To All
I have been traveling most of the past week. Today I tried to catch up
with the thread and started to read the posts I had missed. I gave up
quickly because it seemed I had not missed much. Despite the numerous
and welcome releases the past three weeks most posts add little as
has been the case recently.
Not wanting to contribute to clutter the scene any further I have
refrained from posting anything that would contribute to an idle,
polemical discussion about nothing.
However, looking back to the releases of the last three weeks I see
some good things happening. Was management's communication with the
"outside" shareholders a little disjointed over the past few years,
there is a better flow of pertinent information coming out. While
some releases have some vagueness to them, intended or not, they still
offer enough encouragement to me to offer my unsolicited opinion.
Management changes
Each organization goes through a life cycle with various phases.
Each phase often requires a different set of competencies and
managerial skills. One often finds that going through such different
phases a management team may lack sufficient skills to successfully
traverse these different phases. And it is really unfair to expect so.
Therefore, the recent changes suggest it has been recognized that we
need different management skills to take the company to the next level.
Until we know who will be at the helm to take us to the next level the
jury will be out, but the very fact that at least this process has
been set in motion is encouraging.
Precious Metals - Gold
For now, let us deal with the company as a potential Gold mining company,
Silver and Platinum, if economically recoverable, will be gravy, perhaps
very good gravy at that.
The results contained in news release 98-5 were obtained by standard
lead fire assay procedure. It is my understanding that these results were
derived using stage 1 of the JL methodology. Stage 1, again as I
understand it, only assists in setting proper operating temperatures
and using proper fluxes. While this may say a lot about Dr. Johnson's
understanding about the FL dirt, it is nothing unique. I would liken
it to the (fine) tuning of a complex engine to make it run optimally.
Once these conditions are understood there should be no significant
difference in operating and recovery costs from established mining
companies. One could probably even argue that given the nature of FL
stripping cost and stripping ratio would be more favorable than most
other active mines.
Ledoux found on average (mathematically) 0.148 Au oz/ton (I excluded
the 2.435). In checking at some active mines I found the following
average grades (Au oz/ton):
Battle Mountain Complex (Battle Mountain, Nevada) 0.022
San Luis Mine, San Luis, Colorado 0.043
Pajingo Mine, Townsville, Queensland, Australia 0.217
Kori Kollo Mine, Bolivia 0.061
San Cristobal Mine, Chile 0.029
Red Dome Mine, Queensland, Australia 0.056
These are some random figures of active mines which, granted, may not
necessarily all be economical at current gold prices. I would argue
though that Naxos' results are holding up very nicely.
That being the case I like to make some observations:
The JL method is expensive. It was said some $100 per ton, but that
was a guess. It may well be more. Even if proven effective, employing
the method may not be the best way to go due to the limited tonnage
that can be processed employing the method. Also, the method must
ensure recoveries of Au well in excess of 1 oz/ton to justify the
allocation of considerable financial resources to an approach that
may not necessarily yield the best overall result. It is very
important that management ensures that the limited financial
resources it has are employed in such a manner that it maximizes
the return. While it may be nice to recover say 2.5 oz/ton using
the full JL method, our return on investment may be much higher when
just recovering 0.148 oz/ton using conventional methods. If this is
the case a decision to exercise or not the JL option should not be
too difficult. Mind you I am not judging the recent results to be
the gospel. I just want to draw a distinction between the two
approaches and based on what I have learned so far I would raise
a red flag when it comes to exercising the JL option. So far,
management appears to have taken a similar careful approach, and
correctly so.
If then currently available results indicates that economical recovery
is viable, and considering the level of Au content most probably at
a lower cost than most other existing and operating mines, it is very
important that funds are used where it counts most. At this point
it is much more important to delineate the field to see the results
of hole 4 and 5 confirmed over a much larger area. There is little
benefit to be derived from using such funds to develop and set up a
pilot plant to try to prove a process that IMHO may well be of no
economical use on a full scale.
While part of the JL method (stage 1) may have accelerated the
determination and gathering of vital results, using the full method
is very questionable at this point. Given the precarious financial
position of Naxos, the expense of a pilot plant therefore is
inopportune. Such funds should be used for expanded drilling and
testing programs.
So, get the industry expert selected and at the helm. Give him the
mandate to a) go full out to delineate the field as quickly as
possible, and b) stop wasting valuable resources on matters that
do not contribute to uncovering the true potential of FL.
JMHO
Jan |
