Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (19414)	5/12/2008 10:49:45 AM
From: LoneClone	Read Replies (1) \| Respond to of 195027

Goldsource Mines Sparks Saskatchewan Coal Frenzy By Our Canadian Correspondent minesite.com[tt_news]=45609&tx_ttnews[backPid]=755&cHash=1a976feed6 It’s all a bit reminiscent of Diamond Field Resources’ discovery of the giant Voisey Bay nickel deposit in Labrador back in the 1990s, when the original target was diamonds. This time round, tiny Canadian-listed Goldsource Mines has inadvertently cut thick coals seams while drilling for diamondiferous kimberlite in Saskatchewan. Goldsource, which was trading at C$0.30 per share on 22nd April when the company reported that drilling had been suspended on its Cowan Lake, Crossroads and Border properties in central and eastern Saskatchewan due to spring holidays. At that stage out of a permitted 22 holes had been drilled. None of those holes hit the targeted kimberlite but two holes drilled 1.6 kilometres apart on the Border property did cut a coal seam that showed a thickness of 25 metres from one hole and 35 metres from the other, both intersections about 80 metres down hole. The news of the discovery of this previously unknown prospective coal district started a speculative frenzy, partly driven on because the project has road access and is only about 5 kilometres from a rail line. A total of 47 coal samples were submitted for analysis but initial descriptions of the coal have indicated that it isn’t lignite, the low margin coal that makes up the bulk of Saskatchewan’s coal production. There are currently three operations located in the southern part of the province. The results from the samples came back as "high volatile bituminous C and sub-bituminous A", but because the company was testing for kimberlite the standard precautions for protecting the coal from contamination from drilling fluids and extraneous moisture were not in place, so the quality ranking may yet be higher. More importantly, tests designed to show whether or not the coal has coking characteristics came back negative. But that too may be attributable to the presence of excessive drilling fluids. Perhaps some wishful thinking. Overall, the initial analyses for 22.6 metres of continuous coal in each hole show a range of calorific values of 8,100 to 10,000 BTU (British Thermal Units) per pound, giving an average of 9,200 BTU per pound. The initial sulfur content ranges from 0.25% to 3.84% with an average at around 1.5%. As Goldsource’s president, Scott Drever, puts it: “In light of the apparent nature and quality of the coal, we are truly excited with this new coal discovery in Saskatchewan. The information to date suggests the potential to establish a significant resource tonnage in a relatively short time. We believe that the thickness of the seam, its apparent low geologic complexity and excellent thermal characteristics will make it unique, certainly to Saskatchewan and perhaps to Canada. Our next step will be to attempt to determine the aerial extent and thickness of the seam from our geophysical database. We will follow up with confirmation drilling in June or as soon as weather and permitting allow." Clearly it’s early days, and Goldsource currently has a market value of about C$72 million on the back of two coal intercepts that appear to have non-coking characteristics, encountered 80 metres below the surface and located in an extremely distant area about 50 kilometres north of Hudson Bay, Saskatchewan. That said, it did not take long for the opportunistic bunch on Canada’s junior bourse to catch a ride on the Goldsource coal train by making applications for coal permits in the area of Goldsource’s find. Leading the area play charge was Swift Resources, and Swift was followed by Saturn Minerals, Gold Star Resources, and Canasia Industries. To give you an idea of the trading action in this play, in the first three trading sessions after Saturn announced it had made its coal application, over 39 million shares traded and their value jumped from C$0.27 to as high as C$0.58 from around C$0.27. That’s a huge feat given that the company has only 30.8 million shares outstanding. For investors looking to jump into this play, the train may have already left the station, but if the story does have legs, look for companies with management teams that have a track record in mining and exploring for coal deposits. Despite the company’s name, and the nature of its original target, Scott and his team at Goldsource do have that. Scott has also been excellent with his public disclosure by clearly warning investors “that only two holes have been drilled on the property and that further drilling and significant testing is required to determine the mineability and potential economic value of the coal.” Ending on an optimistic note, it would be so ironic that a tiny company named Goldsource, looking for diamondiferous kimberlites, finds coal and jump starts investor interest in Canada’s junior explorers. We will see.