Answers to some questions....
Status of "Strathcona - Ojolali Review"
The Strathcona Ojolali review was commissioned by ANZ as a part of their due diligence process. It is more or less a total synopsis of the exploration work done to date, along with geological structure interpretation etc.
This report is the property of ANZ. CLL has received excerpts from this report which I have seen. Odds are that the review will not be released in its entirety. It definitely contains information that is not fit for public consumption, including China Gold drilling data and interpretation and opinions which would make the TSE, ASE, and other securities regulators feel uneasy. I would put this review in the same category as the Watts Griffis McOuat review.
One good thing that has come from these reports is that I now have maps etc. in hand. They will be available as a part of the future IR package.
Cash Flow from Venezuela
Now that CLL is seeing limited cash flow from the Pemon, I have been asked for cash flow projections. To make proper cash flow projections I will need a lot more production to do it accurately.
What I have done is used "production goals" to come up with some numbers of my own. Through conversations with CLL management and the Pemon general manager I am under the impression that CLL feels that production from the Pemon can be realistically taken to the 1000 carats per week level over the near term. Long term goals are not known.
The last production run yielded diamonds with a gross value of about US$100 per carat. If we use that number we get a gross number of about CDN$6,500,000 annually.
Costs of production and continued exploration are another story and so is the valuation of the potential gold production from the Pemon.
These numbers are obviously very rough estimates and should be risked significantly at this stage. But I think that many of you would agree with me when a say that I don't believe that the Pemon has been properly valued into the share price.
COW and Permitting status of the Pemon
Exploration, development and mining of minerals by foreign companies in Indonesia is conducted under a Contract of work (CoW) granted by the government. An application for a CoW is made to the Minister of Mines and Energy for approval and successful applications must then be approved by Parliament to become law. Once approval in principal is confirmed by the Department of Mines and Energy, preliminary exploration work can begin under a Preliminary Survey (SIPP) license.
Shallow exploration drill holes are allowed under the SIPP licence. Any development must awaiting the final Contract of Work.
The Contract of Work has high legal standing and is not subject to changes in legislation, positive or negative. The primary feature of the CoW is the establishment of a highly stable investment environment. The Contract of Work sets the fiscal framework, the process for development, and the steps toward reclamation. CoWs can have an initial term of up to 30 years and can be extended.
The Ojolali consists of two parts; KP Exploration Licence DU 254 and Mining Licence DU 190. The property is held under the Kuasa Pertombangan (KP) system reserved for Indonesian citizens residing in Indonesia. Because the KPs have become foreign owned, Coleville has filed application for CoW status for non-resident companies. Coleville has also applied for a CoW on an additional 29,760 ha surrounding the two KPs and has been granted a SIPP for the area.
Coleville's Cow application are a part of the "7th Generation" and this generation will hopefully start to see approvals very soon, but are currently on hold while the Indonesian Gov't attempts to figure out just how much damage has been caused by the Bre-x scandal. CLL management are under the impression that the CoW applications are in good order and that approval is only a matter of time and plan to continue exploration under the SIPP.
Gerry Belanger
Silicon Capital Corp. |
