MYNG Transcript of Tom Allinder of HotStockChat.com’s Interview with Terry Turner,
President and CEO of Golden Eagle Mining, Inc. (OTCBB-MYNG)
Tom: Hello and welcome to HotStockChat. My name is Tom Allinder. Today our guest is Terry Turner. Mr. Turner is the President and Chief Executive Officer of Golden Eagle Mining International. Golden Eagle Mining International is traded on the OTCBB market under ticker symbol MYNG.
Hello, Terry. How are you doing today?
Terry Turner: I’m doing very well, Tom. How are you?
Tom: I’m doing just fine. Could you please provide a brief description of Golden Eagle Mining’s business?
Terry Turner: Yes. Golden Eagle International, Inc. is a company listed on the OTCBB and we have been working for the last five and a half years in Bolivia, in a site about 100 kilometers north of La Paz, Bolivia – the capitol there. The gold site was very interesting to the early officers in our company and when I became President of the company in 1997, we really accelerated our exploration efforts on that property and we own 74,000 acres there and it’s been just an incredible odyssey for us to go ahead and explore that property, and prove up just a very small portion of it, in terms of the resources available to us on the property. This is a historical area that has produced 32,000,000 ounces of gold in its known history, so it’s a very, very favorable gold environment, geologically speaking, and we have now come to the point where we’re going to be putting on a plant and going to prove up the reserve that we really have there.
Tom: All right. Now gold is a very hot subject out there right now in the news, and stock-wise it’s certainly a hot sector. Could you give us a little background on Golden Eagle’s operations in Bolivia right now?
Terry Turner: I can, and gold should be a hot topic. I think gold still remains very underpriced and Golden Eagle has tried to fit into a niche where we are a small mining company but we have a very large property in the Tipuani gold-mining district. We also have a huge exploration play over in the Precambrian Shield in the eastern part of Bolivia, so our operations today center around building a 1,000 ton a day plant on our Tipuani gold property at Cangalli, Bolivia, and that 1,000 ton a day plant is a first phase of an operation that we expect to grow up into an 11,000 ton a day plant. That will then prove up the economic viability of our Cangalli property and then we’re going to be able to put, we believe, between ten and 20 plants on different sites that we have identified on the property. Now in the meantime, while we’re building this plant, we continue our exploration efforts on the other side of Bolivia, on the eastern side of Bolivia, in the Precambrian Shield, where we’re developing a property that has all the indications of hosting what are known as volcanogenic massive sulphides, which have tested very positive for gold, silver, lead and zinc, so we’re in a very exciting phase. We’re in our infancy and we think that our stock is very underpriced for where our operation is going today.
Tom: All right. Now in order to help our listeners, and I can say as well as myself too, understand the nuts and bolts of gold mining a little bit better, can you give us an overview of how a mine is developed from start to finish?
Terry Turner: I can. It’s a good long process and I think one that often times investors feel like ought to happen more rapidly and maybe they’re justified in some cases. But ordinarily from start to finish you identify a prospect, in our case a gold prospect. You would go out and do reconnaissance sampling, make sure that you’ve got good geological mapping, you think you understand the geology of the site. That would ordinarily take anywhere from six to eight months, possibly a year. You identify an exploration program that you want to use to prove up your property, to prove up the resource that is available there, and that took us, in our case, about two and a half years to really identify the resource. Then we went about going into the reserve process and we discovered that our property was so vast that it was very difficult to prove up a reserve. We had had two different studies – one by an American geologist, a graduate of the Colorado School of Mines – he came back and told us that we had 5.1 million ounces in a reserve on the property and then we had a Bolivian geologist who had taken his master’s degree in geophysics at Washington University in St. Louis – he went on the property and came back and said that we had 6.4 million ounces in a proven reserve. We don’t claim any reserve by the definition of the SEC Guide 7. Rather than do that, what we’re going to do is take this 1,000 ton a day plant and prove the economic viability – in other words that we can extract the gold and do it at a good net economy to our shareholders and, by doing so, we believe that we can prove up a substantial reserve on our property and really show that the property will host between ten and 20 plants of the size of the 11,000 ton a day plant that we’re programming.
Tom: I’ve read a lot of numbers before as far as costs associated with mine development and the actual mining of a site. What do you project the production cost for Golden Eagle will be with regard to your mines in Bolivia?
Terry Turner: Well, Tom, that is an excellent question because you see all of the large mining companies, all of the majors, consolidating, joining up because they have to reduce their cost and in today’s world, at today’s gold prices, we have to see a low production cost per ounce. One of the fascinating things about this property, because we have high volume, projected high volume; we have electrical power right over the property – a 25-megawatt high-tension power line that runs over our entire property. We have a low-cost labor force but very, very competent and plus we’ve got a lot of gold prison and that doesn’t hurt, certainly for lowering your costs, and Dr. Ronald Atwood, who is the former Chief Metallurgist for Newmont Mining, and he was our Vice President, he has projected that we will have a cost of about $75 per ounce, which at today’s price – and gold closed today at $325 per ounce – would mean that we would be netting about $250 per ounce, which is outstanding in the industry.
Tom: Yes, that’s certainly a nice profit. How many total acres does Golden Eagle lease or own in Bolivia at this time?
Terry Turner: We currently own in the Tipuani gold mining district, which is this historical district I’ve been talking about, 74,000 acres of ground. The other side of Bolivia, on the eastern side in the Precambrian Shield, which is a different geological setting, we own 125,000 acres of ground under concession from the Bolivian government.
Tom: All right. I would like to get into your production as far as the present time goes. How much gold is Golden Eagle producing today?
Terry Turner: Golden Eagle is not producing anything today, as we speak, because we’ve got everything down while we’re building our plant in its first phase, and we project that we will have that completed by mid- to end of August of 2002. Now we cannot guarantee that, but that is our current projection and we hope to be able to hit that completion date. When we’re up with that plant, we will be able to then grow up into the 11,000 tons a day. At 11,000 tons a day, we’ll be hitting between 100 and 300 ounces a day, based on our projections, which will make us a producer of about 30,000 ounces of gold per annum, again, based on projections by Dr. Atwood.
Tom: On your website, you discuss the company’s future and your management is committed to the following, and that is confirmation of gold resources on the Cangalli gold deposit, and identification of reserves, if any. Can you give us a figure for the total gold reserves at this site?
Terry Turner: Well, as I said before, we’ve had numbers come in between 5,000,000 and 6,000,000 ounces of a proven reserve. Now our object with this plant is to prove up that reserve because we don’t claim reserves based on Guide 7 of the Securities and Exchange Commission. The reason being is that we really have to show economic viability of the gold that we’ve identified, the resources that are there. The total resource that has been called on the property has been in the neighborhood of 170,000,000 ounces, which would make this one of the largest gold deposits in the world. Now, as I said before, we have yet to prove that up and we’re going to be doing that over the course of the next several months. We believe very firmly in the property, it’s a matter of proving it up and making announcements to the public that will illustrate or confirm what we believe is there.
Tom: All right. I know that these are some rather tough questions for you to answer, especially at this time right now, but I thought that I would ask anyhow. Now the second part of that plan was defining a mining plan, on its own or in cooperation with a joint venture partner. Can you bring us up to date as far as that’s concerned?
Terry Turner: Yes, we’ve been approached by a number of potential joint venture partners. We have decided that we were going to be taken advantage of if we didn’t go about proving up the reserve that we believe is on our property, so we have set out a mine plan that includes a method of mining this property that has never been tried before. It is a form of block caving, it is called conal subsidence, and what effectively we do is we tunnel under the ore with an addit, a mine addit or an underground mine, and then we have various lateral mine addits that go out and they have points that draw the material down to these points by gravity. You open up an area about two meters by two meters in the ceiling, and allow this material to cave into that reinforced concrete draw point. Now that material will then be conveyed out to the processing plant and the tailings will also be conveyed which really is a very effective way of cutting our costs because everything is handled by electricity instead of having to burn diesel fuel in this area, which is very expensive.
Tom: Now the final point of those three points that were made on your website was creating an atmosphere while operating and leaving a legacy after completion, of support for health, education and economic stability in the region. You had a recent development here with your news release on 12 April. Can you elaborate on this?
Terry Turner: Yes. We have always tried to be a mining company with a social conscience. We believe very much that you have to return more to the people that live in the area than you actually take out of the ground. We believe that’s a good philosophy. We, over the last six years that we have been in the Cangalli area, we have maintained the only physician in that area. He’s been on our payroll. We rehabilitated the Cangalli hospital and it’s now called the Golden Eagle hospital. We recently installed an x-ray machine in there and we’ve got an obstetric nurse in there that helps with the deliveries, because we found that between 70% and 80% of the people who live in that area were women and children, so women’s needs became very important to us and there have been a number of babies delivered at that hospital. We also provided all of the school supplies to the 137 children that attend the Cangalli school. My superintendent found that those children were attending school with nothing in their hands and it seemed very strange to him. He found out later that because of the economic recession in Bolivia, they just didn’t have the money to provide for their own school supplies. So in April we donated all of the school supplies for an entire year for all of those kids at the Cangalli school, plus we provided them with sports equipment and other supporting equipment. We had already provided videos, charts, physiological charts, teaching aids. Our concept is that we have to leave the community better than we found it.
In terms of the environment, any water that we take out of the Tipuani River, we return 100 times cleaner than the water that we took out, because the tradition in this zone over the 400 years it has been contributing to the Bolivian economy, has been to dump tailings into the Tipuani River and send them to Brazil. Our concept is to orderly put our tailings into tailings dumps and tailings holding areas where they can be re-contoured and be receded and re-circulate our water, but any water that does make it back to the Tipuani, as I said before, will be 100 times cleaner than the water that we took out.
Tom: All right. Along the lines of positive press, Golden Eagle was recently featured in Bolivia’s premier resource and mining magazine, which is titled Energy, Mining and Construction, and you have a reprint of this article on your website for all to read. I noticed that it had mentioned that many other exploration companies had left Bolivia due to the economy. What gives with Golden Eagle and its ability to hang in and execute your business plan?
Terry Turner: Well Golden Eagle has tried to be a very lean operation. We have tried to keep our costs down while we’ve been exploring these properties, despite the fact that exploration costs are ordinarily very high, and we have been able to identify and categorize our resource, estimate our resource, on a very tight budget. The other thing is we’d had a commitment to Bolivia and we have stayed, despite the fact that gold sunk at one time to below $260 an ounce, and now we’re being rewarded by seeing the gold press climb out again and there’s much more interest in gold, and we’re glad we stuck around. We saw a lot of major mining companies pull out of Bolivia and head for other, more well-identified mining opportunities elsewhere in the world. Well no one had identified their mining opportunity as we have identified ours, and we believe that we’re ready to go forward and we’re very, very excited about that opportunity.
Tom: All right. Along those lines again, your company was praised by the gold mining co-op in Bolivia’s largest circulation newspaper. Now you’re buying the co-op out. When will this purchase be finalized?
Terry Turner: Well, that’s a very good question, one that all of our shareholders have been asking now for the last three months. I recently returned from Bolivia four days ago and I can tell you that we have had excellent, excellent progress on our buy out of the Cangalli Gold Mining Cooperative and I can only say that I think we’ll be making what our shareholders will see as a very positive announcement here in the next few days.
Tom: All right. Now I’m going to ask you a little bit more difficult question here, and it’s a question that’s on the minds of many right now, and that’s not just your company but every company, and that is finances. How well is your company financed to continue operations in Bolivia?
Terry Turner: Well, we announced in January of 2002 that we had put in the bank $1.3 million to be able to go forward with this first phase of our plan, and of course we’ve been progressively spending that money as we’ve acquired equipment. We ordered equipment out of Canada; we ordered some equipment out of Tennessee – very specialized pieces for our flow sheet – that equipment has arrived in Bolivia. We purchased a lot of equipment in Bolivia and we’re currently finishing some very, very delicate negotiations with Comibol, which is a national mining company in Bolivia, for the purchase of a very large inventory of equipment from them at extremely reasonable prices and very reasonable financing. So, we believe that we’re in a good position to finish our first phase of construction. We currently have about ¾ of a million dollars in the bank to finish out that first phase of construction, and then to grow up into our 11,000 ton per day operation we’re going to need between $2 million and $3 million to finish that out and we think that we have shareholders and others who have expressed an interest in helping us do that.
Tom: All right. Now with the rise of price of gold, and this has been a rather dramatic thing that’s happened here over the last several weeks actually – have you had anyone come to you, with the exception of the shareholders that is, with an interest in financing your operations?
Terry Turner: Yes, we have. We’ve had, I would imagine, I myself have fielded 20 different offers for financing, it’s a matter of sorting through those, it’s a matter of figuring out which ones are really economical for our company and our shareholders. We probably can keep it in house, and by that I mean we probably could stay within our current shareholders to be able to finance our growth up through our final phase in our plant.
Tom: All right. Now Terry in closing you wanted me to let you mention something regarding your stock and this interview, so go ahead.
Terry Turner: Tom, we would certainly like to indicate to everyone listening that the information on this interview is not all of the relevant information about Golden Eagle, and that pertinent information regarding the company should be reviewed and can be found at our website, www.geii.com, where our management recommends that all shareholders and prospective shareholders review our disclosures, our risk statements, and our previous press releases, and certainly our annual reports on form 10KSB, our quarterly reports on 10QSB and our current reports on form 8K.
The other thing that we would like to say is that some of the statements in here have been forward-looking statements and that we can’t guarantee the future conduct of our business in response to issues that are raised by third parties that may be dependent upon a number of different factors. We just want everyone to keep in mind that terms like “expects to,” “projects,” “estimate” and “plans” are forward-looking statements and the accuracy of these statements can’t be guaranteed. We believe that these projections can be met but we cannot guarantee it. So please look at our disclosure documents at our website where you can gain access to the SEC Edgar electronic filing service and that’s our recommendation. Thanks.
Tom: All right, Terry. We’d like to thank you for being on this session of HotStockChat. We certainly appreciate you taking the time to be with us today.
Terry Turner: Well it’s been my pleasure, Tom. Thanks for the opportunity.
End
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