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Gold/Mining/Energy : Claude Resources TSE.CRJ Undervalued Junior Gold Anyone? -- Ignore unavailable to you. Want to Upgrade?

To: Rick W. who wrote (154)	1/30/1999 5:29:00 PM
From: Gord Bolton	Read Replies (1) \| Respond to of 359

I started this thread in October of 1998 to; #1 alert people to both an excellent short term and long term investment with virtually no downside and huge upside potential. #2 encourage discussion by shareholders and potential shareholders about the future prospects for Claude Resources. For those who believe that gold has no upside potential this stock may be of little interest and that is fine. For those who believe that gold may increase in value relative to the dollar and or other commodities, I believe that this stock will be of great interest. Even if gold were to remain in the $285 to $300 price range, Claude will be both profitable and increasing in stock value due to increasing reserves and production. Claude's cost of production is in the $200 dollar per ounce range which allows for profitable production. Claude has negligible debt obligations at this point in time which allows for expansion and or acquisitions as opportunities arise. This is a growth oriented company with specific targets and plans in place. Claude has a modern 700 tonne per day mill at the SeaBea mine in Northern Saskatchewan. When the SeaBee mine went into production in the early 90s there were 300,000 ounces of reserves defined on the SeaBee property. At this point in time due to continued exploration there continues to be overr 300,000 ounces in reserves including a large quantity of high grade ore (26gpt)from a blow in one of their veins which remains open to depth. A large quantity of this ore has been broken and is blended with lower grade ore to maintain an average mill grade of 10 gpt. Claude will be doing additional exploration work on the surrounding Currie Rose and Santoi properties this winter to satisfy obligations and increase reserves. Some ore will be mined from the Currie Rose property this year.(30,000 tonnes) 1 troy ounce = 31.103 grams The Madsen Property was aquired in the spring of 1998 by Claude. The Madsen property included an 800 tonne per day mill and a 4000 foot shaft, both of which have been fully refurbished by Claude. The Madsen property at Red Lake Ontario produced at least 2.5 million ounces of gold from high grade ore from the Austin zone prior to it's closure in 1976. The grade of the ore increases from average .2 ounces per tonne near surface to .5 ounces per tonne at depths explored so far. Since the aquisition of the property Claude has conducted an exploratory drilling program near the Austin Zone. Earlier this month Claude reported that they had completed nearly 80 holes from surface and horizontally from the second level of the Austin Zone. The Austin zone apears to have a sister dubbed the McVeigh zone about 100 meters away. Claude currently has one drill working from surface and two drills operating from the Austin Zone to further define and explore the McVeigh. The McVeigh shares similiar geological characteristics with the Austin zone. Continued drilling indications confirm that grade is improving with depth and that the mineralization from the Austin Zone is mirrored in the McVeigh. The Austin zone is open at depth in rich ore (.5 ounce per tonne)The Austin zone is being gradually dewatered to facilitate mining and further exploration of the McVeigh. The mill is currently in full production and drawing ore from both the upper Austin and McVeigh zones. The Madsen property has never been fully explored and includes numerous targets which may further add to the ever increasing proven reserves on the property. If expectations continue to be met in the exploration program miling capacity will need to be greatly increased to take advantage of the resources on the property. The question for the investor is how many millions of ounces will be proven on the Madsen property. Unlike many speculative exploration plays there is no downside here at all. Claude Resources is still greatly undervalued by the market at the current price. Claude closed January 29th, 1999 at $2.00 which is approxiamately the share value that Wood Gundy, RBC Securities and myself would attribute to the Seabee mine in Saskatchewan. And there is more. Much Much More. In the spring of 1998 Claude also purchased the Tartan Lake property near Flon Flon complete with modern 440 tonne per day mill, rolling stock and mining equipment from Vista Gold Corp. Nearby Claude has very promising exploration programs underway at Amisk and Laural Lake. Initial exploration on the Amisk/Laural Lake project revealed a high grade 1.5 meter vein containing 1.5 million tonnes of .39 ounce per tonne ore. The vein is open on strike and at depth. It is unlikely that this vein exists in isolation. Once the Madsen program is completed attention will focus on putting the mine and mill near Flin Flon into production. This can be accomplished in very short order as the mill, complete with permits and tailing ponds is in place serviced and ready to go. This is no VSE pumpy dumpy. This is a blue chip company in growth mode in position to take advantage of excellent opportunities as they arise. And last year Claude aquired property in the Jessop township near Timmons, Ontario. The drill will test this property in the very near future. There may be further exploration programs that have yet to be announced this winter. In addition to all of the above Claude has a passive interest in producing oil and gas fields including a NGL plant which are currently valued at .30 cents per share. Wood Gundy Evaluation of net presnt value. ----------------millions -------per share Seabee----------$64.3-----------$2.07 Madsen-----------40.9------------1.32 Oil And Gas-------9.2------------0.30 Amisk/Tartan------4.9------------0.16 Cash--------------2.0------------0.06 Debt--------------0.0------------0.00 Total----------$124.9-----------$4.03 Add $.40 per share for each additional 150,000 ounces drilled off or $2.66 for each million ounces drilled off. RBC Dominion Securities Evaluation "At present we are discounting the gold assets at 5% with a gold forecast of US$296 in 1998, US$330 in 1999, US$340 in 2000 and flat at US$340 thereafter. We have broken out the components of Claude's $2.55/sh net asset value (NAV) as follows: C$1.72/sh for the Seabee asset; C$0.40/sh for Madsen assets; C$0.20/sh for the oil and gas assets and approximately C$0.23/sh in working capital. The company is debt free. The C$12MM in value assigned to the Madsen asset only represents the present value of future free cash flows from the ore left behind in the Austin zone by the former miners. It does not include any value for the potential of the McVeigh zone. Hypothetically speaking, if the McVeigh zone were to "mirror" the Austin zone, then we estimate its NPV could be C$131MM or C$4.29/sh at US$340/oz gold." This is how I see things playing out in 1999. Claude will continue to gradually dewater the Madsen mine allowing access to richer grades of ore from the lower levels. I should emphasize at this point that the Austin zone is by no means exhausted. Production ceased in 1976 due to a very low gold price and other interests and involvements of the owners. Dewatering will allow Claude to further test and evaluate the McVeigh zone at depth. Improvements will be made for efficient access to and transport of ore from the McVeigh zone. As the size of the mineralized zone is increased measures wil be taken to increase the capacity of the mill. There is no reason to believe that mineralization on the Madsen property is limited to the Austin and McVeigh zones. THere may be multiple or even numerous other zones of mineralization on the property. Claude may very soon be in a position to announce that they have drilled off at least 1 million ounces in the McVeigh. I expect to see at least 3 million ounces from the McVeigh eventually. Sometime during 1999 we are very likely to see a significant rally in the price of gold. Commodity prices are generally cyclical. Gold has seen a twenty year low in 1998. There is currently an unpresidented short position in gold, which means that when gold does move up it is likely to move up very rapidly and to a high level if only momentarily. This movement would allow Claude to lock in sales at a much higher price than the current price. The Amisk/Laural mine and Tartan mill would be brought into production. The share price of Claude should begin a gradual rise from it's currently much undervalued status and will spike sharply upward on drilling news and increases in POG. There may be other pleasant surprises along the way. The current $2.00 share price will not be around for long and the sellers are likely to become scarce as the value and potential of the properties becomes better known. Continued success drilling and an upward movement in the POG may quickly propel the stock price towards the $10.00 range. I am a little more bullish than the banks on this stock. Do your own due dilligance and happy investing.