ceocast.com
SPECIAL SITUATIONS:
Golden Eagle International, Inc. (OTCBB: MYNG) $0.14
We continue to believe that the mining sector will sharply outperform the overall market. In fact, our mining Special Situation stocks are up over 50% this year. We have identified another promising mining company called Golden Eagle International. The company is currently focusing its efforts on developing its mining rights on 74,000 acres in the Tipuani Gold Mining District in Western Bolivia, and continuing exploration on 125,000 acres in Eastern Bolivia's Precambrian Shield. Boliva currently generates approximately 50% of its exports from mining operations.
The company has estimated reserves of 6.4 million ounces of gold, an indicated resource of 81 million ounces, and an inferred resource of over 160 million ounces. The company recently announced that it will begin gold production in September at its Cueva Playa site located in the heart of the company's 74,000-acre landholding in the Tipuani Gold Mining District. The company’s has reported substantial progress toward completion of its 1000 ton per day mil, which will enable it to become a producer in Bolivia. The company announced this week that it has the funding to acquire essential mining equipment to support its operations there.
Why should investors be interested in the Tipuani Gold Mining District? It is one of the oldest gold producing areas in the world. The company’s property is located on the Cangalli conglomerate deposit, which is 1,600 to 8,000 feet deep over 24 square miles containing ore varying from very low to very high grade. There are 35 identifiable pay horizons in the district, with single samples running as high as 3,600 ounces of gold in 12.2 cubic meters of material. A report by Behre, Dolbear & Co. in 1999 found gold in 93% of its samples taken from 6 widely separated areas.
The company will also have one of the lowest-cost mining operations in the world. It estimates that it will have a cash cost of below $75 per ounce of gold from its projected 11,000 TPD mill, using an average target grade of .008 ounces per ton, well below the anticipated grades. The infrastructure in the area provides for low-cost electricity for transporting ore via conveyor belts. There is also an inexpensive and qualified labor force and an efficient separation process.
The company currently has a valuation of approximately $31 million, which we believe does not reflect the potential of its holdings in Bolivia. Based upon the overall sector fundamentals, and the likelihood that it will announce significant developments in the coming month from activities in Bolivia, we believe that the stock could likely double from here, as investors begin to value the company as a producer rather than an exploration company. The stock has been a solid performer this year, but we think that there is more upside to come. |
