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Gold/Mining/Energy : Naxos Resources (NAXOF)

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To: sh who wrote (12828)	5/14/1998 6:46:00 AM
From: Henry Volquardsen	Read Replies (1) of 20681

sh, What I was agreeing to was a factual statement about how information flows regarding drill programs at other mining firms. Regarding the other development group, it is easy to check on. The group is the Hunter-Dickinson group and there is a thread on SI specifically about them. It is not a very active thread however. Their largest current project is Taseko Mines (TKOCF). There is a thread for TKOCF as well. Their current projects have been languishing and trading at very depressed prices due to the decline in metals prices. They have developed several mines that were successfully developed and sold to a major. The most recent was El Condor Mines which developed the Kemeses property which was bought by Royal Oak (RYO). I don't know how long the group has been around but the individual mining companies have been around for a number of years, TKOCF is at least 5 years old. They were all accumulating properties and doing prelim work for a couple of years before they started the drill programs. The properties are all 'conventional' properties. They conducted extensive drill programs and mine feasibility studies. I don't have specifics about how long the programs took because they didn't always announce when they had started a program. But the over all process of proving out a property took them a year or more. They do not have any regulatory problems that I am aware of. Regarding management, their strong suit has been a strong cadre of mining professionals that knows how to develop a property. I am not entirely dismissing the multiple ounce per ton results but I am skeptical. Yes we have seen COC numbers in this range using the Johnson-Lett process but not consistently. It is apparent from the lack of consistent results that the J/L process is not stable and perhaps requires technological advance before it becomes viable. The company appears to believe that it is still possible and is investing in research on J/L. But it is poor business practice to gamble all on pursuing this research to the exclusion of other efforts. It is as if the US had decided to send a man to the moon without ever having conducted the Gemini program. I believe the wise approach is to do what the company is now doing. Develop a baseline reserve using standard technologies that will be understandable to the mining industry. This will make financing much easier when we move to developing the property. When we move to the mine feasibility study we will be able to investigate enhancement techniques such as micro milling or J/L. That is how you develop a property. So yes multiple ounce results may still be attainable. But the point of what I was trying to say was that it sets up distorted expectations and priorities. It got all of us and most of the company of pursuing new age technology when we could have been proving out a conventional deposit and then building on that by doing the research into yield enhancements. Its the difference between having a solid business plan and playing roulette with all your chips on one number. Henry

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