Aug 10
25
Warning! Only true high-risk speculators/gamblers should even read on.
I’ve often stated that in the junior resource industry failure is the norm. Despite the most honest effort from most, the vast majority of exploration companies will never go all nine yards. One must be truly mentally and financially prepared to lose part or all of their capital in exchange for a chance to be part of a small minority that end up providing exceptional returns. On that basis, I like to introduce Excelsior Mining Corp. (TSX.V: MIN $.18)
For starters, I’ve purchased and could control 15% of the company shares at this time. Secondly, I must point out from the beginning that Excelsior is not yet a client of mine, but I expect to be retained in the future if management hits some of their milestones during the next quarter. Up until now, Excelsior has been just another typical Capital Pool Company that emerged on to the main venture board in rather ordinary fashion with a middling gold exploration deal. Now, however, Excelsior has the pending acquisition of a company maker project following shareholder approval and I am now writing about Excelsior assuming that transaction will proceed as announced. You should consult the August 23rd News Release after reading this commentary as there is always a risk that the deal won’t close as planned. In addition, you should also factor in a planned 3-1 rollback that will occur if the transaction receives shareholder approval. That means, for example, if you buy stock at $0.20 today, your cost base will be $0.60 on the resulting share position after the rollback.
There are several reasons why I believe Excelsior is worth a gamble:
1) Excelsior has a well established management team with a good reputation and plenty of experience.
2) Excelsior has what seems to be a very attractive copper project in Arizona (Gunnison) with an inferred resource of 4.77 billion pounds of copper.
3) Most of the copper at Gunnison has the potential to be mined using an in-situ recovery (ISR) method, which has both financial and environmental benefits.
Excelsior appears to have hit the ground running and I am looking forward to seeing it come out of the gate in the weeks ahead once shareholder approval is given, which is anticipated to occur on September 17.
A Team To Make It All Happen
A strong management team can make all the difference. With the new Option Agreement between Excelsior and AzTech Minerals Inc., Excelsior’s flagship project certainly deserves the justified attention. Stephen Twyerould, Ph.D., the incoming President and CEO of Excelsior, has over 23 years of experience in the mining industry, 17 of which were spent with WMC Resources Ltd., an Australian mining and fertilizer company that was taken over by BHP Billiton in 2005. Stephen also helped take Reliance Mining (now Consolidated Resources, CSM-AU) from a market capitalization of AUS$3.0M to AUS$100.0M in only 4 years! Roland Goodgame, Ph.D., the incoming VP of Exploration, has over 20 years experience with WMC Resources Ltd. and Anglo Americans global nickel and copper exploration and evaluation efforts. With both Stephen and Roland on board, and their working knowledge of the area, the Gunnison Projectcan get off to a sound start. Chairman of the Board, Mark J. Morabito, J.D., has a background in corporate finance and securities law including over 15 years of experience in public markets with a focus on junior mining and small business venture capital projects. Mark is proficient in corporate development and capital-raising, having raised over $100 million in public markets over the last few years. Mark is particularly knowledgeable on the capital markets side, especially the US capital markets side. I know that the goal of management is to take this US project to the NYSE-Amex to enable Excelsior to be fully marketed to a US investor base. Now that may be a year or more off (if ever), but it’s nice to know where the compass is pointed. Together, with the extensive background of from both Stephen and Roland and the capital markets knowledge from Mark, Excelsior’s Gunnison Project appears to be in good hands. I must also note I’ve very involved in other projects Mark is involved with, most notably, Silver Quest Resources, Alderon Resource Corp. and Crosshair Exploration.
Gunnison Copper Project
The Gunnison Project has two primary assets including the North and South Star copper deposits. Together, these two assets have an NI 43-101 compliant resource of 4.77 billion pounds of copper (787 M tons at 0.30%), which can be more than enough to go into production. The Gunnison Property appears to easily rivals some of the biggest players in the area due to the extent of its resource and the potential for it to be mined using ISR. Other factors that make this project ideal include its proximity to several towns that have skilled laborers, access to electrical power on the property, and an abundant water supply which will be particularly useful for ISR.
Based on the 53,000 meters of drilling to date as well as encouraging results from several metallurgical studies, it has been determined that ISR would be a highly effective method for mining the Gunnison Project. Not only is the bedrock highly fractured, but over two-thirds of the resource is oxide copper, ideal for ISR. According to the expert opinions of the management team, this method of copper extraction would not only be the most environmentally-friendly option, but also the most cost-effective.
ISR involves pumping a solution of diluted sulfuric acid and water into the ground through an injection well, whereby it dissolves the desired copper resource and is sent back up through recovery wells. The recovery solution is then sent to be processed which is usually done by solvent-extraction electrowinning (SE-EW) or chemical precipitation and has proven successful in similar regions mining copper. ISR offers several great advantages for the economists to the environmentalists such as minimal surface and subsurface disturbance, low capital and operating costs (because there is no waste rock moved or created), no creation of tailings, leach pads or waste dumps, and fewer permits required when compared to other methods.
ISR has been successfully permitted for multiple projects in Arizona such as the Miami, Florence, and San Manuel mines, just to name a few! The Florence Copper Project, owned by Curis Resources Ltd. is located only 70 miles northwest of Tuscon and is host to 2.84 billion pounds of copper. Florence is set to commence a production test in 2010-2011 to confirm copper recoveries through ISR, with plans to begin production in 2013.
To sum up, the Gunnison Property has a huge resource capable of being mined in a unique way that should yield profitable results for Excelsior.
Plan of Action
With a resource of 4.77 billion pounds of copper, the company has apparently already well surpassed the minimum mining threshold for this type of deposit in this part of the world. The game plan for Excelsior from this point forth is to commence a drill program of approximately 34,800 meters and complete a pre-feasibility study.
By focusing the drill program on the North Star deposit, Excelsior has the potential to greatly increase and upgrade the current resource. Several infill holes are also expected to be drilled to better define the structural regime of the North Star deposit and to interpret and investigate the geology of the district in more detail. The North Star strike extent is 9,800 feet, 2,500 feet wide and over 900 feet thick in places, and there is ample opportunity for expansion as the resource is open along strike, down dip, and up dip in some areas.
As for the South Star deposit, it appears to have excellent potential for extension of the defined copper resource. Excelsior is already planning to do further exploration drilling to keep this deposit active which will create a pipeline of projects keeping the company quite busy! Having the right project in the right location, I am confident that Stephen, Mark, and Roland, are gearing up to take this project straight through to production in a timely manner.
Bottomline
It’s early to start looking at Excelsior: the deal has been inked, but the ink is not dry until the shareholders say so. But early is where the opportunities are many times in this business. With Mark Morabito’s history of achievement, paired with the expertise of Stephen Twyerould and Roland Goodgame, Excelsior stands a good chance in achieving a strong foothold in this industry in a relatively short period of time. Copper demand is anticipated to rise as developing countries such as India and China continue to grow, and the in-situ recovery method is well established as a safe and controllable method of obtaining resources in an environmentally friendly way. I would certainly recommend you to keep an eye on this one!
