-- Posted Thursday, 8 June 2006 | Digg This Article
The Golden Journey Resumes
www.journeyresourcescorp.com
www.triogold.com
I’ve been an advocate of both Trio Gold (TGK-V) and Journey Resources (JNY-V) over the past six to eight months. The Empire Property near Mackay Idaho was the property that first intrigued me. I’d like you to review the press release that can be found on GoldSeek.com and on both of the above mentioned websites.
JOINT NEWS RELEASE - JOURNEY ENTERS INTO OPTION AGREEMENT WITH TRIO TO ACQUIRE INTEREST IN EMPIRE MINE PROJECT
Journey Resources (JNY-V) and Trio Gold (TGK-V) have entered into an Option Agreement whereby Trio has granted Journey an exclusive option to acquire a 50% lease interest in and to certain mining claims comprising the Empire Mine Property located in Custer County Idaho.
That simple sentence actually speaks volumes about the assiduous efforts of many talented people to bring this transaction to fruition. I know for a fact that quite a few extenuating circumstances had to be addressed. The process included a significant amount of problem solving. Might I suggest a tip of the cap to Harry Ruskowski and Phil Van Angeren of Trio, and Jack and Jag Bal from Journey for pulling this deal together. I believe that the drills will be turning in Custer County, Idaho within several weeks. It could very well be down hill from there; downhill being the path of least resistance.
Please remember what I stated in my last report. The Empire Project is well along in its development and it could be a matter of only several years before it gets close to the production stage. That might seem like a long time but it really isn’t, especially when you stop to consider that a goodly portion of that time will be used for drilling programs, analysis, pre-feasibility studies, and final feasibility studies—all of which will add additional value to the project.
Furthermore, even at a conservative estimate, development costs could be recouped within eight to ten months after production commences. When one stops to contemplate the actual value of the project en toto, it can be a bit overwhelming. The gold, silver, copper, and zinc credits are enormous. It would appear that well over a billion dollars worth of metals will be mined out of this property. This is a recipe for some serious excitement that sooner or later Mr. Market will notice.
The Empire Property is first on the List
In my first article on Journey Resources titled, The Longest Journey Begins With the First Step, I stated:
Jack Bal has put together an impressive package of properties and has put his own money into the deals.
1. The Empire Project: “Earning a 50% lease interest in the Empire Mine Project, a former copper/gold/silver produce, near MacKay, Idaho”.
2. Musgrove Creek: “Earning a 100% lease interest in the Musgrove Creek gold exploration project near Salmon, Idaho”.
3. Vianey Mine: “100% equity interest in the Vianey Mine which contains silver/lead/zinc mineralization in Guerrero State, Mexico”.
As you can see, The Empire Project is first on the list. I believe that Journey’s plan is to be drilling on both the Empire and Musgrove within the next month; that would be June of 2006.
Trio’s plan is to focus on some of the other properties in their portfolio, especially the property in Nevada.
Both of these companies have excellent properties in their portfolios and with market caps in the 6-9 million dollar range, there is huge upside potential for both.Both companies stand to do very well with the Empire Deal which will have a positive effect on their bottom lines.
I believe both companies are undervalued and their progress certainly hasn’t been helped by the tentative resource market over the past several months. But this environment will also pass. In fact, we may be getting close to an exceptionally positive summer for the resource sector.
An Excellent Team of People
The main thing I want you to understand is that Trio has chosen an excellent partner by way of Journey. Jack and Jag Bal from Journey are “can do” guys. I’ve said all along that Phil Van Angeren, Trio’s geologist, is top notch. Together this is a group that is going to build on Trio’s past successes and on the successes of Cambior. It is my firm opinion that eventually this group will find a way to add additional value to the Empire property. After the feasibility work has been completed, there is little doubt in my mind that this project will go into production.
Past Programs
Consider the fact that Cambiro Exploration USA, Inc. spent a good deal of money on Empire.
In 1997, Cambior Exploration USA, Inc. reported a drill indicated, near-surface, oxide copper resource of 18.23 million tons at 0.49% Cu, 0.19% Zn, 13.5 gpt Ag and 0.48 gpt Au, in the upper reaches of the old Empire Mine, along with 9.65 million tons grading 0.29% Cu and 0.31% Zn,
Cambior encountered polymetallic copper skarn mineralization over a strike length of 1,200 metres, thicknesses of 6m to 73m, and depths of more than 150m: mineralization is open along strike.
Cambior used the measured mineral resource block models to scope mineable quantities of material within the known deposit. Cambior’s Denver, CO based engineering group estimated the mineable portion of the deposit as 33 million tons grading 0.44% copper, 0.20% zinc, 0.25 gpt gold, and 6.6 gpt silver at a 1:1 mining ratio. Recoveries are estimated at 70% gold, 60% silver, 80% copper, and 60% zinc. The Cambior estimate was not an optimized pit, but a pit that would access all of the known deposit.
Remember also, that a ten-hole, 700 m (2,300 ft), RC/DD drill program conducted by Trio Gold in December 2004, was successful in improving the thickness of mineralization and in confirming both the grades of copper, and the presence of gold and silver in the AP Pit area. Grades of up to 13.5% Cu over 1.5m, 1.36% Cu over 36.6m, and 5.5 gm/T over 4.5m were obtained.
Crunching Real Numbers and the Reason to be Excited about the Empire Project
A One Billion dollar Project
The numbers add up something like this. There are probably in excess of 290 million pounds of copper on the Empire Property; some estimates come in substantially higher; but let’s conpute this conservatively throughout. Even at only $2.00 a pound for copper, you’re looking at 580 million dollars worth of the metal even without the gold, zinc, and silver credits. Then we delve deeper and become more specific.
Specific? How about this?
Copper: 290 million pounds at $2.00 per pound equals 580 M dollars
Gold: 290,000 ounces at $600.00 per ounce equals 175 M dollars
Zinc: 145 million pounds at $1.50 per pound equals about 181 M dollars
Silver: 7.75 million ounces at $10.00 ounce equals about 77 M dollars
Ladies and Gentlemen, that equates to well over a billion dollars. As you can see, we’ve priced these resources rather conservatively and haven’t included all of the drill results. Add to that the idea that additional drill programs are forthcoming.
And then consider that this is a viable project that can be brought into production within several years and then once into production the capital costs will be recouped in 6-8 months. That is the IRR (Internal Rate of Return). I knew there was a reason I became excited about the Empire Project.
Seriously, people, that’s what we’re talking about—one billion dollars US plus; on a conservative basis!
You can be certain that all parties concerned will be interested in expanding the resource going forward.
A Buy on Both Companies
I personally would consider purchasing Journey up to $1.00-$1.20 and Trio up to $.60 in this market. And make no mistake this market is taking a breather. Commodity prices in general will be moving upwards in the months and years ahead. We’ve all heard the idea that this resource market could be ongoing for the next ten to fifteen years. How many times have you kicked yourself because you missed the boat?
Exercise a little patience and it is my opinion that it will be richly rewarded. After all $100,000,000 here and $100,000,000 there and pretty soon you’re talking about real money. Divide $1,000,000,000,000 (that’s one billion dollars) between two smaller sized companies and that’s $500,000,000 each. Of course these numbers are approximate and all of them could conceivably move up or down along the way.
The share prices of these companies are going to appreciate in an expanding resource market and as these two companies get out of the “deal making stage” and into the “doing work stage”, it is my opinion that prices will appreciate even from these levels.
This is the time we should all be considering adding solid, commercially viable companies to our portfolios. The best time to be buying is when everyone is looking the other way. These are not the biggest projects on the planet, but my feeling is that Jack Bal’s managerial style combined with Phil’s technical expertise will do wonders for this enterprise.
Consider this. A double from these levels—on both companies-- should be more than achievable given the fact that some very astute well connected businessmen are running the show. Business men understand the value of creating value. They know how to run businesses and when these talents are combined with excellent resource projects—and when the trend is your friend, there is an opportunity knocking.
Review their respective websites, perform your due diligence and keep and eye on GoldSeek’s Featured Stock news column for Updates. I’m on top of the situation and am looking forward to the up and coming drill programs.
Until Next Time,
D. Stewart Armstrong
Consultant to the Junior Mining Sector
-- Posted Thursday, 8 June 2006 | Digg This Article
