pacman and Thread.....I came across this bit of ancient history on CKS that I thought would be of interest since not everyone might have had access to it at the time. It is a post from "Goldbugs" to the Leroy Stockman Forum on 12/19/96. Reading it in light of more recent history raises two concerns in my mind:
1. Three years have passed and everyone, except perhaps the old management and those lucky enough to time a few low-entry trades and then sell, is still hurting if they held CKS long-term.
2. The recent "revelation" that the old management somehow overlooked to file with the Indonesian government for a mining permit just doesn't make sense with the statement in the 2nd paragraph which states "CKS has a full, top of the line KP on its property". I've seen this statement elsewhere, perhaps in old news releases, and I always took it to mean that developing the property would proceed smoothly without paperwork obstacles. The presence of Indonesian partners also argued that the right people would make such things happen expediously. It just doesn't make sense that something as important as a mining permit would "fall between the cracks".
Lastly, there is an interesting analysis in this post that essentially says that the gold value in just the several tailings ponds on the property (from past presumably illegal "mining") was about equal to the then market capitalization of CKS. Three years later, with a lower POG, about three times as many shares outstanding (another concern), and about 1/10th the share price, the analysis probably still indicates an undervalued company, assuming the tailings pond numbers are roughly correct and the new management has a vision of increasing value to shareholders. I don't know if this analysis was ever revisited or even if it would be economical to heap leach the tailings.
Charles
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Subject: Goldbugs: CKS.V
LS,
Tremendous press release sent out by CKS today, late in the day.
This company was written up by our goldbug group early this year at
$1 per share, it ultimately ran up over $10 per share, and has now
declined to what we believe is an outstanding value and entry point.
Unlike many of the juniors prospecting in Indonesia, CKS has a full,
top of the line KP on its property. This means that all requirements
on its property have been satisfied, including work, permitting, etc.
, and the government has granted the full and complete right to both
ownership and mining. These rights extend to the whole 4 square mile
property. Unlike BRE-X for example, CKS does not have to apply for
any more permits in order to produce on its property. Also, unlike
BRe-X, all the infrastructure on CKS's property, including roads.
power, water, housing, and a nearby port are ALL IN PLACE.
Phase one results have been spectacular thus far. Remember, this has
only been phase one. The first phase of drilling always involves
guesswork. As work progresses, and the best zones are defined, then
it is more likely for drill holes to hit targets.
Trenching results remain the best we have seen, and it appears that
CKS may be defining a large epithermal deposit that contains
weathered rock at the surface, containing surface, concentrated high
grade ore. A few deposits of this nature have now been defined in the
region. The humid, warm climate, over millions of years has caused
very high precious metals grades right near the surface, in the top
100 feet. This ore is very cheap to mine and refine, and usually
contains large quantities of precious metals, spread out over wide
distances.
Anyone interested should check out CKS's web site:
silvertusk.com
There, you will find the old press releases, a map of the property,
including locations of the drill holes and trenches, and pictures of
the ore within trenches. These are not just hand dug trenches. These
have been excavated with major machinery, and are deep.
The trench results from today were outstanding, and extend the area
of known mineralization another 1500 feet south. A new discovery zone
with very high grade gold and silver is described.
Here's the kicker: This property has been mined by locals for years,
using crude techniques, in which the highest grade gold is extracted
and sold, and the fine gold and the silver have been discarded into
tailings ponds. The property contains 6 tailing ponds, averaging
about 100 feet in width, 150 feet in length, and 25 feet in depth,
containing the discarded ore from past production. 25 pound bulk
samples were taken randomly from each pond, and assayed. The numbers
are outrageous from these samples, averaging 3 grams gold per ton,
and 500 grams of silver per ton. The company will perform a much
larger bulk test, to more accurately predict the gold and silver
contained in the ponds, but here is a crude estimate of mine, using
the data just released:
150 feet, times 100 feet, times 25 feet, times 6 ponds, divided by 10
cubic feet/ton = 225,000 tons of material in the 6 ponds.
225,000 tons, times 3 grams gold per ton = approximately 671,000
grams, divided by 31 grams per ounce = 21,665 ounces of gold.
225,000 tons, times 500 grams of silver per ton = 112,500,000 grams
of silver, = 3,629,000 ounces of silver, or 47,000 ounces of gold
equivalent.
Total gold equivalent in the ponds: 68,665 ounces.
The company thinks that it can produce gold from the high grade stuff
at the surface of the property for under $100 per ounce. Let's use a
cost of $120 per ounce for the metal in the tailing pond to be
conservative, and to account for losses in refining.
This means $250 U.S profit per ounce of gold equivalent, times 68,665
ounces of gold, divided by Canadian/U.S. exchange rate, yields a
value of $23,515,000 Canadian for the metal in the tailing ponds.
Now, because CKS is trading at such a low market value at this time,
check out these numbers: CKS has about 8 million shares outstanding,
and closed today at $3. This is a market cap. of 24 million Canadian.
This means that the stock is now selling for the potential value of
the metal in the tailing's ponds on the property, and we get the 4
square miles of this great property for free, plus all of CKS's other
properties.
More importantly, the potential for this property is massive,
considering what has been done to date using rudimentary mining
methods, and what can be done using modern mining techniques. In
addition, consider the grade of what is being mined by locals, when
they are leaving such high grade commercial amounts of gold and
silver behind. The stock looks like a tremendous value in here, and
is oversold as heck on the chart. Goldbugs
(From Leroy Stockman Forum 12/19/96) |
