Claude,
The latest from NCW is below. Classic situation for a junior. Excellant property but in need of help to get things going. How do you see this thing unfolding. Any rough estimates as to value per share with the scenarios outlined in their release.
Regards
Kevin
Mr John Brock reports
This past year, 1997, has been the most active yet for Northern Crown in Mexico as project expenditures rose to $5.6 million. All work was directed to exploration and preliminary feasibility studies at the Guadalupe de Los Reyes project in Sinaloa State. The company now is examining potential merger opportunities with the objective of enhancing development of the Guadalupe project, and strengthening asset value through combining of precious metals resources.
Northern Crown's original exploration and development objectives are well in sight, with an "in pit" resource of 215,400 ounces of gold and 2.2 million ounces of silver forming the basis of a preliminary feasibility study. The study recommends a production rate of 41,000 ounces gold per year using heap leach processing. An additional 448,400 ounces of gold and 13.1 million ounces of silver, presently categorized as indicated and inferred, require in-fill drilling before being included in a mine plan. Exploration targets, estimated on the basis of wide spaced drilling,
comprise yet an additional 500,000 ounces of gold and 16 million ounces of silver, bringing currently identified total project potential to approximately 1.2 million ounces of gold and 30.7 million ounces of silver. After a three year program of land acquisition and basic exploration within the 88 sq km Guadalupe project, Northern Crown was able to focus 1996-1997 drilling within a 1.5 by 3 kilometre area containing four deposits: the Zapote, San Miguel, Noche Buena and Guadalupe mine zones. Prior to
commencing preliminary feasibility, 375 reverse circulation drill holes totalling 36,100 metres or 118,400 feet were completed.
The company's consultants have advised that, subject to completion of approximately 55 additional drill holes, presently inferred gold and silver resources at the Zapote and San Miguel deposits can be brought into an indicated or mineable resource. The four year Zapote mine plan is then forecast to attain a 21% pre-tax rate of return using a gold price of US$300 per ounce. The project's profitability is highly levered to gold
price: for example, at US$350 per ounce of gold, the rate of return reaches 38%. Total cash cost is forecasted to be US$190 per ounce of gold without inclusion of silver credits. The Guadalupe project requires $1.5 million for completion of drilling at Zapote and San Miguel. An additional $3.0 million financing will then be required for exploration and final feasibility studies, with a production
decision slated for later in the year. Continued exploration is important in order to move additional gold and silver resources to an ultimate Guadalupe project mine plan contemplating a projected production schedule of 100,000 ounces gold per year. Accordingly,
exploratory diamond core and reverse circulation drilling is recommendedfor the balance of the San Miguel, Noche Buena, Guadalupe mine zone and El Orito deposits. Some of the facilities to be used in the initial production plan may also be incorporated into the overall mine plan for the entire Guadalupe camp. Placing Zapote and part of San Miguel into production is a stepping stone toward feasibility and production decisions for the additional deposits
within the camp. The next step will be an important one for Northern Crown. In light of the gold mining sector's continued weakness, the feasibility of equity financing without significant shareholder dilution is of concern. Management is therefore considering two routes to a production decision. Northern Crown may either seek equity financing with a view to building a mine development and operating team, or a merger with an established
operating company. In today's market, management believes that merger has the greatest potential for added value, by capitalizing on operating expertise and the combining of gold and silver inventories. The route of choice will be determined within the next 60 days. |
