeover of Coreland Capital, a shell company (CPC) listed on the TSX Venture Exchange. Concurrent with the takeover and in association with HDI, Rathdowney raised just over $34 million privately at $1.00 per share to develop their projects. The company has drill targets ready in Ireland and a work program established in Poland to maximize conversion of historical resources into NI 43-101 compliance. connected with Rathdowney President & CEO John Barry from his office in Ireland to find out more about their projects.

When you started Rathdowney, could you tell us why did you target zinc? And why did you focus on Europe, particularly Ireland and Poland?

It was early 2007 and the price of zinc was soaring.  Some major zinc mines were slated to close in the medium term and the Chinese appetite for zinc was becoming ravenous.  This year China will consume 44 per cent of world zinc mine supply.  In the past China was a “swing” player in supply demand for the metal, quickly switching from net importer to net exporter depending on price.  As the emerging economies grow and become richer and more sophisticated the raw need for copper and iron for infrastructure shift to second-cycle metals such as zinc as the middle-class expands and its main use for galvanising steel in construction increases with growing demand for cars and white goods (appliances).  In Ireland, Rathdowney staked a large land position second only to Boliden and Teck.  The best place to find a new mine is near an old mine and Ireland has world-class zinc mines such as Navan (5th largest in the world) and Lisheen (10th largest).

Hunter Dickinson (HDI) in Vancouver welcomed the idea of gaining a foothold in the exploration and development of base metals in Europe and became an early investor. Then in September 2008 Lehman Brothers collapsed and triggered the greatest global economic convulsion in living memory and the appetite for exploration risk almost completely evaporated.  We had assembled a crack team which was amply funded and we had the support of HDI so we had to react quickly and find more advanced projects which had much less exploration risk. It so happened that our Chief Geologist Mike Mlynarczyk was Polish and Duncan Large our technical adviser based in Germany could provide insights into the advantages and opportunities for a first-mover into the Upper Silesian zinc-lead district of Poland.

Your project in Poland is clearly your lead horse, can you talk about the history behind the project and what the non-compliant 43-101 resources estimate looks like?

Zinc has been mined in Upper Silesia in southern Poland since the 12th century.  The USGS estimates that it is the largest carbonate-hosted zinc district in the world in terms of total zinc metal endowment which is a measure of the total amount of metal ever mined and still in the ground.  Since World War II and particularly during the 1970’s and 1980’s Polish geological surveys delineated zinc-lead deposits, with resources under a Soviet-era classification system some of which would be considered historic estimates under Canadian standards, northwest of the historic city of Krakow in Upper Silesia.  State mining companies exploited some of these resources moving northwards in a serial or piecemeal fashion.  Resources supported long-life mines and a customised zinc smelter was built. You have to understand the command-economy mind-set.  Why would you need to explore and develop new mines when your existing mine could supply your smelter for forty years or more? Also, Poland has a quite bureaucratic permitting process based on Polish administrative law and acquiring exploration ground particularly containing major resources which have been officially gazetted is not a trivial process.  Rathdowney staked exploration ground over the footprints of substantial deposits to the north of the Pomorzany Mine and nearby concentrator-smelter complex at Boleslaw.  It took about 15 months to permit the first exploration concession.  Poland is not a place where you can fly in and acquire quality exploration assets.  A sustained presence and patience is required and Rathdowney committed to this process early on by assigning Mike Mlynarczyk to a full-time posting in Krakow.  It was worth it because Rathdowney investors have 100 per cent exposure to exploration success with no equity held by any third-party vendor.  Some 180 kilometres of diamond drilling had been completed but evidence is only in the State archives. The replacement value of the historical drilling is probably close to C$40 million.  Rathdowney has electronically captured this vast amount of historical drilling in a project database and having raised C$34 million – on St. Patrick’s Day it so happened – the team is soon to embark on an aggressive resource verification drilling program on the Olza Project with an exploration target of 20 million tonnes to 120 million tonnes at around 6% Zinc equivalent.  The State-owned Pomorzany mine will be exhausted in the next few years and is scheduled for closure in 2016.  The sustainability of this historic mining district now depends on Rathdowney’s aggressive resource delineation program and there is no time to lose.

What type of infrastructure is available in the area (Poland)?

It could not be better.  The best remaining historical resources are now within Rathdowney’s concessions and are located only 30 kilometres from the State-owned concentrator and zinc smelter.  The concentrator can process 2.5 million tonnes of ore and the smelter can refine 100,000 tonnes of refined zinc metal.  Also there is a rail spur from the main Warsaw-Katowice rail line which runs through the concession area right to the Boleslaw concentrator-smelter.

Your Irish concessions are spread throughout Ireland, and I noticed, strategically located either adjacent to existing mines or development projects. What is happening in the region and who else is operating there?

New Boliden operates the Navan Mine about 45 kilometres northwest of Dublin produces about 200,000 tonnes of zinc in concentrate and 40,000 tonnes of lead – there are no zinc smelters in Ireland.  In Tipperary, Vedanta now operates the Lisheen Mine where some 1.5 million tonnes of ore are mined per year at an average grade of 12 per cent zinc and nearly 2 per cent lead.  Lisheen is expected to close in 2014.

In recent years in the Pallas Green area of southern Ireland Xstrata in partnership with Junior explorer Minco has delineated an inferred resource of 24.1 million tonnes averaging 7.85% zinc and 1.35% Pb.  There are some 23 drill rigs operating on the Pallas Green project. Nearby at Stonepark Teck in partnership with Connemara Mining are very optimistic about a new zinc discovery.  Six drill rigs are churning through a 25,000 metre diamond drill program planned for this year. In County Clare, Lundin Mining in partnership with Belmore Resources is exploring the Kilbriken zinc-lead discovery where five drill-rigs are in operation.  Drilling continues to cut thick high-grade zinc-lead-silver sulphide mineralisation.  Rathdowney’s Mallow and Galway project areas are in this district straddling know mineralised structures.

It takes good people to develop good projects. Could you tell us about your team and also your relationship with Hunter Dickinson?

Yes people are as important if not more important than a particular project itself.  If you back good people they will generate quality projects and that is exactly what happened with Rathdowney. I was having a pint of Guinness with David Hall in a Dublin pub and we came to the realization that there was only a handful of junior zinc explorers but lots of companies out looking for the next big discovery in copper.  To the west and south lay the Midland Ore Field which, although small in area, is acre for acre one of the richest exploration districts in the world for zinc.  There was some quality exploration ground available but we realised we would have to focus the best minds in the business to discover the next generation of concealed carbonate-hosted zinc deposits.  I had worked on exploring the peripheral parts of the Navan resource back in 1988 and I joined the exploration team at Lisheen shortly after discovery in 1990 so I knew my way around the Irish zinc-lead district. David and I asked Dick Sillitoe one of the world’s foremost copper exploration geologists and Duncan Large an internationally respected expert on carbonate-hosted zinc-lead to help as technical advisors.  Then Ron Holman, a retired octogenarian and discoverer of the Ballinalack zinc-lead deposit near Rathdowney’s Westmeath project areas, joined the team. Bill Fisher who at one stage was Boliden’s VP for Exploration also agreed to become technical advisers to Rathdowney.  When Hunter Dickinson took an interest Mark Rebagliati was able to add his considerable experience to the mix.  So we have a highly experience international team with a track record of discovery.  This is why I like to say that with Hunter Dickinson and its pool of expertise that Rathdowney has the muscle of a major with the flexibility of a junior. The team has regular technical review sessions which support and provide guidance for our very talented team of geologists in Poland and Ireland.  We have regular brain-storming sessions and now that the drill targets have been selected we look forward to engaging and passionate discussion and of course exciting results.

This interview appeared in 10 Base Metal Stocks to Watch – Part 2 – CLICK HERE – for the article.

President & CEO William Randall, "We are developing the potash potential of our current properties".

A tale of two projects. Toronto’s Rodinia Lithium (TSXV:RM), like its peers Talison and Lithium One, is developing lithium projects in two radically diverse geographical areas; Nevada and Argentina. But unlike its counterparts, Rodinia is focused exclusively on lithium brine production. A comparison of Rodinia’s properties reminds investors that geopolitical concerns are never far from the mining world.

Earlier this month, Rodinia announced results from an independent brine resource estimate of its Diablillios Project in the province of Salta in Argentina. As conducted by AMEC Internacional Ingenieria y Construccion, the report is consistent with the standards set out in Canadian Securities Administrators’ National Instrument 43-101 but does not constitute a NI-43-101 report. Nonetheless, the report identifies 4,959,000 tonnes of lithium carbonate equivalent, 19,837,000 tonnes of potassium chloride and 6,194,000 tonnes of B203.

Talking about the results William Randall, Rodinia’s President and CEO said, “This resource represents one of the largest estimated brine resources in the world. In addition to its size, the brine geochemistry is favourable with low magnesium-to-lithium and sulphate-to-lithium ratios.”

Lithium brine refers to lithium that is not mined, but rather, produced from brine, or salt water. To recover lithium this way salt rich brines are pumped from just beneath the surface of the desert and diverted into a series of large, shallow ponds. Areas of Nevada, Chile and Argentina are particularly rich in lithium brine.

At first blush the timing of Rodinia’s resource estimate was not ideal. A few days after the report the government of neighbouring Jujuy province in Argentina announced a decree making lithium of strategic importance to their region making investors nervous that legislation around lithium in places like Argentina might become more widespread and protectionist. Then on March 11th the Japanese earthquake and subsequent tsunami hit resulting in general and widespread market instability. Shares of Rodinia feel from $0.57 to $.385 in a matter of days.

Rodinia was quick to point out that its two main projects were unaffected by the decree. President and CEO William Randall calmed fears by pointing out, “Mining legislation and government activity within the mining sector varies dramatically from province to province in Argentina, and the evolution of legislation in one province does not directly impact neighbouring provinces”.

Clearly, the position of the Jujuy province in Argentina has no bearing on the company’s Clayton Valley Project in Nevada which the company believes can offer some strategic benefits down the road. The sat down with William Randall to find out more about Rodinia Lithium, its strategic partnership with China’s Ningbo Shanshan and the company’s future plans.

Rodinia Lithium has properties in both the United States and Argentina – could you tell us about the projects and why the company is focused on two geographically diverse areas?

Rodinia has a project in Salta Province, Argentina, covering the entire Salar de Diablillos.  This property hosts a recently announce resource of almost 5 million tonnes of lithium carbonate and 20 million tonnes of potash.  Coupled with this very large resource are high grades of both lithium and potassium as well as a brine geochemistry that is amenable to low cost, conventional processing.  This project has lots of upside and is well positioned to become the newest lithium carbonate and potash producer.  Our second project is in Nevada, United States, and covers 70,000 acres of the only lithium brine producing salt flat in North  America.  The brines have been harvested since the 1960’s, so it is an asset with proven potential.  These two flagship projects have many common elements that we consider important: stable, friendly mining jurisdictions; brine-based lithium and potash source (lower cost than hard rock lithium or conventional underground potash), excellent geochemistry, and very significant land holdings that allow us to control the salt lake. Argentina gives us a significant potential producer in the heart of the South American lithium triangle.  To that, the Nevada asset provides geographical diversity and access to a very large domestic market that is supported by investments from the Obama government as well as auto and battery OEMs.

Argentina is a notable mining country but it is also notorious for its archaic bureaucracy – has Rodinia faced any of these issues in Argentina?

Argentine mining law is determined provincially.  It is therefore very important to make sure you choose projects that are in mining friendly provinces such as San Juan and Salta.  Salta, where our Diablillos asset is located, has a very long and stable mining history, evidenced by the presence of numerous international mining companies including Rio Tinto Minerals.  As such, Rodinia has not faced any issues so far and does not expect to in the future.

There has been a lot of talk lately from the Obama administration about energy independence – as supplier of lithium that is based in the U.S. is anything materializing on the front lines or should we chalk this up as more government rhetoric?

This is an avenue that the Obama administration is actively pursuing.  In fact, last year the government issued a $30M grant to expand the Silver Peak lithium carbonate production facility, located in Clayton Valley, in a push to secure a domestic supply of lithium.  I think we will find the US to be increasing its activity in the sector in a push to gain independence from the oil producing countries.

You recently closed an $11.5 million financing, where do you plan on spending that money and what major milestones are you hoping to accomplish?

We are now well financed to reach major milestones on both properties.  In Diablillos we are moving towards a feasibility study.  Our work program will incorporate further exploration drilling, an updated and upgraded resource, metallurgical report to demonstrate the brine’s amenability to conventional processing, pump tests to determine the production potential of the salar and seismic profiles.  A feasibility study will allow us to prove the excellent production potential of the deposit.  In Clayton Valley we will move towards the resource stage by completing an exploration program on the southern claims.  We hope to release a resource estimate in the second half of 2011.  This area hosts the only brine resource in North America.

I noticed on your website you have an “Other Projects” section that says “Coming Soon”. Is the company looking at other non-lithium projects or will your focus remain Lithium?

We are not looking at non-lithium projects.  We are developing the potash potential of our current properties and will devote this section of the website to this.  We have 20 million tonnes of potash contained in Diablillos brine.  As a co-product during lithium carbonate production, this could be introduced to the market at the very low end of the cost curve.  We think the potash company offers upside for the company over other lithium deposits that do not have this advantage, primarily the hard rock facilities.

Can you please discuss the significance of you recent announcement with strategic investor Shanshan?

Shanshan is the largest lithium battery components manufacturer in China.  What that means is that they produce the anode and cathode material for the Li batteries.  They are a major consumer of lithium carbonate and are trying to secure a steady supply of the stuff for future growth.  They estimate huge growth in the sector and have a very aggressive agenda to increase their market participation.  The private placement we completed with Shanshan late last year was an indication of their interest in our properties.  We are now working on developing a more involved partenership with them and the Institute of Salt Lakes (ISL) whom they sponsor.  ISL is a university with over 40 years experience in the brine processing field and will be an integral part of our project going forward.

What sets Rodinia apart from its competition?

Rodinia is well positioned to take advantage of the growth in lithium carbonate and potash demand.  With our brine assets, containing what we believe are world class resources, we can project operating costs in the lowest percentile distributed in two mining friendly jurisdictions.  We are fully funded to meet our next milestones and have the backing of China’s largest lithium carbonate consumer.  We think the company has a bright future!

This interview appeared in 5 Lithium Stocks to Watch in 2011 – Part 2 – CLICK HERE for the article.

Allana's President and CEO Farhad Abasov meets with Girma Wolde-Giorgis, the President of Ethiopia.

Potash is hot. Allana’s potash might be just a little hotter.

That’s because Toronto based Allana Potash’s (TSXV:AAA) property is located in the Danakil Depression of Ethiopia, one of the lowest places on earth not covered by water, and, with temperatures routinely soaring to over 60 Celsius, the hottest.

When Potash was discovered in this basin near the Red Sea in 1918, most wouldn’t blame anyone for simply turning their back on it. But the quality and amount of potash available here, as Allana’s short experience in the region is already proving, means the appeal is simply too lucrative, even in the excruciating heat of the Danakil Desert.

Potash production began in the Danakil in 1918 after a railway was completed from the port of Mersa Fatma in Eritrea to an area 28 km outside of Dallol. But when large-scale supplies from Germany, USA, and USSR came to market the region sat dormant for decades.

But just a few years ago, with Potash high in demand again, Etiopia and Eritrea governments granted a number of licenses. Allana’s property surrounds Sainik’s Crescent Potash Project and is adjacent to BHP Billiton’s holdings in the Depression. When Allana acquired its Ethiopian potash concessions in September, 2008 the transaction was supported by a NI-43-101 compliant technical report from ERCOSPLAN Ingenieurgesellschaft and North Rim Exploration. That report showed an inferred mineral resource of 105,200,000 tonnes of potash mineralization (Sylvite and Kainite) with a composite grade of 20.8% KCl with near surface mineralization was presented.

Since acquiring the concessions Allana has been busy developing the project, attracting a $12.3 million strategic investment from Liberty Metal and Mining; 17% ownership stake, and a two million dollar investment from China Mineral United Management. Then, On March 1st, Allana completed $38 million in financings from a syndicate of brokers and an over-allotment option from Liberty Metals.

Recently The talked to Farhad Abasov, President and CEO of Allana Potash about their experience in the Danakil and the 154,000 hectares land position the company holds in the Nequen province of Argentina.

The Danakil Depression in the Afar Region of Ethiopia is noted as the hottest place on earth and, based on the photos I’ve seen from the area, is one of the most visually stunning. Could you tell our readers a bit about the region and the people who inhabit the area.

The Danakhil Depression is truly one of the most interesting locations in Ethiopia.  The Dallol area is very hot and is approximately 125 metres below sea level.  In the centre of the Dallol area sits Dallol Mountain which contains active hot springs that spew smoke and sulphur and form terraces with unique geological features.  Surrounding the Dallol Mountain, which is really just a small hill, is a very flat white salt plain similar to other salt plains around the world.  The area is virtually uninhabited due to the hot climate where year round temperatures average 40°C and lack of rainfall.  On the flanks of the depression Afari nomads come to the area in the cooler months with their goat herds and to mine salt and export it to market in camel caravans.  Allana currently employs approximately 25 Afaris and we have found them to be reliable workers, keen to learn and very friendly.

From 1998 to 2000 Eritrea and Ethiopia were at war and in 2007 there was a hostage taking by Eritrean militia in the area along the Eritrea and Ethiopia boarder – what is the current political state concerning the disputed border region?

The border is very quiet now although Ethiopia does maintain a military presence near the small village of Hamadela.  The border is approximately 20 km from our camp but for the past three years that Allana has been working in the area there have been no incidents whatsoever.

By way of background, could you explain the genesis of Allana Potash and talk about some of the early challenges and successes your company faced?

Allana Potash grew from Allana Resources which was a company formed in Canada.  Allana entered into an agreement in 2008 to earn 100 % of the project and began field studies in 2008 and 2009 followed by camp construction and drilling in 2010.  The main early challenges faced by the company were related to the poor infrastructure in the region and the climate.  Early in the program it was recognized that a modular camp complete with air conditioning, kitchen, showers etc. would be necessary to conduct advanced exploration on the project.  While the project had been drilled in the 1950s and 1960s, additional drilling by Allana would be necessary. To facilitate our exploration efforts the government of Ethiopia rehabilitated and modified about 60 km of road to provide good access to the area and allow heavy machinery to make it to site.

The company experienced many successes in 2010 including the completion of the first drill holes in the region in almost 40 years, completion of a seismic program in the evaporite basin and expanding our land position.  To date Allana has completed 11 drill holes all of which intersected potash and some at fairly shallow depths, as shallow as 110 metres.

In March last year it was reported that that China Investment Corp and their $300 billion Sovereign Wealth Fund was looking at your Dallol potash project – where is the company at with these discussions?

Allana was actually not directly involved in these discussions. However, we have been actively discussing our project with other potential development partners.  We are looking at partners who can contribute to the development of the project either financially or technically. And in the last 6 months, Allana has succeeded in bringing two strong partners to the table to support our project.

Would you mind telling us more about your partners and their value to Allana?

In November 2010 Liberty Metals and Mines, a private equity fund that is a part of Liberty Mutual Group based in Boston, invested over $12 million in Allana and showed a strong commitment to assist Allana at the construction stage financing. And recently, on March 24, Allana announced a strategic investment of $10 million by a very strong group, IFC – part of World Bank Group. IFC is one of the largest multilateral financing organizations contributing to the development of key mining, infrastructure and industrial projects worldwide. In fiscal 2010, IFC invested $18-billion internationally and our board believes the support that IFC can provide to us in Ethiopia is significant.

This interview appeared in 5 Potash Stocks to Watch in 2011 – Part 1 – CLICK HERE for the article.

Lithium One President & CEO Patrick Highsmith with lithium carbonate from the Sal de Vida brine project in Argentina.

Other people’s money. Not only does Lithium One (TSXV:LI) have what might be one of the purest sources of lithium in the world; the company recently reported what it described as favorably low magnesium and sulphate content at their Sal de Vida brine project in Argentina, but some well timed agreements have minimized the company’s requirements for additional fund raising to capitalize on the project.

In early June of last year Lithium One entered into a joint venture earn in agreement with Korea Resources Corporation (KORES) to develop their Argentinian Project. The arrangement required KORES to fund up to US$15 million to complete a Definitive Feasibility Study and to provide a completion guarantee for Lithium One’s share of the debt portion of project development. KORES then brought more to the table when it entered into a consortium with GS Caltex and LG International, two leading battery and energy companies in Korea, to share equally in the 30% ownership stake.

With things in full swing, Lithium One, early last month, reported its first independent lithium and potassium resource statement for its flagship Argentinian project. The inferred resource estimate, prepared by E.L. Montgomery and Associates, includes 5.44 million tonnes of lithium carbonate equivalent and 21.3 million tonnes of potash equivalent. Lithium One’s property is adjacent to FMC Corp.’s lithium brine operation, the source of more than 15% of the world’s production of lithium, in the eastern part of the same Salar.

Lithium One’s second project, a spodumene hard rock project in James Bay, Quebec exhibits a spread-the-risk methodology similar to the one used on their Argentinian property. In February, the company announced a joint venture agreement with Galaxy Resources (ASX: GXY), an Australian listed mining company, whereby Galaxy can acquire up to a 70% interest in project in Quebec through earn-in conditions including $6 million in payments and the completion of a feasibility report. Galaxy owns and operates the Mount Cattlin mine in Western Australia which is currently producing spodumene concentrate. The connected with Lithium One’s President and CEO Patrick Highsmith recently to discuss the company’s future.

You have two projects, your flagship brine project in Argentina and a “hardrock” project in Canada, can you share with us some of the key points about each project and what makes them attractive from a development perspective?

Our flagship Sal de Vida brine project is located at Salar del Hombre Muerto in north-western Argentina. This area of South America produces about 60% of the world’s lithium annually, from two commercially productive lithium salars: Salar de Atacama in Chile and Salar del Hombre Muerto where our neighbour, FMC Corporation, produces about 15% of the world’s lithium.  So we are developing the eastern half of this dry lake bed, while FMC expands their producing operation the western half.

From our work to date, the Sal de Vida brine is emerging with all the positive characteristics of the world-class commercial brine deposits in the region, including a large volume of near-surface brine containing high concentrations of lithium and potassium, with low concentrations of impurities such as magnesium and sulphate.  This was quantified in our recently announced NI 43-101 compliant inferred resource estimate, totaling 5,440,000 tonnes of lithium carbonate equivalent and 21,300,000 tonnes of potash equivalent, placing the project as one of the largest and highest grade undeveloped lithium and potash projects in the world.  Furthermore, the resource covers only about two-thirds of the project area known to contain high-grade brines at surface, so we have significant expansion potential to the north and south, as well as at depth. The project is road-accessible with a gas pipeline, rail, and power line nearby.  Importantly, we also have joint venture partners who are funding up to US$15M to complete the bankable feasibility study in the next year, plus securing the project debt facility for mine construction including Lithium One’s share, and who have committed to purchasing at least 30% and up to 50% of lithium production.

Our James Bay project is a spodumene pegmatite lithium deposit in north-western Quebec.  Last fall we announced our first open pittable resource estimate including indicated resources of 11.75 million tonnes at 1.30% lithium oxide and inferred resources of 10.47 million tonnes at 1.20% lithium oxide.  While the project has significant growth potential, the indicated resource is already similar in size and grade to Galaxy Resources’ Mt. Cattlin lithium pegmatite deposit in Australia, which recently began producing lithium concentrates and selling them into the rapidly growing Chinese market.   In fact, the similarities between the deposits and the success Galaxy has had in developing Mt. Cattlin led us to form a joint venture that sees Galaxy earning a 70% interest in James Bay in exchange for both cash and funding the project through bankable feasibility within two years.  Galaxy are aggressively expanding their operations to include lithium carbonate production in China and potentially even lithium battery production, so we believe they will make for strong partners in the development of James Bay, which will allow us to focus even more attention on our Sal de Vida project.

Your Sal de Vida brine project in Argentina is adjacent to FMC Corporation’s Fenix operation – how does your project compare?

FMC’s Fenix operation is a fully permitted lithium operation. The western half of the Salar del Hombre Muerto basin has been host to the Fénix lithium brine operation for about fifteen years. Our Sal de Vida project occupies the eastern half of the salar basin, in a 100% controlled land package of about 385 square kilometers.  And while our side of the basin differs somewhat geologically from the FMC side, we are seeing the chemistry and scale of the brine emerge as very similar.  The average grade of 695 mg/l lithium reported in our recent resource estimate is very close to the average reported by FMC, and while they have estimated reserves of approximately 4 million tonnes of lithium carbonate equivalent, we currently have an inferred resource of just over 5.4 million tonnes contained lithium carbonate equivalent.  We have confidence that as we further define the key economic parameters this year they will continue to be similar to this neighboring project.

It’s obviously a little premature to try and determine the exact cost of production for each project but could you comment on the economics?

All indications to date are that the Sal de Vida Project will have very positive economics due to its favourable chemistry, large scale, and strong jurisdiction. Our plans for Sal de Vida are to recover lithium carbonate and potash from the brine using a solar evaporation circuit, which is typically the lowest cost method of commercial lithium production and allows for the recovery of by-product potash.  The adjacent Fénix operation historically recovered only lithium and therefore used an ion-exchange method; however it is now adding evaporation ponds that will allow the recovery of potash.

We recently announced the start-up of the year-long on-site evaporation testing to produce lithium carbonate at a pilot scale and validate the process as designed by our consulting engineers.  We have already recovered several batches of lithium carbonate and potash from the pilot plant. Results show that we are well on the way to matching the bench-scale tests that indicated our evaporation circuit could result in concentrations of 2% lithium and more than 4% potassium in the evaporation ponds, well beyond that necessary to recover lithium carbonate and potash from conventional commercial processing plants.  The pilot plant is also achieving good separation of the waste products, including magnesium, sending a good signal that the evaporation upgrading will exceed expectations and result in a low-cost process design.  It’s important to note that some the world’s largest lithium deposits are uneconomic mainly due to very high concentrations of magnesium relative to those of lithium, but at Sal de Vida we are fortunate to have much lower concentrations of magnesium. In fact, Salar del Hombre Muerto is known for having one of the lowest magnesium to lithium ratios of any salar in South America.  And finally, our high concentration of potassium in the brine translates to the recovery of potash (as potassium chloride) which we will look to market locally to achieve a significant by-product credit.  Given the considerable size and quality of the potash resource, we are even examining the potential economics of larger-scale potash production.

For hard rock projects like James Bay the processing, and therefore the economics, are completely different.  These deposits use fairly conventional mining and milling to produce a concentrate, which then requires several steps including roasting and leaching to produce lithium carbonate.  The results are that total costs to market as lithium carbonate can be as much as twice those from brine operations.  However, with a good combination of low-cost attributes, the right hard rock project can certainly be economic; and at James Bay we believe we have many of these attributes.  To start with, the project lies in one of the most favourable mining jurisdictions in the world.  Quebec is a world leader in incentivizing mineral exploration and development and it boasts some of the lowest cost power and best infrastructure in the mining world.  James Bay is located on a paved highway and cross-cut by a major power line.  The deposit is at surface and amenable to open-pit mining, and the large grain size of the lithium minerals and lack of penalty elements contribute to lower-cost processing.  The deposit is also higher grade than others recently going through feasibility.  In addition, our new partners, Galaxy Resources, have demonstrated that the James Bay deposit may be amenable to lower cost dense media separation instead of flotation. We have already produced battery grade lithium carbonate from James Bay samples at the lab scale, and we are taking advantage of a wide array of expertise and Galaxy’s recent lithium mine commissioning experience to aggressively focus this project on commercial success.

All the stakeholders in the project, including the First Nations communities, are taking a keen interest in nurturing us to success.  Given such broad support and favourable technical characteristics, we are confident the James Bay Project can be commercially successful.

What are the estimated capital costs associated with building a lithium brine processing facility in the area?

Well, FMC built the neighboring Fénix Project in the mid 1990’s with somewhat different technology, and with less infrastructure in the area, for approximately US $150 million. An evaporation based processing plant for recovering lithium and potash, similar to Salar de Atamaca in Chile or Silver Peak in Nevada, would function differently than FMC’s lithium-selective ion exchange process, but we believe the capital costs would be similar. We have seen capital cost estimates for other lithium and potash brine projects ranging from US $140 million to US $250 million.  We haven’t published a PEA or Scoping Study yet but we expect to issue guidance on capital cost estimates for Sal de Vida towards the middle of the year and we believe the numbers will be consistent with that range.

You have already assembled some impressive partners for the Sal de Vida project – could you talk a little bit about these relationships and what they mean to Lithium 1?

A key component of the economics of any new lithium production is securing a buyer. Lithium is not traded on an open market; like many industrial minerals it is sold by contract.   Therefore, without having customers arranged a project is unlikely to move forward.  Historically there has been a very small group of large companies controlling the production and sale of lithium products.  However, there is a forecast increase in demand for lithium in 2020 of between 2 and 5 times that of today, driven mainly by the growing lithium battery market. There appears to be a lack of confidence in the current supply chain with respect to its ability to adapt to a world with large scale lithium powered electric vehicles and still provide lithium when and how it is needed.  As a result, several major end-users of lithium sought us out to explore a relationship that could give them stability of supply while at the same time deferring risk for our shareholders.   These types of relationships open the door to this complex closed market for potential new producers by entering into off-take agreements in exchange for funding at the resource and feasibility stages.

In June we announced just that kind of strategic partnership for the Sal de Vida project with three Korean companies: LG International, Korea Resources Corporation (KORES), and GS Caltex.  Korea has committed to the aggressive development of its lithium battery industry, so we are thrilled to be partnering directly with the government and leading international battery and energy players.  LG International is the trading arm of the giant LG Group, which includes one of the largest batter makers in the world, LG Chem.  GS Caltex is a 50% Chevron owned joint venture company with the Goldstar group; they are one of Korea’s leading energy companies and have recently announced direct entry into the lithium battery sector themselves.

The earn-in agreement includes an estimated US $15 million to advance Sal de Vida to feasibility, which means we don’t have to go to the market for those dollars.  More importantly, we have structured an off-take agreement for a minimum of 30% and up to 50% of our lithium products, which as I mentioned is a key component of moving the project forward.   Furthermore, our agreement includes a provision for securing the debt financing when we get to the mine construction phase.  Being able to secure these high-caliber partners under these terms for only a 30% stake in the project, at a time when we hadn’t yet completed a resource estimate, spoke volumes about the quality of the Sal de Vida project.  With this agreement in place we are able focus on advancing the project with the confidence that given a positive feasibility study, we will be able to develop the project and market our product.

Are you standing pat in 2011 or are you looking at any additional partnerships in 2011 for either of your projects?

We aren’t a big enough company to “stand pat” on anything.  We are moving faster and faster every day it seems.  But, in regards to the project partnerships, we believe the stakeholders in the Company and the projects are well served by the existing relationships.  Both projects are funded all the way through feasibility.  We have secured off-take of up to 50% of the lithium production from Sal de Vida, and we have excellent market access for the James Bay lithium through Galaxy Resources.  Our focus is now on delivering the results at Sal de Vida, where we are the operator and will maintain 70% project ownership, and lending support to Galaxy as they get their feet on the ground in Quebec.

It is true, though, that we always have our eyes on the market.  It is not many junior companies that are on the cusp of mine building decisions on two of their projects almost simultaneously.  I would say that some of the most exciting opportunities for us may be with regard to the potash production from Sal de Vida.  We have already been approached by some groups with interest in our potential low-cost potash production.  We retain all the marketing rights for the potash component of production, so we will certainly be looking at the best way to extract value from the world’s need for fertilizer. We are also continuously looking at new opportunities in the so-called energy metals, but so far, we have elected to stay focused on these two sector-leading projects.

How is the feasibility study progressing at Sal de Vida?

When you ask yourself, what constitutes a successful feasibility study; you have to say we are faring very well. We’ve made exceptional progress over the last 18 months.  We have defined high-grade lithium and potash in near-surface brines over an area of more than 260 square kilometres.  We subsequently delineated one of the largest and highest grade lithium and potash resources in the world – potentially economic in grade and scale – over just two thirds of that area.   We have demonstrated the amenability of that resource to conventional processing technology.  We have even completed a small scale “test mine” by pumping a continuous bulk sample from one of our wells into our pilot plant, which is producing both lithium carbonate and potash at a small scale.  That will continue through the third quarter, providing information on lithium and potash recoveries and product quality. Over the next quarter, the pump tests will provide critical information on the behavior of the aquifer and constitute our large-scale test of extractability of this brine, which will be used to model the long-term production scenario.  Given success there, we will have all the major technical components required to accurately assess the engineering and costs of a major mine development.  The preliminary economic assessment and/or scoping study due in the next three to four months will be a good progress report for us, and we expect to see very “good marks” when that progress report comes out.

This article appeared in 5 Lithium Stocks to Watch in 2011 – Part 1 – CLICK HERE for the article.

President & CEO Patricio Varas describes the company's May, 2008 IPO as "impecable timing".

Western Potash, as its name suggests, is developing a potash project in Saskatchewan, the sparsely populated province in Western Canada that produces about a third of the world’s supply of the stuff. The company’s Milestone Potash Project is located in the central part of the province, about 35 kilometres southeast of Regina.

Saskatchewan potash deposits are deep, typically a kilometre or more underground. For deep deposits, a range of factors must be considered over and above the pure economics associated with building a processing facility. Historically, underground mining was not considered feasible if a deposit was deeper than 1100m below surface. Western Potash’s deposit is way underground; the potash rich ore is located at a depth of 1,700 meters.

So what’s the solution for Western Potash? Solution mining. Solution mining is a process used to extract minerals using an aqueous leaching solution. The solution is pumped into a deposit and makes contact with the ore. The resulting solution is then pumped to the surface and processed. The process was discovered in the 1960’s and is only now being used to mine salts such as potash, copper and uranium. Australia’s Beverley Uranium Mine is the first operating solution, or in-situ mine in the world.

Solution mining can be tricky business. Certain temperature conditions, for example, need to be available in order for solution mining to work. Generally a temperature greater than 50 degrees Celsius is required, implying a depth of at least 1,450 meters. Solution mining begins by undercutting the mineralized zone by dissolving an initial cavern below the seam of interest within the potash beds. This is followed by dissolving the salt and potash upward and through the mineralized beds while utilizing a “ceiling cap”. The oil or gas ceiling cap inhibits vertical cavern growth until a large area is undermined. Mining then progresses vertically by raising the cap and dissolving mineralized portions of the roof. The minerals are then recovered from the saturated fluid by recrystallization. After mining the empty caverns may be useful for underground storage, and are sometimes more valuable than the minerals produced during cavern development.

Western Potash management believes its potash properties are top notch candidates for solution-mining. A NI-43-101 resource estimate determined the Milestone Project had 41 million tonnes of Measured Resource, 133 million tonnes of Indicated Resource, and 560 million tonnes of Inferred Resource with an average grade of around 30% KCl. The resource estimate, prepared by Agapito Associates, suggests an annual potash production rate of 3 million tonnes for well over forty years.

But building a potash mine is not an inexpensive proposition, the price tag associated with Western’s project is estimated at $2.5 billion. To that end, the company recently completed a $20 unit financing at $1.10 and, with the proceeds, has initiated their feasibility study for Milestone Project, engaging engineering consultants AMEC Americas. The connected with Western Potash President and CEO Patricio Varas for an exclusive interview.

Western Potash went public in 2008 just before the financial crisis hit the markets – can you tell us a bit about that experience?

It certainly was an exciting period for Western Potash. We raised a significant amount of capital ($20 million) privately prior to our ($23 million) IPO in  May 2008. With hindsight we had impeccable timing as the markets fell apart a few months after. So we were able to weather the financial storm and begin the exploration work that the project demanded.  We were able to discover 3 new and distinct potash deposits. 2 in Manitoa and 1  in Sasaktchewan. We settled on the best potash address in the world- Saskatchewan Canada. We were offered a plethora of potash projects, from Alberta to Africa during this period. Our philosophy ws simple – if we found a beter project we would snap it up. We never found anything to match our Milestone Sk. project.  We have a stable supportive government , a clearly defined potash industry, predictable and manageable environmental permitting and regulation, an independent and large Tier 1  NI  43-101 potash resource and a solid technical and financial  team behind it all.  So far it’s been a great experience.

At the depth of the crisis shares of Western Potash traded all the way down to $0.15 but it has been a slow and steady recovery since the beginning of 2009. Apart from the rebound in the overall markets – what do you attribute your success to during the period?

I certainly believe it’s due to the slow recoginition of the quality of our Milestone project and the steady progress we made developing it. Today, we have clearly established a significant and unique  Tier 1 NI 43-101 compliant potash resource that is gaining attention from a variety of global fertilizer, mining and state owned enterprises.

Another key component is that Western Potash has a great depth of exploration and development experience that we have been able to drawn on.  Each one of our top 4 mining executives has spent time with Rio Tinto and has been involved in the process of bringing a mine into development. Whether it be 0ur discovery of diamonds at Diavik, gold at Lahir or copper at Sto Domingo Del Sur our exploration team has proven it can deliver results.  The Western team knows what needs to be done and, perhaps more importantly, we also understand what the majors are looking for. That’s why we parked our claim on top of a geothermal heat anomaly.  This one factor should contribute enormously to lowering our cost of production as a viable solution mining operation; and, low cost production is  major  factor for Tier 1 companies looking for new project entry points. Our Scoping Study does a good job of encapsulating this fact.

Could you tell us about the current status your project?

We have begun the Feasibility Study Process. We have engaged AMEC Americas Ltd as the lead consultant for this process. Headquartered in Saskatoon they are completing expansion work at Potash Corp’s mines and understand the potash sector and know saskatchewan intimately. We are now in  the process of updating our NI 43-101 resource calculation (41 M t of measured, 133 Mt Indicated and 560 Mt of Inferred) to plug into the study. In Februaray we completed a small 2 well program to gather geotechnical information  and expand the resource.  In addition we have brought considerable new land into the resource area which will definitely enhance our Measured and Indicated resource estimates.   We are also conducting trade-off studies with regards to water, energy, process technology, etc. Considerable focus is on our water, we have just signed an MOU for delivery of the water with the city of Regina. Fresh water for solution mining is critical and this new option will lower our CAPEX and potentially our OPEX.

In December last year the company completed a $20 million financing – do you have sufficient money to complete your feasibility study?

We have raised enough money to complete the prefeasibility study portion of the Feasibility Study Process and, with the execution of outstanding warrants, will bring in the remainder required to take us to Feasibility.

Given your strong financial position, is the company considering partnering as a mechanism for fast-tracking the project? If so, what type of capabilities would an ideal partner have to compliment Western Potash?

We are definitely actively pursuing a partner to work with to capitalize the project. Unlocking the value is a major part of the process with a project of this size and scope. The attributes of the “ideal partner” would be a purchaser of potash as a consumer or trader, project development and engineering expertise, and have the financial ability to cooperatively finance a $2.5 billion project. However, it is more likely that each one of those components will be spun out of the project and developed in association with the other components. Regardless of the partnership structure, going forward there will be a debt and equity component, an enormous EPCM contract; and, a long term secure supply of potash. Our mangement tean has just returned from a 2 week trade mission with the Saskatchewan government  in India and we are our continuing to build our strategic relationships in China with yet another road trip to Beijing and Hong Kong next week.  There is plenty of global interest in the Milestone project  and we hope to convert that into long term shareholder value.

This interview appeared in 5 Potash Stocks to Watch in 2011 – Part 2 – CLICK HERE for the article.

Balmoral's Wagner: "The current market in gold is very strong and we believe that when conditions like these exist explorers need to be as aggressive as possible in driving their assets forward."

How do you go from zero to sixty in record time? Whether you’re a Nascar driver or a gold miner the answer is the same – experience. Balmoral Resources, a fledgling Canadian gold miner, got a good head start because of who they had behind the wheel.

Balmoral President & CEO Darin Wagner spent his first ten years as a project generator and exploration geologist with two of Canada’s largest exploration and mining companies Noranda (now Xstrata) and Cominco (now Teck). More recently, he served as President and CEO of West Timmins Mining through the discovery of a high-grade gold zone in Timmins, Ontario to the acquisition of West Timmins by Lake Shore Gold in an all share deal valued at $424 million that was completed in November of 2009. As a result, Darin was able to attract a raft of notable industry professionals that a normal mining start-up could only dream of, including Canaccord founder Peter Brown and Haywood boss John Tognetti.

Today, Balmoral is putting their money to work and they are currently drilling the Fenelon and Martiniere properties in central Quebec. We sat down with Balmoral’s President & CEO to find out more about the genesis of Balmoral Resources and the company’s future plans.

Darin thanks for joining us, could you tell us a little more about how Balmoral Resources was founded?

Coming off the heels of the sale of West Timmins our team was looking for a scalable opportunity in the precious metal space to found our next venture around. Through one of our current directors – Gordon Neal – we had been introduced to Henk Van Alphen and his team at the Cardero Group and agreed to join forces on this new venture with them. Having assembled a veteran and market savvy team, with a number of successful ventures to their credit including West Timmins, MAG Silver, International Tower Hill and Cardero Resources, and having located a vehicle which we could acquire and finance readily we set out to locate a prospective package of assets for Balmoral which would allow us to quickly gain market traction and asset value for our shareholders.

How many different projects did you look at before you decided on the package of 5 properties?

Lots! In total I think we reviewed well over 100 individual opportunities and examined prospects in no fewer than 8 countries. We were looking for the right mix of advanced assets with clear upside, a resource base to provide a basis for market valuation and earlier stage projects with exploration upside. It was important to us that these assets be located in favourable – read safe, mining friendly and financeable – jurisdictions and that the package or property be drill ready so there would be no lengthy delays getting the projects up and running quickly.

Why did you elect to pursue two different property acquisitions in two separate areas?

Balmoral’s assets came to together in two transactions, both announced and completed in conjunction with each other in order to assemble a district scale opportunity along the Detour Lake trend in central Quebec. One of the transaction, a purchase of non-core assets from a copper-gold developer American Bonanza, allowed us to acquire the high-grade Fenelon and Martiniere gold projects along the Detour trend, the N2 project in Quebec and the Northshore Property in Ontario. Collectively these assets host over 935,000 ounces in historic gold resources (non 43-101 compliant as the resources were drilled out prior to the implementation of NI43-101) which we purchased for roughly $6.3 million in cash and shares, our roughly $7.0 per in-situ ounce. We combined this purchase with an option to earn a 60% interest in the large Detour East project in Quebec to assemble our asset base giving us the dominant land position along the Detour Trend in Quebec, a good resource base for a start up and massive exploration upside.

Can you share with us your exploration program for 2011?

We launched our first drill program with two drills, one on each of our Martiniere and Fenelon projects, on January 20th, 2011, just over two months from the date we came public with the asset package. To date we have completed 21 holes and another 35 are planned in this phase 1 program which we hope to complete by early April. This is the first phase of the program which will see drilling on at least 4 or our five projects in 2011 and, everything according to plan, resource updates on at least three fronts over the next 12-14 months. The current market in gold is very strong and we believe that when conditions like these exist explorers need to be as aggressive as possible in driving their assets forward. Our 2011 exploration budget is $7.5 million and that may expand as warranted by results.

Is the company looking at additional projects within Canada or outside of Canada?

In this business you are always on the lookout for opportunities. In the case of Balmoral we continue to look for additional acquisition or corporate opportunities and would consider opportunities in any of the major North American gold districts if they fit with our growth plans and drill focused exploration model. Our most recent hire, Exploration Manager Richard Mann, has spent several years with a major Canadian based gold producer and in that role has had the opportunity to review and examine a number of prospective gold projects worldwide. We will certainly draw on that experience and our own industry contacts and experience in trying to identify the next valuable piece of the Balmoral puzzle.

Exploring for gold in Peru.

Technology. According to Vancouver’s Dorato Resources new technology, specifically modern geophysical techniques could be the “game-changer” for the company actively exploring in Peru. The area the company is focused on is the Cordillera del Condor Gold District. Adjacent to the Ecuadorian border, a number of world class gold and copper deposits have been discovered in the region including Kinross Gold’s Fruta del Norte gold deposit. Fruta del Norte is a 13.7 million ounce gold deposit which was acquired by Kinross in July, 2008 via the acquisition of Aurelian Resources.

While the Ecuadorian side has been a source of gold since Incan times, and has therefore had centuries to be discovered through on the ground exploration, the area that Dorato is exploring in Peru is less developed and absolutely massive (1,050 square kilometers) and therefore needed a faster and more cost effective approach. Enter advanced airborne geophysical survey, geological mapping, and geochemical sampling and exit 13 new targets that the company just identified for exploration. We recently connected with Keith Henderson the Company’s President & CEO for an exclusive interview on Dorato’s progress.

By all accounts the Cordillera del Condor Gold, Copper District along the Ecuador border in Peru is a huge area to explore, does the company have a strategy in place to expedite exploration?

Yes, this is a large land position and efficient exploration required an efficient approach. Systematic on-the-ground exploration could take decades and was quickly ruled out! Airborne geophysics is the approach that has been taken and it has been fast, cost-effective and successful. If readers are interested in the details of the technique, Dorato has provided an explanation of techniques on the Company website. In short, a helicopter makes a series of low-flying passes over the block, collecting data on magnetic, electromagnetic and radiometric properties of the rocks. Geologists and geophysical experts then review the data and identify a series of targets based on anomalies. These targets are approximately 2 km by 2 km in size and are small enough to allow systematic on-the-ground evaluation. This is done by collecting geochemical data on ground and by geological mapping and sampling. By collecting this data, the geologists can continually re-prioritize the targets as data is received from the lab. The process of re-prioritizing means that you are always drill testing your best targets first, increasing the chances of an early success. Geophysical data cannot directly detect gold mineralization, but the data does point to certain physical properties of the rocks at surface – it gets you into the right area fast.

The company released some very encouraging trenching results (188 metres of 2.08 grams per tonne) from the Lucero target and the shares of Dorato essentially doubled from $0.70 to $1.40 – how are things progressing at Lucero?

Minera Afrodita’s exploration at Lucero is progressing extremely well. The initial discovery of surface mineralization was in a completely virgin area and was achieved after interpretation of airborne geophysical data. This is important as it bodes well for screening of additional geophysical targets through the remainder of 2011. In the case of Lucero, the geologists who initially checked the anomalies on the ground were able to quickly find gold mineralization and massive magnetite and sulphides associated with skarn mineralization. If the other geophysical anomalies can be relied upon in this way, the geologists will have a great chance of finding a significant deposit in the near to medium term.

The drilling intersected thick mineralization and results have been received for the first 12 drillholes. Three types of mineralization have been intersected to date: skarn mineralization, sediment hosted mineralization and porphyry mineralization. The drilling intersected up to 150 metres of skarn mineralization on the edge of the anomaly – interpretation of the data points to potentially higher-grade gold mineralization to the west and drilling is currently testing this interpretation. The real prize at Lucero though, is the potential for a large copper-gold porphyry at depth. Drillhole 19 is currently testing this target for the first time and results are pending.

What’s the next target at Cordillera del Condor and when do you begin work?

A final decision on the next target to be tested will be made in the coming weeks, but it is likely to be Cobrecon, where geologists have identified a gold skarn target and two large porphyry targets. These targets are located just a few kilometres from Santa Barbara and El Hito in Ecuador – two existing porphyry deposits in Ecuador. Each of the porphyry targets is greater than 1km across and therefore have potential to host sufficient tonnes.

There is a lot of mineralization in the area but the geologists are not focused on drilling a series of small, high-grade gold intersections. This might look good in a news release, but it would not bring the Company any closer to a potential acquisition. Real size potential is an important criteria in prioritizing targets and the focus is very much on discovery of a 3 to 5 million ounce (or equivalent) deposit. It is important for investors to know that this is the focus of the program.

If you would like to receive our free newsletter via email, simply enter your email address below & click subscribe.


 Daily Gainers

 Lincoln Minerals Limited LML.AX +125.00%
 Golden Cross Resources Ltd. GCR.AX +33.33%
 Casa Minerals Inc. CASA.V +30.00%
 Adavale Resources Limited ADD.AX +22.22%
 Athena Resources Ltd. AHN.AX +22.22%
 Azimut Exploration Inc. AZM.V +21.98%
 New Stratus Energy Inc. NSE.V +21.05%
 Dynasty Gold Corp. DYG.V +18.42%
 Azincourt Energy Corp. AAZ.V +18.18%
 Gladiator Resources Limited GLA.AX +17.65%