Gold Speculator - Grandich Blog http://www.gold-speculator.com/ News, commentary and company reviews by Peter Grandich. You can subscribe to his commentary for free by visiting grandich.com en Fri, 10 Sep 2010 07:40:33 GMT vBulletin 60 http://www.gold-speculator.com/images/misc/rss.jpg Gold Speculator - Grandich Blog http://www.gold-speculator.com/ Your Kindness is Needed http://www.gold-speculator.com/grandich-blog/37800-your-kindness-needed.html Thu, 09 Sep 2010 22:22:05 GMT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio!
September 09, 2010 12:22 PM


Dear Readers,

I like to urge all of you and especially those of you in the Vancouver area to help this cause. Imagine both the child and mother going through this! I’ve known Anna and have had Garde’s excellent service when dining in Joe Fortes.

I know you don’t know them but what would your act of kindness mean to them and you?

I will speak to anyone for one hour if they make a $500 or more donation (not ticket purchase – straight donation). Contact me and Robert Ferguson if you like to do this.

Thank you

Peter Grandich

Below is a message from Robert Ferguson

“Some of you know Anna from the numerous times she assisted with us at Trade Shows and some of you know Garde from his many years at Joe Fortes and the Cannery. Some of you don’t know them at all but I am hoping you can help me with this important fundraiser. Purchasing tickets will be a great help to this family and should also prove to be a great evening. On behalf of the family thank you for any support you can offer”.

We are holding a fundraiser for our dear friends, whose lives have been severely affected by cancer.

Anna was diagnosed 3 years ago with breast cancer and then within the same week, she was told she was pregnant.


Baby Nolan, now 2 1/2 years old, is a miracle child who survived Anna’s surgery for a mastectomy, as well as her 6 rounds of chemo while she was pregnant with him. He was born prematurely at 3lb 13oz, and endured 3 surgeries and 7 resuscitations. After spending over 6 months in the hospital, Nolan was diagnosed with low muscle tone and other developmental troubles. Thankfully, he has shown amazing progress with neuromuscular re-education treatments in San Francisco.

Unfortunately, Anna has been battling lung, bone and now liver cancer.

Their future is very uncertain and they need HELP. Anna undergoes expensive injections hoping to save her life, while the ongoing neuro-muscular treatments and travel costs for Nolan are not covered by our medical system. Our dream is to provide lifelong security and care for Nolan if Anna loses her battle.

****Please support us by buying tickets to the fundraiser or by donating items for our silent auction.****

The event will be held at one of Vancouver’s premier venues featuring live music by The Blues Piggies, silent auction, and lots of fun with friends. Tickets can be purchased for $40 each from any of the administrators of this event.

Please help us spread the word!* Tickets available at:

Crossroads Wellness Centre,

726 West 16th Ave. and Dr. Steven Moore, D.C.;

604-872-4476

drsmoore@shaw.ca




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grandich.com ]]> Grandich Blog RssFeed http://www.gold-speculator.com/grandich-blog/37800-your-kindness-needed.html Closed until 9/14 http://www.gold-speculator.com/grandich-blog/37799-closed-until-9-14-a.html Thu, 09 Sep 2010 22:22:05 GMT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio!
September 09, 2010 12:49 PM


Our office will be closed until Tuesday, September 14th




http://www.grandich.com/
grandich.com ]]> Grandich Blog RssFeed http://www.gold-speculator.com/grandich-blog/37799-closed-until-9-14-a.html Silver Quest Resources, The Yukon Gold Rush and Gold and Silver http://www.gold-speculator.com/grandich-blog/37788-silver-quest-resources-yukon-gold-rush-gold-silver.html Thu, 09 Sep 2010 20:15:24 GMT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio!
September 09, 2010 10:54 AM


First and foremost, I’m extremely biased when it comes to SQI-TSX-V as they’re not only a client of mine, but I currently own shares, warrants and options totally 3.5 million shares. And note I will be a seller of part or all of that as early as tomorrow or weeks, months or years from now.

Since somewhere around a $.25, I’ve spoken highly about SQI. I know others have taken that to heart and the combination of their interests and mind has led to SQI being on my mind seemingly 24 hours a day. It shows you how old I got since other things use to hold that position.

On July 9th, SQI was $.40. Yesterday, it hit $1.05 and is now around $.86. In just two months, the stock rose 150%. What we seen the last 24 hours or so is “A”-typical profit-taking, healthy and could even continue into next week. I don’t think it changes anything one could have thought of when it comes to SQI 48 hours ago except its share price.

As noted yesterday in my sarcasm, if a correction leads you to tears and fears, not only should you sell SQI but put your money in the bank instead (Maybe not a U.S. bank-lol).

The fundamentals of SQI and the Yukon Gold play in general have never been better. Any belief it wasn’t a gold rush had to end on the back of several Yukon stocks not only doubling, tripling or more, but some fantastic results from Atac and Kaminak (Note ATAC has fallen 35% in just last couple of days but is up 1,000% last 52 weeks).

Lets do a quick review of what SQI has going for it:
  • It has a 25% carried interest in a deposit with RVC that right now we feel is 1 million ounces of gold to SQI and RVC appears to be kicking butt in recent weeks on the drill bit side of things
  • The Capoose drilling has added a whole new dimension and with massive sulphide stringers starting to be found, makes for some real interesting drilling in the coming days. The deposit has clearly grown in 2010 and has all sorts of upside potential going forward.
  • If you aren’t following the Yukon rush closely, you may not be aware that the lab(s) have been horribly backed up. Atac has had I think 4 or 5 drills going since late spring and you don’t even need one hand to count the drill holes they have announced up until now (But one heck of results to start). I could be wrong but I think SQI drilled 18 holes on the Boulevard and today announced drilling on what I and I think Randy Turner believes is SQI’s best Yukon target – The Prospector. We’re likely to start seeing results come in from the Yukon next week and could last all the way to Christmas. Many other players up there are also going to announce results for weeks and months ahead.
  • SQI has been staking more ground throughout the summer and will have taken more than 10,000 soil samples in the Yukon alone which you’re sure has led to many more drill targets being defined.
  • The majors are all over the Yukon. Look for at least one more Underworld type deal before next spring.
  • SQI has a first class management team and a board that helps a lot behind the scenes. Case in point Robert McLeod-Read this article about him and what he said about SQI
So to all the emails and callers since yesterday, I see no fundamental reason to change my view on SQI despite all the potential biases. Can it fall to $.50? Absolutely if we bust in the Yukon. Do I think that’s likely? Heck no!

Quick note on gold and silver -* As noted earlier today, I did suggest the characters on the Comex could try to take both metals down in a dump. They did but their dumps have become far less “smelly” and I fully anticipate by next week we can be back challenging the all-time nominal high.




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grandich.com ]]> Grandich Blog RssFeed http://www.gold-speculator.com/grandich-blog/37788-silver-quest-resources-yukon-gold-rush-gold-silver.html Update 8:30AM EST http://www.gold-speculator.com/grandich-blog/37751-update-8-30am-est.html Thu, 09 Sep 2010 13:53:23 GMT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio!
September 09, 2010 04:33 AM


U.S. Stock Market - The market appears to want to trade back up to the top of the trading range but as we get closer to November elections, I suspect we can see a break below the bottom of the trading range as the economy slips back into recession.

A rumor I’ve heard from some credible sources is the Obama administration is considering a plan that effectively would end up having Uncle Sam back all outstanding Fannie and Freddie mortgages if the banks take a 10% hit on the principle amount. If true, this may give a short boost to the markets but I think if there still was a straw to break the camels back, this would be it.

Gold and Silver – Both metals are knocking hard on the door to breakout highs. We saw some of the best two-way action in both metals yesterday and I suspect more of that today. Whether we break through now or we witness one of those sharp short-term dumping’s and then rally back, the bottomline is we’re going much higher IMHO. The gold perma-bears only have this in their future.

U.S. Dollar Index - I believe it’s rolling over and should be testing key support around 80 in the 4th quarter. I continue to greatly favor the Canadian Dollar and it’s the only truly fiscally sound Country in the G-7



U.S. Bonds - While this CNBC anchor person made a complete fool of her self (that seems to be part of the job requirement for most at CNBC), the guest she targeted her tirade at made some very valuable points about bonds.

Oil and Gas – I continue to ignore these two all together.




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grandich.com ]]> Grandich Blog RssFeed http://www.gold-speculator.com/grandich-blog/37751-update-8-30am-est.html Grandich on Tandem Radio http://www.gold-speculator.com/grandich-blog/37744-grandich-tandem-radio.html Thu, 09 Sep 2010 11:50:55 GMT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio!
September 09, 2010 03:46 AM


Listen




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grandich.com ]]> Grandich Blog RssFeed http://www.gold-speculator.com/grandich-blog/37744-grandich-tandem-radio.html Special Invitation to Vancouver Conference on September 15, 2010 http://www.gold-speculator.com/grandich-blog/37690-special-invitation-vancouver-conference-september-15-2010-a.html Wed, 08 Sep 2010 22:23:27 GMT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio!
September 08, 2010 01:10 PM


A special invitation to readers here has been extended by the #1 Junior Resource Newsletter, Hard Rock Advisory to a special one-day conference in Vancouver next Wednesday, September 15th. All you have to do is go to this link and note you’re a Grandich Letter reader and you’re in. I’m told Silver Quest Resources is among several companies presenting in addition to the speakers.

The Coffin Brothers are worth it alone but you will also have other well-known speakers and a select group of resource companies. I believe the seating is limited and they’re doing me a favor by allowing readers to attend so register ASAP!




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grandich.com ]]> Grandich Blog RssFeed http://www.gold-speculator.com/grandich-blog/37690-special-invitation-vancouver-conference-september-15-2010-a.html TOUT-TV Hits New Low (If That’s Possible). http://www.gold-speculator.com/grandich-blog/37689-tout-tv-hits-new-low-if-s-possible.html Wed, 08 Sep 2010 22:23:27 GMT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio!
September 08, 2010 02:12 PM


Over the years I’ve not been “nice” to CNBC-TV as I along with many others felt it was little more than a front for the “Don’t Worry, Be Happy” crowd on Wall Street. Outside of Rick Santelli and larry Kudlow (some days), I wouldn’t give any of the anchor people and most guests the time of day.

Now to be fair, I almost never watch since my local cable company got Fox Business and Bloomberg. A reader sent me this link . The only thing the guess was rude about was his brutal honesty and not willing to back down from it in order to suck up to host.

Mark this date down-this host will eat her words and actions but America will be so messed up no one will have anytime to show her.




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grandich.com ]]> Grandich Blog RssFeed http://www.gold-speculator.com/grandich-blog/37689-tout-tv-hits-new-low-if-s-possible.html If This Is You http://www.gold-speculator.com/grandich-blog/37669-if-you.html Wed, 08 Sep 2010 18:10:34 GMT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio!
September 08, 2010 08:32 AM


today regarding SQI, I strongly suggest you sell everything and put your money in treasuries… That’s what I told my wife today-lol (and several others who emailed and called).




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grandich.com ]]> Grandich Blog RssFeed http://www.gold-speculator.com/grandich-blog/37669-if-you.html Politically Incorrect? http://www.gold-speculator.com/grandich-blog/37668-politically-incorrect.html Wed, 08 Sep 2010 18:10:34 GMT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio!
September 08, 2010 10:02 AM


While some seem to forget (or not care), this blog contains social, political and life commentary as well as financial/economic commentary. While much of America (and especially the media) has gotten way too caught up in political correctness, I speak my mind and let the chips fall where they may. I do so on the belief many here like to know my opinion even if they don’t agree with it (or why else would you be here? We’re not holding any body’s family hostage… I don’t think we are-lol).

Back in 2009, I wrote about a very politically-incorrect topic that at the time wasn’t even remotely getting noticed as it is now, but I predicted it would… and sooner than most could imagine. I said it would have a major impact socially, politically, spiritually and economically. I said it won’t be popular to point this out (and it wasn’t–I did get some actual threatening emails), but it was going to impact just about everyone.

Here’s what I wrote.

As we approach the ninth anniversary of America’s worst terror attack and the subsequent atrocious failure to take care of the great Americans who went to Ground Zero to help (with the full support of our government) immediately afterward, many of the factors I spoke about in my original writing have already come to fruition.

It’s critically important to note that while I do include my own personal views, my commentary in this area has been mainly as a source of providing insight and hopefully being ahead of the crowd that inevitably impacts our finances.

Sadly, the idiotic thought that burning copies of the Quran somehow rights wrongs is just one of the bad reactions to what I’ve called the number one factor to impact the world’s changing demographics. The pro and con demonstrations to all this is only going to grow and multiply.

Knowing what I’m about to show will not be universally accepted, I do think it’s an extremely important information on this critical factor. I believe the commentator makes important points that are critical to understand the bigger picture.

Lastly, if I haven’t upset some already, this will: As a Christian, I believe in the Revelation told to us in the Holy Bible. Simply put, at our end times, the author says we don’t kill or hurt anyone whether they are believers or not. Our possible punishment comes only after this life. In the Quran, it says if one doesn’t believe what it says, those who do must do away with those who don’t eventually. I always stand ready to be corrected, but I find it hard to accept that someone who clearly may want to live at peace with me now is called to do away with me in the future if certain times call for it. I don’t consider that real peace.




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grandich.com ]]> Grandich Blog RssFeed http://www.gold-speculator.com/grandich-blog/37668-politically-incorrect.html Gold and Silver Alert – The Final Battle? http://www.gold-speculator.com/grandich-blog/37657-gold-silver-alert-final-battle.html Wed, 08 Sep 2010 16:01:21 GMT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio!
September 08, 2010 06:14 AM


Despite all the predictions of gold’s demise and numerous perma bears rants accompanied by many in the media, gold and silver stand today at the threshold of major breakouts. Already this morning we’ve seen multiple bear raids in hopes of preventing the breakout. They know if they fail we can see a major run up in both metals. I believe the results for the gold and silver bears shall be the same as it was for the Zulu tribe (Bill Murphy is Michael Caine).




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grandich.com ]]> Grandich Blog RssFeed http://www.gold-speculator.com/grandich-blog/37657-gold-silver-alert-final-battle.html Grandich Client Update – Silver Quest Resources http://www.gold-speculator.com/grandich-blog/37642-grandich-client-update-silver-quest-resources.html Wed, 08 Sep 2010 13:57:09 GMT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio!
September 08, 2010 04:06 AM


Silver Quest’s new flow continues with some great results this morning that increased the depth of the deposit by approximately 70 metres on the west side.* The three drill holes that were released today all have significantly long intercepts including 101 metres of 1.60 g/t of gold equivalent, 301.5 metres of 0.88 g/t gold equivalent and a total of 128 metres in the third hole with a weighted average grade of 0.71 g/t gold equivalent.* These kinds of results are impressive in their length, grade and continuity.

The goals of the Capoose program are to continue to expand the resource in all directions (including at depth) and to increase the size of the inferred resource.* With drill results like these, where the entire hole is mineralized from top to bottom, this is an easy goal to accomplish.* All seven drill holes released so far from this year’s drill program have been mineralized from top to bottom and have expanded the resource to the south, west and at depth.

The added bonus to this project is the pockets of high grade materialization in the form of massive sulphide stringers and gold mineralization forming along sulphide veins and within garnet clots.* These pockets produce values such as 8.9 g/t gold and 427 g/t silver.* This particular intersection was over a 6 metre interval and works out to be approximately $650 rock.* It’s hard to ask for more than that!

I look forward to seeing the rest of the pending assays form Capoose as well as the drill intersections from the Boulevard and Prospector Mountain projects in the Yukon.* There is still plenty of upside potential for Silver Quest, as they have completed enough work this summer that their news flow is expected to last well beyond Christmas.






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grandich.com ]]> Grandich Blog RssFeed http://www.gold-speculator.com/grandich-blog/37642-grandich-client-update-silver-quest-resources.html Grandich Client Update – Crocodile Gold, Has Adversity Created Opportunity? http://www.gold-speculator.com/grandich-blog/37641-grandich-client-update-crocodile-gold-has-adversity-created-opportunity.html Wed, 08 Sep 2010 13:57:09 GMT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio!
September 08, 2010 05:35 AM


First the bad news. The Croc has clearly disappointed so far in 2010. To say anything else would be unfair. The good news? Despite falling short,* they have come a long way in less than a year. As a recap to those of you who may not be familiar with Croc, Croc paid only US$9 an ounce to acquire a large 2,500*km2 land package in the Northern Territory of Australia, great infrastructure including a few processing facilities and has over 5 million ounces of gold in resources. They are currently producing from the Howley, North Point and Princess Louise open pit mines and the Brocks Creek underground mine, and are developing the Cosmo underground mine.

The Cosmo underground mine and development is the real future of the Company and its crown jewel. Is expected to be in full production in mid-2011 and offers the potential of 100,000 ounces a year of low cost production just from Cosmo.

Croc put out some encouraging news today that they may have some near term targets directly adjacent to their Union Reefs mill. The good news about this is that if they can do the work to get these smaller targets into production, it could have a direct impact on reducing their operating costs as these targets are within kilometres of the mill, which means minimal haulage costs. Their current average haulage distance from the operations to the mill is about 80 kilometres, so haulage makes up a larger chunk of their costs. The two areas are the Union Reefs area and the Pine Creek area. Over 800,000 ounces were mined in the Union Reefs area in the past from 12 open pit operations, and in looking at some of the historic drill intercepts in their press release, it looks like there is still some encouraging upside potential in this area. Historical production in the Pine Creek area has yielded over 750,000 ounces of gold production from six open pits and some limited underground production. Croc is going to be completing the necessary prep work over the coming months to bring one or more new projects on stream.

They also produced 8,100 ounces of gold in August reaching 50,000 ounces year-to-date. They plan to produce over 9,000 ounces in September and to reach their target for the third quarter of 25,000 ounces.

As I’ve noted before, Croc’s share price has been volatile for some time, and I have had many questions about this from justifiably concerned shareholders. Most start-ups are not without their problems, and I would advise shareholders to focus on the month by month reliability and improvement in production especially during the remainder of 2010. We also need to keep our eye on the bigger picture and potential of this company, especially the progress of the Cosmo development where we should expect some Cosmo ore starting to be fed to the mill in the 2nd quarter of 2011 coinciding when we should see a ramp up in overall production and lower operating costs. There are not many other emerging producers as young as Croc and with a similar growth profile. Croc plans to produce 85,000 ounces of gold this year and expects this to increase over the coming years while at the same time decreasing costs.

Crocodile Gold personnel are actively researching historical exploration information and I expect that there will some news soon on some of this potential. With such a large land package there is significant potential for them to increase their resource base and expand production.

We can continue to cry over spilled milk or concentrate what’s in front of us. Management has clearly made some missteps but I will give them credit in that they have not deviated from the importance of developing Cosmo for the future. They have really ploughed through a lot of the start up operating issues and* are now starting to see them hitting their targets. In my discussions with management, I know they are totally focused on increasing production and reducing costs. If they deliver we can see that value reflected moving forward.




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grandich.com ]]> Grandich Blog RssFeed http://www.gold-speculator.com/grandich-blog/37641-grandich-client-update-crocodile-gold-has-adversity-created-opportunity.html Silver and Gold http://www.gold-speculator.com/grandich-blog/37632-silver-gold.html Wed, 08 Sep 2010 11:53:11 GMT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio!
September 08, 2010 03:43 AM


are at key breakout points. The bears are doing all they can to stop the run. Exclusive video of Bill Murphy taking on the bears.




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grandich.com ]]> Grandich Blog RssFeed http://www.gold-speculator.com/grandich-blog/37632-silver-gold.html Grandich Client Update – Farallon Mining http://www.gold-speculator.com/grandich-blog/37610-grandich-client-update-farallon-mining.html Wed, 08 Sep 2010 01:02:10 GMT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio!
September 07, 2010 03:45 PM




The Company has been focused on operational improvements and efficiencies in all aspects of the G-9 operation. Management is focused on delivering 2,000 tpd at reserve grades of 10% by Q4 2010. Improvements in metallurgical performance will also be high on the list of priorities for the company. The G-9 Mine has proven to be one of the lowest cash cost zinc producers in the world at $0.05/lb of zinc in Q2 2010 and the company intends to maintain that low-cost advantage that mine enjoys on the global scale. The plan is to add the new G-9 “gold zones” into the mine plan going forward and will be additive to current zinc resource base that the company has established. This should help further improve the economics of the operation at G-9.

From an exploration perspective, Farallon has recently completed a Titan 24 IP survey along the Abajo horizon to focus on anomalies that are present on the property. Once the data has been analyzed against the current geological information that the company has, new targets should become the focus of the surface exploration program. The company currently has two surface drills on site and plans to quickly engage them when the targets are identified. Further good news from the drill bit is highly anticipated. These types of volcanogenic massive sulphide (VMS) deposits are known to be complex by their nature, however once a company is operating in an area of VMS deposits; the likelihood for future discoveries is very strong. Farallon has numerous untested anomalies on the Campo Morado property that give the company significant exploration upside.

Additionally, Farallon Mining has engaged engineering consultants to produce a Pre-Feasibility Study on the original deposits on the Campo Morado property including Reforma, Naranjo, El Rey and El Largo. These deposits host 11.2 million tonnes of indicated resources that contain close to 1 million ounces of gold and 60 million ounces of silver. Since the last time these deposits were review, three major developments have occurred that should help add to the economic viability of opening a second mine on the property. First, the price of gold has tripled from $400/oz to over $1,250/oz today. Second, the property now has the infrastructure built on-site to enable a much cheaper and smoother transition into production. The existing G-9 mill could potentially treat the ores from the original deposits. Finally, the understanding of the metallurgy on-site has been greatly enhanced, and with the company’s ability to produce a precious-metals rich copper concentrate at G-9 that is very marketable in the global concentrates trade, this allows the company greater options to pursue a similar-type precious metal rich copper concentrate from these original deposits as well.

Farallon is still strategically focused on growing both organically through the existing opportunities mentioned above; however there is also the external strategy to grow through merger and acquisition opportunities. The intention is to eliminate the “one-mine” discount in the market-place, through a strategic merger with the resulting entity receiving greater valuation multiples in the marketplace by the fact that risk is diversified across two cash-flow positive mining operations.

There are few opportunities in the marketplace to play the zinc market. Farallon is an opportunity that allows the shareholder to add a zinc story to their portfolio. Many of the other metals have had strong runs in the past 6 months or so. Zinc on the other hand, has been sitting on the sidelines waiting for an opportunity to break-out. Farallon is well-positioned to take full advantage of any upswing in zinc prices. Going forward the Board and Management of Farallon Mining Ltd. are focused on greater rewards and growth for all the shareholders.




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grandich.com ]]> Grandich Blog RssFeed http://www.gold-speculator.com/grandich-blog/37610-grandich-client-update-farallon-mining.html Client Update – Donner Metals Feasibility Study Says to Me, Show Me The Money! http://www.gold-speculator.com/grandich-blog/37609-client-update-donner-metals-feasibility-study-says-me-show-me-money.html Wed, 08 Sep 2010 01:02:10 GMT The following is automatically syndicated from Grandich's blog. You can view the original post here. Stay up to date on his model portfolio!
September 07, 2010 04:17 PM




For those of you away from your desks over the long weekend, here is an update on Donner Metals* and their recent news of a Positive Feasibility Study, as well as the confirmation of an additional 2.07 Million Tonnes of Inferred Resources at McLeod Deep.

A positive Feasibility Study announcement for the Xstrata Zinc – Donner Metals Bracemac-McLeod zone tells us that the new mine, which has been under construction since July, is economic. By beginning construction back in July, Xstrata made it clear that the results of the Feasibility Study would be positive and in order to meet their own needs for mill feed, construction needed to begin to ensure the Bracemac-McLeod Mine would be ready following the closure of the currently producing Perseverance Mine (wholly owned by Xstrata). A few key take aways from the positive feasibility study include:


  • Proven and probable mining reserve, including dilution, of 3.73 million tonnes grading 9.60% zinc, 1.26% copper, and 28.25g/t silver and 0.43g/t gold based on indicated and measured resources (massive and semi massive sulphides) of 3.39 million tonnes grading 11.31% zinc, 1.47% copper, 34.27g/t silver and 0.50g/t gold.
  • 4 year life of mine at a 2,500 tonnes per day production rate, with production expected to begin in late 2012 – early 2013.
  • Total capital cost on a 65% (Xstrata) / 35% (Donner) joint venture basis will be US$163.7 million.
  • Capital requirements are split with approximately US$115.6 million (2010-2012) in pre-production development for the Bracemac zones followed by US$48.1 million (2012-2014) to be incurred concurrently with production and cash flow from Bracemac as the McLeod zone is developed.
  • Economic threshold analysis of the project on a joint venture basis (after tax) returns a 8.1% internal rate of return and an NPV7 of US$3.4 million using zinc: $0.80 $US/lb, copper $2.50 $US/lb, silver $12.00 $US/ounce and gold $1000 $US/ounce with an exchange rate of $CDN 1.04 to the US dollar.
The numbers used for this study read more like a Worst-Case Scenario document, with metals prices well below where we are today, and what analysts like Rik Visagie from Octagon figure are exceedingly low when taking forecasts for future metals prices into account.

Rik Visagie’s Comment: “The feasibility study is a threshold study, which is essentially a very conservative case, prepared by a potential buyer of Donner Metal’s interest in the Project. We believe the metal prices used in the study are exceptionally low for the period of production. During the period 2013 to 2017, we expect zinc and silver prices to average 50% higher, and copper prices to be 20% higher. In 2009, the Mattagami mill operated at an average through put rate that was 12% higher than the rate used in the study. In addition, there is the Deep McLeod, the Inferred Resource and further exploration potential in and around the project which ultimately will add tonnes and life to the mine. Higher prices, greater throughput rates and lower costs due to the increased throughput rate, more reserves and longer mine life will all increase the value of the project.”

The project is sensitive to metals prices, exchange rate and capital costs. A 10% increase in metal prices translates to a 12 fold increase in net present value and a 2 fold increase in internal rate of return.



Industrial Alliance increased their recommendation on Donner Metals to $0.37 based on a 1.0x multiple of their estimated Donner NAVPS (7.0%, $0.90/lb Zn, $2.75/lb Cu, $16.00/oz Ag, & $1,000/oz Au). The increased recommendation price is derived from Industrial Alliance’s revised Bracemac-McLeod deposit NPV and discounted $0.045/lb attributable in situ value of the McLeod Deep zinc resource. According to Industrial Alliance’s analysis, given the increase in zinc prices generally expected over the next few years, the target price could underestimate the upside potential of the stock.

I want to stress that feasibility study is NOT a promotional document. It shows that even with the most conservative estimates available, this new mine is poised to make a great deal of profit before even considering what has been discovered over the past few months.

It’s important to note that the positive feasibility study was based on proven and probable reserves of 3.73 million tonnes grading 9.60% zinc, 1.26% copper, 28.25 grams silver per tonne and 0.43 grams gold per tonne and incorporated an average 19% dilution. Measured and indicated resources tally 3.39 million tonnes grading 11.31% zinc, 1.47% copper, 34.27 grams silver, and 0.50 gram gold. The scope of the feasibility study is on a threshold analysis and DOES NOT assess the extension of the mineralization – notably the 2.07 Million tonnes at McLeod Deep, grading 10.66% zinc, 1.33% copper, 41.72g/t silver and 1.21g/t gold. The extent of mineralization in the McLeod Deep zone is not defined nor has a connection of mineralization with the McLeod Zone been investigated. There is more potential expansion for both the Bracemac-McLeod deposit as well as the McLeod Deep area, which is not taken into account in the positive feasibility study.

Finally I would like to add that this is just one very small section of a 4,750 square kilometer property where exploration drilling is ongoing year-round. As part of the news about the McLeod Deep Inferred Resource, we also got to see some more exploration drilling results; the PD1 deposit is confirming historical results and shaping up nicely as potential open pit nearby.




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