Hi CC!
First let me point out that I have a great deal of respect for your work, and you have a track record of success that speaks for itself. Also, based on my own limited experience, I know that there are too many companies and too many stories to maintain and in-depth understanding of more than a handfull. Sometimes you have to sort through various plays and find reasons to reject them, in order to focus on the ones that you believe have the best potential. I think it is great that we do agree on so many great companies.
With BGL, I have tried to present the facts to my knowledge on why I still think the company is cheap compared to its peers, and why I believe it will become one of the top stories in Mexico over the next few years.
You speak of the resource potential for the stock, as based on disclosure by Tumi Resources. Tumi studied a plan to access a large block of the historic mine workings by blasting the entire rock mass to excavate an open pit, as a means to extract the remaining lower grade resource. This would have resulted in a high strip ratio since most of the ore was localized into narrow veins and associated stocks and contact zones. That is the excuse that Tumi offerred in their statement to abandon the project:
tumiresources.com
I reference the following resource estimate by a qualified geologist working for Tumi:
tumiresources.com
In that report he identified a 2.25 million tonne indicated resource compliant within NI43-101 standards, grading 171 g/t silver and 1.2 g/t gold at the El Abra Mine. I was at that mine last year, and I can tell you that it is an open pit project, at the top of a hill, with almost a zero strip ratio for much of that tonnage. The average grades of this material are exceptional for that type of mine considering the cash costs to mine and process it will likely be in the range of $20-25 all in, even for a modest operation. BGL also has the data from many decades of past production and metallurgy work so they can plug in a degree of confidence in their projections.
Now Tumi walked away from the project for a number of reasons that I do not wish to discuss here, and the above resource is not something that BGL is allowed to talk about until they complete their own resource estimate. But those ounces of gold and silver did not just disappear and they still amount to an economic resource. You refer to the potential of CKG for a large deposit, which at present is not documented with a compliant resource, but almost in the same breath you reject BGL because it does not have a documented resource.
As for Tumi, I need only look at the performance of that company since they abandoned the Cinco Minas project. They have been a terrible investment during the most bullish resource market in 20 years. Management has utterly failed to create shareholder value, and I think one should cast a very skeptical eye on their claims that Cinco Minas is not vaiable. I am quite confident to make the claims that time will ultimately judge that company harshly for the failure to develop Cinco Minas.
Furthermore, I wish to point out that the BGL exploration team has identified several new mineral occurrences since they secured control of the project, and are currently developing one new mine that Tumi did not even complete sampling work on. That is the Cerro Colorado deposit, another low grade open pit mine similar to El Abra, with a low strip ratio. There are several other high grade zones that have also been identified at other mines on the property and will be put into production.
CC, you are experienced enough in the mining industry to know better, when a company has failed and published what amounts to a lame excuse for their inability to advance a project. BGL has come in and completed a great deal of work in a short amount of time, and they are on the brink of putting the project into smaller scale production as the first phase of their development plan. I urge you to take the time to revisit the Cinco Minas project, and initiate discussions with the management of BGL. I think you will discover, as I did, that this company is a powerhouse in the making, and it would be a fine addition to your newsletter. Ask them to outline exactly how Tumi overlooked the development potential, and how BGL is now in position to deliver on that promise. I think you will find that the story is very attractive.
cheers!
COACH247
PS: We can agree to disagree on ECU... ;-) |
