Fairmile Gold Corp March 1999 Newsletter
Fairmile Gold Corp. continues to make important changes in order to preserve shareholder value and prepare for the inevitable upcycle in gold.
Results of the Annual General Meeting
Fairmile held its AGM at the Crown Plaza Hotel in Vancouver on February 26th. Following the meeting, Joe Kizis presented an update of Fairmile's projects.
There was strong representation at the AGM, with approximately 50% of the Corporation's issued and outstanding shares represented by proxy. An overwhelming majority of those shares approved all of the ordinary and special resolutions and elected each of the directors. Each resolution was approved by at least 92.3% of those shares voted by proxy. Each director was elected by 99.6% of those shares voted by proxy. As stated in the Information Circular, those shares that were not voted via proxy were considered a vote in favor of all of the resolutions and all of the directors. The directors appreciate this strong show of support.
Michael Raftery appointed director
Michael P. Raftery, C.A. has been appointed a director of Fairmile, subject to regulatory approval. Michael is a Chartered Accountant, and since 1971 has been a director and officer of many publicly listed companies in Canada. Since 1984 he has specialized in providing accounting, management, securities regulatory compliance, and corporate secretarial services to companies listed on Canadian stock exchanges and on NASDAQ. Michael will provide Fairmile's Board with expertise in finance, complimenting Fairmile's other directors who provide expertise in exploration geology (Joe), mine engineering (Tom), and law (Mike).
Agreement to defer BV land payment
Fairmile reached an agreement with Repadre Capital Corporation to defer for a year Fairmile's land payment for the Buffalo Valley project. Repadre will receive 700,000 common shares of Fairmile Gold Corporation as compensation for the deferment.
Fairmile has been making payments of US $200,000 per year to purchase the underlying lode claims at Buffalo Valley. Fairmile owes US$500,000 to complete this purchase. Repadre purchased the underlying ownership of the lode claims from the original vender last summer, a strong show of support for the project.
Update on Investor Relations
Comments to date regarding the Newsletter have been very favorable. We intend to make the Newsletter our basis for communication with our shareholders and potential shareholders; thus, we will discontinue the toll free number. We can still be reached via phone, fax, or email. This minor change reflects management's opinion that real value is built over time. Therefore, we will issue a Newsletter approximately every other month, which is a frequency that we feel is reasonable in order to judge the progress of our company.
We encourage all of you to sign up for email distribution of your Investor Relations information, as it saves an enormous amount of time and money. In addition, our Newsletter and other Investor Relations information will be posted on our Web Site www.fairmile.com.
Questions and Answers
Question: What did Fairmile's legal council have to say about PriceWaterhouseCooper's (PWC) decision to drop Fairmile during the audit? Does Fairmile have legal recourse?
Answer: Fairmile's legal council advised us not to pursue this case, and the Board has decided to take their advice. Although PWC's decision caused Fairmile embarrassment and resulted in a period during which Fairmile stock was halted, actual physical damages would be very hard to assess. Canadian courts are reluctant to grant damages without actual physical damages; therefore, expensive legal action would not likely result in success.
Question: How does the 600,000-ounce-gold resource at Buffalo Valley compare to other resources that have been identified?
Answer: The simple answer to this complex question is that the resource does compare very favorably to other early stage projects.
As most of you know, a resource is further divided into measure, indicated, and inferred based on the level of confidence, usually determined by the density of drilling. More than 75% of our Buffalo Valley resource is in the measured and indicated category (determined by Humboldt Mining Services), showing a high level of confidence in the resource.
Mining Investment Services (see Mining Journal, 9/18/98) reports the average grade for 281 early stage projects (those with some category of resource defined) in North America to be 0.031 oz. Au/ton, with the average resource containing 680,000 oz. Au. This compares well with Buffalo Valley, and shows that the Majors have a lot of projects to investigate. The study above does not weed out those projects that have metallurgical or logistical problems, environmental or legal problems, or do not have exploration upside. When these factors are considered, the number of attractive early stage projects dwindles considerable.
The Buffalo Valley project is attractive because it does have strong upside exploration potential, it has numerous logistical advantages being located in central Nevada, the preliminary metallurgical testing is favorable, and there are no unusual environmental or legal concerns regarding mining. The large number of mines and advanced projects surrounding the Buffalo Valley project attests to the likelihood of further mine development in this region when gold prices improve.
One project with which we can make a direct comparison is the Converse project (North Redline deposit and South Redline deposit). The project is a joint venture between Newmont (50%), Cameco (25%, currently operator), and Romarco (25%), and the project is located approximately 6 miles north of Fairmile's Buffalo Valley resource. The Converse project is considered an advanced stage project, not yet in production. Newmont intends to take over project management of the Converse project after Cameco and Romarco complete their earn-in expenditures (expected during 1999). The table below compares the two projects.
Converse Buffalo Valley
Resource Oz Au 1,009,800 600,106
Resource grade 0.021 opt Au 0.029 opt Au
Royalty 5% NSR 3% NSR*
Water Table mostly below entirely above
Host rock Havallah Havallah
Gravel cover entirely covered partially covered
Other Au zones none reported several
* An 8% NSR exists on the Sante Fe lease (1/2 section in the western portion of Target L), which does not contain any of the current resource.
As shown in the table, these two projects are very similar, although Fairmile's Buffalo Valley project is not as advanced as Converse. Newmont is expected to evaluate the Converse project for commercial development as a satellite operation of its Lone Tree Mine Complex, similar to the way it handles its Trenton Canyon Complex (located directly north and northeast of Fairmile's Buffalo Valley project).
Fairmile Gold's Projects
Buffalo Valley Project - Lander Co., Nevada
· Resource of ~600,000 ounces gold (~20 million tons @ 0.029 oz. Au/t)
· Much exploration potential remains
· Resource is oxide, above water table
· Preliminary metallurgy favorable
· No unusual environmental concerns
· Excellent logistics: roads, power, mining supplies, manpower
· Numerous deposits within 20-mile radius, including (clockwise from north): Converse, Lone Tree, Marigold, Trenton Canyon, Copper Basin, Copper Canyon (includes Fortitude), Cove & McCoy.
Highland Project - Lander Co. Nevada
· Minor historic production of high-grade gold
· Geologically similar to other bonanza-grade gold camps
· No drilling below 200' vertically beneath strongest veining
· Numerous exploration targets with strong surface gold values
E-mail distribution…
It's fast, it's easy, and it saves us a lot of time and money! That's time and money we could be using to find more gold. So… please sign up to have your Investor Relations info distributed via email. Those of you brontosaurus' without email will continue to receive information via fax or snail-mail.
Hope for gold prices?
The World Gold Council (Business Wire, 2/17/98) reports that fourth quarter 1998 demand for gold reached the highest level ever recorded for any three-month period. High demand in the USA, Europe, Brazil, and Mexico, with steady demand in the Middle East, more than compensated for the continued weak demand in Asia.
This Newsletter
...will be published bimonthly. Initially, however, we expect to produce the Newsletter monthly in order to keep our shareholders up to date while we undergo the recently announced changes.
We invite you to email your questions to us, and we welcome your suggestions for articles that may be of interest to our shareholders.
You may contact the Company at:
Fairmile Gold Corporation
PH5-1060 Alberni Street
Vancouver, BC CANADA V6E 4K2
Telephone: (604) 257-4254
Fax: (604) 608-2949
Online at: www.fairmile.com
E-mail: info@fairmile.com |
