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Strategies & Market Trends : Natural Resource Stocks -- Ignore unavailable to you. Want to Upgrade?

To: isopatch who wrote (5897)	1/7/2004 1:47:11 AM
From: croesus1111	Read Replies (2) \| Respond to of 108830

Talked to the CAU president in the afternoon. Dick DeVoto says that Canyon has $5 million in cash on hand to run the company, finance the takings lawsuits, and run the campaign to reverse the initiative that banned cyanide heap leach mining in Montana. Although the Briggs mine is winding down and mining will be finished by about April, they will continue to produce gold there for the next year and a half or so, he says. He says they expect to get another 50k ounces of gold out of that mine. He says that the company will have drill results for the exploration in Oaxaca, Mexico soon. He did not seem excited about the prospects for that exploration. He did say that plans are being made to utilize the equipment that is currently being used at the Briggs mine, to create an income stream once the mining is done at Briggs. CAU has hired a team with an excellent track record, Dick says, to run the potential recall campaign against I-137. Preliminary polling indicates that 65% are in favor of recall, he says. I asked whether the clean-up of their old Montana mine would be completed before the campaign heats up, because I am concerned that the ongoing clean-up controversy will be used by the opposition. Unfortunately they will not be able to finish the clean-up by that time, as there are water quality issues that cannot be solved only by moving dirt, and will require time for the contaminants to leach out. I asked about the takings law suit. There is a suit pending before the Montana Supreme Court. Normally a decision would be expected by about June, but there is no requirement for the court to act by then. (Editorial note: If I were in the justices' shoes, I would consider waiting until after the initiative petition was voted on, in an effort to avoid dealing with this hot potato. Which would screw up my personal trading strategy, where I have recently taken some profits [bought at $1.90, sold half at $3.98], assuming that CAU would lose the court case and the stock would plunge, allowing me to rebuy at a good price. That could still happen, but it might not.) If the Montana court case loses, the company will appeal in federal court where Dick says they feel they have a better chance. The company would prefer to go the electoral route rather than the judicial route. It's important to note that when I-137 passed, there was a law on the books that prohibited Canyon from participating in the election; the law was later declared unconstitutional, but too late for that election. There is another issue, which is that Canyon may have lost or be in the process of losing its permit to mine the MacDonald deposit. CAU contends that this is an illegal outcome and a breach of contract, but that too may have to be adjudicated. So even if I-137 is reversed, there is a potential for another legal obstacle to the mine. Please be aware that I did not take notes on this conversation, so what I've written here is my recollection of a conversation that took place this afternoon.