Quelle: http://www.businessedge.ca/article.cfm/newsID/17449.cfm
Miners lay money down on exploration
Despite industry's hit-and-miss nature, spending hits record levels
By David Hatton - Business Edge Published: 03/21/2008
- Vol. 8, No. 6 EmailPrintComment
A six-kilometre stretch of rock and dense brush in northern Ontario might appear to be barren wasteland to the casual observer flying overhead in a helicopter.
Temperatures are known to easily drop to bone-chilling levels during winter months and the nearest civilization is miles away. But Mike Koziol insists that underneath all that rock is millions of dollars in gold. All it takes to find the right spot is careful patience. "Our testing is pointing to a lot of gold somewhere in this area; it's just a case of drilling in exactly the right spot," says Koziol, president and CEO of Vancouver-based Alto Ventures Ltd. He's not alone in that belief. Two other mineral-exploration companies have set up close by in this remote area about 25 kilometres northeast of Beardmore. Known as the Beardmore-Geraldton Gold Belt, the land has produced more than 4.1 million ounces of gold since exploration began in the 1930s.
In the late '80s, Noranda Exploration staked out the area, doing extensive mapping and laying trenches for prospecting. It gave up after a few years, but local prospector Frank Houghton continued to work in the area until 2004, when Koziol and Alto Ventures purchased the full mineral rights to the land. Testing done the following year showed 12 gold "occurrences" and 20 more "anomalies" that could be related to sulphides and traces of gold. More sampling was done this past January and is just starting to come back now, Koziol says. "We believe this spring or summer all the results of our work will pay off," he adds.
The company has three other exploration camps in northern Quebec, Manitoba and a site about 100 kilometres north of Thunder Bay.
Junior mining companies, including Alto Ventures, have been attracting special interest from investors since metal prices started to go up in 2002. Then Toronto-based Aurelian Resources discovered 13.7 million ounces of gold in April 2006, in a remote part of Ecuador. Company executives watched their fortunes skyrocket immediately, with the stock going from being worth pennies to more than $6 a share almost overnight. Last year, total global exploration spending reached an overall record US$10 billion. The trend appears as if it will continue this year, with base- metal prices already up 27 per cent in 2008. But for every discovery, there are hundreds of mining companies that have come up empty in locations after years of testing. "The business is unbelievably hard. It's not an easy way to get rich by any means," says Koziol, who is also a professionally trained geologist. Hundreds of junior mining companies were in Toronto earlier this month to set up booths at the Investors' Exchange, a financing trade fair held during the Prospectors and Developers Association of Canada's (PDAC) annual convention. Investors from all over Canada and other countries, including China, Australia and Great Britain, walked past rows of booths, stopping occasionally to study rock samples and maps lying on tables. "Junior mining companies are essential and the backbone of our industry," outgoing PDAC president Patricia Dillon said in an interview. "The fact that you have so many here in Toronto is a sign of how extremely healthy our industry is right now. "You have to consider that the juniors are smaller and can make decisions far more easily than the larger companies. They are also far more willing to accept risk. If they see an opportunity, they can go after it almost right away," she said. It's not just gold reaching record price levels. Platinum recently topped $2,000 an ounce and even rhodium is up about $1,000 in the past year to about $7,000 an ounce.
Wayne Cheveldayoff, the director of investor relations for Thompson Creek Metals Inc., believes molybdenum will be next.
The silvery-white metal is known for being able to withstand intense heat, which makes it ideal for use in everything from automobiles to architecture.
"The price is nowhere near peaking yet, so there is lots of opportunity for investors right now," he said. Molybdenum prices went from about $26 a pound last April to $35 in June. It currently trades at about $33.40 a pound on world markets.
Thompson Creek has an open pit mine in Idaho, a metallurgical roasting facility in Pennsylvania and two mines in British Columbia. Late last month, however, the company downgraded production estimates at its Endanko mine in B.C. The company said in a news release it was due to a pit wall that slid down in November. Production estimates went from between 7.5 and 8.5 million pounds to 6.5 and 7.5 million pounds of molybdenum for this year.
Several blocks away from the convention on the floor of the Toronto Stock Exchange, traders were reacting to a record high price for bullion as spot gold almost reached the $1,000 an ounce mark. Trading went as high as US$969 an ounce before closing the day at US$968.90. But that has little effect on the juniors, says Koziol. While major exploration companies saw their stock prices reach 52-week records this past January, junior companies had their peak last spring. Ever since, they've been looking and waiting for the next big find. "The big concern for a lot of juniors is that their companies will run out of cash when they are frustratingly close to a discovery," says Koziol. "Metals, especially gold, can represent a safe haven for all the investors after what happened (with asset-backed commercial paper and the sub-prime mortgage fallout) last summer. But investors are still scared. They're choosing where to put their money very carefully." Koziol says Alto Ventures has spent close to $1.2 million on operations so far, but it has another $3 million in its corporate bank account after completing a round of private funding last fall. "There's a lot of pressure for me now to produce something, sure. I mean it is stressful, but I can handle it." There is even more pressure on Aurelian Resources, which is looking for its next big discovery. Co-founder Patrick Anderson repeated several times during an investor presentation at the conference that they were getting close again. "We have a good relationship with the Ecuadorian government. They recognize the importance of the mining industry to their economy and want to work with us as closely as possible," he says. Anderson says exploration is continuing at the Fruta Del Norte site, with a new chief operating officer and several other new staff that were just hired. "We're confident that there could still be another big discovery there this year," says Anderson. "It's just waiting for us. The question is exactly where."
(David Hatton can be reached at hatton@businessedge.ca)
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