Hi G-T et al ...
I posted this Vancouver visit report at another Board this afternoon so I thought I better place it here as well!
Good luck to us all!
Hola compadres!
Finally I bite the bullet so to speak! It has been difficult getting down to plunk out my GOZ visit report. But here it is for what it is worth. I hope it is a least somewhat of interest to you.
Aside: I just do not know how some folks find the continual motivation to file as many insightful reports as they do! I am certainly engaged in the sector but still, to produce these sort of reviews takes time! Maybe it is my MINUS 10 words per minute typing speed?!! I should cure that, si?
Background: I am a Gold-ore shareholder of great happiness! Thus the following report is highly biased. Going to the Vancouver Gold/Resource Show was one thing but visiting at length with Messrs. Wasylyshyn and Dickson was the major ‘other’. I spent a very high quality 2 hours at GOZ’s office, Tuesday the 23rd.
All perceptions, observations and summations are mine … I am new at this sort of thing so please factor in my inexperience, biases and hopes as you read. I hope I am not … and I believe I am not … BUT I may be all wet! There are many superb companies within the Silicon Investor pages and archives, but few will reward your own DD as much as Gold-Ore!
The following is a sort of compendium of random thoughts, answers to questions I had compiled and observations flowing from the time with Bob Wasylyshyn, President of Gold-Ore.
- I reiterate what is commonly known of the GOZ management. Swannmex was the first to mention it … Dickson and Wasylyshyn are two of the most approachable, genuine and gentlemanly mining execs you are liable to run across. The time spent was simply wonderful and oh so informative!
- In BW’s summation of the Bjorklund project, he showed the maps of past drilling. The place has data like you would not believe! There are literally thousands of drill holes and a similar number of assays. This is no spring chicken project. The executive went into this project with eyes open wide and the data they have produced continues to stimulate their exploratory heart!
- One really significant result of last years tunneling, the building of the major ramp GOZ is presently working from, was the confirmation of a slight vein deviation and the fact that the general vein swarm continued unabated as they transitioned into the overlying meta-volcanic rock from the granodiorite. The deviation pointed the vein swarm directly towards the Storheden target of known of mineralization.
- The GOZ land holding in the Bjorklund project area is approximately 43 sq. km. It is a sizeable area to explore and recognize that BW/GD are exploration geologists at their core. A major question for them is how to continue to fund the exploration! But they fully recognize that the central question for the investor is how soon until substantially expanded production. They are also fully cognizant that that enhanced production is the answer for both issues … share price appreciation for shareholders AND ongoing funds for exploration of the property. I remain fully confident that that enhanced production will be in place later this year.
- Let me comment on the need for the PP. In planning for the calendar year 2007 BW/GD recognized that funds would be needed for several reasons.
1. For the $2 mill. payment for the property,
2. To pay for confirmatory and exploration drilling, and
3. To pay for the large bulk mining sample (I get a kick out of the word “sample” being used here … like a 25-50 tonne outcome is a sample!). BW joked that wouldn’t we all wish that that the contract miners would work first and then wait to get paid from the proceeds received from the gold produced!! No, no it just doesn’t work like that! They have to pay first then receive the profitable product of that mining later.
BTW, all underground mining and drilling is done by independent contractors. The Bjorklund employees that they ‘inherited’ are all working on the transportation and milling side of the equation. Thus none of the monies generated from the PP will go towards mining equipment purchase or employee expansion.
- One other potentially very significant need for the funds is to pay for the detailed airborne geophysical survey, which will begin fairly shortly. BW had a gleam in his eye when he brought out a map showing regional electro-magnetic signatures. The map showed a large ring of a prospective signature(s) arcing from the vicinity of the nearby Boliden mine around the Bjorklund area and eventually traversing the GOZ land holdings on the other side (north-northeast) of Storheden! You must appreciate that Boliden gold grades are in the order of 13 g/t. It is hoped that this helicopter-borne data collection will yield results that could point to similar sulphide accumulations on GOZ property!
- As noted in the Jan. 15th NR, the bulk sample mining is slated to begin in April. The large sample will be collected from the area between the “drives” tunneled last year. The present in-fill drilling is aimed at facilitating the knowledge of the areas to be bulk mined. Note that the drives are tunneled at right angles to the ramp. The drives follow the general orientation (strike) of the vein swarms. Aside: GD and BW do not have to be present to see the progress of the tunneling process. Digital pictures of the tunnel face are regularly sent to HQ. GD and BW can easily make comments and suggestions because the contrast between the veins and the host rock matrix is so very clear. Light coloured veins and dark matrix! A GOZ geologist is always present during the mining. The geologist documents and samples the tunnel face.
- N.B. the assay / grade variation within the vein swarm is very, very surprising and you would think that the think veins would be the best prospect for mining wouldn’t you? No, it is in fact the narrower “parasitic” veins that have (by far) the highest grade. Some of these grades are truly bonanza-type but when averaged across all parts of the tunnel face, the average grade is moderated. Luckily for us the grade ends up good to great for ‘our’ production planning! Thus part of the puzzle in all this is the process by which the geologist attempts to estimate the best areas of average grade …. Those ones have the best small vein-to-host rock ratio. BTW: the host rock has very low grade … there seems to be little in the way of halo effect.
- The effect of average grade in the bulk sample is important. SAY 25K tonnes at 5 g/t AU … is approx. 4400 oz. At a profit of $300 per oz., the net to GOZ is $1.328 million dollars. But at 6 g/t the net is almost 5300 oz., which translates to $1.587 million. The range of tonnage stated in the Jan. 15th news release was 25K to 50K tonnes of ore for the bulk sample. At these sorts of netbacks, I personally hope they go for 50K. At 5 g/t, and a net of $300 / oz., that would net the company over $2.6 million dollars. Every in-tunnel, real-time effort to maximize the grade of the eventual ore will pay off in a big way!
- BW did not mention an upcoming news release ... mind you I forgot to ask as well! My sense is that the location of the bulk mining sample has been decided and that there are no doubts that underground mining will be the central component of the so called “full production” (75K to 80K oz. Per year).
- One final note on the ongoing drilling. The August ’06 article in the Resource Investor mentioned the prospect of deeper drilling at Bjorklund. There is one deep, or at least deep relative to all other previous drilling on the property, hole being drilled at the moment. It is being drilled from the last drive at a 37-degree angle. Its eventual depth will be approximately 150-m below the ground surface. It is a kind of shrug-the-shoulders type of exploration hole, who knows what data will come from it …. Certainly it is hoped it will provide guidance as to whether the same type of mineralization occurs at greater depth.
- There are many other points but I will stop with this final observation. BW and GD have to be circumspect about future exploration results and plans. Thus their statements are cautious. The news releases must say “could” and other such cautionary jargon. But they note in the NR of Jan. 15th that they are “optimistic” that full production will be in-hand towards the end of the year. Read into that optimism what you will, but as I noted before, the data bank that GOZ has is very large by any standard. They would not go forward with the Minmet payment or be so aggressively planning “Phase II” if they did not see practical application for that “optimism”!
It is going to be a great year! I have not even mentioned the upgraded 43-101 that will be submitted after the bulk mining sample, or the logical likelihood of a super-pit for the future. Even my plunking has limits!!
But I can say the Storheden and Nylund targets are REAL close to the existing pit. 800-m to Storheden is only about 1000 normal strides! The vein swarm strike points toward Storheden, historic drilling at Storheden is positive (to say the least) and the gold mineralization is at the surface at Storheden i.e. the marble cap at the present pit disappears. Add it all up and I believe you should conclude that the probability of an eventual super-pit is not all that far-fetched! That super-pit would add many, many years of low cost mine life and we know the market loves a 20-year mine relative to a 10-year mine!
Compadres, the above has been respectfully submitted! Your comments and musings are always welcome as per usual!
Buena suerte a todos y mucho saludos!
Dorinho |
