That was a predecessor company ... Flanagan had a private company called Corner Bay, it had around that time a copper property in the Chibougamau ... in '91-'92 or so he and his partners sold it to a TSE-listed company, whose chart before that time would be what you're looking at there ... doesn't have much to do with the current bay.to .... i can't remember if Brunelle and Mordaunt were Flanagan's partners then ... i don't think so ... they didn't pick up Alamo Dorado until '95 at least, if memory serves .... 'Corner Bay' is a place name from the Chibougamau ... WillP wrote a StreetWire on bay some time ago, a lot of the history should be in it ... [edit] - here -
Corner Bay Minerals Inc
BAY
Shares issued 10,941,109
Nov 26 1999 close $2.660
Friday Nov 26 1999
Street Wire
THE SILVER LINING
by Will Purcell
Corner Bay Minerals Inc. recently announced the updated results of a
prefeasibility study, conducted by Mintec Inc., on its 100-per-cent-owned Alamo
Dorado silver and gold project in Mexico. The latest version of the report has
significantly expanded the stated resource, and continues to suggest the project
will be economically viable. The property is now believed to contain the equivalent
of just under two million ounces of gold, and is amenable to open pit mining. For
Corner Bay, the project presents an excellent opportunity to graduate from the
ranks of an exploration company.
Corner Bay began the decade by merging with Seabright Exploration Inc.
(Seabrex). Corner Bay brought with it a 70-per-cent interest in a promising
property located in the Chibougamau region of Quebec, while Seabrex held minor
properties in New Brunswick and Nova Scotia. At the time Corner Bay
Resources was a private corporation, and its shareholders received Seabrex
shares in return. A consolidation of Seabrex shares followed, and the newly
merged and consolidated company was renamed Corner Bay Minerals.
For several years the company slowly worked its eastern Canadian properties,
and did achieve a bit of success with the Chibougamau copper prospect. In 1994,
the property was optioned to MSV Resources Inc. Later, the option agreement
was replaced by a deal whereby MSV would purchase the property and place it
into production. Corner Bay would receive a 1.4-per-cent net smelter royalty
after 750,000 tonnes of ore had been mined. The property currently contains 1.6
million tonnes of ore, grading 4.04 per cent copper. It was a minor success story
for Corner Bay, but it would pale in comparison to the company's next success.
Corner Bay began to look farther afield for new ventures. In the spring of 1994,
the company acquired an option to earn a 100-per-cent interest in the Cerro
Verde copper property, located in Sonora, Mexico. Two years later, Corner Bay
signed a deal with Minera Phelps Dodge, allowing that company to earn a
60-per-cent stake in the play. That fall, Phelps Dodge completed a seven-hole
drill program, and followed it up with an 11-hole program in 1997. Since then
however, little work has been completed. Corner Bay vice president, Steve
Brunelle, said that the company was now taking a very slow approach to Cerro
Verde, and would continue to be very low key, monitoring opportunities as they
might arise.
In September, 1997, Corner Bay made the move that would ultimately change the
company's fortunes, acquiring the Alamo Dorado gold-silver concession in
Sonora, Mexico. Under the terms of the deal, Corner Bay could gain a
100-per-cent royalty-free interest in the property by making cash payments
totalling $800,000 (U.S.) over four years. The company conducted a limited
surface trenching program on the property that fall, and assays revealed gold
values of 0.5 gram per tonne, and a silver content of approximately 45 grams per
tonne.
The results were certainly encouraging, but the property continued to play second
fiddle to the Cerro Verde project into the next year. Early in 1998, the company
completed a $1.2-million public offering to raise money for Cerro Verde, and
Corner Bay pledged to spend only a token amount on Alamo Dorado. The
company did carry out an additional small surface sampling program on the
property shortly thereafter, and the results continued to be encouraging, if not
good. The samples yielded 0.6 gram of gold and 58 grams of silver per tonne,
over an average width of 67 metres, and an expanded surface sampling program
was immediately planned. The results continued to expand the width and strike
length of the mineralization, and Corner Bay began to take a more determined
approach to the property.
A 10-hole reverse circulation drill program was conducted during the summer of
1998, with two holes every 100 metres, covering a 500-metre strike length. The
assays from these samples were good indeed, with individual samples returning
silver values up to 162 grams per tonne, and a gold content of 0.5 gram per tonne.
Alamo Dorado was suddenly beginning to emerge as a promising silver play, with
gold credits as well. The average metal content for all 10 drill holes was 100
grams of silver, and 0.31 gram of gold per tonne. The gross value of this rock was
only about $20 (U.S.) per tonne, but the ore body was beginning to take on larger
proportions, and appeared very suitable for mining by open pit. With the
mineralization still open in three dimensions, Corner Bay now realized that Alamo
Dorado was its main play and threw its exploration program into high gear.
A preliminary metallurgical program was conducted late that summer, and gold
and silver recovery rates in excess of 90 per cent confirmed hopes that the
minerals were not metallurgically complex and might be amenable to heap
leaching. A new round of drilling was undertaken that fall, with five holes planned
to test the down dip extension, and another five were planned in an attempt to
expand the strike length to the north and south. This program returned lower, but
quite satisfactory metal assays, and the zone remained open down dip, and to the
south.
Early this year, Corner Bay announced the results of a prefeasibility study on the
project, conducted by Mintec Inc. The work to date had outlined a geological
resource in excess of 47 million tonnes of ore, grading 42 grams of silver, and
0.15 gram of gold per tonne. Mintec estimated that just under 25 million tonnes of
this would be mineable in an open pit operation. This mineable reserve contained
71 grams of silver and 0.22 gram of gold per tonne. The rough plan envisioned a
4,000 tonne per day mine for the first five years, expanding to 7,000 in year six. A
more detailed metallurgical study continued to provide satisfactory recovery rates,
with about 90 per cent of the gold and 70 per cent of the silver being successfully
extracted.
It was summer, and time for more drilling, as Corner Bay was now remembering
little else but its Alamo. The most energetic program to date was designed to
conduct infill drilling, especially in up dip areas where some of the earlier holes had
stopped while still in mineralized rock. As well, more downdip drilling was
planned, to increase the depth of the mineable reserve, and finally, the company
planned to drill test an interesting zone just to the northwest of the main area. The
program was a success, revealing that the ore body had excellent continuity.
Perhaps of more importance, the work indicated that the previously stated widths
were understated. The latest results suggested an average width of 185 metres, as
opposed to the earlier 105-metre value.
Corner Bay completed a $775,000 private placement, with the proceeds now
earmarked for completing the work required to commence a final feasibility study
on Alamo Dorado. The company planned further metallurgical work, and
additional drilling. Corner Bay planned to recover roughly 16 tonnes of ore by
completing approximately 1,000 metres of large diameter core diamond drilling.
The recovered rock would be used to determine the optimum parameters for a
commercial heap leaching operation. Meanwhile, the width of the ore body
continued to grow as further assays poured in.
Last Thursday, Corner Bay released the final results of the Mintec prefeasibility
study. The total resource had expanded to 75 million tonnes of mineralized rock,
with 49 million tonnes, grading 52 grams of silver and 0.19 gram of gold per tonne
estimated to be mineable by open pit. The company estimated the cost of mining
at 90 cents (U.S.) per tonne of material, and calculated the processing cost for the
higher grade ore to be $2.80 (U.S.) per tonne. A revised mining scenario also
substantially reduced the stripping ratio, from 1.09 to 1, down to 0.39 to 1. The
plan forecasts a cash cost per equivalent silver ounce of $1.71 (U.S.) initially,
climbing to $3.39 (U.S.) per ounce for the final phase of mining. It now appears
that Alamo Dorado is a Corner Bay success story, with a mineable resource of 82
million ounces of silver and 300,000 ounces of gold, and the cash cost of
production estimated to be only 42 per cent of potential revenues.
Nevertheless, questions do remain to be answered. The prefeasibility report did
not address the capital expenditures required to bring the property to production,
and with the results of the metallurgical testing of the 16-tonne minibulk sample still
outstanding, the silver recovery rates are of some concern. Mr. Brunelle said that
the most important thing right now was getting the metallurgical work completed.
He stated that the drilling was now complete, and the tests were expected to run a
minimum of 90 days. Mr. Brunelle said: "This is a very important aspect, as it
relates to the economic modeling that we have done. It will have an impact on the
capital expenditures of the project, and certainly the bottom line on operating
costs, so it's an important part of what we are doing. We expect to get some good
results out of it."
Mr. Brunelle said that it was likely that the company would likely begin a full
feasibility study and start to arrange for the required financing in the second
quarter of next year, although it could be delayed by more drilling if the size of the
deposit were to grow. He said that the company had additional targets, and he
stated that those targets "will probably lead us to an additional program of drilling
on the property."
Corner Bay estimates that the capital expenditure required to develop the mine
will be in the order of $30-million (U.S.), plus or minus about 10 per cent. "That's
one of the more attractive features of the project," said Mr. Brunelle. With the
expanded reserves comes a planned mining rate well in excess of the earlier
proposal. "Things have changed on us since the March Mintec study. We have all
recognized that this thing has gotten a jump up by almost an order of magnitude,"
he said adding, "You are probably going to see seven million tonnes come out of
the pit per annum." That would equate to a 20,000 tonne per day operation, and
would indeed be a dramatic step up from earlier, more modest plans. At that rate,
Alamo Dorado could conceivably produce the equivalent of 10 million ounces of
silver annually, generating nearly $80-million in gross revenue. As a result, the
company appears to be a highly leveraged silver play.
Corner Bay shares traded as low as 10 cents in the early 1990s, but found a
range between 50 cents and $1 for several years as the company began to poke
holes into Mexican rock. The collapse of the junior markets took the stock back
to 25 cents early in 1999, where it languished for much of the winter. As the
significance of the Alamo Dorado find became clearer, Corner Bay shares began
to appreciate in value, rising from less than 60 cents in mid-July to as high as
$3.04 in recent days.
The company has long been covered by John Kaiser's Bottom-Fish Tracker, and
has been recommended by him since late in 1996. Those recommendations now
appear to be paying off. Meanwhile, Corner Bay has been steadily attracting the
attention of brokerage analysts, with Steven Butler of Nesbitt Burns and George
Albino of Deutsche Bank joining the veteran Corner Bay watchers, Doug
Leishman and Art Ettlinger of Yorkton Securities. Mr. Butler calls the company
shares a speculative buy, and suggests a $4.40 target price. Corner Bay shares
closed Thursday at $2.70, unchanged on the day, as investors now await the
results of the metallurgical testing, and hope the silver recovery rates do indeed
hold up.
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