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Strategies & Market Trends : Winter in the Great White North -- Ignore unavailable to you. Want to Upgrade?

To: marcos who wrote (7262)	11/22/2006 12:35:34 PM
From: teevee	Read Replies (1) \| Respond to of 8273

Someone is else on the DRA story. Interesting post here: stockhouse.com RED DRAGON: (just like Golden Star, Diamondfields, Arequipa, Aurelian: an early stage geologists oportunity?) EARLY STAGE (GEOLOGISTS NO-BRAINER) Red Dragon’s potential rosy future is tied to the (undrilled) Weixi silver-zinc-lead project (Ag- Zn- Pb) , north Yunnan Province, China. Weixi is a SEDEX (sedimentary exhilarative) depost (the mineralization was originally deposited in layers from hot springs into a huge marine sedimentary basin. Thus SEDEX deposits are tens of meters thick and extend with extraordinarily consistency over many square kilometers. (Mt Isa and Hilton mines in Australia and the Red Dog mine in Alaska). HIGH SURFACE GRADES- HUGE TONNAGE POTENTIAL The Weixi mineralization is intermittently exposed through overburden over more than 16 kilometers. The company reports fairly consistent surface grades averaging about 26 gm/tonne of Ag, 9% Zn, and 5% Pb. At current metal prices this equates to about $US 475 per tonne value (equivalent to 0.76 oz gold/tonne or 0.35% uranium oxide/tonne). WORLD CLASS MINE POTENTIAL At the “main zone” a reasonable 100m (wide) x 700m (long) x 350m (depth) volume would potentially contain about 74 million tonnes of rock, of $US 35 billion gross value. On the “extension” a conservative 10m (wide) x 15km (long) x 700m (deep) volume would possibly contain an additional 315 million tonnes, worth about $US 150 billion. CURRENT $1.40/SHARE ($23 TO $124 /SHARE POTENTIAL) Lets compare this with George Soros’ Apex Silver (AMEX:SIL). At its Bolivian San Cristobel deposit Amex reports a 230 million tonnage of 1.58% Zn, 0.58% Pb, and 63gm Ag/tonne, (at current metal prices worth about $US 104 / tonne) calculating a gross value of about $US 24 billion. Currently 61 million share Apex Silver, trading at $US 17 /share, has a market capitalization of about $US 1 billion. Therefore the market values Apex at a discount of 1/24 (4.3%) to the gross mineral value. Red Dragon currently has about 73.5 million shares fully diluted and thus has a projected share value of: (1) Main Zone: $US 35 billion x 4.3% divided by 73.5 million shares is worth about $CDN 23./ share, or (2) Main Zone + Extension: $US 185 billion x 4.3% divided by 73.5 million shares: $CDN 124 / share. WHY SO CHEAP? So why is such a potentially valuable project undrilled and Red Dragon currently trading at only $1.40 ? (1) Weixi is located in mountainous terrain at high altitude (southern Tibet Plateau) and thus like Apex Silver’s San Cristobel mine had sub-economic grades at the metal prices of a few years ago. However with China’s and the worlds acute shortage of Zinc and eminent mine closures the prognoses for Zinc prices and a successful drill program at Weixi in particular are outstanding. (2) Red Dragon is currently negotiating the exclusion of the project from the development restrictions of a nature reserve. In China nature reserves are the domain of the provinces, and Yunnan Province is desperate for development to halt the population drain to the booming cities. Fortunately Bolivian-Venezuelan-Mongolian style expropriations have not yet prevailed in China!