December 15, 1997
Hello Web Lurkers,
By now many of you know me and the kind of person I am. I do not support junior mining companies or their stock, and pardon me if I do not change. I do support the resolution of problems many of these companies have in common. They are trying to solve technical problems that are clearly above their heads in many cases. And it should not be for them to do so. They should be able to find a mineral resource, develop the mine, concentrate the ore and sell it at a profit. But what do they do? They are dealing with an ore that has technical difficulties they do not understand and the commercial labs are not equipped or staffed to help them. The scene that follows is ugly indeed. Millions of dollars invested by investors seeking a high performance security or other investment are left to a management that seeks help at the expense of their investors just to educate some bozos in the analytical field. And if they get through this bogus due diligence game which involves chain of custody and hours of work with chemists filled with suspicion and doubt, what they have is an assay that has cost millions of dollars. And it is just an assay. No mine has developed, no concentrator has been erected and the money has been spent on overhead and bozos. May I apologize where some quality labs have been wrongly indicted here that are clearly not bozos. I am sorry for the sad waste of funds resources for literally nothing in return. The investor should be wise to this total disregard of common sense. Here is the question. Do you trust the sincerity of the company you are going to risk money into? Is their plan reasonable? And are the people qualified to do the job? Well, my first impression is that if they are hiring consultants to help with the problem, and not to just try to pay a fortune to a consultant to get him or her in their corner, fine. They should have people that bring about confidence in the management and in their investors. And their objective is either an exploration company or a mining project development company. In today's market, the first is probably ill advised. Too many risks are piled on top of risks.
Now a good company should review the possible means to production. Forget developing reserves if you have metallurgical, analytical, repetition problems etc. Getting a commercial production flow will eventually resolve the other questions. Later the assays can be refined against production and reserves can be drilled out and calculated. The cost can come out of profits. Reserves are for bank financing. No bank will loan to a junior mining company anyway. Once you can prove profitability, banks will come looking for the new producer.
Here is where I begin to stray from my convictions. On Friday, one week ago, others and myself entered into an agreement with Stanley Wardle and his wife, formerly known as Friendship. The association was brought about to create a company that could purchase these gold and PGM concentrates from companies that affectionately have become known as Desert Sands mining companies. The association was largely brought about because of a company I will refer to as GPGI. You may not have heard of them. I will try not to discuss them much further as they are one of many companies and private investors that are coming to us with requests for similar help.
Well, GPGI has a couple of prospects. I will call them prospects until they are in commercial production. They have a concentration process. It produces bullion made of copper and the precious metals derived from their prospects. There is a lot more copper in this metal than precious metals when produced. There are technical reasons for this that I will not pursue now. The fact is that the metal is magnificent. But there are no refiners in the world today that will purchase this metal at this time. They are just not equipped to do so.
Stan Wardle apparently told GPGI that he could process the metal. It was more of a noble and honest good faith gesture than one based on good science. Let me explain further. Stan has been researching these ores and the metal forms in them for some time. He is in full belief that these metals will follow process in normal fashion. He will process the metals and sell the bullion and pay GPGI. He wants to do the best he can do. I visited his lab some time ago at his request. It is a wonderful lab. Lacking the science expertise, he has a knowledge of which recipes for extraction work the best. He devised a wonderful facility. I was impressed. A dream come true for the Desert Sands. But it is only a lab. Precious metals are marketed in 1000 ounce minimums for favorable treatment. Here the cost of production is excessive considering that Stan was working alone with his wife in a facility that can process the copper dore' into anode muds at only about 50 pounds per day. The anode bars from GPGI are only about 7 pounds each. A commercial plant for this purpose must process anodes that are 300 pounds each if labor to volume are not to eat up all the value in the metals. Economists call it "economies of scale". Additionally, Stan points out that his production is encountering problems. What are they? Well he identified each one he could put his finger on and each in order was corrected or studied to where it could be resolved. But through mutual discussions we determined the plant needed equipment changes for the work to be done more efficiently. Even as a pilot lab.
Well, we are breaking the silence. Just once we hope. Global is producing a metal dore'. Some of that Dore' is being sent to us at Consolidated Noble. Consolidated Noble is the name we are using for our newly formed partnership. Stan and his wife have processed a little more than a thousand pounds of GPGI metal. He has produced a high grade anode product that is not up to eventual expected specifications because of the design of the plant equipment and for the lack of some desired equipment. This will have to be modified some day.
The facts are clear. The metal is there and is being produced. Currently, we are not accepting new shipments because our plant is just costing too much to operate as a refinery that was only meant as a laboratory. Stan can not continue to operate at a loss. In the beginning, as I understand the situation, Stan wanted to work with GPGI and others to refine precious metals from concentrates produced by GPGI and others. Today, GPGI has shown that they can produce precious metals into dore' and Consolidated Metals has shown GPGI that they can extract those metals from their dore. Both have engineering to do to improve performances. This may be thought of as research by some, but I prefer to just call it engineering. Selecting better procedures and equipment to improve what has already been successful is learned through pilot lab scale operations. The plane is invented. We now have to learn how to be pilots.
Currently, there have been two series of anode muds produced and cleaned. One contains 2512 opt precious metals in 1027 grams of cleaned anode mud. The second series contains 2388 opt precious metals in 5409 grams (11.9 pounds) of cleaned anode mud. Gold and platinum are the predominant values. Because of the work in the cells being so time consuming, only spot tests of the anode muds have been done to determine approximate percentages of values. I could give more details, but to do so would clearly be out of our realm of responsibility.
In summary, I am excited. Precious metals have been taken from less than conventional natural resources, mined, concentrated in repeatable fashion, fired into copper bullion, treated, converted to conventional chemically predictable metals and could be marketed when available in larger quantities. The disposition of the metals in hand will probably be decided by GPGI and Consolidated Noble. No more questions on this matter. Thank you, mike |
