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Volume 7 Issue 7

POTASH Contributing to the World’s Food Security

The McFauld’s Lake

Ring of Fire

Exploring Albania p. 20 5.95 CDN / US

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PC Gold explores old Pickle Crow Gold Mine p.28 IN VE S Pa TO ge R K 44 ITS

Publications Mail Agreement No.40845066

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CONTENTS JULY 2009

mining Laurentian Goldfield/Kinross form 23 Uchi Exploration Alliance

Alternative Energy Alternative Energy Review 36

by Joel Bainerman

by Ellsworth Dickson

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Legend Power knows how to put 38 less vim in your volts

Building Solomon’s 25 Gold Mine

by Peter Caulfield

by Thomas Schuster

The McFauld’s Lake Ring of Fire 6

Australian Update 27 OceanaGold records four quarters of increased gold sales

Alternative Energy in the News 39 BP Solar/SolarEdge Technologies Inc. Plutonic Power/General Electric Rentech Inc.

by Ellsworth Dickson

by Greg Barns

by Joel Bainerman

Potash – contributing to the 13 world’s food security by Jennifer Getsinger, PhD, P.Geo.

HOT ROCKS 30 Golden Band Resources Inc. IMPACT Silver Corp.

PC Gold exploring old 28 Pickle Crow Gold Mine

Alexco Resource cleans up/explores 31 Keno Hill, Yukon

by Ellsworth Dickson

by Mike Niehuser

Investment

Electra Gold acquires another 33 BC coal project

FEATURES

BROKER’S PICKS 19 Serengeti Resources developing Kwanika tonnage by Dorothy Hoffert

INSIGHTS & INVESTMENTS 20 Why Albania? by Eric Hoesgen & Dennis Hoesgen

SPECULATIONS 22 Interest rates and precious metals

oil & gas

Departments

Chevron recovers first oil 34 from Tahiti field

Editor’s Comments 4 It’s a balancing act by Ellsworth Dickson

The Oil Patch Report 35 Texalta Petroleum targets both sides of globe

OFF THE WIRE 32 Brett Resources Inc. Uranium Star Corp.

by Joel Chury

by Leonard Melman

RESOURCE ROUNDUP 41 The Nanaimo Coal Fields

AT THE MARKET 23 Sell in May – No Way!



by Rod Blake

Coming Events 42

FEARLESS TALK 24 New excellence: Less awful

Reader Response Card 44 Advertiser Index

by H.R. Tschudi

10%

Epilogue 46 The world’s second oldest profession?

Cert no. SW-COC-002226

July 2009

by Kathrine Moore

by David Duval

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editor's comments

July 2009 Volume 7, Issue 7

Ells wo rt h Dic kson

Co-Publisher Editor-in-Chief Ellsworth Dickson Co-Publisher Business Development Paul Dickson

It’s a balancing act We are all aware of how financial transactions occur at the speed of light as buyers and sellers from anywhere in the world purchase and sell mineral commodities. The advent of instant worldwide electronic communications has resulted in metal prices changing by the minute as buyers and sellers get together. At the present time, there is a battle between commodity buyers and sellers and it is anyone’s guess what the future may bring. On one hand, we have China taking advantage of low commodity prices and stockpiling huge quantities of copper, nickel, aluminum, tin, zinc and oil, while, on the other hand, resource companies have been closing mines which will eventually lead to metal shortages. Meanwhile, for the first quarter of 2009, many resource stock investors abandoned the mining sector after the big meltdown. This could be seen in a revealing chart in a recent Ernst & Young mining report that showed the price/earnings ratios of many industrial sectors. A high price/earning ratio is usually considered an indication of investors’ faith in higher future earnings. The chart showed no less than 35 industrial sectors with higher P/E ratios than the mining industry. Obviously, for the first three months of 2009, investors remained bearish on mining. However, don’t be too discouraged. Turning to the following page in the Ernst & Young report, there were charts that depicted global metal consumption and production. It was clear that, despite economic downturns occurring every few years, metal consumption and production have always “continued to expand to meet ever-increasing consumption.” The past couple of months have seen metal prices recover somewhat, in part probably due to China’s stockpiling, but what will happen when that country has had its fill? The mining industry will need more than just China to sustain robust metal prices – it needs a more broad-based world economic recovery to maintain strong metal prices. When metal prices are weak, not only do marginal mining operations shut down, nobody even wants to explore for metals that have been beaten down in price. This, of course, impacts the chance of building future mines that the world will need. Along with somewhat increased metal prices, mining company financings have seen a recent rise. At first it was just producing gold companies that found the easy money; however, since April, there has been a shift in attitude by private placement investors. Fear seems to be abating and investors are now helping to finance juniors. But keep in mind that these recent financings are at nowhere near the price levels of previous years, resulting in less money in total being raised for exploration. So, while investors may be getting back their nerve to a certain degree, junior miners are not out of the woods yet. In the end, it comes down to the balancing act between supply and demand of commodities. n Ellsworth Dickson, Editor-in-Chief Email: [email protected] T: 604 484 3800 | 1 877 484 3800 | F: 604 685 3833

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Contributing Editors Dr. Edward Schiller David Duval Robert Simpson

Contributing Writers Rod Blake • Peter Caulfield Joel Chury • Jennifer Getsinger Dennis Hoesgen • Eric Hoesgen Dorothy Hoffert • Leonard Melman Kathrine Moore • Mike Niehuser H.R. Tschudi • Thomas Schuster Australian Correspondent Greg Barns European Correspondent Joel Bainerman Art Director, Design and Production Jocelyne Laflamme Circulation 1-877-484-3800 Advertising Manager Vancouver, BC Irene Fournier 1-877-484-3800 Calgary, Alberta Oil & Gas Advertising Christine Perrin 403-648-1793 Administrative Assistant Rhonda Tobin

ResourceWorld Magazine is published 10 times a year by Resource World Magazine Inc.. #709 – 700 West Pender St., Vancouver, BC V6C 1G8. ©2002-2009 Resource World Magazine Inc., all rights reserved. No part of this magazine may be reproduced, in whole or in part, without the expressed permission of the publisher. Reprints available by request at the above address or by emailing: [email protected]. Disclaimer: While every effort has been made to ensure the accuracy of information contained in Resource World Magazine, and the reliability of the source, the publisher in no way guarantees nor warrants the information and is not responsible for errors, omissions or forward looking statements made by advertisers. Articles and advertisements in Resource World Magazine are not solicitations to buy, hold or sell specific securities; they are for information purposes only. Opinions and recommendations made by contributors or advertisers are not necessarily those of the publisher, its directors, officers or employees. Investors should be aware that risk is associated with any security, strategy or investment and are advised to seek the counsel of a competent investment advisor before making any investment, or utilizing any information contained in this publication. Subscription, advertising and circulation information can be obtained by visiting our website: www.resourceworld.com or contacting our offices by phone: 1-877-484-3800 or by writing to the address below.

Publication Mail Agreement No. 40845066 Return undeliverable Canadian addresses to: Circulation Department 709-700 West Pender Street Vancouver, BC Canada V6C 1G8 Email: [email protected] Issn 1712-253 April 2006 Printed in Canada by Mitchell Press February 2006 July 2009

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In a series of pleasant geological surprises, exploration of the McFauld’s Lake Ring of Fire in the James Bay Lowlands of northern Ontario has resulted in the discovery of a veritable treasure trove of many different metals.

The McFauld’s Lake Ring of Fire

by Ellsworth Dickson

COPPER NICKEL GOLD SILVER PLATINUM PALLADIUM COBALT CHROMIUM VANADIUM TITANIUM IRON ZINC

W

hen Contributing Editor Dr. Ed Schiller wrote about the McFauld’s Lake mineral discovery in the May 2008 issue of Resource World, he reported on the staking rush that was taking place following the Noront Resources nickelcopper-platinum-palladium discovery of the Eagle One mineral deposit in September 2007. Drill hole NOT-07-05 returned 68.3 metres grading 5.90% nickel, 3.10% copper, 2.87 grams platinum/tonne and 9.78 grams palladium/tonne. In a scenario reminiscent of the Voisey’s Bay, Labrador, discovery by Diamond Fields, it was diamonds that were the original target; however, it was volcanic-hosted base and precious metals that were discovered. This has now been followed by another surprise – the discovery of chromium, vanadium and iron. In a recent press release, Freewest Resources Canada reported drill hole BT-09-37 intersected 174 metres grading 34.1% 6

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Left, Dr. James Mungall, PhD., Chief Geologist for Noront, at the front right is Michael Grey, of Genuity Capital. In the middle-left is Omar Murad, of Thomas Weisel Partners and in the background is Craig Stanley of Pinetree Capital. Photo courtesy Noront Resources Inc.

July 2009

Drilling in the Norton Lake area, a joint venture between White Tiger Mining Corp., 51%, and Cascadia International Resources Inc., 49%. Exploration geologist/geophysicist Bob Middleton, P.Eng, on the left, with diamond drillers. Photo courtesy White Tiger Mining Corp.

chromium (Cr2O3) at its Black Thor chromite zone. Located about 600 kilometres north of Thunder Bay, Ontario, the McFauld’s Lake mineral play is accessed via the town of Nakina. Situated at the end of both the road and the railway, Nakina is about 300 road-kilometres north of Thunder Bay. As such, the town is utilized as a staging centre by exploration companies active in the fly-in only McFauld’s Lake region. The flat and swampy region is characterized by a lack of outcrops as well as infrastructure. Back in 2001, hoping for another discovery like their Victor diamond-bearing kimberlite 170 kilometres to the east, DeBeers came up with massive sulphides on a McFauld’s Lake area property optioned from KWG Resources and Spider Resources. Not interested in base metals, De Beers returned the claims to KWG/ Spider which investigated the discovery, located in the Sachigo Greenstone Belt. Some new players arrived on the scene; however, the massive sulphide discovery didn’t trigger a staking rush. It was Noront’s Eagle One discovery that prompted the major staking rush. Staking the geologically favourable ground resulted in a claim map with properties forming a ring; hence, the Ring of Fire name. Actually, it is not really a ring, it is more of an arc, or sideways letter “U” with some outlier prospects spread out over a wide area. Freewest’s chromite discovery has July 2009

placed the McFauld’s Lake region under a new light. The very size of the discovery could lead to a major chromium mine and smelter. Chromium, or chrome, is used for more than plating your toaster or your car’s bumper. The shiny metal is an absolute necessity for the manufacture of stainless steel due to its natural resistance to corrosion. South Africa is the world’s largest producer of chromite ores, producing over 50% of the worldwide production of about 20 million tonnes per year. Other chromite-mining countries include Zimbabwe, Kazakhstan, India, Turkey, Russia, Finland, Brazil, Australia, Iran and Oman. Chromite ores are converted into what is called ferro chrome to make stainless and heat resistant steels. Up to 25% of stainless steel consists of ferro chrome. Some 90% of ferro chrome production is used to make stainless steel. Due to the dwindling supply of ferro chrome, thanks to the booming stainless steel industry, particulary in China, the price of ferro chrome has soared, and is being further pushed higher by a new tariff imposed by India on chromite exports. Freewest management will probably have to make some decisions with regard to how big a mine to build, although a feasibility study has not yet been completed. If the operation is too small, the economics won’t be optimized. If the mine is too big, flooding the market with ferro chrome could drive down prices.

While Freewest’s chromium discovery is exciting, so is Noront’s discovery of vanadium and iron in a new type of mineralization in the Ring of Fire at the Thunderbird anomaly. Vanadium is used in specialty steels to add hardness, in alloys with aluminum and titanium for lightweight uses and in batteries. (In September Resource World will have a full report on vanadium.) Noront has also recently intersected chromite in its drilling program. It is rather unusual for so many different metals to be discovered in one region in so short a time. Unless it has been blind luck, exploration results to date could be a sign of many more mineral discoveries to come. Below are updates on the various explorers active in the McFauld’s Lake Ring of Fire. Black Panther Mining Corp. [BPCTSXV] can earn up to a 75% interest in the Seagull/Wolf Mountain property from East West Resource Corp. [EWRTSXV] and Trillium North Minerals Ltd. [TNM-TSXV]. Located about 90 kilometres northeast of Thunder Bay and south of the Ring of Fire region, exploration has discovered several layers of copper, nickel and platinum group metals. To date, about $4.3 million has been spent on the property with $150,000 budgeted for the current program. East West Resource has a number of projects, on its own and with partners, in the McFauld’s Lake and outlying areas. Bold Ventures Inc. [BOL-TSXV] has two projects in the McFauld’s Lake region: an www.resourceworld.com

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50% option with Noront on the Ring Star Project 30 kilometres north of Noront’s copper-nickel discovery and a 50/50 J/V with Melkior Resources Inc. [MKR-TSXV] on the West Nickel Project 20 kilometres north of the Noront discovery. Melkior also has a 50% interest in a 24,000-hectare claim group east of McFauld’s Lake where airborne geophysics have been completed and are under interpretation. Canadian Orebodies Inc. [CO-TSXV] has assembled a large property portfolio of 12 land packages. The company has a 100% interest in eight properties, a 50% interest in three more through a J/V with MacDonald Mines and Temex, and an 80% interest in the Trump Project through a J/V with East West Resource. Additional targets are also being explored in the region. Diamondex Resources Ltd. [DSP-TSXV] can earn a 51% interest from private Canada Nickel Corp. on a 725-claim group that extends for over 250 kilometres, with some parts within 12 kilometres of the

Double Eagle nickel deposit. East West Resource Corp. has various interests in 11 properties in the general McFauld’s Lake region: Feeder (KWG), Fishhook (Noront), GP (Temex), GP2 (Temex), Magtail (100%), Max (Northern Shield), North Trap (Temex/Gee-Ten), Norton West (Trillium North/Cascadia), Norton East (Trillium North/Cascadia), Ox (Gee-Ten), and Trump (Cdn. Orebodies). Fancamp Exploration Ltd. [FNC-TSXV] has drilled 10 holes on its McFauld’s Lake property where hole 2 (C-1) returned 3.52% nickel, 0.17% copper, 2.7 grams palladium/tonne and 233 ppb platinum over 0.9 metres. Freewest Resources Canada Inc. [FWRTSX] continues to drill-test the Black Label chromite zone situated stratigraphically below the larger Black Thor chromite zone with three rigs on the 100%-owned claims. Drill spacing has been tightened from 200 metres down to 100 metres along the 2.6-kilometre strike length, and down to 350 metres in depth. Early drilling at Black Label

intersected three chromite zones assaying 32.4% Cr2O3 over 37.2 metres, 14.5% Cr2O3 over 22.0 metres and 28.3% Cr2O3 over 28.8 metres in hole BT-08-08. Drilling into the upper Black Thor chromite zone has returned 34.1% Cr2O3 over 174 metres in hole BT-0937 that contains three higher-grade intervals: 40.4% Cr2O3 over 38 metres, 43.1% Cr2O3 over 64 metres, and 41.6% Cr2O3 over 35 metres. Black Thor has a true width of about 50 metres and remains open along strike and to depth. While company geologists are keeping their eyes open for possible nickelcopper-platinum-palladium mineralization, the current drilling will be used as part of the basis for a NI 43-101 compliant resource estimate. In a related development, Freewest has completed a private placement with Cliffs Natural Resources [CLF-NYSE, Paris] of Cleveland, Ohio to raise $5,162,500 to be used for chromite exploration. On the adjacent property, Freewest, 50%, and partners KWG Resources Inc. [KWG-TSV], 25%, and Spider Resources Inc. [SPQ-TSXV], 25%, are generating

LEADING

THE CHARGE in the

“Ring Of Fire” McFaulds Lake

James Bay Lowlands

Investor Relations Contact Joanne C. Jobin Phone: 416 238 7226 [email protected] www.norontresources.com

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Noront Resources Ltd. 15 Toronto Street, Suite 1000 Toronto, ON, Canada M5C 2E3 Phone: 416.367.1444 Fax: 416.367.5444

July 2009

This AD is for proofing purpose only. Any other use requires permission from Resource World.

CHROMIUM Chromium was discovered in 1797. Stainless steel that is highly resistant to corrosion is made by adding chromium and nickel to iron. Chromium and ferrochromium are produced from chromite (FeCr2O4), the only commercially viable ore. Making stainless steel and plating are its main uses. Chromium is a lustrous, hard metal that takes a high polish and melts at 2,671° C. Two thousand year old bronze crossbow bolts and swords from China show no sign of corrosion as they are coated with chromium.

comparable widths and grades of chromite mineralization at the Big Daddy Project. Cliffs has invested US $3.5 million in a KWG private placement. Nineteen drill holes have traced the chromite zone along a 400-metre strike length which remains open in all directions. Hole 22 intersected 34.8 metres of 42.1% Cr2O3, 16% iron, and 0.4 grams combined platinum/palladium/ tonne. KWG and Spider can increase their combined interest to 60% by completing a feasibility study within 18 months. Hawk Uranium Inc. [HUI-TSXV] has a J/V with MacDonald Mines in the six Hawk-McNugget claims covering 1,554 hectares where nickel targets have been identified by geophysics. International Bethlehem Mining Corp. [IBC-TSXV] can earn to a 75% interest from East West Resource Corp. in the Eva Kitto platinum prospect located near Beardmore, 153 kilometres north-northeast of Thunder Bay. This summer, new oles will be drilled and some old ones re-drilled in the $350,000 program. James Bay Resources Ltd. [JBR-TSXV] has a 19,700-hectare prospect about 30 kilometres west-southwest of the Eagle One discovery. Airborne geophysics has identified over 30 targets. Some drilling has been completed which returned anomalous copper/zinc values. MacDonald Mines Exploration Ltd. [BMK-TSXV], while still holding on to some 88,000 hectares in the McFauld’s Lake region, the company is basically sitting out this exploration season to focus on July 2009

TSX-V: SPQ

Spider Resources Inc. is the Pioneer Exploration Company in the James Bay Lowlands of Northern Ontario, exploring area since 1993. Spider’s Exploration team headed up by Neil Novak is responsible for the discovery of 3 Jurassic aged Kimberlites (MF1, MF2 and Good Friday) within a few kilometres of Ontario’s first diamond mine Victor, now in production, as well as five Proterozoic hidden Kimberlites (Kyle 1 – 5) located 100 kilometres to west of Victor. Regional diamond exploration by same team lead to discovery of McFauld’s Lake VMS deposits (1 and 3) in 2002-03, as well as 8 other VMS occurrences spawning The McFaulds – Ring of Fire. Geophysical surveying and other exploration efforts as initially conducted by Spider formed the exploration data-set that lead to the first discovery of Chrome in the area in 2006 as well as the Eagle One Magmatic Massive Sulphide Deposit. For information, contact Neil Novak P.Geo. Tel: 416.203.8636 Fax: 416.815.1355 304 – 65 Front Street, Toronto, Ontario M5E 1B5 [email protected]

www.spiderresources.com Spider.indd 1

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other projects. Mill City Gold Corp. [MC-TSXV] can earn a 50% interest in the GP2 property held in a J/V between East West Resource and Temex Resources Corp. [TME-TSXV; TQ1-Frankfurt]. The property is located 50 kilometres southwest of the Noront discoveries. Earlier drilling has returned 0.15% copper over 80 metres with several higher grade intervals. Mill City is testing a number of targets. Temex has various interests in 375,400 acres of claims. Noront Resources Inc. [NOT-TSXV] controls 100% of about 48,600 hectares and has joint ventures comprising another 68,000 hectares. The company has completed a NI 43-101 compliant resource estimate at Eagle One, discovered the Eagle Two nickel-copper deposit and made two high-grade chromite discoveries – the Blackbird One and the Blackbird Two. Indicated resources (massive + disseminated) at Eagle One currently stand at 1,834,000 tonnes grading 1.96% nickel, 1.18% copper, 0.15 grams gold/tonne, 1.12 grams platinum/tonne, 3.91 grams palladium/tonne and 3.81 grams silver/ tonne. Inferred resources (massive + disseminated) are pegged at 1,087,000 tonnes grading 2.39% nickel, 1.27% copper, 0.13 grams gold/tonne, 1.37 grams platinum/ tonne,design 4.50 grams Ad by palladium/tonne and 4.21 grams silver/tonne. For these esti-

mates, a cut-off grade of US $115/tonne southeast of the Ring, including the net smelter return was used. Highbank Lake, Eastbank, Wabassi Nos. In late April 2009, Noront announced 1 & 2, Cain & Abel, Hale Lake and Fringe the discovery of two mineralized zones targets. Till sampling at Eastbank, where of vanadium, titanium and iron at the a drill program is planned, has returned Thunderbird Anomaly. In the A Zone, chromite grains. At Highbank, where drill hole NOT-09-2G21 intersected 0.36% Impala Platinum Holdings Ltd. can earn a V2O5 (vanadium), 2.77% TiO2 (titanium) 60% interest, a platinum soil anomaly has and 24.72% Fe3O4 (iron) over 178 metres. been discovered and drilling is planned. The B Zone returned 0.36% V2O5, 2.66% Probe Mines Ltd. [PRB-TSXV] holds TiO2 and 23.58% Fe3O4 over 99.64 metres. claims favourably located adjacent to Noront has planned a metallurgical study Norton’s Eagle One discovery and others to examine the best extraction method for directly on strike from the Black Thor, Big these metals. Daddy and Blackbird chromite discoveries. On the chromium front, Noront reported Probe’s 100%-owned Tamarack property intersecting 21.5 metres of massive chro- hosts a one-kilometre strike length of mite at the Blackbird area averaging untested ultramafic intrusive rocks located 41.56% Cr2O3 in hole NOT-09-1G130. In northeast of the nickel and chrome disaddition, hole 1G104 cut 25.1 metres aver- coveries where a summer drill program is aging 36.82% Cr2O3, including 5.2 metres planned. Geophysical programs were carof 40.61% Cr2O3. ried out in 2007 and 2008. At the present time, Noront has five drills Probe’s 100%-owned Victory property turning. Two rigs in the Eagle One area are covers the interpreted southeast extension drilling to expand the known resources, of the McFauld’s Lake volcanic belt. The two other rigs are testing the Blackberry company plans to drill-test selected geoarea and one is drilling in the Oval Lake physical targets this summer. Probe also area targeting geophysical anomalies. The has a 50/50 joint venture with Noront on a company expects to have a NI 43-101 property situated between the Black Thor resource estimate for the chromite deposits and Big Daddy chromite discoveries of the in Q3 of this year. Down-hole geophysics Freewest and Freewest-Spider-KWG J/V. will also be carried out at Eagle One. Airborne geophysics has identified anomaThisInc. AD[NRNis for proofing purposecontinues. only. Any other Northern Shield Resources lies. Exploration use requires permission from Resource World.on page 44 continued TSXV] has several prospects south and

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POTASH Contributing to the World’s Food Security by Jennifer S. Getsinger, PhD, P.Geo.

E

Everyone needs NPK. It’s not a stock trading symbol, but a formula for enhanced food productivity – nitrogen, phosphorus, potassium – the essential triumvirate of fertilizer. Even during an economic downturn, the increasing world population needs food. Plants eaten by people and domestic animals (raised for meat and dairy products) are dominantly cereals (grains of the grass family: mainly rice, wheat, and corn, as well as oats, rye, barley, sorghum, and wild rice) and legumes (beans, soybeans, peas, peanuts, etc.), which, when consumed in combination provide a balanced protein diet. Other important grasses to the economic system are sugar cane and bamboo. Productivity of all crops can be improved with appropriate applications of modern fertilizer in addition to maintaining good soil, using best management practices, and farming wisdom developed July 2009

Drilling operations at Western Potash’s Milestone property in southeast Saskatchewan. Photo courtesy Western Potash Corp.

over millennia of human agriculture. Where does fertilizer come from? N, or nitrogen, makes up 79% of air and is fixed in soil by legumes in conjunction with soil bacteria, and can be added to soil from organic waste. P, or phosphorus, a main component of phosphate minerals in bones, can be mined from phosphate rock such as the Permian Phosphoria Formation of western North America. K, or potassium is derived from potash. Potash is the name given to various potassium salts and compounds used in fertilizer. Originally derived from wood ash in a simple lye-making process that left white powder in a big pot, hence the name “pot ash”, now most potash comes from mineral sources. Potash is generally mined as KCl (potassium chloride, or muriate of potash, aka MOP), the mineral sylvite, which occurs abundantly and naturally in

extensive strata of evaporated Paleozoic epicontinental seas in the subsurface of southern Saskatchewan, along with the more common mineral halite (NaCl, or table salt). Potash is often measured and reported in tons of K2O equivalent, for which 1 ton KCl = 0.63 tons of K2O. Most lode salt mines contain ore of the evaporite rock sylvinite, an aggregate of sylvite and halite +/- clay, anhydrite, or dolomite (water insolubles); high-grade sylvinite contains more than 30% K2O equivalent. Associated minerals include magnesium-bearing carnallite (giving potash ore its reddish colour). Extensive evaporite strata were deposited in the Paleozoic Era. In Canada, the Elk Point Basin of Saskatchewan formed in the Devonian, and potash mines in the Maritimes in Carboniferous basins, whereas in Europe the Zechstein basin, hosting salt mines of Germany, Poland, and www.resourceworld.com

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Austria, formed in the Permian, like the Kama Basin in the Perm area of Russia. Potash can also be mined from modern evaporites or brines, in similar geological environments to lithium deposits and brines (inland tectonic basins), such as the Dead Sea, Alberta oilfields, or Andean salars. In the August 2008 Resource World, an article on potash reported that demand had increased so fast that prices soared from about $200/tonne in 2007 to about $1,150/tonne by 2008 (with higher estimates for 2009 and beyond). Exploration companies started looking toward developing new potash mines. Demand for potash is driven not only by population explosion (the need to eat), and by increasing income (a desire to eat well), but also by urbanization (reduction in arable land) and the use of oil-alternative biofuels. If more crops are grown for fuel and animal feed (to satisfy higher meat consumption), and if there is less land to grow crops, then higher productivity from less land area is desirable. Therefore, it was reasoned from positive projections that the demand for potash would continue to rise. How has the past year’s economic weather changed these predictions? What hasn’t changed is that people are still eating and growing grains and beans, and the main non-North American markets for potash are still China, India and Brazil. However, all over the world people are spending less money, and that includes the entire agribusiness sector, from megacorporations to family farmers. What this means for the fertilizer business is that the predicted demand for NPK slowed down. Prices for N and P fell, precipitating unexpected losses. However, according to sources such as Citigroup Global Markets Citi Investment Research firm’s January 2009 report on Potash Prospects, because the potash industry is relatively consolidated, the price remained somewhat high and even though sales weakened, companies concentrating in potash still came out ahead. The major potash producers reduced production of inventory to meet the lesser demand, and attempted to hold firm on 14

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pricing. Citi forecasts a price of $650/tonne in 2009 and $600/tonne in 2010, with an average price of about $400/tonne over the long term. While these are much lower than the $1,000+ per tonne potash prices of a year ago, they are still better than pre-2008 prices, and the prognosis is good for continuity. Perhaps the world’s middle class will not fatten up quickly enough for speculators to make a fast buck on potash, but the food – and hence fertilizer – industry remains a stable bet for the long term. The potash business is dominated by eight main producers in only a few countries, with yearly production of about 30 million tonnes. Canada remains the number one world potash provider with its Canpotex marketing group consisting of Saskatchewan’s Potash Corp. [POT-TSX; POT-NYSE], Mosaic [MOS-NYSE], and Agrium [AGU-TSX; AGU-NYSE], together making up 35% of 2008’s global potash capacity (Fertecon, as reported by Citi). Belarusian Potash Co. exports potash from Belaruskali and Uralkali [URKA-MM], and International Potash Company exports potash from Russia’s Silvinit [SILV-RU]. These three companies made up 29% of global potash capacity in 2008, with Germany’s Kali & Salz (K+S) [SDFFrankfurt] at 10% and Israel’s ICL [ICL-Tel Aviv Stock Exchange] at 8%. The remaining 17% potash capacity comes from a combina-

tion of smaller producers such as Intrepid Potash Inc. [IPI-NYSE], the largest producer in the USA, which produces 8.5% of United States consumption, and 1.5% of world consumption, and Arab Potash Company (APC) [APOT-Amman Stock Exchange] in Jordan, which is a major supplier to the Middle East, Asia, and Africa. Major potash consumers are China, North America, India, Russia, and Brazil. The largest known potash reserves are in Canada (>50%), Russia/Belarus (~30%), and Germany (9%), with smaller amounts in other countries, including significant production from the Dead Sea area. The German reserves are estimated to last 40 more years, whereas Canadian potash longevity is, so far, inestimable (reserves estimated at 75 billion tonnes of KCl, according to the Canadian Encyclopedia online). The Vancouver Sun in May 2009 quoted Kelvin Dereski, president of the Saskatchewan Mining Association, saying that 2008 mining production in Saskatchewan, largely due to potash, “was valued at a record $9.7 billion – positioning the province as the No.1 mineral-producing jurisdiction in Canada.” Until the 20th century, almost all world potash was supplied by burning wood to ash and by European salt mines, but World War I sparked new mineral resource discoveries in North America, among them the mines of the Carlsbad area of New Mexico, July 2009

USA, active in the 1930s. It wasn’t until deep drilling for oil in 1943 penetrated evaporite strata in central North America that the huge potash reserves beneath southern Saskatchewan were revealed, as most of the potash-bearing rock is found at depths between 1,000 and 3,000 metres. Some potash extraction in Saskatchewan is by underground mining, and some is by solution mining, depending on depth of the potash-bearing strata and also subsurface temperatures. Although the larger companies seem to have a production advantage, there is still room in the future of potash for new discoveries and mine development, especially considering factors of convenience, proximity, and changes in demand not only for fertilizer but also the other uses of potash, such as glass making, health products, and chemical applications. Canadian resource companies with interests in potash Agrium Inc. [AGU-TSX; AGU-NYSE], headquartered in Calgary, is an integrated agricultural retailer, providing NPK nutrients from source to consumer. Its flagship potash facility at Vanscoy, near Saskatoon, produces 1.8 million metric tonnes of potash annually. Alix Resources Corp. [AIX-TSXV] and Geo Minerals Ltd. [GM-TSXV] acquired areas prospective to potash in Saskatchewan and Manitoba in July 2008, but appear to have intersected and explored coal seams near Wapawekka Lake instead, according to a news release by Michael England (dated April 30, 2009). On June 11, 2009, Alix and Geo announced acquisition of a lode gold quartz property in the Yukon, but have not released any news of their Saskatchewan potash prospects since July 2008. Allana Resources Inc. [AAA-TSX] is a Canadian company with 100 million tonnes of NI 43-101 compliant inferred potash resources in its Dallol property in a historical potash mining area of the Danakil Depression of Ethiopia. (See the write-up on Allana in June 2009 Resource World.) Athabasca Potash Inc. [API-TSX] is July 2009

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advancing its Burr Project in Saskatchewan near PotashCorp.’s Lanigan Mine with a pre-feasibility study, and recently announced NI 43-101 measured and indicated resources of 425 million tonnes potash, and an additional 187 million tonnes inferred. It holds 23 potash leases on almost 7,000 square kilometres of property. BHP Billiton Ltd. [BHP-NYSE] in a J/V with Anglo Potash Ltd., in 2006 acquired about 7,000 square kilometres of potential potash mining property near Saskatoon, and intends to open the first new potash mine in Canada in 30 years, the Jansen Lake Project, of which it now owns 100%. Director Gordon Graham plans to involve local First Nations and Metis. The mine is slated to open in January 2015, with full 8 million-tonne yearly capacity by 2026. Canasia Industries Corp. [CAJ-TSXV], in addition to gold properties, has the Eyehill Creek Potash project in Alberta, where geophysical studies have suggested

subsurface potash strata not far west eral permits along the Saskatchewan-Alberta from Saskatchewan’s Unity potash mine. border that include rights to potash mining. Exploration work is now underway on It is currently reviewing geophysical data their 20 permit areas. and planning potash drilling programs. Last Channel Resources Ltd. [CHU-TSXV] year, Shear Minerals Ltd. [SRM-TSXV] has analytical results that suggest pot- signed an option with Grizzly, but no potash might feasibly be co-produced with ash news has been reported since. lithium carbonate from brines at their Lara Exploration Ltd. [LRA-TSXV] has Fox Creek project in the Alberta oilfields, been granted potash exploration licenses according to Cyrus Ameli. (See June 2009 encompassing about 14,000 hectares in Lithium article in Resource World.) Sergipe State, northeast Brazil. The claims Confederation Minerals Ltd. [CFN- are adjacent to and cover the extensions of TSXV], headed by Lawrence Dick, PhD, the potash-bearing sedimentary basins of P.Geo., recently announced a joint venture Vale’s producing Taquari-Vassouras potash with Magna Resources Ltd. (they each mine. own 50% of American Potash LLC) to MagIndustries Corp. [MAA-TSXV] option U.S. potash prospects in Utah and announced agreements for financing Phase Arizona. Although the properties are not I exploration on its Kouilou Potash Project named specifically in the June 3, 2009, in the Republic of Congo, a greenfields news release, they are located within the development with a design capacity of Paradox Basin and Holbrook Basin, like the 600,000 tonnes of potash, hoping to be prospects offered by Ringbolt Ventures. the newest potash facility in Africa. The Grizzly Diamonds Ltd.This [GZD-TSXV] main potassium is carnallite AD is for proofing purposemineral only. Any other (also announced in June 2008 its subsurface min- containing magnesium), and the expected

• World-class shallow depth potash • Inferred Resource of 105 million tonnes at 21 % KCl • Potentially lowest CAPEX and lowest OPEX potash project in the world

TSXV: AAA 16

www.resourceworld.com Allana.indd 1

use requires permission from Resource World.

• Amenable to Solution Mining and Solar Evaporation • Located in one of the largest evaporite basins with known potash mineralization

Farhad Abasov, President/CEO: 416 309-2691

www.allanaresources.com July 2009 5/20/09 10:53:54 AM

process is solution mining. Orocobre Limited [ORE-ASX] has a resource 4.4 million tonnes of potash at its Olaroz lithium-potash project in northwest Argentina based on 5.32 tonnes of lithium carbonate being equivalent to 1 tonne of lithium and 1.91 tonnes of potash being equivalent to one tonne of potassium. Passport Metals Inc. [PPI-TSXV] is drilling (diamond drill and reverse circulation) its 100%-optioned Holbrook Basin, Arizona, potash property, where the salt layers occur in the Permian Supai Formation. Downhole geophysics will also be carried out. Historic drilling has returned potash values ranging from 11.05% to 14.59% K2O. Potash Corporation of Saskatchewan was formed in 1975. Now known as PotashCorp., the largest fertilizer company in the world, it provides NPK with “a commitment to grow” and a strategy of putting potash first. An interactive map on its website shows world agriculture

July 2009

and fertilizer markets by country. It has five potash mines in Saskatchewan, one in New Brunswick, a nitrogen gas facility in Trinidad and part ownership of several international potash producers. Potash One Inc. [KCL-TSX] recently updated NI 43-101 estimated resources on its 400 square kilometre Legacy Project near Regina (adjacent to Mosaic’s Belle Plaine solution mine property) to 29 million tonnes of measured potash resources, 222 million tonnes of indicated potash resources, and 852 million tonnes of inferred potash resources. In January 2009, Potash One and the former Potash North Resource Corp. announced a merger which was approved by the BC Supreme Court in April 2009. In mid May, Paul Matysek, President, announced Robert Friedland will be Chairman. Mr. Friedland will advise the company on its selection of strategic financing partners. Potash One had SNC-Lavalin complete a prefeasibility study for a 2.5-million tonne/year potash solution mine. Capital cost is US $1.877 billion for a

initial 40-year mine life with a 3.3-year aftertax payback. IRR would be 30.1%. Raytec Metals Corp. [RAY-TSXV] plans to sell its Saskatchewan potash interests to Angus Ventures Corp. [AGN.H-TSXV] and Encanto Potash Corp., which will merge under the name Encanto Potash. Raytec will then earn in for a 51% interest and Encanto may repurchase the 51% interest. Raytec will make $6.5 million available for exploration. The Spar property is reported (NI 43-101 compliant) to have an indicated resource of 12.24 million tonnes of K2O, and is undergoing geophysics. Ringbolt Ventures Ltd. [RBV-TSXV] is “sustaining agricultural growth” by making its potash prospects in Utah (Lisbon Valley, Paradox Basin) and Arizona (Holbrook Basin) a priority, along with one uranium property in Canada. New directors came on board in November 2008, and are seeking investors in order to continue the path toward developing their prospective potash assets in the U.S.

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Sidon International Resources Corp. [SD-TSXV] in December 2008 received the 10 potash mineral permits over 870 square kilometres in the Vermilion area of Alberta for which they applied in July 2008; however, in 2009 it appears that their main activity has been fundraising. The Mosaic Company produces muriate of potash from its solution mine at Belle Plaine and two other mines in Saskatchewan, the Colonsay and the Esterhazy (one of the largest potash mines in the world), and exports potash through Canpotex, also providing phosphate, “to help the world grow the food it needs”. Mosaic recently won a National Environmental Education award for its work educating school children in Florida, where it mines phosphate rock. TNR Gold Corp. [TNR-TSXV], featured in the June 2009 Resource World lithium article, has acquired 100% interest in Argentina’s Mariana brine property, located in an Andean salar or salt lake. President Gary Schellenberg and John Harrop,

P.Geo., report that “historical sampling has reported significant lithium, boron, and potash levels in brines and sediments” in the salar. Processing surface salts is much less costly than underground mining for these elements. Trigon Uranium Corp. [TEL-TSXV], part owner of Intercontinental Potash (ICP), is exploring and studying feasibility of polyhalite mining in New Mexico in addition to ICP’s other potash properties in Colorado and Utah. Polyhalite, a hydrated sulfate of potassium, calcium, and magnesium, would provide “an organic, non-chloride, slowrelease, and multi-nutrient fertilizer.” Vale S.A. [VALE-NYSE], formerly Inco, one of the largest mining companies in the world, bought Rio Tinto’s Canadian potash holdings near Regina early in 2009. Vulcan Minerals Inc. [VUL-TSX], while exploring for oil near Newfoundland, discovered its Flat Bay Potash/Salt project in the Carboniferous Maritimes Basin (Bay St. George Basin) at the southwestern corner

of Newfoundland. It expects to produce de-icing salt there, after assessing the potash (so far analyzed up to 20.4% K2O) and halite resources. Altius Minerals Corp. [ALS-TSX], with investment partner Sprott Resource Corp. [SCP-TSX], has begun potash exploration in the Bay St. George Basin. Cornerstone Capital Resources Inc. [CGPTSXV] advertises its Codroy property, at the southwestern corner of Newfoundland, as a potash prospect, but it is also exploring for uranium and copper in the area. Western Potash Corp. [WPX-TSXV; AHE-FSE] reports positive drill results from its 500 square kilometre Milestone property southeast of Regina on the same trend with Mosaic’s Belle Plaine producing solution mine and adjacent to properties held by Potash One, BHP, and Vale (Rio Tinto). John Costigan, VP of Corporate Development, says that Western Potash is drilling in new areas, targeting significant heat anomalies where the cost of solution continued on page 42

THE LARGEST LOW-GRADE RESOURCE OF MANGANESE IN THE U.S.

1.07 BILLION LBS* OF INDICATED RESOURCES 9.66 BILLION LBS* OF INFERRED RESOURCES Manganese $1.10/lb

* Summary of National Instrument 43-101

Resource Classification Indicated Inferred

Open-pit Manganese face 18

www.resourceworld.com

Tonnes (Billions) 10,865,929 96,933,724

%Mn 4.46% 4.52%

Pounds 1,068,307,976 9,661,091,721

ROCHER DEBOULE MINERALS CORP. www.rdminerals.ca [email protected] TSX-V: RD Ph. #: 604-531-9639 July 2009

broker's picks Do r o t h y Ho f f e r t

Serengeti Resources developing Kwanika tonnage

U

nder the direction of David Moore, President and CEO, Serengeti Resources Inc. [SIR-TSXV] acquired 100% ownership of the Kwanika Project through staking between 2004 and 2006. The Kwanika Project is located in north-central British Columbia about 140 kilometres northwest of Fort St. James and lies in close proximity to the well serviced mining communities of Prince George and Smithers. It is situated in a large porphyry copper-gold belt geologically referred to as the Quesnel Trough between Northgate’s Kemess Mine, which produces 300,000 ounces of gold annually, and the Mt. Milligan deposit, reported to contain 5.6 million ounces of gold and 1.7 billion pounds of copper, currently being developed by Terrane Metals and Goldcorp. The Kwanika Project consists of two mineralized areas known as the Central Zone and the South Zone. Prior exploration on the property occurred between 1966 and 1995 during which time a historic resource (non NI 43-101 compliant) of 36 million tonnes grading 0.20% copper was estimated on the South Zone. Exploration conducted by Serengeti during 2005 and 2006 included airborne and ground geophysics as well as drill programs that resulted in the discovery hole K-06-9 that intersected 111.1 metres grading 0.69% copper and 0.54 grams gold/tonne in the Central Zone in December 2006. Since that discovery, Serengeti has expanded the central area of high-grade, copper-gold mineralization using drill hole spacings designed to support a resource calculation. The company completed 56,000 metres of drilling in 123 holes by August 2008. Some of the drilling highlights include Hole K-07-15 that cut 328.3 metres grading 0.61% copper and 0.72 grams gold/tonne and Hole K07-29 that intersected 48.6 metres of 0.75% copper and 2.5 grams gold/tonne. Hole K-07-28 encountered a 322-metre interval of porphyry-style copper-gold mineralization that graded 0.40% copper and 0.40 grams gold/ tonne. A 240-metre interval in Hole K-08-62 produced 1.28% copper and 1.41 grams gold/tonne. A NI 43-101 compliant resource estimate conducted on the Central copper-gold zone at the Kwanika Project was released in late February 2009. The estimate is based on 78 drill holes totaling 40,784 metres that were drilled between 2006 and 2008. The resource estimate was based on a 0.25% copper equivalent cutoff grade and outlined 182.6 million tonnes of indicated mineral resources grading a 0.47% copper equivalent or a 0.71 grams gold/tonne equivalent containing 1.62 million ounces of gold and 1.15 billion pounds of copper. Inferred mineral resources of 28.5 million tonnes grade 0.32% copper equivalent or 0.49 grams gold/ tonne equivalent and contain an additional 0.2 million ounces of gold and 120 million pounds of copper. A higher grade zone July 2009

Kwanika Resource Block Model Feb 2009 >0.25% Cu Eq Cut-off looking East

based on a 0.40% copper equivalent contains 75.1 million tonnes of indicated mineral resources grading 0.42 grams gold/tonne and 0.41% copper. An environmental scoping study and preliminary metallurgical studies have been completed. Serengeti has approved a $3.1 million program for 2009. The company will be drilling high priority targets to expand the known mineralized zones and to search for new zones around the Central and South Zones of the Kwanika Project. Follow-up drill programs will also take place on other highly prospective properties in the Quesnel Trough. Joint venture partner Newcrest Mining Limited of Australia is fully permitted to conduct a $1.5 million follow-up drill program to test copper-gold targets on the Croy Bloom-Davie Creek property this year. The Mil property, a 50/50 joint venture with Fjordland Exploration Inc. [FEX-TSXV], will be drilled as well as the 100%-owned Choo and Osilinka properties, also located in the Quesnel Trough. Serengeti is well funded to advance its projects with a working capital of approximately $8.6 million in the treasury. n (CIPF) Dorothy Hoffert has been an Investment Advisor for 20 years with a focus on the Mining Sector. The information contained in this article was obtained from sources believed to be reliable; however, we do not represent that it is accurate or complete. This report is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell securities. The views expressed are those of the author and not necessarily those of Wolverton Securities. Wolverton Securities has not performed any investment banking for this company in the last 12 months. Ms. Hoffert can be reached at 604-662-5271. www.resourceworld.com

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insights & investments E r ic H oe sg e n & D e nnis H oe s g e n

Why Albania? A new European mineral frontier is opening up for explorers

W

hat is the first thing that comes to mind when you think of Albania? Tough to say isn’t it? This is because very little has been known of this country in the last 100 years, up until very recently. Today, the country is starting to attract a significant amount of foreign investment; it also led Europe in GDP growth in 2008. I (Eric) traveled to Albania in May of 2008 and was truly amazed at the development and beauty of this country. Oddly enough, my cell phone had better coverage in northern Albania than in some parts of British Columbia, which was impressive. Now, you might be wondering what I was doing in the mountains of Albania. Please read on. The country boasts 450 kilometres of gorgeous coastline and a cuisine comprised of Greek, Italian and Turkish influences – nations that had each occupied Albania at different times throughout history, leaving their mark on Albanian culture. The pizzerias almost make you feel like you are in Italy. The culture of Albania has evolved over hundreds of years. While the country is currently still recovering from the politics of the Communist Party of Albania that ended in the early 1990s, it is making great strides to eventually join the European Union. Albania is actually more stable than one would think, having a parliamentary democracy. Tirana, the financial capital of the country, is home to approximately 895,000 of the country’s 3.6 million people. Free-market reforms have opened the country to foreign investment, especially in the development of energy and transportation infrastructure. Also, as of January 1, 2008, Albania implemented the 10% flat personal and corporate tax system, one of the lowest in Europe. The country is staunchly pro-West and is a new NATO member. 20

www.resourceworld.com

This brings me to the key reason I went to Albania; I was interested in seeing what the climate was like for investing there. A sector that is getting a great deal of attention in the country is exploration and mining, largely due to the success of only one or two companies. A new mining law was passed in 1994 as well, specifically geared towards attracting new foreigninvestment. The stability of the Mining Law, the excellent tax environment and the favourable geology has the resource world getting increasingly excited. Historically, Albania started as a copper producer in the late 1920s and 1930s, but stopped when World War II broke out. Things didn’t get going again until the 1950s and 1960s, when the Soviets, occupying the country at the time, carried out extensive exploration programs. Those programs uncovered many of the known deposits throughout what is known as the Mirdita district. A junior company by the name of Tirex Resources Ltd. [TXX-TSXV] acquired this crown jewel of Albania approximately two years ago. The Mirdita District is 344 square kilometres, covering most of the traditional Albanian Mining District. Following this, Tirex began conducting the first ever modern exploration program in the country, a move that has given the company first-mover status in this geologically-rich country. In 2007, Tirex conducted the first airborne geophysical survey in Albania which uncovered 102 geophysical targets, most of which are previously undrilled and unknown. The Tirex exploration and development team believe that Mirdita has the potential to become one of the world’s great volcanic massive sulphide (VMS) districts hosting many large economic deposits. Since formation, the company has raised $25 million in capital and has drilled more than 15,000

metres, resulting in some excellent grades of copper, zinc, gold and silver mineralization over wide widths in three separate areas of the district. It’s not very often that an opportunity to acquire an entire district comes along and Tirex is working to turn this good fortune into a significant win for both shareholders and for the people of Albania who want a large and prosperous mining industry to fuel economic growth and advancement. In addition to generating attention in the field with some rather spectacular drill intersections, Tirex has also established a reputation for completing very unique financings. In fact, in 2008 Tirex brought the $20 billion European Bank for Reconstruction and Development (EBRD) on board in what was their first ever financing of a mineral exploration company anywhere in the world. One comment we get frequently is the fact there are few investment opportunities with exposure to Albanian exploration companies. And with Tirex well into their program, what are the options if you want to invest into something at the ground floor? There is only one that we know of and it’s a company by the name of Volcanic Metals Corp. [VOL.P-TSXV]. This is a small junior on the TSX Venture Exchange with big plans. It seems they have acquired what they consider yet another VMS District in Albania, the Gjegjan Property. Volcanic Metals is led by an interesting group of people who all have very successful track records of creating shareholder value, but who have been drawn together for the first time due to the significant potential at Gjegjan. The board consists of Michael Iverson, CEO who was a founder of Fortuna Silver Mines, Rock LeFrancois who is the President of Niogold, Jason Scharfe who is a Managing Director of March Canada, July 2009

Brian Slusarchuk, CEO of Tirex Resources, examines diamond drill core from the 344 square kilometre Mirdita property in Albania. Photo courtesy Tirex Resources Ltd.

Bryan Slusarchuk who is the CEO of Tirex Resources, and Gary Freeman who is President/CEO of Pediment Gold. The Gjegjan property is located in northeast Albania and consists of two separate, but near contiguous, property blocks covering a total area of 173 square kilometres. The permit forms a three-kilometre wide strip that stretches for 75 kilometres through the Surroj, Arre Molla, Pregje Lure and Mbasdeja areas. The property straddles a 75-kilometre long segment of the Volcano-Sedimentary sequence exposed on the eastern margin of the Mirdita ophiolite belt. The sequence is recognized to be very prospective in hosting copper-rich VMS deposits and past exploration by the Albanians uncovered a deposit that turned into a major producing copper mine for the government. Exploration efforts to uncover additional deposits were hampered by a lack of modern exploration techniques, equipment and the severe isolationist policies of the government. Volcanic will conduct the first ever large scale and modern exploration program in this prospective setting. Logistically, the property can be accessed easily due to the recently completed £700 million highway from Kukes to Durress (essentially, from the property boundary to the port city), with its grand opening this month. It makes the driving time from the property to the capital only two hours on a four-lane highway. This is an incredible improvement as it was triple the time in the past. The northeast part of the property, located east of the town of Kukes, encompasses the former Gjegjan copper mine, which is excluded from the permit. Gjegjan is recognized as one of the richest historical copper producing assets in Albania that is hosted within the Volcano-Sedimentary sequence. Geological mapping of the Kukes area was conducted by the Albanian Geological Survey (AGS) in the mid to late 1950s, with varying results. The Gjegjan copper-rich massive sulphide horizon was intersected July 2009

in 1959 in a water well hole. At least five sulphide occurrences were documented along two distinct areas within the Volcano-Sedimentary sequence. Values of up to 7-8% copper were obtained from the horizon. Mining operations from underground and open pit extended from 1961 to 1993, when the country’s industry collapsed due to political reasons. During this period, the Gjegjan Mine produced a total of 4.4 million tonnes averaging 3.30% copper. Remaining reserves were estimated at 61,000 tonnes grading 2.56% copper. The Gjegjan sector remains a principle exploration target as VMS deposits are known to occur in clusters and no other deposits were found during past state-run exploration. Much like Tirex, Volcanic will be conducting the first ever large scale and modern exploration in the area surrounding the Gjegjan Deposit. Volcanic Metals is currently halted pending a qualifying transaction. Initial geophysical work has been completed around the historical deposit area. Of significant interest is the exploration potential underneath a limestone cap in the vicinity of the known historical deposit. One thing that we have learned via Tirex is the significant difficulties the past Albanian state-run programs had in terms of technical drilling issues, such as penetrating to deeper depths. They regularly drilled only 2 metres per day in areas where Tirex now gets 50 metres per day. The equipment they were using was quite antiquated. Therefore, the areas Volcanic is targeting to develop multiple new drill targets are relatively unexplored by previous Albanian explorers. We consider this to be a very attractive, early stage opportunity for speculative investors. The stock will hopefully come back to trade early July pending exchange approval. Following on Tirex’s success, which we think will be substantial this year,

This unusual-looking instrument is used for helicopter-borne electromagnetic surveys. Tirex Resources was the first company to utilize airborne geophysics in Albania; Volcanic Metals will be the second one. Photo courtesy Tirex Resources Ltd.

Volcanic could offer substantial upside for speculative investors in our opinion. n This article is solely the work of the authors. Although the authors are registered investment advisors at Canaccord Capital, this is not an official publication of Canaccord and the authors are not Canaccord analysts. The views, (including any recommendations) expressed in this article are those of the authors alone and are not necessarily those of Canaccord. Information in this article is drawn from sources believed to be reliable, but the accuracy and completeness of the information is not guaranteed, nor in providing it, do the authors or Canaccord assume any liability. The holdings of the authors, Canaccord, its affiliated companies and holdings of their respective directors, officers and employees and companies with which they are associated, may from time to time, include the securities mentioned in this article. For more information regarding this article, contact Dennis Hoesgen (Dennis_Hoesgen@ canaccord.com) or Eric Hoesgen (Eric_Hoesgen@ Canaccord.com) at Canaccord Capital (Member CIPF) 604-643-7705. www.resourceworld.com

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speculations Leo nard M e lm a n

Interest rates and precious metals

M

ovements in interest rates, particularly long-term rates, can be said to be the net distillation of a number of important factors being continually evaluated by the entire financial community. And, in my opinion, movements in longterm rates can have a profound effect on precious metals investments. One of the most important components of long-term interest rates is the expectation of future moves in the underlying rate structure. As the late Professor of Economics, Murray Rothbard, discussed in his text, Man, Economy and State, “...What happens if the interest rate is expected to change in the near future? In that case, there will be a similar process as in the case of speculation in commodities. Speculators will bid up the interest rate in the expectation of an imminent rise or bid down the rate in the expectation of a fall.” (my emphasis) Regarding the U.S. Treasury 30-year bonds, we have seen both directions during the past two years. It can readily be seen on the accompanying chart that rates held between 4% and 5% for most of 2007 and 2008, then they fell sharply in late 2008 to barely 2.5% as the U.S. government ratcheted up its moves to drive interest rates lower and also announced that the Federal Reserve Board would begin purchasing U.S. government debt with money created by what they called quantitative easing, which many interpret to mean monetization of debt.

22

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However, despite the positive talk from government and the fact that shortterm rates had been driven down toward actual zero, a remarkable transformation took place. The long end of the interest rate market abruptly turned higher early in 2009 and has now recovered the entire decline of the past two years as rates rose sharply from 2.5% to over 5% in just a few months. Our goal then is to identify why this change of direction took place and whether it is not only likely to continue into the future, but may even accelerate. We believe that anticipated rates of future inflation are the most important single component of movements in interest rates since, as a minimum, investors would hope to at least recover the purchasing power of their funds when they close out their investments. Therefore, as the anticipated rate of inflation would rise, so would the amount of interest demanded by investors before committing funds. Next, in the modern-day context, one of the driving forces behind anticipated rises of inflation is the degree of financial stimulation undertaken by government in general and the United States in particular, as well as the effects of the financial imbalances created by the recent avalanche of stimulus and rescue programs undertaken by that government. The figures are startling indeed. During the past year, the estimated budget deficit has swollen from less than one-half trillion U.S. dollars to $2 trillion. America’s national debt has grown from US $9.4 to US $11.4 trillion. The Federal Reserve’s Monetary Base has doubled and the level of Federal Reserve assets has shot up by an unprecedented 130%. Many economists believe that the incredible rise in the level of these figures augurs

for future inflation unless the Obama-led government gains control over the situation, reins in the growth of government expenditures, and begins the reverse trip from soaring to falling budgetary deficits. But will it? I have my doubts. During recent months, we have heard of commitments to create millions of new jobs; to introduce government-sponsored national medical insurance programs; to re-regulate the entire financial structure; to rescue important players in the auto, banking, mortgage insurance and general insurance industries; as well as spend trillions on infrastructure projects while somehow saving millions of homeowners from foreclosure proceedings – and that is just a partial list. In addition, many states and municipalities are facing hundreds of billions in operating deficits and the federal government will be called upon to help in that direction as well In short, I believe that conditions are in place which will likely contribute to rising inflation-based interest rates, not falling; to increasing money creation, not diminishing; and increasing weakness in the U.S. dollar, not strengthening. Historically, rising inflation, escalating money creation and a weakening U.S. dollar have provided exceptionally bullish backgrounds for the precious metals markets.Therefore we look for growing upward pressures, not only sustainable at present, but accelerating into the future, for the price structures of the monetary precious metals. That is the speculation. n This material is taken from sources believed to be reliable and is provided for information only. Any investment decision should be made only after prior consultation with investment professionals. Leonard Melman is a financial and political writer who focuses on issues relating to the resource sector. Mr. Melman lives in Nanoose Bay, British Columbia, Canada and can be reached at [email protected] July 2009

at the market Rod Blake

Sell in May – No Way! I’ll bet that you smiled when you opened your investment statement for May. This is of course a complete reversal for many of my clients who actually spared themselves the pain and didn’t even open their statements last fall. And it’s all because this resource market seems to continue to attract new investors who have pushed the TSX Venture Exchange up by another 115 points to 1,124 in May for an impressive gain on the month of 11.4%! There’s an old market adage that says we should “sell in May and go away”, which refers to the market’s tendency to peak in the spring. The rule of thumb is to get into cash by early May and then wait out the summer doldrums before re-entering in the fall as the market rebuilds for the coming year. In the more focused case of resource stocks, it has proven very prudent over the

Laurentian Goldfields/Kinross form Uchi exploration alliance Andrew Brown, President/CEO, reports Laurentian Goldfields Ltd. [LGF-TSXV] and Kinross Gold Corp. [K-TSX; KGCNYSE] have signed a letter of intent to form an alliance to carry out a $500,000 generative exploration program in the Uchi geological subprovince of Ontario and Manitoba (the Uchi alliance). The project will target the prospective Red Lake, Rice Lake and Pickle Lake greenstone belts. Under the terms, Kinross and Laurentian will invest $400,000 and $100,000, respectively, to finance one year of early-stage exploration to identify new gold targets, which can be extended upon mutual agreement. Kinross can create a joint venture with Laurentian on a 50/50 basis in any of the projects identified and acquired. Kinross can increase its interest to 75% on each J/V property by financing $1.5 million of future expenditures over two years from the date the J/V is formed. The alliance is subject to signing a definitive agreement. July 2009

last number of years to sell your positions just as the annual Prospectors & Developers Association Conference takes place in early March, as it seemed that the enthusiasm for investing in resource issues peaked at that time. However, had we sold at the PDAC this year, when the Venture Exchange was at about 830, we would have made a nice 19.1% from the market’s low of 697 in December, but we would have left a very painful 35.4% on the table, with perhaps, more to come. What I’m trying to show here is that with investing, especially resource stock investing, we can’t be complacent and just rely on what worked in the past, as every cycle of every market can be different, sometimes for the worse, but so far this year, very much for the better. As I write this column in mid June, the Venture Exchange is still up from its close at the end of May, but it is looking a bit suspect for a correction. So I’m taking

partial profits on my leading positions to build up cash, while keeping a core position, as I don’t want to be completely out of this market as it may still have some legs. I’m looking to redeploy some of those profits into sectors that have lagged behind, such as uranium and natural gas that have so far this year failed to follow crude oil higher. In short, I’m locking in profits and rotating my portfolio to protect my downside, but I’m staying with a youthful bull resource market that has outperformed even the most optimistic of talking heads expectations. Lock in profits and create capital… yes. Rotate your account… yes. But sell this May and go away… no way! n

Laurentian has also formed a three-year exploration alliance with AngloGold Ashanti Ltd. [AU-NYSE; AGG-ASX; ANGJo’burg], which includes a subscription by AngloGold to a $400,000 private placement in Laurentian. Chris Lodder, Greenfields Exploration Manager: Americas, of AngloGold states, “AngloGold has chosen to work with Laurentian in several new frontier areas of Canada because of the team’s ability to design, implement and conduct exploration in an innovative and efficient manner, which generates new Greenfields drill projects rapidly.” In year one, AngloGold will provide $700,000 for exploration, including at least $500,000 for generative exploration efforts in five selected areas in Quebec, Ontario and Saskatchewan, to identify new grassroots gold exploration projects, and up to $200,000 for upgrading targets within portions of Laurentian’s 100% owned Grenville Project, about 200 kilometres east of Val d’Or, Québec. The Grenville Project is an earlystage exploration property modeled after

AngloGold’s Tropicana deposit, Western Australia. In year two and three, at AngloGold’s option, AngloGold may fund an additional $4,700,000 to follow up on year one results. Upon spending $5,400,000 over three years, AngloGold will earn a 60% interest in each project under the alliance with Laurentian retaining a 40% interest. AngloGold may then increase its interest to 75% in any project by funding any exploration through to completing a NI 43-101 compliant, inferred gold resource, within three years of the earnin period. Any assets acquired during the earn-in period that do not progress to a joint venture will revert 100% to Laurentian. Laurentian has further increased its land position in Van Horne Township, near Dryden, Ontario, with an option on a single patented claim within the boundaries of its existing Van Horne property. Last year, Laurentian geologists collected grab samples along a four-kilometre trend, eight of which assayed better than 15 grams gold/tonne, including one as high as 124.5 grams/tonne. More work is planned. n

Rod Blake is an investment adviser at Canaccord Capital Corp. He can be reached at 604-643-7567 or [email protected]. Member CIPF

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fearless talk H.R . T sc hudi

New excellence: Less awful

S

ome see green shoots. Others see the shoots already brown. The differences amongst economists are wider than ever. In light of a short shelf life, politicians are portraying optimism as a way of professional principle for not knowing any better. In for the long haul, as entrepreneurs, we are hopeless optimists. However, if companies keep piling up deficits, increasing debt loads are the consequences. Wishful thinking will then lead to unavoidable defaults. While well managed companies such as Alcoa engage in drastic reductions in capacities and have cut their work force substantially, others hope that the experience of short recessions hold true this time around as well. Politicians are already declaring victory – only that things are much different now. Governments across the world seem to be engaging in said optimism and placing their bets on a recovery just around the corner. Meanwhile they are piling up unprecedented peace-time debt. At ultra-low interest rates, that debt comes cheap and it is said interest rates provide the “silver lining”. It made adjustable rate mortgages (ARMs) much more affordable to the extent that the disposable income in the U.S. has increased by 8% – easy to achieve after the disposable income was near zero for years. It is interesting what Americans are doing with their new-found relief. While they used credit cards during previous recessions, this time around they seem to be more sensible by reducing debt and increasing savings. Do they know something that governments don’t know? My take is that, rather than looking at disposable income, they are looking at their deflating pay cheques – a sure-fire indicator of financial worries. Consequently, entire industry sectors remain subdued, automotive manufacturers and their supply chains, transportation on ground, water or air, apparel, consumer electronics, construction, finance, recreation, 24

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travel, publishing, primary, even entertainment and education. It logically follows that prices are under pressure and, sure enough, the latest statistics show producer prices dropping, however slightly. However, there is a silver lining in base metal prices. Aluminum, copper and nickel are way off their lows from only a month ago. Also, energy prices have soared recently in anticipation of an economic recovery. These factors indicate that there is some sort of a floor that has been reached, if only temporarily. What others celebrate as a new excellence, I would term as merely less awful. It seems that agriculture and health care are part of the few stable sectors, relatively speaking, and it might be a good idea to revisit investments into agriculture and its related industries such as potash, for example. The bigger picture does not look all that encouraging, though. Many industries hang on to the governments’ umbilical cord, either directly or indirectly. And governments throughout the world are reaching their breaking point of just not being able to do more to stimulate the economy. If a recovery does not kick in during the fourth quarter of 2009, Europe’s automated stimuli in the form of unemployment insurance and subsidized shorter working hours will start to run dry. In my opinion, America’s ill-designed stimulus plans will be ineffective before any sizable recovery can take hold. The U.S. better not depend on exports to Europe, which, because of its own dependency on exports, European export figures are falling faster than in the U.S. Thus, if the timing is off, we are to brace for another oncoming storm. We should be careful before laughing at the crumbling authority in Iran over its election and economic woes and be more cautious in arrogantly declaring victory for democracy. Social unrest is oblivious to organizational forms of societies, but more receptive

to high unemployment. The darkest clouds are coming from raising interest rates that were a comfort centre for the two first quarters of 2009. It will not only undo the gains in disposable income that resulted from ARMs, but it will add more financial concerns to all those that refinanced properties using ARMs. Apart from the interest rate threat, there are two main psychological factors in play that have changed the name of the game back to where it was three decades ago. First and foremost, responsible citizens seem to have learned that living above their means is probably not worth their families falling apart over financial stresses, particularly when facing lower income. Secondly, banks finally seem to have gotten the message that handing out credit to those that can’t pay it back isn’t such a great idea after the Ponzi Scheme of repackaging shady debt has come to light. They will need some time to come up with the next scam. While governments engage in praising themselves for having stemmed off the gravest financial crisis in this generation with trillions of dollars in near-zero percent loans and bailouts, they might be well advised to put all the options on the table for an economic restructuring. It should soon dawn on everybody that the level of economic activity of the past decade was a mere illusion based on bad credit. The world has to think about returning to living within its means. In terms of GDP, it is not all that awful – it’s just less excellent. n H.R. Tschudi is an economist and entrepreneur in Vancouver, BC. You can find more political and economic columns by H.R. Tschudi in www.fearless-society.com and leave comments. This material is taken from sources believed to be reliable and is provided for information only. Any investment decision should be made only after prior consultation with investment professionals. July 2009

MINING

Aerial view of Gold Ridge processing plant facilities, December 2006. Photo courtesy Australian Solomons Gold Ltd.

Building Solomon’s Gold Mine by Thomas Schuster

Australian Solomons Gold Ltd. [SGATSX] is close to bringing the Gold Ridge Mine back into production on the island of Guadalcanal. Guadalcanal is part of the Solomon Islands chain in the South Pacific. The islands were named by a Spanish explorer who, on finding alluvial gold on Guadalcanal in 1568, believed he had found the source of the biblical King Solomon’s gold. In truth, the gold he had discovered near the mouth of the Matepono River originated upstream, on what is now the Gold Ridge Mine site. The Solomon Islands form part of the circumpacific Ring of Fire and are within an active subduction zone. There are numerous other gold deposits in the region that are related to the same system of subduction zones, including the Lihir Mine on Lihir July 2009

Island (22 million oz.), the Porgera Mine on PNG (+7.8 million oz.), the Emperor Mine on Fiji (+12 million oz.) and the Panguna goldcopper mine on Bougainville Island (25.6 million oz. gold/6.5 million tonnes copper). Australian Solomons Gold was incorporated in 2004 with the primary goal of acquiring 100% interest in the Gold Ridge Gold Mine. The mine was originally built by Ross Mining in 1998, but only operated for 22 months before it was abandoned due to ethnic tensions on Guadalcanal. Only 210,000 ounces of gold were produced during this time. Extensive infrastructure still exists on-site including diesel generators, a tailings storage facility and a processing plant plus related haul roads and ancillary buildings. The project currently boasts a NI 43-101 probable reserve containing 1.15 million ounces gold hosted within 19.5 million tonnes averaging 1.8 grams gold/tonne. Measured and indicated resources tally to 1.54 million contained ounces averaging 1.7 grams/tonne and an additional inferred resource adds 455,000 ounces at 1.8 grams/ tonne. Pending successful financing, commercial production is scheduled to resume Q4 2010 at a rate of 136,000 oz/year (124,000 oz/year lifeof-mine average). Estimated cash costs are US $419/oz. the first three years and US $468/oz. over the seven-year mine life. The mine plan

envisions 6,850 tonnes/day from four deposits: Valehaichichi, Kupers, Namachamata, and Dawsons. These deposits lie within a diamond-shaped, hydrothermally-altered zone measuring 2.5 x l.4 kilometres and trending north-northeast. Geologically, they are low-sulphidation, intrusion-related epithermal gold deposits and display many similarities with other Pacific Rim deposits. The feasibility study, completed April 2007, estimates metallurgical recoveries at 82% with a life-of-mine strip ratio of 1.55 to 1. The After Tax Internal Rate of Return of the project is estimated to be 27.5% based on a US $850/oz. gold price. Australian Solomons anticipates the fully permitted mine can be restarted at a preproduction capital cost of US $101 million. The company expects to raise half of this through debt financing. Towards that end, arrangements are progressing with several multi-lateral agencies. In April this year a member of the World Bank Group, the International Finance Corp. (IFC), signed a formal Mandate Letter to invest up to US $30 million in the project; US $25 million will be in the form of a project debt facility and the remaining US $5 million will be equity. Australian Solomons believes the mine has much more to offer in terms of additional gold resources and has proven this through its Charivunga Gorge discovery. The Charivunga Gorge prospect is www.resourceworld.com

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On the Path to Gold Production The La Ronge Gold Project has a near-term target of 75,000 ounces a year for 10 years starting with four gold deposits and processing at our upgraded Jolu mill. We’re Golden Band Resources, and together with our northern partners, we’re on the path to production.

In northern Saskatchewan—the future is golden. Golden Band Resources, Saskatchewan’s leading gold explorer is a locally-based, publicly listed company (GBN: TSXV) whose focus is the long-term systematic exploration and development of its 100% owned La Ronge Gold Belt Properties. An updated and expanded Positive Pre-Feasibility Study is available on the website.

GBN:TSX.V

100-701 Cynthia Street Saskatoon, SK S7L 6B7 T 306.955.0787 F 306.955.0788 Toll Free 1.866.501.5651 www.goldenbandresources.com

located between the Namachamata and Kupers deposits and mineralization has been traced for strike length of about 350 metres. It remains open to the north and southwest as well as up and down dip. Australian Solomons Gold believes it may even extend beneath the Valehaichichi pit situated to the north. Gold mineralization in the central portion of the Charivunga Zone has been found to extend from surface to 360 metres vertical depth. Highlights of the most recent Charivunga drill results are as follows: • Hole 167 cut multiple intersections of mineralization between 271 and 386 metres down-hole including; 11 metres averaging 2.74 grams gold/tonne, 25 metres of 2.46 g/t, 26 metres averaging 2.16 g/t, 10 metres of 1.63 g/t and 16 metres averaging 6.85 g/t. • Hole 168 intersected gold mineralization closer to the surface, starting at 52 metres and ending at 212 metres down-hole. Assays include 30 metres of 2.5 grams gold/tonne, 24 metres of 2.89 g/t and 17 metres averaging 3.21 g/t. • Mineralization outlined to date in the Charivunga Gorge has not been included in the resource estimate nor is it part of the current mine plan. Continued exploration near the pits and on the surrounding 130 square kilometre exploration license could significantly add to the resource and extend the mine life of the Gold Ridge Project. Australian Solomons Gold has a 2 million-ounce gold asset with demonstrated expansion potential. The project is situated in a favourable geological setting surrounded by elephant-sized gold and gold-copper deposits. Most of the mine infrastructure is in place and the local community on Guadalcanal is keen to get the operation back into production. It may not be the fabled King Solomon’s Mine, but with successful financing, both the company and the Solomon Islanders should reap the rewards of the Gold Ridge Mine. n

Thomas Schuster is a contract geologist and independent consultant for Jordan Capital Markets. 26

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July 2009

AUSTRALIAN UPDATE

OceanaGold records four quarters of increased gold sales by Greg Barns

Gold producers are bright stars on an otherwise somewhat hazy horizon at the moment and New Zealand and Philippines-focused producer OceanaGold Corp. [OGC-TSX, ASX, NZX] is no exception. The company’s first quarter results for 2009 showed gold sales of 81,093 ounces at a cash cost of US $279 per ounce, which not only exceeded company expectations but, “reflects the fourth consecutive quarter of increased gold sales and declining cash costs for the company” according to OceanaGold. OceanaGold will shortly announce a new CEO with incumbent Steve Orr having left by the time you read this. Whoever gets the job, unknown at the time of writing, is arriving at an exciting, but challenging time for the company. The major asset OceanaGold owns and operates is the Macraes Mine on New Zealand’s south island. It is an open cut and underground operation which has been in production for almost two decades and has produced over 2.5 million ounces of gold. The company estimates an average production number over the next two years of 200,000 to 220,000 ounces a year. Last year, OceanaGold commissioned its Fraser underground mine and the company says it is excited about its potential. In April this year, the company encountered, during decline development, a zone of high-grade mineralization, located structurally below the base of current reserves. The company’s announcement said that exploration drilling is currently in progJuly 2009

Hauling ore at OceanaGold’s Macreas Mine on New Zealand’s south island. Photo courtesy OceanaGold Corp.

ress and results received to date “range from 2 to 27 metres in thickness. Average grades across these intervals range up to 7.2 grams gold/tonne using a 10 grams/ tonne top cut. Excluding the top cut, a 1.0-metre interval at 39.5 grams/tonne was intercepted within a broader interval of 5 metres at 11.17 grams/tonne,” the company said. Importantly, the area known as the Panel 2 Deeps Zone, is open to the south and east. On New Zealand’s north island, OceanaGold operates the Reefton Project, which is in a historic mining area where over 2 million ounces of gold has been produced from hardrock mining and there are estimates of another 8 million ounces from alluvials. The company commissioned the Reefton open cut mine in 2007, which has a seven-year mine life. It’s a smaller operation than Macraes with annual production of about 65,000 ounces. While New Zealand hums along nicely for OceanaGold, it has some challenges with its Didipio gold and copper project in the Philippines. Partially constructed, but with the global economic crisis in full swing, it is on care and maintenance at the moment.

OceanaGold is proposing a long-life mine of 15 years and it currently has reserves of 1.65 million ounces of gold and 0.19 million tonnes of copper averaging 0.56% copper and 1.48 grams gold/tonne. The plan is for annual production of about 120,000 ounces of gold and 15,000 tonnes of copper. OceanaGold recently said that “the Didipio Project in the Philippines has been redesigned to benefit from changed market conditions. The improved capital cost estimate is prospective for recommencement of construction in the future,” a company press release said. The Philippines is not the easiest country in the world for mining companies and the Didipio Project has had chequered history, with some in the local community opposing the project. But OceanaGold says it is working hard on community relations and its Country Manager, Blair Way, was reported by the Philippines’ media in April this year as telling government officials that all legal problems the company previously had with the local government and community in Nueva Ecija have been resolved, paving the way for the reactivation of the project. n www.resourceworld.com

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PC Gold exploring old Pickle Crow Gold Mine With the price of gold hovering in the US $930/oz. range, a number of exploration companies are targeting old formerly producing gold mines seeking ore that would not have been economic at US $35/oz., before President Nixon allowed the price of gold to seek its own level in 1972. Such is the case for PC Gold Inc. [PKLTSX], which is currently exploring the old Pickle Crow Gold Mine located about 400 kilometres north of Thunder Bay, northwest Ontario, in the historic Pickle Lake mining camp. The mine is accessed via a paved road to within 6.5 kilometres, and gravel thereafter. The underground Pickle Crow Mine was among the highest grade and longest-producing gold mines in North America, having been in operation from 1935 to 1966. The mine produced 45 tonnes of gold (1,446,214 ounces) and about 5.25 tonnes of silver (168,757 ounces) from 2,785,488 tonnes of quartz-carbonate vein ore that averaged 16.14 grams gold/tonne and 1.88 grams silver/tonne. The original shareholders were rewarded with a dividend less than a year after mining began during the depths of the Great Depression, and the mine spun off profits for the next 28 years straight, a track record that contributed to the development of the mine’s legendary reputation in this country. After World War II, Dr. Norman B. Keevil, (senior), then president of Pickle Crow Gold Mines, guided the mine to further success, the dividends from which partially underwrote the growth of parent company Teck Corp. during that period. However, with gold pegged at US $35/ oz., and mining costs rising as some areas of the mine exceeded one kilometre in depth, by 1964 Pickle Crow was operating at a loss. Accordingly, Dr. Keevil announced the mine would close. Not before, however, enterprising persons who remain unknown to this day managed to 28

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make off (1966) with the last three gold bars poured at Pickle Crow, giving rise to a cottage industry of speculation as to their whereabouts. On closing, the mine was known to host a significant quantity of gold resources left in place, mostly in lower grade iron formation which averaged 5.5 grams gold/tonne – below their cut-off at the time. In addition, all the productive high-grade veins from which the bulk of the historical gold production had been drawn, remained open to depth, unmined, below the workings. A National Instrument 43-101 technical report prepared in early 2008 by independent MPH Consulting Limited of Toronto stated there are several historical gradetonnage estimates for the old mine ranging from, at the low end, reserves on closing of 140,000 tonnes averaging 11.31 grams gold/ tonne (46,190 ounces) to a global resource (Noramco, 1988) of 5,731,050 tonnes grading 7.26 grams/tonne (1,213,919 ounces). While these are historical figures and not NI 43-101 compliant, they give an idea as to the remaining potential of this mine. Recognizing this potential, PC Gold was formed in October 2007 to consolidate the property ownership, which had become fragmented in the years since the mine closed in 1966. In the face of the most turbulent market conditions in years, the brand new company managed to go public through an initial public offering (IPO) on the Toronto Stock Exchange on May 13, 2008, an achievement that says something about the merits of the property and lingering positive reputation of the old mine. In the process it acquired a 100% interest in the 99-year mining lease for Pickle Crow, subject to NSR royalties of 1.25% that can be purchased in their entirety. PC Gold is currently conducting a major exploration program thanks to the $11.5 million raised on the IPO, and a subsequent $2 million

by Ellsworth Dickson

private placement financing completed in March this year. Kevin Keough, President and CEO of PC Gold, said a key element of preparations for sustained exploration on the property was the signing in May this year of an Exploration Memorandum of Understanding with Mishkeegogamang Ojibway First Nation, on whose traditional lands the mine is located. The MOU puts the company at the forefront of such joint industry-First Nation initiatives in the province of Ontario. This summer’s Phase II drilling program began in mid June by following up on near surface, high-grade gold intercepts in the Albany shaft area discovered in the fall 2008 Phase I program. Although Phase I was designed primarily to confirm historical drilling results, the company nonetheless made a significant new discovery in hole 27, the last hole completed during the Phase I program. The company intends to focus its early Phase II drilling efforts on the find. Hole 27 tested deeper near-surface areas of the Albany shaft portion of the mine in an area never previously drilled, returning multiple high grade hits within a considerable core length of lower grade material hosted in heavily sulphidized iron formation, including 36.00 grams/tonne gold over 0.50 metres, 26.60 grams/tonne gold over 0.44 metres, and 23.3 grams/tonne gold over 0.60 metres. As the Phase II program ramps up going forward, it is envisaged that drilling will test down in a staged manner to depths of as much as 2.5 kilometres from surface, using “mother and daughter” hole combinations. In addition, a program of mapping, geochemistry, geophysics, trenching and drilling will be carried out to evaluate recently identified potential for a new type of gold deposit within the immediate vicinity of the mine workings July 2009

– disseminated replacement-style mineralization similar to that of the prolific Madsen mine at Red Lake. A deposit of this type, if it exists, would be hosted at or near the contact of the Pickle Crow and Confederation rock assemblages, which underlies an area immediately south of the mine largely covered by swamp and glacial deposits, and for that reason historically largely unexplored. The Phase I drilling carried out during the fall of 2008 was primarily intended to confirm historical drilling results, but also to prove the company could successfully drill deep holes from surface. Both objectives were achieved. In the Albany shaft area of the mine, for example, hole 20 was targeted to drill through shallow historical workings where the records suggested the high-grade No. 14 vein was developed upon but never actually mined. The hole returned 3.90 metres grading 17.39 grams/ tonne gold on the No. 14 vein structure, proving it remained in place. Surprisingly, two other previously unknown zones of mineable width and grade were cut even closer to surface in the same hole – a second zone grading 4.03 grams/tonne gold over 13.50 metres (including 3.80 metres of 9.13 grams/ tonne gold) and a third zone of 5.30 metres grading 4.99 grams/tonne gold (not true widths). Another highlight of the Phase I drill program was hole 14, the deepest diamond drill hole ever completed on the property, which cut through three different historically mined high-grade veins in addition to gold-bearing iron formation and the first ultramafics ever discovered on the property. The hole proved the company can cut through multiple gold-bearing structures with individual deep drill holes, providing a key exploration advantage as it will increase the new resource ounces returned from each July 2009

hole in future deep drilling efforts. Fundamental to the success of exploration efforts on the property is the massive effort PC Gold has had underway for the past 18 months to digitize and model the historical data sets for the 4,117-hectare property, a process which is now about 70% complete. This includes digitizing surveys and assays for at least 3,800 historical drill holes, mine level plans, chip assays, and historical resource blocks, as well as 1,850 maps and reports. Digitization will allow the company to prepare, likely later this year, a NI 43-101 compliant resource calculation for the Pickle Crow gold mine property. Crucially, it will also enable effective targeting of exploration efforts, especially deep exploration efforts. A bonus for the project is the existing on-site infrastructure and year-round, allweather exploration status of the property, comprising a 225 tonne-per-day gravity mill, full power supplied by diesel generators, housing in the community of Pickle Lake for staff, a mine “dry” for drilling and mine crew clean-up, an on-site office, heated core shacks and core logging units, extensive drill core racks, and upgraded roads and bridges. The ultimate objective of exploration efforts on the property is to demonstrate the existence, to current NI 43-101 standards, of a gold resource of sufficient size to attract the attention of the markets, and ultimately, perhaps, the attention of a major. Having the advantage of a substantial level of historical resources to build upon, the company would appear to be well on its way to achieving the former objective. It’s also interesting to note that well-known mining major Goldcorp, which made its name in the same Uchi geological subprovince with its rich Red Lake mine further west, has to drive over a corner of PC Gold’s Pickle Crow property to get to its large Musselwhite Mine further north.

Top, a diamond drill rig tests gold targets at the Pickle Crow Gold Project, located approximately 400 kilometres north of Thunder Bay, northwest Ontario. Bottom, a grab sample from the D Zone in the Albany shaft area shows visible gold in a white quartz vein. Photos courtesy PC Gold Inc.

At Musselwhite, Goldcorp mines about a quarter of a million ounces of gold a year from an iron formation of character and grade very similar to what the historical tonnages suggest at PC Gold’s Pickle Crow mine. PC Gold’s directors include well-known mining executives Ewan Downie, President of Premier Gold Mines, Bill Fisher, former chairman of Aurelian Resources, and Nelson Baker, president of Rainy River Resources. PC Gold has 29,750,000 shares outstanding. n www.resourceworld.com

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H OT R O C K S Golden Band increases Bingo gold resources Rodney Orr, P.Geo., President/CEO, reports Golden Band Resources Inc. [GBNTSXV] has completed an updated NI 43-101 resource estimate for the Bingo gold deposit, a high-grade, quartz vein-hosted gold deposit in northern Saskatchewan, 45 kilometres southwest of the company’s Jolu gold mill. Gold resources (capped) now total 73,777 ounces in the measured/indicated category and 67,756 ounces in the inferred category, using a cut-off of 5 grams gold/tonne over a diluted minimum width of 2.0 metres. These figures represent an 18% increase in the measured/indicated resource and a 368% increase in the inferred category since the previous estimate of November 2008. High-grade gold mineralization in the Bingo deposit now continues to depth along a steep plunge to the north for an additional 200 metres vertically, and remains open to depth. The nearby Cockrum Zone, now incorporated into the resource model for the first time, is also open in several directions. The Bingo deposit (including the Cockrum Zone) is estimated to contain measured/indicated resources of 174,668 tonnes grading 13.14 grams gold/tonne gold at a cut-off of 5 grams/tonne over a diluted minimum width of 2.0 metres. An additional 155,074 tonnes averaging 13.89 grams/tonne are inferred. The Cockrum Zone, open to the northeast, southwest, and down plunge, appears to be a potentially high-grade gold zone sub-parallel to the Bingo deposit. Based on nine shallow drillhole intersections, the Cockrum Zone accounts for an inferred resource of about 3,000 tonnes averaging 6.0 grams/tonne. The Quarry showing represents the northern extension of the Bingo deposit and is included in the Bingo geological model. 30

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With this increase in the Bingo resources, an updated summary of the NI 43-101-compliant gold resources contained in eight of the 12 deposits owned by the company brings the total measured/ indicated resources to 817,879 ounces of gold. Inferred resources now total 254,657 ounces. Approval has been received for the 100%-owned La Ronge Gold Project, Saskatchewan. The company can now apply for the construction and operational permits. Pending receipt of permits and licenses, and subject to financing, construction could start in July, with a goal of commercial production by year end. Ronald Netolitzky, Chairman, said, “While this significant achievement allows us to re-start gold production with this initial project, the company’s stated objective is to expand from the initial four years to a minimum of 10 years with the production of at least 75,000 ounces/year based on an initial milling rate of 700 tonnes-per-day from the Bingo, Komis, and EP deposits.”

Impact makes two new silver discoveries IMPACT Silver Corp. [IPT-TSXV] has received assays from two newly discovered silver areas found during exploration in the Royal Mines of Zacualpan Silver and Gold District, central Mexico. The Nido de Oro area is 4.5 kilometres west of IMPACT’s Guadalupe processing plant. The first drill hole completed on the main Horqueta Vein returned 6.2 metres (5.0m true width) grading 227.8 grams silver/ tonne, 2.20 grams gold/tonne, 1.18% lead and 3.71% zinc, including 2.5 metres (2.0m TW) of 342.9 grams silver/tonne, 5.22 grams gold/tonne, 1.24% lead and 4.08% zinc. This main northeast-dipping Horqueta Vein has been traced on surface for 1.9

kilometres and a series of southwest-dipping veins, including the Armadillo and Nido de Oro Veins, have been found 50 metres west. Surface samples from hand trenching of the Horqueta Vein over a 550metre length have returned values up to 639 grams silver/tonne and 0.5 grams gold/ tonne over a 0.9-metre width. The Armadillo Vein has been mapped and sampled in historic underground workings over a 100-metre strike length and has returned values up to 679 grams silver/tonne and 1.4 grams gold/tonne over a width of 0.5 metres. The Horqueta Vein mineralization is open for expansion to the north and additional drill pads have been constructed for further drilling. The Las Aguilas area is 4.2 kilometres southwest of IMPACT’s Guadalupe processing plant. It hosts a series of southwest-dipping veins partially exposed in historic underground workings and in outcrops where rock chip samples returned up to 287 grams silver/tonne and 3.25 grams gold/tonne. At Las Aguilas, hole Z09-07 cut 0.53 metres grading 2,040.0 grams silver/tonne, 0.36 grams gold/tonne, 1.41% lead and 2.23% zinc. Hole Z0908 cut 0.55 metres of 362.0 grams silver/ tonne, 0.23 grams gold/tonne, 0.14% lead and 0.56% zinc. Both of these holes at Las Aguilas were drilled on Section 2050N, with Hole Z09-08 undercutting Hole Z09-07 by 50 metres. Upon reviewing the geological cross sections, it is evident Hole Z09-08 only intersected the first vein and should have been drilled deeper. Phase II drilling will test the northern extent of the mineralization where several old workings are located. IMPACT has a profitable producing silver operation at the Royal Mines of Zacualpan, the 200-square-kilometre advanced Mamatla Mineral District and a portfolio of projects with an option on a producing mill at Zacatecas. n July 2009

MINING

Alexco Resource cleans up/explores Keno Hill, Yukon by Mike Niehuser

Keno Hill, Yukon, is one of Canada’s greatest silver districts, producing 217 million ounces of silver between 1921 and 1988. While modest relative to Idaho’s Silver Valley, the grades were exceptional. Grades averaged 40.5 ounces per ton, with significant lead and zinc values, placing Keno Hill, by grade, in the top 3% of global silver producers. The district was shut down in 1989, during a period of low silver prices and increasing environmental regulation, when United Keno Hill Mines declared bankruptcy. Following bankruptcy, zinccontaminated water continued to flow from several of the closed mines. Zinc is harmful to wildlife, especially fish, where the zinc damages gills. In June 2005, Alexco Resource Corp. [TSXV-AXR; AXU-NYSE AMEX] was selected from over a dozen applicants by the Bankruptcy Trustee as purchaser of the assets of the United Keno Hill Mines and to clean up the district. This was due to their environmental expertise in mine permitting, closure and remediation as well as valuable patents. These patents were included as part of the ongoing cleanup of the well-publicized, contaminated, Hinkley Project seen in the film, Erin Brokovich. The origins of Alexco’s environmental business come from the formative experience of its CEO, Clynt Nauman, when restarting the Greens Creek Mine while at Rio Tinto. Nauman found himself as the point man with government regulators, successfully resolving critical environmental issues. The experience made clear the necessity and value of environmental expertise to the mining industry from mine permitting through closure. Integral to Alexco’s selection, they became the sole source provider of environmental cleanup of Keno Hill. Alexco’s patents are essential to complete the cleanup at a cost of about $60 million. This may be a bargain as compared to remedial water treatments costing millions of dollars more over sevJuly 2009

eral decades. The work at Keno Hill may begin as early as next summer. Alexco is now successfully treating zinc-contaminated water flowing from historic mines at Keno Hill. Water from the Galkeno 300 Mine produced water with zinc levels of 100 to 120 ppm zinc. This mine is located in the hills above the small community of historic Keno City. While zinc levels of 5 ppm are considered to be Alexco water treatment system operator, Grant Ewing, a daily water sample at the Galkeno 300 Mine water safe for humans, Alexco was takes treatment facility in the Keno Hill Silver District, Yukon successful in reducing zinc in Territory. Photo courtesy Alexco Resource Corp. water returned to the environment to less than 0.5 ppm and meeting for its environmental business. Early on, water quality standards. the company anticipated that their potenThe patents also treat other forms of tial market was limited to countries with contamination including arsenic, sele- the strongest environmental laws, including nium, chromium and uranium. Alexco U.S. and Canada. Increasing environmental recently completed cleanup of the Barite Hill awareness beyond North America is openSuperfund site in South Carolina. Rainwater ing new markets. More significant than and exposed surfaces of the gold mine’s open higher revenues, Alexco’s experience and pit produced acid which ran into the pit. patents may position it for additional corWater from the pit lake posed a significant porate development opportunities or the ecological risk to the watershed area, as the ability to take equity in projects. pit occasionally overflowed during high seaAlexco is entitled to develop the presonal rainfall. The EPA considered numerous cious and base metal resources of the Keno expensive solutions ranging from filling in Hill district while being held harmless for the lake to long-term water treatment for the liability due to historic mining activities. foreseeable future. They are scheduled to make a construction The solution included stabilizing the decision for the Bellekeno Mine at Keno water level of the pit. Areas above the water Hill in August of 2009. line were capped by contouring the slopes Silver Wheaton Corp. [SLW-TSX] has and landscaping the exposed areas with committed US $50 million to fully fund acid resistant grass. Alexco applied lime mine development and mill construction and its patented carbon solution consisting in return for the right to purchase 25% of of molasses and alcohol to the water in the the silver produced in the Keno Hill silver pit. The lime reduced the acidity, allowing district. Of the silver production purchased bacteria in the solution to survive. In addi- by Silver Wheaton, Keno Hill is the earlition to reducing acidity, heavy metals were est stage project. This suggests that Silver precipitated by the bacteria drifting to the Wheaton perceives long-term potential bottom of the lake. The pit lake now poses beyond the identified resource. Beyond no immediate danger requiring complex or Keno Hill, Alexco’s patents provide a valucostly treatment or management. able solution for the mining industry and Alexco is targeting 25% annual growth the environment. n www.resourceworld.com

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Brett confirms continuity of gold values Brett Resources Inc. [BBR-TSXV] has reported results from 16 holes drilled in a spring drill program at the Hammond Reef Property 23 kilometres north of the town of Atikokan, northwest Ontario. The drilling confirms the continuity of the gold system more than two kilometres along strike to the northeast of the current resource. Step-out holes outline new nearsurface mineralized intervals south of the resource area. This will allow for expansion of the current 4.8-million ounce gold resource and may reduce pit strip ratios. One of the main objectives of the drilling was to test the depth extension of mineralization noted in two surface trenches located more than two kilometres along strike to the northeast of the current 4.8 million-ounce gold resource. The location of these trenches is northeast of the Manley Patents, site of at least nine historic shafts mined by small-scale mining in the early 1900s. The Manley Patents were privately owned until 2006 when Brett optioned them. Modern exploration methods have not been used in this area and that will be one of the main objectives of the summer and fall exploration programs. Drill holes BR-133 and BR-134 were drilled to test mineralization below these two trenches. These holes were collared in the Snail Bay area about two kilometres northeast of the 41 Zone. BR-133 confirmed the down-dip continuity of the broad low-grade mineralization, outlined with channel sampling on the 5500 Trench (0.42 grams gold/tonne over 18.0 metres, 0.46 grams/tonne over 19.5 metres and 0.69 grams/tonne over 25.5 metres). The entire mineralized interval for BR-133 is south-dipping and extends from 132.5 to 197.0 metres. This interval intersected 0.30 grams/tonne over 64.5 metres, including a narrower zone of 0.51 grams/tonne over 19 metres. This interval has the hallmarks of Hammond Reef mineralization with elevated levels of pyrite and 32

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extensive alteration. The hole confirms the gold system extends for a minimum of 2.0 kilometres northwest of the current resource. Hole BR-134 was drilled about 400 metres north of BR-133 to test a second broad low-grade gold zone on Trench 5600 (0.85 g/t over 30.2 m and 0.76 g/t over 10.5 m). Results from BR-134 indicate a narrow mineralized interval of 3.0 metres of 0.51 grams/ tonne from 23.0 to 26.0 metres. These new

gold discoveries in the Manley area are the same style of mineralization found in the A Zone, where gold grades increased with depth. This new mineralized area remains open along strike and to depth. A second objective of the spring drilling was to provide data for a scoping study expected to be completed during Q4 2009. Spring step-out drilling has extended the resource at depth by as much as 150 metres down dip to the south. The program also intersected additional shallow gold-bearing structures that are not in the current resource. These new structures have excellent potential to allow Brett to expand the current resource and positively impact the strip ratio of the pit. The best drill results are from hole BR 126 which intersected 40.5 metres of 1.95 grams gold/tonne and from hole BR 127 which cut 159 metres of 0.97 grams/tonne. Brett’s drilling has extended the Hammond Reef resource in three direc-

tions: to the west; down dip by over 150 metres and northeastward by confirming that the strike extent of the gold-bearing structures extend past the Manley Patents by more than two kilometres northeast from the currently defined resource. Metallurgical studies have confirmed gold recoveries exceed 91%. Uranium Star reports vanadium assays Uranium Star Corp. [URST-OTCBB; YE5-Frankfurt] has received results from 15 additional trenches on its Green Giant Vanadium Project in Madagascar. A total of 21 trenches have been established to date. All have been mapped, sampled and analyzed using NitonXRS analyzers. The company is encouraged by the recently received trench results that confirm the host structure along its entire 21-kilometre strike length contains vanadium values of economic interest. A highlight includes Trench 21 with 1.08% V2O5 over 51 metres; Trench 19 with 0.77% V2O5 over 105 metres; Trench 15 with 0.56% V2O5 over 54 metres; and Trench 7 with 0.41% V2O5over 150 metres. Trenching is being done over anomalous vanadium trends and their strike extensions defined by 2008 drilling and geophysical/geochemical surveys. Trenches TR-09-01 to 08 and TR-09-11, 12 and 13 were dug in the property’s southern zone. They represent a strike length of 4.2 kilometres with the first nine trenches having a strike length of 1.2 kilometres. Trench 12 is a further 1.2 kilometres north and Trench 13 is 1.8 kilometres north of Trench 12. The Central Zone is 5.5 kilometres north of Trench 13 and trenches represent a strike length of 900 metres. The North Zone is 6.8 kilometres north of the Central Zone and has been trenched along strike for one kilometre. Trenching continues and will infill between the three zones to further validate that vanadium mineralization is as wide spread as the geological, geophysical and geochemical signatures indicat. n July 2009

MINING Electra Gold acquires another BC coal project Electra Gold Ltd. [ELT-TSXV] recently acquired the Hushamu Coal Project along Holberg Inlet only 2.5 kilometres from its flagship PEM100 quarry (Apple Bay Project) near Port Hardy, northern Vancouver Island, British Columbia. The area is secured by the application for a coal licence over an area of 300 hectares at a cost of $7.00 per hectare. Work on the property in 1985 indicated the Hushamu coal zone could contain about 7.28 million tonnes of historical resources (non NI 43-101 compliant) in part, possibly open pit coal. Consulting geologist G. CathylBickford, P.Geo., has made an initial field assessment and recommended a work program. Samples of surface coal have been sent for analysis. Trenching and sampling are planned. Coal produced at Hushamu could be shipped via an existing log dump on Holberg Inlet, less than on kilometre distant. Electra has arranged a $300,000 private placement of up to 6 million shares at $0.05 each, subject to regulatory approval. Proceeds will be used to explore the 100%-owned Harvey Cove Project, also on northern Vancouver Island. Some of the funds will cover initial costs of the Suquash and Hushamu coal projects. A high alumina source (chalky geyserite) was recently discovered at Harvey Cove, west of LeMare Lake, which will be explored in 2009. The geyserite zones are numerous and appear to be similar in size to PEM100 or larger. The potential project is near existing load-out infrastructure.The Suquash Coal Mine was in production 1908–1922 on seam No.2. Electra has completed diamond drilling. The company has shipped over 600,000 tons of a silica-alumina product since 2003 for gross revenue of over $10-million to cement producers. Electra also owns the Lang Bay kaolinite-gallium-germanium property on BC’s Sunshine Coast. n July 2009

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33

OIL & GAS

Chevron recovers first oil from Tahiti Field Chevron Corp. [CVX-NYSE] reports that it has started crude oil production from its Tahiti Field, the deepest producing field in the Gulf of Mexico. First oil from Tahiti was achieved on May 5, 2009. Daily production is expected to ramp up to approximately 125,000 barrels of crude oil and 70 million cubic feet of natural gas before the end of the year. The Tahiti Field is one of the largest in the Gulf of Mexico. It was discovered in 2002 and is estimated to contain total recoverable resources of 400 to 500 million oil-equivalent barrels. The total cost for the first phase of the project is $2.7 billion and represents one of 40 projects in which Chevron’s share of the investment is over $1 billion. “Tahiti is a significant addition to our growing reserves and production,” said George Kirkland, executive vice president, Global Upstream and Gas. “It is another demonstration of our deepwater expertise, and our ability to execute an industry-leading queue of

Chevron’s oil platform at the Tahiti Field in the Gulf of Mexico, located 190 miles south of New Orleans, in approximately 4,100 feet of water. Photo courtesy Chevron Corp.

major capital projects.” Tahiti is located at Green Canyon Blocks 596, 597, 640 and 641, approximately 190 miles (305 kilometres) south of New Orleans, and in approximately 4,100 feet (1,250 metres) of water. Primary pay sands are Lower to Middle Miocene from 23,000 to 28,000 feet and lie below a salt canopy ranging from 8,000 to 15,000 feet thick. The deepest producing well is more than 26,700 feet, a record for the Gulf of Mexico. Production is from two subsea drill centres tied to a floating production facility supported by a truss spar. Chevron holds a 58% working interest in Tahiti and is the operator, StatoilHydro holds a 25% working interest, and Total owns a 17% working interest. n

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July 2009

the oil patch report J o e l Ch u r y

Texalta Petroleum targets both sides of globe

D

epending on the angle you chose, in theory, if you drilled deep enough, you could bore a hole through the earth from Saskatchewan to Australia. Utilizing a much more cost effective, and ultimately realistic, method, one company is attempting to tie these two points on the globe together using a drill bit and their geological prowess. Figuratively, not literally, of course. Calgary-based Texalta Petroleum Ltd. [TEX.A-TSXV] has balanced its operations on this unlikely pairing of regions, taking full advantage of the current US $69+ oil price and spreading its risk over two global hemispheres. But beyond the visuals of endless grain fields juxtaposed against that of deserts and kangaroos, Saskatchewan and the Land Down Under actually share some common traits. “In a way, our land position in Australia is geologically similar to the Williston Basin that resides in parts of Saskatchewan, Montana, Manitoba and North Dakota,” said William Nixon, President/CEO of Texalta. “The source bits and layers of rock that contain the hydrocarbons are especially similar.” Holding an 82% interest in permits covering over 23,000 square kiolometres, Texalta has focused its southern hemi-

July 2009

sphere operations in the Georgina Basin in Australia’s Northern Territory, north of the more well known Cooper Basin. Picking its targets within the 5.5 million acres worth of permits, Texalta is still assessing its risks with an extensive seismic program. “We wanted to mix up the pot a little and make a mixture of both low risk and high risk situations,” says Nixon. “Because the higher risk ones can provide much higher payouts if you get lucky. Australia would be a great place to find some oil. If you get your hands on some good acreage there and promote, wildcat drilling has the potential to be very profitable.” It wasn’t that long ago that drilling in Saskatchewan also seemed risky. Before becoming the industry darling that it is now, the Williston Basin and its prolific Bakken formation wasn’t seen as a profitable endeavour without sizeable risk. With the technological advances that have taken place, through multi-stage frac and other stimulation and mapping methods, Saskatchewan is now seen as a secure investment. This is why Texalta relies on its Northern Hemisphere operations to fund its adventures in Australia. Already the company has taken part in discovering a new pool known as Wordsworth, along with further wildcat wells being successfully drilled at West Wildwood and West Queensdale. Holding working interests ranging from 16.05% to 71.60% in these oil producing wells in southeast Saskatchewan, the company plans to capitalize on currently economic oil prices with its lucrative cash flow. “In Saskatchewan,

we’re hoping to drill several horizontal wells that will again increase our cash flow by the end of the year,” says Nixon. “At the same time, we have a couple of wildcat ideas that are deeper targets that we’ll be promoting. Those will be the ones that we’ll be looking for outside help to drill over the next year or so.” Unlike the second half of last year, if needed, Texalta should have less of a problem finding a suitable partner. Though prices aren’t at the astronomic levels of this time last year, they are high enough to draw the right kind of attention. “Our luck in trying to find a partner was awful six months ago. There was a pause in drilling development in the Bakken Zone over that period, because at US $30-$40 oil, it just wasn’t going to work as well,” adds Nixon. “But today and in the months ahead, it’s a lot better. US $70 oil just changes everything. I’m definitely a lot happier than I was six months ago.” “We have enough money to pay our share of the wells we plan to drill over the next year and a half,” says Nixon. “So we won’t need financing, unless our program in Australia gets accelerated. But for now, we’ve finished the field seismic work in Australia, drilled one wildcat well in Saskatchewan, and are getting ready to drill a horizontal development well at Wordsworth in early July. That’ll be followed up by another well in the Wildwood area probably later in the summer.” By using cash flow from operations in Saskatchewan to help pay for exploration in Australia, Texalta is making a link from two points of the globe through the drill bit. If the oil prices hold up long enough for it to complete research in the land down under, Nixon and his crew may actually pull off their Australian goals and reap the rewards of production from both sides of the globe. n www.resourceworld.com

35

ALTERNATIVE ENERGY REVIEW

Developments in Alternative Energy by Joel Bainerman Researchers in UK and Canada create more efficient batteries

Researchers at the University of St. Andrews in the UK have developed a new type of air-fueled battery that can provide up to 10 times the energy storage of designs currently available. The new design has the potential to improve the performance of portable electronic products as the batteries enable a constant electrical output from sources such as wind or solar, which stop generating when the wind changes or night falls. According to Professor Peter Bruce of the Department of Chemistry, the key to the development is to use oxygen in the air as a re-agent, rather than carry the necessary chemicals around inside the battery. The improved capacity is achieved with the addition of a component that uses oxygen drawn from the air during discharge, replacing one chemical constituent used in conventional rechargeable batteries. Not having to carry the chemicals around in the battery offers more energy for the same size battery. Reducing the size and weight of batteries with the necessary charge capacity has been a long-running battle for developers of electric cars. Called the STAIR (St Andrews Air) cell, it should be cheaper than today’s rechargeables as well since the new component is 36

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made of porous carbon, which is far less expensive than the lithium cobalt oxide it replaces. “Out target was to develop a five to 10-fold increase in storage capacity, which is beyond the horizon of current lithium batteries,” said Professor Bruce. Another research team at the University of Waterloo in Ontario, Canada, has laid the groundwork for a lithium battery that can store and deliver more than three times the power of conventional lithium ion batteries. Dr. Linda Nazar says that this composite material can supply up to nearly 80% of the theoretical capacity of sulphur, which is three times the energy density of lithium transition metal oxide cathodes, at reasonable rates with good cycling stability. Her research team is the first to demonstrate robust electrochemical performance for a lithium-sulphur battery. The prospect of lithium-sulphur batteries has been of great interest to chemists for two decades, and not just because successfully combining the two chemistries delivers much higher energy densities. Sulphur is cheaper than many other materials currently used in lithium batteries. It has always showed great promise as the ideal partner for a safe, low cost, long lasting rechargeable battery – exactly the kind of battery needed for energy storage and transportation in a low carbon emission, energy economy. The difficult challenge was always the cathode, the part of the battery that stores and releases electrons in the charge and recharge cycles. Says Dr. Nazar, “To enable a reversible electrochemical reaction at high current rates, the electrically-active sulphur needs to remain in the most intimate contact with a conductor, such as carbon.”

Green Ocean Energy plans two marine energy devices Green Ocean Energy Ltd. from Aberdeen, Scotland has developed a wave power machine which uniquely attaches to an offshore wind turbine thereby giving combined wind and wave power from one installation. The economics of both machines will be enhanced as the expensive infrastructure, such as the foundation and cabling will be shared. Managing director of Green Ocean Energy, George Smith, who invented Wave Treader, said, “Each Wave Treader machine generates approximately 500 KW which is enough electricity to power 125 homes.” The Wave Treader has been developed using the core concept of a stand alone wave power device called Ocean Treader which is also being developed by the company. Mounting the device on the foundation of an offshore wind turbine makes that technology more commercially viable because of the relatively low technical risk. The Wave Treader comprises sponsons mounted on the end of arms both in front and behind the turbine’s column which is vertically mounted on the seabed. Hydraulic cylinders are attached between the arms and an interface structure, and as the wave passes along the device, the sponsons and arms lift and fall, stroking the hydraulic cylinders. The cylinders pressurize hydraulic fluid which, after smoothing by accumulators, spins hydraulic motors and then electric generators. The electricity is exported back to the shore through the same cables used by the wind turbines. Wave Treader can turn to face the direction of the wave train to ensure maximum operational efficiency. It also has active onboard adjustments to allow for the effects of tidal range. July 2009

ALTERNATIVE ENERGY REVIEW

World’s second largest solar power plan online

South Korean scientists develop new power cell

Spain’s Abengoa Solar has commenced operation of the new PS20 solar power plant located near Seville, southern Spain, which will be the world’s second power tower plant in commercial use. With a power generation capacity of 20 megawatts, the new PS20 solar farm will produce enough renewable energy to supply 10,000 homes – avoiding the emission of approximately 12,000 tons of CO2 compared to conventional coal fired power generation. Unlike photovoltaic (PV) panel-based solar farms, the PS20 solar power station consists of 1,255 mirrored heliostats. Each heliostat has a surface area of approximately 120 square metres. The heliostats reflects sunlight onto a receiver, located on the top of a 162 metre-high tower. This receiver heats water, that then produces steam which is run through a turbine to create electricity.

A team of researchers at the Gwangju Institute of Science and Technology (GIST) have said that its solar cells are designed to imitate the photovoltaic activities of plants, and can reach an energy efficiency rate of 6.2%. When the flexible solar cells are totally developed, they could be attached to coats, bags, electronic appliances and windows. This is the highest number reached by any singlelayer plastic, organic photovoltaic solar cell created in the world to date and should greatly increase commercial use of solar power. Energy efficiency represents the percentage of sunshine that solar cells turn into electricity. The team said they used a new material that has open circuit voltage properties and titanium oxide to reach high efficiency. Under so-called green light conditions (light used to transport data rather than electricity) , the energy efficiency of the new plastic power cells attained 17%, which is more than sufficient to start commercial power generation. An efficiency rate of 7% must be attained for plastic solar cells to become commercially feasible. Conventional inorganic silicon-based solar cells used in homes have an efficiency rate of 7% to 8%, while very expensive panels placed on satellites have numbers reaching 15%

July 2009

Plastic solar cells on the way

University of Chicago chemists Luping Yu (right) and Yongye Liang display a new material they synthesized called PTB1. The University of Chicago has licensed the material to Solarmer Energy Inc., which is developing plastic solar cells for portable electronic devices. (Lloyd DeGrane)

Researchers at the University of Chicago have developed a new semiconductor material called PTB1, that converts sunlight into electricity. The active layer of PTB1 is a mere 100 nanometres thick, the width of approximately 1,000 atoms. Solarmer Energy, Inc. of El Monte, California, is developing plastic solar cells for portable electronic devices that will incorporate the technology. The company will complete a commercial-grade prototype later this year. The prototype, a cell measuring eight square inches (50 square centimetres), is expected to achieve 8% efficiency and to have a lifetime of at least three years. New materials with higher efficiencies are the key in the industry, the company said. Plastic solar cells are behind traditional solar-cell technology in terms of the efficiency that it can produce right now. Synthesizing even small amounts of the solar cell material is still a time-consuming, multi-step process. n www.resourceworld.com

37

ALTERNATIVE ENERGY

Legend Power knows how to put less vim in your volts Innovative technology saves energy costs and the environment by Peter Caulfield

Legend Power Systems Inc. [LPS-TSXV], of Burnaby, British Columbia, has the worldwide distribution rights to the Electrical Harmonizer, an innovative Japanese technology that adjusts the voltage of the electrical current that flows from the power grid to individual customers. Legend Power has combined the Harmonizer with a device of its own design, called an automatic voltage regulator (AVR), to provide a way for utilities and their commercial and light industrial customers to reduce power usage, save money and reduce greenhouse gasses. “Here is an analogy that explains the technology and its benefits,” said Gerry Gill, CEO and chairman of Legend Power. “If a car has a leaky gas tank, it would get fixed immediately, because no one likes to waste energy. But, for some reason, buildings are not treated the same way as cars. Most buildings are terribly inefficient and energy leaks out of some of them like water out of a sieve. In its simplest terms, Legend Power’s technology identifies the buildings’ electrical leaks and plugs them.” The source of these inefficiencies lies in the nature of power grids themselves. Like most distribution networks, it takes more effort to reach a customer who is far away than one who is nearby. To ensure that a customer at the end of the grid receives enough power to operate its electrical equipment, utilities deliver electricity to customers near the beginning of the grid at a voltage that is higher than what is actually needed. In addition, the power flowing through the grid is constantly fluctuating. Voltage levels that are higher than required can overdrive electrical equipment, which shortens their useful life spans. The Harmonizer adjusts the incoming voltage to a customer’s optimum operating level by 2%, 4% or 6%, depending on how much the power grid fluctuates. 38

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“Flexibility in the rate of voltage optimization is critical to maximizing conservation and eliminating risk,” Gill said. The AVR enables the Harmonizer to automatically adjust the level of voltage optimization as the load fluctuates. It will automatically direct incoming electricity past the Harmonizer (0% optimization) if the voltage falls below the optimal minimum level. The benefits to utilities are reduced dependence on high-cost, peak-demand imported power; increased capacity of the existing generation and distribution infrastructure; and increased productivity of the most inefficient part of the power grid. On the demand side, Gill says that any commercial or light industrial utility customer that is a large consumer of power and is located close to a substation has much to gain from the installation of the technology. The benefits to facilities are a seven to 12% reduction in electricity bills; 8%-12% reduction in peak electricity demand; 7%-10% reduction in energy consumption; and reduction in greenhouse gas emissions. “Real energy demand is effectively reduced by 12%-14%,” said Gill. “This is the true measure of the Electrical Harmonizer-AVR technology as a conservation device.” Legend Power was founded in 2001 and, until 2009, was engaged in R&D and product development to the tune of $9 million. With more than $1.2 million in sales so far, Gill says Legend Power is in the early commercialization stage. In addition to looking for financing, the company is also actively searching for new customers. The company is currently focused on developing markets in BC and Ontario. “We are planning to enter the California market in the near future,” Gill said. “Our long-term plan is to develop a market for our technology in North America and then

Gerry Gill, Chairman/CEO, displays the Legend Power Electrical Harmonizer. Photo courtesy Legend Power Systems Inc.

to license distributors in other countries.” The average cost, including installation, of Legend Power’s Harmonizer-AVR technology is $70,000-$80,000. But government-sponsored financial assistance can lower the cost of purchasing the devices considerably. “The provincial governments in BC and Ontario have mandated energy-saving plans and targets and the utilities in those provinces have incentive plans that reduce the cost of purchasing energy-saving technology,” said Gill. “BC Hydro will pay for up to 60% of the installation cost. In Ontario, it’s up to 40% of the installation cost. Taking the subsidies into account, the equipment’s pay-back period is three to four years.” The only other company that offers voltage optimization technology is targeting small business and residential customers. “Legend Power doesn’t compete directly with that company,” Gill said. “Our technology is designed for larger facilities.” Legend Power has eight employees, who work in marketing, sales, finance, administration, R&D and operations. All other functions, such as assembly and installation, are contracted out. n July 2009

ALTERNATIVE ENERGY

In the news

by Joel Bainerman

BP and SolarEdge team up for more efficient solar power BP Solar [BP-NYSE] and start-up SolarEdge Technologies Inc. have signed an agreement to embed SolarEdge’s photovoltaic (PV) module-integrated power harvesting system directly into BP Solar modules. The combined solution will maximize energy generation throughout the life of the solar power system while dramatically reducing complexities and costs. Standard power system architectures and designs may lead to losses of up to 20% or more per solar field in some installations due to module and array mismatch and partial shading. Some system architectures also lack full monitoring, have sub-optimal roof utilization and generally are weak in fire and maintenance safety, and ineffective in module theft prevention measures. To achieve optimal energy yield while reducing these installation and maintenance challenges and costs, BP Solar will integrate SolarEdge’s electronics directly into their modules, thereby preventing theft issues. The combined technologies are currently undergoing rigorous thermal cycle testing to emulate 25 years of volatile solar field conditions. “We believe the SolarEdge technology, when combined with BP Solar’s patented IntegraBus™ module power strip, can significantly enhance the energy output of residential and commercial scale systems,” said Eric Daniels, Chief Technology Officer of BP Solar. “By addressing the problems that the industry has overlooked or considered unavoidable, we can greatly improve solar economics through increasing energy output while reducing system costs.” Solar Edge is also working with the German multinational glass company, Schott AG, on a partnership to develop a PV panelintegrated power harvesting system embedded directly into the German’s company’s modules. The outcome of the joint efforts will maximize power generation throughout the solar lifecycle while dramatically reducing complexities and costs. SolarEdge also has a joint venture agreement with Gehrlicher Solar AG, a German-based a photovoltaic company that constructs, finances and maintains photovoltaic systems. Gehrlicher will incorporate the SolarEdge innovative power harvesting solution in its PV system integration portfolio. The companies also intend on establishing a joint proliferation plan in Germany, covering joint marketing programs and installer training.

GE/Plutonic Power set sights on Dokie Ridge Wind Farm General Electric Co. [GE-NYSE] has signed a deal with EarthFirst Inc. [EF-TSX; EF.WT] to consider taking over the partly completed, 145-megawatt Dokie Ridge Wind Project in northeastern July 2009

British Columbia that was initiated by EarthFirst. The project, located near the town of Chetwynd about 1,100 kilometres north of Vancouver, is the largest wind farm project under construction in the province. Subject to due diligence evaluations and internal approvals, GE will be joined in the project by Plutonic Power Corp. [PCC-TSX], a Vancouver, BC, run-of-river hydro power developer. Plutonic and GE are working together on several run-of-river projects north of Vancouver.

The Dokie Wind Project in northeast British Columbia. Note the man in the photo for scale. Plutonic Power and General Electric are considering taking over the partially completed project from EarthFirst Inc. Photo courtesy Plutonic Power Corp. www.resourceworld.com

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About $100-million has been invested in the EarthFirst wind project. GE and Plutonic would be 50/50 equity partners in the project. A second phase of the deal calls for a $4.5 billion project to be built with BC Hydro. British Columbia is the only province in Canada without any installed wind power. The Dokie Project comprises the fully permitted and partially built 144-megawatt Dokie Phase 1 Project that utilizes Vestas 3-megawatt V-90 turbines and includes the rights to expand the project to 300 megawatts. GE and Plutonic would both jointly provide equity and arrange project debt financing arrangements to complete the construction. EarthFirst has stated that the Dokie Phase 1 Project is designed to generate 340 gigawatt-hours per year. This represents sufficient electrical power for 34,000 homes. In addition, this equates to more than 229,000 tonnes of carbon dioxide emissions from a coal plant or the equivalent of taking 44,000 cars off the road. The three-way arrangement between the companies was made possible by EarthFirst having previously obtained court-ordered protection from its creditors under Canada’s Companies’ Creditors Arrangement Act. The Court of Queen’s Bench of Alberta, Judicial Centre of Calgary has approved the proposed transactions involving the Dokie Ridge Wind Project. Besides the Dokie Project, GE Energy Financial Services and Plutonic are already partners on three hydroelectric projects in British Columbia, including the 196-megawatt East Toba River Montrose Creek Project which has been under construction since July 2007. In addition, GE and Plutonic Power have jointly bid the 166-megawatt Upper Toba Valley Project and the 1,027-megawatt Bute Project into BC Hydro’s 2008 Call for Power issued in November 2008. The Plutonic Power’s proposed Green Power Corridor™, which includes 40 power project locations, not including the flagship $660 million, 196-megawatt East Toba River and Montrose Creek run-of-river hydro-electric project currently under construction, have a design capacity to generate enough energy to meet the annual needs of about 586,000 homes and create some 5,900 person years of employment. Completion of the projects are scheduled for 2010. When construction is completed, the Green Power Corridor could offset almost 4 million tons of CO2 emissions every year which represents the equivalent of taking as many as 760,000 vehicles off the road. In early April 2009, Plutonic Power’s subsidiary, Upper Toba Hydro Inc., was granted a Provincial Environmental Assessment

(EA) Certificate from the Ministry of Environment and Ministry of Energy, Mines and Petroleum Resources for the Upper Toba Valley Hydroelectric Project. The project consists of three run-ofriver facilities located on the Upper Toba River, Jimmie Creek and Dalgleish Creek, respectively, all of which are in the Toba Valley 150 kilometres north of Powell River, coastal BC. In a related development, Plutonic Power has received a letter of support from the Klahoose First Nation on whose traditional territory the project is located. Plutonic and the Klahoose are working towards finalizing an Impact and Benefit Agreement for the project.

Rentech aims to be leader in coal to liquid fuel Los Angeles-based Rentech Inc. [RTK-NYSE-AMEX] has put the final touches on a project using its technology for the commercialization test which will churn out 600 barrels per day of ready-to-use diesel fuel and other products, as well as generate about 35 megawatts of electricity. The planned plant in Rialto, California will have close to a no carbon footprint because it will use renewable feedstocks, mainly wood wastes, as well as biosolids from a nearby processing plant. The facility is expected to be up and running by 2012. It will convert waste into syngas using technology from Atlanta, Georgiabased SilvaGas Corp., which built a syngas plant in Burlington, Vermont. That gas will be converted into “finished, ultra-clean” syngas via Rentech’s technology to be converted into fuels and other materials using technology developed by Rentech. Rentech’s technology is based on the Fischer-Tropsch process, developed in the 1920s for turning carbon monoxide and hydrogen gas into liquid fuels. It’s a well-known process – Nazi Germany used it to turn coal into liquid fuel for its war machine, and Sasol Ltd. [SSL-NYSE; SOL-JSE] uses it today to provide much of South Africa’s diesel fuel from coal. The company says its process, which uses a slurry bubble column reactor and iron as a catalyst, instead of the more typical fixed bed reactor technologies using a cobalt catalyst, is simple to build and operate as well as more efficient than existing technologies on the market. Rentech has been running a test facility in Commerce City, Colorado, since August, 2008 turning natural gas into about 10 barrelsoffuelperdaythatisbeingusedbycustomersincludingtheU.S. Air Force. n

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July 2009

R ESOU R C E R OUNDU P –

facts and news

The Nanaimo Coal Fields by Kathrine Moore

Though Nanaimo, British Columbia began as a tiny Hudson’s Bay Company trading post it was not fur that brought the company’s Chief Trader, James Douglas to Nanaimo – it was coal. The town site of Nanaimo was purchased from the Crown by the Hudson’s Bay Company for the sole purpose of developing its coal resources to feed the coal burning steam engines that were revolutionizing manufacturing and transportation. At that time, England was a developing industrial economy and was looking worldwide for coal deposits to feed its factories and to fuel its new steam navy. Those economies that owned or developed coal, the fuel of industry, would become the world’s industrial leaders. Coal was first discovered in BC in 1836 when a clerk of the Hudson’s Bay Company at Fort McLoughlin on Milbanke Sound investigated rumours of a burning black stone. It did turn out to be coal, but the North Vancouver Island deposit was of poor quality and the McNeill coal mine was never a success. However, in 1850, a Hudson’s Bay clerk told Governor James Douglas about a canoe laden with fine quality coal that was brought to the fort. The source of the fine quality coal was Point Gabriola on the east coast of Vancouver Island. The land was purchased by the Hudson’s Bay Company and they gained the exclusive right to mine for coal on the property. Experienced miners were needed to develop the resource and, in 1854, 22 miners and their families arrived in Nanaimo from Staffordshire, England to work the mine and establish a settlement. The Hudson’s Bay Company, however, was not successful at mine management and sold the mine to London businessmen and the Vancouver Coal and Land Co. was incorporated on August 1, 1862. The package included the town site of Nanaimo as well July 2009

as Newcastle, Cameron and Douglas Islands. With the mines under new management, Nanaimo became a thriving community and a great coal mining centre. The Vancouver Coal and Land Co. was a progressive enterprise and had a long reputation as a good employer. They planned BC’s first company town thoughtfully and built modern and spacious company houses. A peek at Nanaimo on Google maps reveals the radial layout of the town’s streets implemented by the Vancouver Coal and Land Co.’s architect in an effort to promote community growth. Three or four miles from Nanaimo, just outside the Hudson’s Bay limits was the Harewood Mine. Opened in 1862, it was under the management of the notorious Robert Dunsmuir who in 1871 discovered the Wellington seam – the most profitable and productive of all the Nanaimo coal seams. Dunsmuir, who rose from a poor immigrant to become a business tycoon and built a castle, Craigdarroch, in Victoria for his wife, was known for his rough manner of dealing with miner’s complaints and for his union and strike busting tactics. In 1903, after their funds ran out, 800 striking miners were forced back to work at a rate of pay that was reduced by 5%. Eventually, dangerous working conditions in BC coal mines, the Extension and Cumberland mines among them, would spark one of the longest and most bitter strikes in the province’s history. The Vancouver Coal and Land Co. and Dunsmuir Diggle & Co.

were the dominating coal companies in the area. Though the two companies were vastly different in their treatment and care of miners, they both had their share of trouble. Early Nanaimo coal mines were known for bad ventilation and gases. Explosions took many lives and, during this time, one out of every five coal miners in Nanaimo was involved in a mining accident. Improvements in working conditions were hard won by those early miners. On December 18, 1902, The Western Coal Co. purchased the New Vancouver Coal Co. for $650,000. A few years later, on January 8, 1910, Dunsmuir sold his coal properties for $11 million. Nanaimo coal mines produced 49 million tonnes of coal. The most productive mines were the No.1 Mine, producing about 17 million tonnes and the South Wellington No.10 Mine producing 2.5 million tonnes. No coal mining occurs in the area today; the last underground coal mine at Nanaimo, White Rapids, closed in 1950. But the Bastion, part of a fort built by the Hudson’s Bay Company in 1853 to protect the miners and settlers, still stands as both a monument to past citizens and a reminder of Nanaimo’s beginnings. n

Coal miners at the Jingle Pot Mine near Nanaimo, British Columbia, circa 1910. Photo courtesy Nanaimo Museum. www.resourceworld.com

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coming events Cambridge House International is presenting the Toronto Resource Investment Conference September 26-27, 2009 at the Metro Toronto Convention Centre. Free admission if you pre-register – $25 at the door. For more information, go to www.cambridgehouse.com or phone 604-687-4726. The Las Vegas Hard Assets Investment Conference will be held September 5-6, 2009 at the Mandalay Bay Resort & Casino, Las Vegas, Nevada. The conference will feature expert keynote speakers, an investors’ interchange, exhibits, newsletter editor master classes and special topic speakers. Network with top company executives to determine the best performing stocks on the horizon. Learn upcoming market trends from the pros.

The San Francisco Hard Assets Investment Conference will be held November 21-22, 2009 at the San Francisco Marriott Hotel. Register today for free admission – call 1-800-282-7469 For more information, go to www.iiconf.com The Sustainable Development Indicators in the Minerals Industry Conference is being held in Gold Coast, Queensland, Australia, July 8-9, 2009. Other related conferences include: The Iron Ore Conference in Perth, Western Australia, to be held July 27-29, 2009; The Seventh International Mining Geology Conference in Queenstown, New Zealand, to be held August 24-26; The Water in Mining Conference in Perth, Western Australia, to be held September 15-17; The Tenth Mill Operators’ Conference in Adelaide, South Australia, to be held October

12-14, 2009; The Sampling 2010 Conference in Perth, to be held May 10-12, 2010; and The AusIMM International Uranium Conference in Perth, to be held June 23-24, 2010. For more information on the any of the above conferences, contact Alison McKenzie, Manager, Conferences & Events at [email protected] or phone her at +61 3 9658 6123 or fax +61 3 9662 3662. MoneyShow, the world’s leading producer of investment tradeshows and cruises, has concluded an agreement to acquire The Financial Forum and CTAS conferences from Diversified Business Communications. As a result of the acquisition, MoneyShow will now produce The Financial Forum events under its World Money Show brand. The next conference is The Forex and Options Expo to be held

August 2-4 at Ceasars Palace, Las Vegas, Nevada. You will learn to profit from the newest and most successful strategies and tools used by some of the most prominent options and forex traders in North America. For more information and to register, go to www. financialforum.ca The 5th Annual Alaska Oil & Gas Conference will be held September 14-17 at the Anchorage Marriott Downtown, Anchorage, Alaska. Hundreds of leading industry players will meet and discuss the latest developments, regulatory changes as well as current and proposed projects. For media accreditation and for more information, contact Jessika Hunt, American Conference Institute, 1-888-224-2480, Ext, 324 or Email at J.Hunt@ AmericanConference.com n

POTASH continued from page 16

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mining would be reduced due to the help from natural geothermal energy (>62°C). Once additional assays are received, they will begin the process of issuing a NI 43-101 resource calculation on the Milestone Project. Western Potash recently reported results from its first potash exploration well on the Milestone property in southern Saskatchewan. The first well targeted potash prospective sequences within the Prairie Evaporite formation, and was drilled to define the extent, grade, thickness and type of potash mineralization present on the property. The well was drilled vertically to a total depth of 1,776 metres. Coring started at a depth of 1,640 metres and intersected the Prairie Evaporite Formation at a depth of 1,657 metres. The well intersected a total of 19.9 metres of potash mineralization averaging 17.2 wt.% K2O across three potash-bearing members. n July 2009

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RING OF FIRE continued from page 12

UC Resources Ltd. [UC-TSXV] has optioned the McFauld’s Lake 1 and 3 properties from Canstar Resources Inc. [ROX-TSXV]. The properties are contiguous to the southeast of the Spider/KWG massive sulphide discovery. UC recently signed a 51% option on the McFauld’s Lake East and West properties held jointly by Spider and KWG. On the East block, line cutting and geophysics are part of the work program that will lead to drilling. White Pine Resources Inc. [WPR-TSXV], formerly WSR Resources, Noront and Golden Valley Mines Ltd. [GZZ-TSXV] have a J/V on the Luc Bourdon and Bourdon West Properties in the Ring. Airborne geophysics has been completed and drilling has intersected visible massive sulphides. Assays are pending. White Tiger Mining Corp. [WTC.H-TSXV] has acquired a 51% joint venture interest in the Norton Lake property, located 413 kilometres north of Thunder Bay and on the south margin of the Ring of Fire, from Cascadia International Resources Inc. [CJ-TSXV]. Since 2001, over $3 million has been spent on exploration that included 44 drill holes. In-situ measured and indicated resources have been estimated at 2,258,654 tonnes containing 33.5 million lbs. nickel, 30.4 million lbs. copper, 1.6 million lbs. cobalt and 33,682 oz. palladium. Inferred resources approach 200,000 tonnes. Four drill holes have just been completed with the core containing visible massive sulphides – assays are pending. The present program cost $550,000. Down-hole Pulse EM surveys are planned. The program is working towards a NI 43-101 resource estimate. Looking at the numerous multi-metal discoveries made to date in the McFauld’s Lake Ring of Fire and surrounding regions, it certainly appears that a new mining camp is developing that will play an important role in the future of Ontario’s mineral industry. n 44

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July 2009

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epilogue David D uva l

The World’s Second Oldest Profession

M

ining may not be the world’s oldest profession, but it would probably rank a close second. Perhaps the best example of its impact on humanity is the fact it supplied the basic materials for the Industrial Revolution which set the stage for the industrialization of the modern world. Despite the passage of time since that fabled era, at least one thing has remained virtually unchanged. The industrial strength of major economies still depends upon their ability to acquire basic commodities in sufficient quantities to meet their requirements and at reasonable prices. It’s a simple fact that you can’t produce steel without iron ore concentrate and the alloying agents that are associated with steel production including nickel, molybdenum and chromium. And that’s why a healthy exploration industry will play such an important role in helping countries realize their industrial potential. What I find alarming in a longer term context is the lack of financing for grass roots exploration which some argue is understandable given the fact we haven’t had a major grass roots discovery in almost two decades. When I refer to a major discovery I’m talking about a Voisey’s Bay (nickel/copper), Hemlo (gold) or Point Lake (NWT diamonds). These are world class discoveries that boosted capital markets – and the availability of risk capital – as far away as Australia. It has been just in the past two months that junior financings have increased, albeit at much lower prices than in recent years. By now we’ve all heard the refrain that the easy-to-discover and readily exploitable mineral deposits have mostly been found and mined out. Making matters worse is the fact that the undeveloped resources that remain in mature mining jurisdictions, such as the U.S, Canada and Australia, are gener46

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ally low-grade, inaccessible, expensive to develop, subject to anti-development pressures and generally sub-economic even at much higher metal prices. Also alarming is the fact that the exploration and development timeframe for new mines has changed profoundly – and not for the better. In the developed world, it can take seven to 10 years (and sometimes longer) to discover and bring a viable mining operation on line. That time factor has served to constrain supplies of minerals coming into the marketplace, pushing nominal prices for industrial commodities such as copper and nickel to historic highs in recent years. Increasingly, declining mine output coupled with increased demand will lead to severe supply shortages in global metal markets, boosting commodity prices to levels perhaps never before imagined. This rapidly unfolding scenario is playing into the hands of companies with resources in the ground, which is probably not surprising. Unlike their junior grassroots competitors, this segment of the marketplace is finding it much easier these days to raise money for resource-targeted exploration. In most cases, the deposits they are attempting to exploit are relatively small with little in the way of world class potential. But longer term I can’t help but wonder if the small scale nature of their holdings could work in their favour. What’s surprising about today is the reluctance of companies to consider the small scale, staged development of mineral deposits which was very much the mode of operation when Canada’s major gold camps were discovered. It’s much less risky from a financial standpoint and technically as well. Bigger is not always better as we have learned all too well during the current global financial crisis. In an escalating commodity price environment, the appeal of these modest-sized

operations is certain to increase, especially where possibilities exist for multi-sourced production that will boost consolidated output of companies to attractive levels. This has been a feature of China’s mining industry for generations and may well catch on in the West. What we really need in a hurry is a favourable regulatory framework that will support and encourage the development of small scale mineral deposits whose environmental footprints would be much more palatable to the not in my backyard crowd. As some of the larger deposits in the province are mined out, facilities at existing mines could be used to custom mill smaller deposits in the region with compatible metallurgy. Clearly, these established operations will have some role to play long after their deposits are mined out. At some point governments will also have to increase tax incentives to spur grassroots exploration and, just as important perhaps, reduce the regulatory burden on companies so more money goes into the ground. Instead of focusing on onerous regulations to prevent fraud, maybe some tougher enforcement along the lines of you do the crime, you do the time, would be more effective. Given the lead time from discovery through to mine development – even for smaller operations – these incentives will need to be put in place sooner rather than later. In fact, the long-term viability of the minerals industry in this country will depend on it. With little money being directed to grassroots exploration, the opportunities for discovery in this market segment are extremely limited. Today, few investors in their thirties and forties have ever had the opportunity to participate in a grass roots mineral discovery and the regional excitement (area plays) they usually generate. That’s a pity. n July 2009

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