“Hit Me with Your Best Shot”

Before we go into any serious detail about Madison’s progress, allow me to first “hit you with my best shot” as the pop song goes. This way I can offer up the big picture for all those in hurry and who is not in a hurry these days!

There has been substantial progress occurring on many fronts with Madison-Enterprises. (MNP-V; MDSEF-OTC)   Exploration events are unfolding rather successfully at Mt. Kare in Papua New Guinea (PNG) where the emphasis of Madison (www.madison-enterprises.com) has been focused over the past several months. Drilling has recommenced there after an excellent “IP” (Induced Polarization) program was recently completed.

Additionally, Madison will soon be back in Nevada working on their “Lewis Property” and preparations are currently underway to resume prospecting, geochemical sampling and geological mapping at that project.

The Lewis Property in Nevada still holds all its excitement and promise, but recently the center of attention has been on moving the PNG project forward.

Regardless of how the gold market reacts in the short term, junior exploration projects move forward. They cannot be held captive of the gold price and Madison is no different. The excellent news for Madison shareholders is that exploration programs are to be implemented simultaneously on both of their world class projects. So while the focus has been on Mt. Kare in terms of the IP program, geophysics and the core drilling program currently underway, the Nevada property will also be the beneficiary of ongoing work in the very near future.

I believe we can be anticipating the results of the current drill program in Mt. Kare sometime in late August or early September. One always has to keep in mind the vicissitudes of these types of projects but realistically, September seems to be a good bet.

That’s it in a nutshell as they say; the short and sweet of it. But of course there is always a lot to talk about with projects of this magnitude and so after this brief synopsis, we’ll go into a bit more detail.

On to the Two Recent Press Releases

The Press Release dated June 24, 2004 and titled Mt. Kare Exploration Update did exactly that. It offered an update on the company’s progress at Mt. Kare in Papua New Guinea.

I’m going to quickly address that Press Release for two reasons. One is that these press releases are always put forth in such a way as to be totally factual—no hyperbole, exaggeration or embellishment is acceptable. While that is all well and good, sometimes we miss the real excitement if we are not “in tune” with mining parlance and what management is actually saying.

The second reason is that it would appear that the market discounted the true value of what was recently put forth. Very possibly that was the result of a gold market that has been marching sideways for the past six months and in the process confusing many investors.

It could also be that sometimes these press releases can be difficult to comprehend. I wouldn’t disagree with you if you said that understanding the vernacular of geologists is no small feat. So not only do investors have to understand the gold market and the specific factors that drive it, they also have to understand the junior mining business with all that it entails.  Both fronts can be very technical in nature and both require one to do their homework or “due diligence” as it is referred to in the business. I would like to suggest that the more one can learn about the mining business, and how specific junior mining companies operate within those parameters,  the more likely success as an investor is possible.

With that in mind, I think the “real news” that Madison put forth in that June 24^th press release was that the “IP” (Induced Polarization) program recently completed at PNG was terrific.  It went so well in fact, that they decided to expand it even as the program was underway.

Madison extended the IP survey from about 30 miles to 40 miles of coverage because of successful results identified in the early part of the survey. Additionally, two of the newly identified IP targets have been tested by drilling and we will receive those results at some point in the future—most likely combined with the results of the holes currently being drilled.

Even though the junior mining business is driven in large part by the results of the actual drilling, IP surveys can be excellent indicators of mineralization.  It is unfortunate that the market doesn’t give much credence to IP programs these days even though they are very much part and parcel to successful exploration programs implemented by junior mining programs. Successful IP programs are instrumental in locating high priority drilling targets.

As such Madison has been extraordinarily fortunate with the results of this latest IP program because they located a large number of those high priority drill targets. Now of course the proof is in the pudding, meaning that those targets have to be drilled out, but in reality, there is an enormous amount of effort put into establishing these targets and they shouldn’t be taken lightly.

I’ve been told many times that if you’re going to spend the “big bucks” to drill, you better drill in the best possible place so as to maximize your efforts and your capital. Consequently all the work that goes into establishing those high priority drill targets via IP surveys, geophysical and geochemical work, trenching and sampling can be worth its weight in, dare I say it—gold!

A tripling of Size is BIG News!

Here are several other things to consider. There have been over two hundred and twenty holes already drilled at the Mt. Kare property within a specified and very finite area. That, in essence is the area where the known mineral resource is located at Mt. Kare, and it covers a surface area measuring approximately 600 meters by 800 meters.

By any standard, given the large land area that Mt. Kare encompasses, 600 x 800 meters is a rather finite land area. The actual size of the property is something like 200 KM so you can see that in US terms, 600 x 800 yards is rather small. It leaves a lot of area for exploration in a geographical location that has some of the largest gold mines in the world.

The second point to remember is that because of the results of this recent IP survey, an area with very similar geophysical characteristics has been discovered. The new target area now measures a minimum of 800 meters by 2,400 meters, essentially tripling the area where drilling becomes not only promising but quite viable. Of course, most of this newly discovered area has not been drill tested.

This is very important because it means that if we extrapolate the known information from where MNP previously drilled and came up with close to 2,000,000 ounces of gold and 20,000,000 ounces of silver, it would be logical to assume an increased resource of gold and silver on the property.

A Metaphor for a Better Understanding

I’ve requested that maps of the Mt. Kare Project go up on the web site (www.madison-enterprises.com) to better help our shareholders and interested parties understand the geographical proportions and drill sites. If they are not up already, they should be soon.

In the interim, David Mallo, one of the chief geologists on the project described the project to me in this way. He said to think of a business envelope and that envelope is the total land area of the Mt. Kare project which is located in Papua New Guinea. Then he said to think of a postage stamp on that envelope. For our purposes at this point it doesn’t matter where the stamp is specifically located. But that stamp represents the area where this new target area is now located. If we take that stamp and enlarge it by 200% we have a stamp about three times the size of the original. That is the new target area now measuring about 800 x 2400 meters. On the edge of the original stamp is where Madison is currently drilling and around and about the original stamp is where past drilling has occurred. So you can see that in a very large land mass which encompasses the Mt. Kare project, the mineralization encountered has been in a rather small finite area. This begs the question of what will be found on the 80% or so unexplored area of the property!

The Second and Most Recent Press Release dated July 21, 2004

After completing the recent IP survey, Madison has chosen several of the high priority targets to drill and are currently in the process of doing so. They are in the C-9 Zone which happens to be where they encountered excellent gold mineralization in the past (2.57g/t gold over 67.5 meters including 4.75 g/t gold over 22.5 meters). It makes sense because these trends where the gold mineralizations appear seem to be consistent.  Management believes this is the place to be because not only has the recent IP survey indicated high priority drill targets there but past drilling in these locations has generated success.

We have to be as unemotional as possible in reporting these events as they unfold but truly there are some very exciting intercepts being encountered which is cause for encouragement. Darn, now I’m starting to sound like a geologist!

Several Points in Passing

I’ve recently learned that it can take up to four weeks to drill approximately 600 meters at Mt. Kare in PNG. Therefore, it is no walk in the park to drill over 220 holes. There have been enormous amounts of sweat equity and brain power already spent on this project. There has also been a lot of money spent in PNG and that requires financing. As there has been talk about the number of outstanding shares, I’d simply like to point out that those shares have financed those 220 holes which have garnered an enormous amount of data and other technical information such as those high priority drill targets previously mentioned. These are not shares outstanding in a vacuum but shares that have carried their weight well and have given good value from their creation.

In a better gold market encompassing the past ten years, financing would have come at a price that would have had less shares in the marketplace. But sometimes you takes what you can get and move forward as best you can. There are a lot of “would have, could have, should have” in this business and there are also a lot of failures. The success stories come from companies that bite the bullet, believe in what they are doing, utilize the best technological gear and employ the best people they can find. Madison fits this bill perfectly and from that you may draw your own conclusions.

Remember that Mt. Kare is a remote area and that many of the holes have been drilled after the drill rigs have been transported in by helicopter. Consider then that it can take up to four weeks to drill a single hole and you begin to realize that eight years of this kind of effort can be expensive. The company firmly believes that all this work is worth the effort and I concur with them wholeheartedly. Do not be discouraged. I’ve said it before and I’ll say it again. This is a team that is very high on the chart of technical and technological capabilities. They believe in this project because if they didn’t, they would be out of their minds (not a very technical term is it?)  to endure the kind of challenges that have presented themselves. Read between the lines and you’ll understand, as I do, that Mt. Kare is loaded with promise.

A Resumption of Drilling as of Mid-July 2004

Madison has now resumed the drill program which was discontinued for a brief interval in order to give management sufficient time to evaluate all of the new information that has recently been compiled. At some point in the near future, the results of all the recent holes that have been drilled will be reported upon. This will, of course, offer us an even better understanding of a resource that Madison has been continually expanding upon for over eight years.

Finally, A Word about the Gold Market

This is “off the record” between You and I and not Company Sanctioned

We find ourselves here towards the end of July 2004 and the gold market has been sending mixed signals for quite some time and many are confused. Some folks believe that the price of gold is inversely tied to the dollar while others believe the precious metals markets are totally manipulated. For every price surge or price drop a reason is found to justify the move by the high profile gold analysts. There is talk about inflation and deflation and how gold will react to each scenario.  Personally, I believe a little of all these elements come into play and we can add several more key factors to the mix such as interest rates, the state of the economy, the enormous levels of debt at all levels along the continuum (personal, corporate and government), and the upcoming elections.

Of course we all have to make a decision at some point whether or not to be involved with gold and the precious metals on some level or another. There are intense pressures being brought to bear upon the precious metals complex because of all the factors just mentioned. Nevertheless, it is my belief that gold will have its day and that it makes sense to have some portion of ones portfolio allocated to gold and gold shares. Remember that the trend is your friend. Try not to get too caught up in the day to day machinations of price movements

Anyone who has been involved with gold or gold shares has had a tough time of it lately. As of July 26, 2004 gold is pricing out about $386 ounce. We are all looking for gold to “get up” and past $400 and then to move upwards from there. No one has a crystal ball so we can only make assertions based upon our best analysis. But think of where the price of gold was this time last year and you’ll feel much more encouraged. Consider why you became involved with gold investments in the first place and I think you’ll find most of those underlying reasons still valid. I personally don’t believe that now is the time to abandon gold stock positions on a wholesale basis, but we all need to make decisions that are individually appropriate. Finally, review a gold chart that covers that past five to seven years and you might feel even better.

D. Stewart Armstrong

Disclosure: The author has not been paid to write this article. The author and GoldSeek.com are shareholders in the company  and will benefit from any increase in the company’s share price.  The author is an investment relations for the company.

-- Posted Thursday, 5 August 2004 | Digg This Article