Mining Analyst

An assay is the standard procedure for determining the metal content of a mineral sample. Drill core, RC and channel chips as well as bulk samples are all assayed to determine the metal content, and therefore value, of the rock being evaluated for a mining operation. The problem is that not all assays are created equal. This can be illustrated by the strange example of Prophecy Platinum, no, I meant Wellgreen Platinum, no again, I meant Nickel Creek Platinum ( TSX:NCP ). Whatever they call themselves these days, the company is engaged in the development of the Wellgreen Ni-Cu-PGM deposit in the Yukon. And man, do these guys and gals have a lesson to teach us. It seems few people to this day seem to understand what, why or how the disappointment at Wellgreen happened ... possibly not even some of the people at the company. So I thought maybe it's time to pull back the curtain and look a bit closer.

Excelsior Mining is developing the Gunnison copper project in Arizona. It is an In-Situ-Recovery (ISR) project and many people including a significant portion of the industry itself are not familiar, or at least not comfortable, with it. ISR involves drilling wells and injecting a dilute acid to dissolve copper from fractured rocks. The pregnant solution is then recovered and standard solvent extraction and electrowinning is used to produce a copper cathode (sheets of nearly-pure copper that are sold directly to manufacturers and therefore no refining is required). Lack of familiarity by the market is usually an opportunity for astute and fearless investors, and it is the case here.

Pure Gold owns the Madsen underground mine in the Red Lake mining camp near Goldcorp's world-class Red Lake and Campbell mining complex. The planned production profile and grade compares favorable to recently-acquired operating gold mines and advanced projects in Canada (Island Gold, Lamaque, Timmins, Seabee, Macassa, Casa Berardi). Purchase price and subsequent market valuation reveal these underground Canadian gold mining projects tend to trade at a premium to asset value. Well at least at some point in their development or operating lifetime. Pure Gold currently trades at substantial discount to NPV. That will change.