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Gold/Mining/Energy : Naxos Resources (NAXOF)

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To: Richard Mazzarella who wrote (9830)	3/12/1998 5:16:00 PM
From: Kim W. Brasington	Read Replies (3) of 20681

Richard: Freeport-McMoran's Grasberg deposit in Irian Jaya (old Dutch New Guinea) has 82+ million ounces of gold. Their recovery rate is .05 ounces/Au per ton along with 26 pounds of copper. Lihir island has 43 million ounces of gold with a recovery rate of .14 ounces of Au/ton. The deposit is a sulfide refractory (complex) one. Barrick has reserves of approximately 51 million ounces over various properties. I state all of the above to put these numbers that we have received today into context with other properties. The Grasberg and Lihir had to have massive amounts of money expended on them to build an infrastructure to get at them. The Grasberg being on the dorsal spine of the jungle mountains running down the center of New Guinea. Lihir is a tropical rain forest island that is an extinct volcano - all port and recovery facilities had to be built "in situ". Contrast that with the proximity of Franklin Lake to the mining capital of the U.S. (Las Vegas) and a stripping ratio that appears to be "0", and Franklin Lake could be far more feasible infrastructure wise than either of the two largest gold deposits in the world - Grasberg and Lihir Island. Let us go further down the road and venture a guess that the numbers that we have seen today can be improved upon and replicated over much if not all of the playa. Toss in any vagrant other metals of your choice (for there seem to be plenty that have been identified) that would add to the economic cost of extraction. What sort of response would all of this engender if the stakes became plainly higher. No doubt you are aware that all recovery processes are tailored to the ore body that they face, so if evidence continues building that we have a very large precious metals deposit at Franklin Lake, then there will be many parties who will no doubt feel the risk level has decreased in proportion to the amount of metals that are present. In one sense it can be an economy of scale - the larger the deposit, the more interest it can generate. Many large finds have fantastic rises in their share price BEFORE a feasibility study is ever done. Now, all of the above being said, for the purposes of recovery and other aspects, Naxos is building a pilot plant and already has an in-house lab at Death Valley Junction. These numbers on the news release are a standard lead fire assay - the mining industry understands this. The results are from two labs, and other labs will be coming on board. Any guesstimates on recovery costs can be relegated to the future, for that is just what they are - guesstimates. A feasibility study takes the data from a pilot plant and adds it to the assay results of a part or the whole property - all of that will not happen in '98. We are much further advanced than we have been, and I am personally excited by this news release. Regards, Kim W.

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