guyana – a golden opportunity - stocks and speculations · 2011. 1. 20. · simple sluicing...

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G uyana, a small South American country, has a rich endowment of gold and other metals. Those

riches have long been known to the mining industry, but for a number of reasons, that mineral wealth remained under cover. A dramatic improvement in the political climate a few years ago brought back the explorers. Some important discoveries quickly emerged to confirm the enormous mineral potential in the country. Investors are just waking up to that potential. As the mining industry continues to make new discoveries – and with several gold deposits now advancing toward production – the investment community is beginning to pay attention to Guyana. We had great success in Resource Oppor-tunities with Sandspring, following it from its initial public offering late in 2009. In little more than a year, that company produced a five-fold return for investors as it advanced a gold deposit in Guyana. Guyana is at a very interesting stage in its evolution to becoming a major gold producing nation: Enough work has been done in the past to confirm the enormous geological potential. Yet, small compa-nies have been able to secure large tracts of highly prospective ground. Investors can buy stakes in those explorers at price levels that allow huge upside potential. It is inevitable that the work now underway in Guyana will turn up a number of large gold deposits. This issue reviews the companies that we are currently following in Guyana and also presents a new company. We have

also included a brief summary of the geol-ogy, political situation, logistics and other issues regarding exploration in Guyana, based in part on my recent tour of the country. We believe that Guyana will soon be recognized as an emerging gold producer and that some of the companies operating in the country offer enormous

opportunities for investors. Lots of Gold in the Ground There is no doubt about the geological potential of Guyana. Gold was discovered in the region by Spanish conquistadors nearly 500 years ago. Literally thousands of small mining operations throughout the country are producing hundreds of thou-sands of ounces of gold a year by simply processing the surface gravels. The multi-tude of gold occurrences at surface points to a rich endowment of gold at depth. One needs to look only a few tens of kilo-meters to the west to understand the geo-logical nature and the discovery potential of Guyana. Exploration in Venezuela has turned up enormous mineral wealth. Im-

. . .Discovering value in natural resource stocks...Discovering value in natural resource stocks...Discovering value in natural resource stocks...Discovering value in natural resource stocks

I N S I D E

1– Guyana Overview

5– Company Updates

9– Initiating Coverage

12- Conferences

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Volume 13, #18 December 2010-1

Editorial

Guyana – A Golden Opportunity The enormous mineral wealth of Guyana is just being discovered.


Resource OpportunitiesResource Opportunities

portantly, the big gold discoveries in that country are clustered near the border with Guyana. In fact, the geological features that host the gold deposits in the neighbor-ing country continue across Guyana. The favorable geology doesn’t end at the line on the map. (See the Geology sidebar.) The only difference between the two coun-tries is that more work has been done next door. For a number of reasons, including difficult access and an unfavorable politi-cal situation in the past, the mineral riches of Guyana remained largely untouched. The political situation in the country has now swung solidly in favor of mining. Several international mining companies are now at work. Those companies that have secured property positions are in an exceptional position to benefit as Guyana evolves toward becoming an important part of the gold industry.

We saw a similar evolution in Colombia, which opened up to the mining industry a few years back. A change in the political situation in that country saw the mining industry take a close look at what was long recognized as favorable geology. Before long, a number of large gold discoveries had been outlined. The highlight for Co-lombian exploration is Ventana Gold (VEN-TSXV). Shares of that company traded at only four cents in late 2008. An impressive gold discovery in Colombia the next year led to a recent takeover offer which values the shares at C$13. A few years back, Colombia was com-pletely out of favour. Due to the success of Ventana and other explorers, that country is now front-and-center for gold investors. Guyana is still at an early stage with re-gard to an influx of mining exploration

companies. The companies now exploring are building on a great deal of past work that provides an excellent starting point. Guyana was explored by several major mining companies in the 1970s. That first pass of modern exploration was primarily aimed at base metals. Those efforts identi-fied numerous metal occurrences. Evolv-ing from that early work, the country re-mains an important producer of bauxite (aluminum ore). Venezuela, immediately west of Guyana, was also being explored at that time. Venezuela, with a larger population, had much better road access and other infra-structure. In addition to the challenges of access within Guyana, that country during the 1970s and 1980s had a socialist gov-ernment that did not welcome the interna-tional mining industry.



In spite of the challenges to mineral devel-opment in Guyana, the Omai mine was developed and produced 4 million ounces before closing in 2005. Although the geology is identical on both sides of the border, the more favorable conditions in Venezuela saw the explora-tion efforts focused in that country. The geologists poured into Venezuela. With exploration efforts came success. Several multimillion ounce gold discoveries add up to more than 100 million ounces of gold outlined to date on the Venezuelan side of the border. Supportive Government The political situation has now improved dramatically in Guyana. A stable, democ-ratically-elected government is putting considerable effort into attracting foreign investment in all sectors. The country has learned from years of “experience with various socialist models” and they are now totally committed to a free enterprise eco-nomic system. The very capable government recognizes the enormous benefits that mining can bring to a developing nation. In that re-gard, they have instituted a regulatory sys-tem that is supportive of mineral explora-tion and development. Title to mineral claims, permitting, mining regulations, taxation and other government related matters are now on a par with the better mining nations. First-hand View In a recent tour of Guyana, I met with management and geological staff of sev-eral international exploration companies, I met government officials, including the Prime Minister, and also talked with local business people. I visited the exploration projects of four different companies, trav-eling by airplane, helicopter and road. I stayed in the capital city Georgetown and also a smaller mining center in the interior. Guyana has one of the most modern and sophisticated geological databases of any country. The Guyana Geology and Mining Commission has gone so far as to seek ISO 9001 certification for their programs to ensure the international mining industry

Guyana Geology Guyana sits astride a regional geological feature known as the Guiana Shield. Stretch-ing from Venezuela across Guyana and into Surinam and Brazil, the Guiana Shield contains extensive greenstone belts. That same type of geological environment hosts some of the most important gold districts of the world, including the Abitibi region of northern Ontario and Québec. A remarkably similar greenstone belt hosts the rich gold deposits of West Africa.

It is not a coincidence that the Guiana Shield is similar to the geology of West Africa. At the time of formation of those gold deposits, the two regions were part of the same geological feature. When Africa was pulled apart from South America, the gold fields were divided in half. The gold-bearing greenstone belts of South America are identi-cal to those that have turned up large gold deposits in West Africa.

The surface geology in Guyana is typical of wet tropical environments. Over time, the rock near the surface becomes weathered: granite and other hard rocks turn into clay and gravel. Over time, the loose surface material is carried down rivers so that the landscape becomes flatter. As the surface layer is removed, the weathering profile moves downward.

The weathered material at or near surface can extend from several meters to a couple of hundred meters or more, depending on the nature of the rock and the local condi-tions.

The layer of gravel and clay at surface, known as laterite or saprolite, masks the un-derlying rocks. Depending on the topography and other conditions, the surface layer may have been formed in situ, it may have simply come down from an adjacent slope or it might have been transported considerable distances.

When gold occurs in the weathered material, it can be readily recovered by way of simple sluicing operations. In essence, a slurry of gold bearing mud and gravel is pumped through a sluice box where riffles along the bottom of the box trap the parti-cles of gold.

There are roughly 3,000 licensed dredging/sluicing operations active in Guyana. The reported production from those licensed operations is in excess of 300,000 ounces of gold a year. It is not clear how many unlicensed miners are operating or how much gold is produced and not reported to the government.

The small-scale miners conduct only the crudest exploration. For the most part, they do nothing more than sample the surface gravels with simple panning techniques. When sufficient gold particles turn up in the gold pan, they rip out the trees and set up mining operations. Some of the operations employ large excavators to systematically dig up the gravels which are processed through large sluices.

The gold recovery in the most sophisticated of the sluicing operations is estimated at around 30% of the gold contained in the gravel. The reason for such a low recovery is that the sluice can only recover gold particles that have been liberated from the origi-nal rock material through weathering. Gold particles in the larger rocks that make up the gravel component are not recovered by sluicing. Further, the very fine gold parti-cles also pass through the sluice as they are not caught by the riffles.

At this time, there are no hard rock gold mining operations in Guyana. Considerable

capital is required to set up the mining operations and the recovery plants to process

hard rock deposits. The country is now moving toward large-scale development of its

vast mineral wealth. Several international companies are presently exploring in the

country. Several gold deposits are now moving toward production. As those projects

continue to evolve, and further discoveries are made, the level of activity in the coun-

try is sure to expand.


of the highest reliability of their data and services. Meetings with senior officials of the GGMC made it clear that the govern-ment mandate is to build the mining in-dustry as an important part of the national economy. The U. S.-educated son of a leading Guy-ana businessman said that the family is totally committed to re-investing their profits in the country. That group, with considerable wealth, could easily diver-sify a portion of their holdings into some other country, yet remains fully focused on Guyana. The Prime Minister of Guyana, Sam Hinds, in a face-to-face meeting, empha-sized the importance of mining to the de-velopment of his country. His govern-ment is dedicated to promoting the mining industry as a means of bringing greater wealth to the people of his nation. The Prime Minister's background is mining, so he is fully aware of the economic benefits of the industry. He clearly understands the importance of building and maintaining a favorable image of the country for inves-tors. In short, the political situation is now wel-coming for the international mining indus-try. There is every indication that the situation will remain that way for years into the future. Success Leads to Success Sandspring, which we mentioned at the beginning of this overview and will update later in this issue, has already outlined more than 6 million ounces of gold. That is an impressive achievement in little more than a year of exploration as a public company. Sandspring’s Toroparu mine was oper-ated for several years by a private com-pany. That mine, like all of the other gold mining operations in Guyana, simply processed the clay and gravel that sit on top of the hard rock. When the operators of the private company put a few drill holes into the underlying rocks, they found that the gold appeared to have originated in situ. Importantly, the initial drill holes suggested that the gold contin-ued to some depth in the bedrock.


Mining to Protect the Forests

The government of Guyana is supportive of the international mining industry. At the root of that support is the knowledge that mining brings investment into the country and creates jobs. Another important element in the pro-mining policy is forest protection. The reason is that, at present, literally thousands of small mining operations are destroying vast areas of forest and damaging streams and rivers throughout the country. Those small operations rip out the forest, but then only process surface gravels down to a few meters. The sluicing operations stir up mud in the creeks and rivers which can create ecological havoc for miles downstream. Furthermore, many of those small operations use mercury to recover the gold, which poses another environmental hazard. The government recognizes the benefits of large scale mines operating to in-

ternational environmental standards. By mining down hundreds of meters in-

stead of just a few meters, the larger mines will produce a great deal more

wealth for the country while disturbing only a tiny fraction of the forest that is

now being uprooted. Developing those mines to international standards will

greatly reduce the environmental damage that is being wrought by the thou-

sands of small-scale miners.

Guyana Prime Minister Sam Hinds


Recognizing the potential for a large gold deposit, they took the company public to raise the money to properly explore the project. In 2009, Sandspring had a tough time raising C$6 million dollars at C$0.35 per unit to explore a gold project that had been in operation for several years. A year later, with exploration success and grow-ing investor acceptance of Guyana, Sand-spring offered shares at C$2.60 and a C$45 million offering was quickly over-subscribed. Another important success story is Guyana Goldfields (GUY-TSX), which is well advanced on a feasibility study for its 4.6 million ounce Aurora deposit. That study was deferred in order for the company to revise its mine plans to incorporate three recently discovered gold zones. That com-pany’s exploration success in Guyana has earned it a C$10 share price and a total market value in excess of C$800 million. The earlier stage exploration companies that are now operating in Guyana will have an easier time in gaining investor acceptance, following on the success of Guyana Goldfields and Sandspring. Guyana has extraordinary geological po-

tential. Enough historic work has been

done to provide a good starting point for

modern exploration. Several junior compa-

nies have established substantial property

positions. The value of that property will

increase as more companies attempt to get

established in this emerging gold region.

Most importantly, building on the earlier

work, those companies are poised to

quickly add value as their projects ad-

vance.

Company Updates

GMV Minerals (GMV-TSXV)

GMV holds mineral rights to nearly 900 square miles in Guyana. Those claims cover some of the most highly prospective gold exploration areas of that mineral-rich country. The GMV properties are at early stages, but have had enough work to dem-onstrate that they have large-scale potential.

Earlier in the year, the company was reor-ganized and financed in order to advance those projects. After months of sitting in limbo as it closed the deals, management is now starting to tell the story. Fieldwork, which is now getting underway, could quickly generate important news. Guyana hosts the same gold-bearing greenstone belt that is so productive in West Africa. In Venezuela, which neighbors Guyana to the west, exploration over several decades has turned up a num-ber of large gold deposits, some in excess of 20 million ounces. Guyana is at an ear-lier stage of exploration than its neighbour, but the geology does not end at the line on a map. With exploration in the country ramping up, Guyana offers tremendous discovery potential. Unlike Venezuela, Guyana welcomes the mining industry with a very supportive political situation. Investors are only starting to wake up to the tremendous exploration potential and the favorable investment climate in Guy-ana. GMV is headed by Ian Klassen who has

many years of political and business ex-

perience. His extensive background in-

cludes being a senior political advisor to

the Canadian government. Douglas Per-

kins, senior vice-president, exploration,

has more than 25 years of exploration and

management experience in the mining

industry.

GMV’s first property acquisition was an option from Shoreham (SMH-TSXV) ear-lier this year. That company has been op-erating in Guyana for several years and has accumulated a wealth of high potential properties, some of which were offered for joint venture. GMV can earn a 100% inter-est in the Shoreham property in return for $3 million of exploration expenditures and the issuance of 3 million shares. The com-pany is presently evaluating the geological information on those properties and is also working toward further acquisitions that could extend the property positions. In July, GMV optioned a large property position from a Guyana miner. That indi-vidual has been conducting alluvial mining operations on the properties for several years, producing 70,000 to 90,000 ounces

per year from the surface gravels. The option involves 483,000 acres of mineral rights. To exercise the option, GMV must pay $1 million over two years and spend $5 million on the property within three years. In addition, the vendor is to receive shares in GMV that would give him 30% of the outstanding shares. The production of gold makes it clear that there is gold in the surface gravels. How-ever, as in most wet tropical areas, it is difficult to get a clear view of the bedrock geology. The surface is typically weath-ered into clays and gravels for depths ranging from meters to tens of meters. It is often difficult to determine if that weath-ered material originated in situ or if it was transported. In this case, it appears the saprolite was formed in situ, and that im-plies that there may be a hard-rock gold source located nearby. GMV geologists have several reasons to believe that the gold in the gravels is de-rived from nearby hard-rock sources. That premise is based on work conducted by the Guyana geological survey, from work done by other companies in the area and from recent work conducted on behalf of GMV. Exploration work on the property includes compiling the geological information from various sources, surface sampling and geo-physical surveys. That work will form the basis for drilling programs, expected to get under way in the new year.

The significant concentration of gold in the saprolite and the presence of gold val-ues over extensive areas, combined with the regional geological setting are condu-cive to the presence of large gold deposits. At this time, GMV’s projects are at an early stage and highly speculative. The flipside is that a gold discovery in that setting would quickly translate into enor-mous gains in share value. The company just raised C$7.5 million in a C$0.45 private placement (share and half warrant), enough to conduct a substantial exploration program. The share price has just begun to move, but the company remains largely unknown



in the investment community, as manage-ment has just completed the corporate re-organization and the fieldwork is getting underway. The share price should continue to advance in the near term as manage-ment works toward greater investor recog-nition. Positive news from the exploration program could have a very substantial impact. Price December 10, 2010: C$0.51 Shares Outstanding: 36.5 million Shares Fully Diluted: 36.5 million Market Cap: C$18.6 million Contact: Investor Relations 604-899-0106 www.gmvminerals.com Last updated: September 2010-1

Shoreham Resources

(SMH-TSXV)

Shoreham is exploring several projects in Guyana and Canada for gold, silver, ura-nium and base metals. Considerable work already completed demonstrates the upside potential of those projects. The gold pro-jects in Guyana offer near term upside, with work presently underway. David Bending, the president, is a geolo-gist who worked in Guyana for many years. David’s local experience (plus get-ting in early) enabled Shoreham to acquire an extensive property position in the most highly prospective regions of the country. Extensive alluvial mining on the projects held by Shoreham demonstrates the pres-ence of gold in the surface layers. Historic work on those projects, combined with work by Shoreham, demonstrates the pres-ence of gold mineralization in the underly-ing bedrock. The company is now con-ducting exploration programs in anticipa-tion of drilling, which will get underway shortly. That work includes systematic surface sampling, geophysics and compila-tion of historic data. On the Sardine Hill project, drill pad con-struction is underway in anticipation of drilling in the new year. Geophysical re-sults point to targets below areas with gold values in surface samples. The Otomung project is contiguous with the northwest portion of Sandspring’s

Toroparu project. That company has out-lined more than 6 million ounces of gold. The Shoreham property covers 23 kilome-ters of the Puruni River structural break in an area having prospective geology. That same structure hosts the gold on the Sand-spring property. The Aunama properties cover 145 square kilometers of known gold mineralized, in host environments prospective for large deposits. Surface sampling last summer turned up encouraging results. Further sampling is now underway to extend the areas of interest. An airborne geophysical survey is also underway. The Arawini project covers 241 square kilometers and is 20 km northwest of the Aurora property on which Guyana Gold-fields has identified 4.6 million ounces of gold. In addition to alluvial mining, work by previous operators has identified sev-eral areas of gold mineralization in the bedrock. Surface work is underway to de-fine drill targets. The Whana/Five Star projects cover four major gold targets which are also being prepared for drilling. Geological mapping and sampling, trenching and systematic deep auger sampling is underway. The funding for some of the Shoreham properties is being provided by a private company that is earning an interest in those projects. That company, managed by a knowledgeable geological team, is in-vesting in shares of Shoreham as well as directly in the properties. GMV Minerals (GMV-TSXV) is also funding work on some of the Shoreham properties. Another private company is set to begin small-scale gold production on Shoreham properties. An alluvial mining operation (that is, recovering gold from the gravels and weathered rock at surface) is projected to produce about 25,000 ounces of gold per year. Shoreham is to receive a 10% royalty from the operation. Work on the projects in Ontario has been put on hold in order to focus on the Guy-ana projects. The company had earlier planned to split the company into two pieces, but that has been deferred. The company is presently completing a C$1

million financing at C$0.20 a unit to con-tinue its exploration program. In summary: Shoreham has an extensive portfolio of gold projects in Guyana, each of which has potential to add enormous value. Enough work has been done on each of those projects to demonstrate that they have large-scale exploration potential. Management has chosen to focus on ad-vancing the projects and has neglected investor communications. The property situation, being extensive and complex, makes it very difficult for investors to un-derstand the potential of the projects. Having seen some of the projects first-hand and reviewed the geology with the senior geological team on site, I can appre-ciate the geological potential. As the com-pany is able to report further results, it should become clear to investors that Shoreham has some of the best gold pros-pects in the country. With drilling about to get underway, and with growing interest in Guyana, this company will gain a great deal of investor interest in the coming weeks, which should translate into a rising share price. Positive results from the drill-ing would have a big impact on the valua-tion. Price December 10, 2010: C$0.29 Shares Outstanding: 72 million Shares Fully Diluted: 84 million Market Cap: C$21 million Contact: Investor Relations 604-533-9288 www.shoreham.ca

Last Updated: August 2010-2

Takara Resources (TKK-TSXV)

Takara has two gold projects that were acquired earlier this year, one of which is moving quickly toward production. A preliminary economic assessment is under-way at the same time as the company is conducting an exploration drilling program that has shown that the deposit could be much larger than the market is currently giving it credit for.

The two gold projects are located in



Guyana. That South American nation has exceptional geological potential and is a very favorable place for mine develop-ment. Guyana sits in the middle of the Guiana Shield, a gold-rich greenstone belt that continues into Venezuela. Easier ac-cess to the Venezuela portion of the Greenstone belt saw intense exploration activity going back several decades. As a result, several large gold deposits have been outlined in Venezuela, including the 32 million ounce Las Christinas deposit The Chavez government has made Vene-zuela an unpopular place for mine devel-opment. In sharp contrast, Guyana is a very favorable country for mining compa-nies. The democratically-elected govern-ment is very supportive of mining. That English speaking country offers secure title to mineral rights and favorable taxa-tion. As road development and other in-frastructure improvements open up more of the country, the mining industry is find-ing and expanding gold deposits in Guy-ana.

Takara acquired the gold assets from Vic-toria Gold (VIT-TSXV) after that com-pany acquired StrataGold. Victoria bought StrataGold for its Nevada assets as a com-plement to its own project. They swapped the Guyana gold projects to Takara in re-turn for 21 million shares of Takara, mak-ing it the largest shareholder. That move allowed Victoria to focus on its Nevada projects while retaining a stake in the up-side of Guyana.

Takara’s president and CEO Jennifer Boyle is a lawyer by background, with many years of experience in the organiza-tion and management of exploration com-panies. Chairman John McConnell is a mining engineer and the executive VP of Victoria Gold. Pamela Strand, executive VP of Takara, has 22 years of exploration experience.

StrataGold discovered the Tasawini de-posit and was intent on bringing it to pro-duction quickly. Drilling focused on a couple of areas where they outlined 499,000 ounces of gold, of which 437,000 ounces are classed as an indicated re-source. Work by StrataGold included 110,000 meters of drilling, metallurgical

test work, environmental baseline studies and construction of a permanent camp and airstrip. Roads on the property provide exploration access and tie the project to a barge loading facility on a river 10 km away. That resource is in both the saprolite and the underlying bedrock.

Since taking control of the project a couple of months ago, Takara began work on two aspects of the project in tandem. The first is to complete an economic evaluation of the existing resource. That study is being conducted with a view to ultimately devel-oping a larger project than the present re-source.

In tandem with advancing preliminary engineering work, the company is investi-gating the exploration upside. Numerous targets were identified by the previous operator, but not pursued as they focused on bringing the initial resource area to production. There are seven other defined target areas close to the resource area. There is wide-open potential beyond that for several kilometers along the trend on property now held by Takara.

Field work by Takara geologists and fur-ther interpretation of the results of the prior work has led to an improved geologi-cal understanding of the known deposit and of the district around the deposit. Spe-cifically, they now recognize that the geo-logical model is a shear-hosted quartz car-bonate deposit similar to other gold depos-its in the Guiana Shield. Surface sampling (rocks and soil geochemistry) have identi-fied 30 linear kilometers of prospective shear zone on property held by Takara.

The company recently completed a surface sampling program that used a type of au-ger drill to sample down to about 6 meters below surface. Assays from 1,521 samples outlined several areas with gold minerali-zation in the surface material within a few kilometers of the resource area. Those areas appear similar to the resource area and provide scope for expanding the pre-sent resource.

Those results support management’s belief that the present resource could be ex-panded considerably. In fact, the improved geological understanding and the results of

the sampling suggest that the property held by Takara has large-scale potential, consis-tent with other gold deposits in a similar geological setting.

The present 499,000 ounce resource grades about 1.3 grams per tonne and is located at surface. Metallurgical testing showed good recoveries of gold by simple cyanide leaching. Investors have so far not put much value on a gold deposit that ap-peared to have limited upside. The pre-liminary economic evaluation now under-way will support the economic viability of the present deposit, which should see a re-rating of the value of the company.

Of far greater interest is the strong likeli-hood that more ounces will be outlined in the drilling that will take place over the coming months – perhaps a great deal more ounces. In fact, the project has multi-million ounce scope.

In addition to Tasawini, Takara also ac-quired a 30% interest in a joint venture project located about 40 kilometers to the west of Tasawini. Guyana Goldfields re-cently acquired the majority stake in the project from Newmont. That 300 square kilometer area is road accessible and hosts active alluvial and small scale hard rock mining. Results to date include a deposit with an initial estimate of 285,000 ounces, which remains open to expansion. An-other target produced bonanza gold grades from initial drilling. A further 19 target areas remain to be tested by drilling.

The company has just announced a private placement financing of up to C$8 million at C$0.25 a unit (share and half warrant)

to fund the on-going work in Guyana.

In summary: The valuation of Takara has been held back by the mistaken perception that Tasawini is no more than a half mil-lion ounce deposit. In fact, that project has excellent prospects for growing much lar-ger, potentially a multiple of the initial estimate as high priority exploration tar-gets are tested. Mine planning now under-way considers the premise that the project will have a scope well beyond that initial figure.



Over the next few months, Takara share-holders can expect results of the prelimi-nary economic assessment and will begin to see results of the exploration program on the nearby targets. At the same time, investor appreciation for Guyana will cer-tainly increase as several other companies operating in the country continue to ex-pand and upgrade gold deposits that are already significant.

Price December 10, 2010: C$0.24 Shares Outstanding: 55.2 million Shares Fully Diluted: 55.2 million Market Cap: C$13 million Contact: Investor Relations 647-430-0966 www.takararesources.com Last updated: October 2010-1

Sandspring Resources (SSP-TSXV)

Sandspring is continuing to advance its 6 million ounce Toroparu gold deposit in Guyana. An updated resource estimate in September outlined an indicated resource

of 2.64 million ounces of gold plus an in-ferred resource of 3.42 million ounces. The deposit also contains 478 million pounds of copper. Work is underway on several fronts. A preliminary economic assessment is due for completion during the first quarter of next year. At the same time, drilling is underway to further upgrade the resource within the resource area, and to provide further details for mine planning. The drilling will also test for extensions to the resource area. The company will also be drilling other targets along the geological trend that hosts Toroparu. Several areas where there has been surface mining were tested with geophysics and look similar to the Toroparu area. Based on the success at Toroparu, prospects are reasonably good that one or more of those targets will pro-duce favorable results. The company will also be drill testing other target areas on its district-scale prop-

erty. Surface mining has identified several areas with gold in the surface material Geological and geophysical work has helped to evaluate those areas with the best potential to host gold in the bedrock. Sandspring has achieved a great deal in its first year as a public company. That pro-gress has generated a five-fold return for investors. Importantly, the company is on track to continue to both expand and ad-vance its already substantial gold deposit. There is still scope for enormous upside in the share price as that work continues, with the additional upside potential of new discoveries. The Sandspring history is interesting in its own right, and also useful in understand-ing other exploration companies operating in that region. The Toroparu deposit was operated as an alluvial mining operation for several years. The private owners of the mine developed a 3,000 tonne per day operation that processed the unconsoli-



dated clays and gravels at surface. Explo-ration by the private group demonstrated that the gold at surface was derived from the weathering of the bedrock in situ. That is, the surface material had not been trans-ported. Drilling by the private company outlined a gold resource of 2.3 million ounces. Rec-ognizing the potential for a much larger gold deposit in the bedrock, the owners took the company public to raise financing to further explore the project. Drilling be-neath the surface gold values, guided by modern exploration techniques, quickly expanded that initial resource to the pre-sent 6 million ounce level. Toroparu is in an undeveloped part of Guyana. However, the company has al-ready constructed a road linking the pro-ject to a port on a river, allowing it to bring in equipment and supplies. A mining permit is already in place, based on the 3,000 tonne per day operation. The permit will have to be updated to accommodate a larger operation, but that process will be a great deal faster than permitting a new mine. The company now anticipates get-ting a permit in 2012 and being in full scale operation in 2014. The present share price values Sandspring at $48 per ounce of total gold resource (giving no value to the copper). With 2.64 million of those ounces already at an indi-cated level, that is a low valuation. There is considerable upside potential in that valuation, based on:

• The likelihood that the on-going drilling will upgrade more ounces to indicated category.

• Completion of the preliminary eco-nomic assessment in the next quarter.

• The potential for the present resource to expand with further drilling.

• Discovery potential, as the company explores “look-alike” targets on trend.

The company is well funded to carry out the work to realize that potential, having recently completed a C$51 million offer-ing at C$2.60 a share. In the near term, the Sandspring share price will benefit from the strength in the

gold market and also from the growing recognition that Guyana is a very favor-able place for mine development. Over the coming months, the on-going work should continue to build shareholder value. Price December 10, 2010: C$3.12 Shares Outstanding: 71 million Shares Fully Diluted: 88 million Market Cap: C$221.5 million Contact: Investor Relations 720-854-0104 www.sandspringresources.com Last updated: September 2010-1

Initiating Coverage

Argus Metals Corp. (AML-TSXV)

Argus has an extensive property position

in Canada’s Yukon Territory, an area that

has produced several important gold dis-

coveries over the past couple of years.

The company also has exploration proper-

ties in Guyana, a South American nation

that is rapidly gaining stature as an impor-

tant gold exploration region. In addition to

gold, the Guyana property also has ura-

nium potential.

The core properties in Yukon and Guyana

were acquired last year from Victoria Gold

(VIT-TSXV). That company earlier ac-

quired Stratagold for its Nevada property,

and then dealt the other properties to Ar-

gus and another junior in return for shares.

Argus is headed by Michael Collins, a

bright young geologist who joined the

company last year to oversee the explora-

tion of those two promising projects. Mi-

chael is backed by a strong team of direc-

tors and advisors.

The Hyland gold project is located in the

southeastern portion of the Yukon. The

property is away from the main action in

the central part of the territory, but still

within the prolific Tintina gold belt. Sev-

eral multi-million ounce deposits have

been outlined along that trend that extends

across Yukon and into Alaska.

Limited work on the Hyland property in

the 1980s outlined a small gold deposit

(non-compliant resource of just over

100,000 ounces.) That work consisted of

shallow drilling, with an average depth of

about 40 meters. The objective at that

time was to outline a near-surface oxide

deposit amenable to heap leaching. An-

other heap leach operation had begun pro-

ducing gold in the Yukon and the search

was on for similar deposits.

Recent drilling by Argus has shown that

the gold at surface extends well below the

area that was previously explored. That

work has shown that there are good pros-

pects of outlining a substantial zone of

primary gold mineralization.

The gold is hosted in carbonate rocks con-

centrated along a fault zone. Trenching

returned up to 30 meters at 4.8 grams per

tonne and drilling produced results as high

as 2.6 grams per tonne. Geochemical sam-

pling conducted by Argus has identified

large areas with gold and/or indicator min-

erals for gold.

Atac Resources (ATC-TSXV) made an

important discovery in a similar geological

setting just to the northwest of the Argus

property. That discovery earned Atac a

market value of C$450 million. The Atac

success, and results from work by Argus

led the company to stake an additional 360

square kilometers of property along the

prospective trend.

The company has identified two kilometer

-scale geochemical anomalies that resem-

ble the Hyland zone. Further work on

those areas will be undertaken early in the

field season. Over the winter, the company

will continue to review the information

and improve the geological understanding

of the district, based on results from

Hyland and the Atac results.

The company plans to use a winter road to get equipment and supplies into the project



in anticipation of an active summer pro-

gram.

The Yukon has become a hot area for gold

exploration following on several important

gold discoveries in the past couple of

years. So far, Argus has kept a low profile,

as it quietly secured a large property posi-

tion in the emerging Hyland district.

Looking toward the next field season, Ar-

gus should begin to gain a substantial in-

vestor following. Building on the results

from Hyland, and following up on the

known geochemical anomaly, Argus is

well-positioned to generate positive results

as work get underway.

The Guyana property, known as the Kai-

tuma project, was also acquired from Vic-

toria Gold in return for shares. Guyana

Goldfields outlined 4.6 million ounces and

is now headed toward production. Sand-

spring has so far outlined 6 million ounces

at its Toroparu project.

The Kaituma property, in the northwest

part of Guyana, is approximately 30 km

from the Venezuela border. The property

covers a large intrusive in the midst of a

greenstone belt that runs through that part

of Guyana and into Venezuela. Several

multi-million ounce gold deposits have

been discovered n that region.

The area was first explored for base metals in the 1970s. An airborne geophysical survey conducted

as part of that program turned up a large

area with uranium values. Ground follow-

up confirmed wide-spread uranium miner-

alization, in an area measuring 4 km x 1

km. The geological setting is similar to

Rossing, a multi-hundred million pound

uranium deposit in Namibia that has pro-

duced for a couple of decades.

The Argus property is just 5 km from Port

Kaituma, a town of 3000 people. The

town was established as a river port that

can handle ocean going vessels. A rail line

traverses the Argus property and was used

to transport manganese to Port Kaituma.

Efforts are now underway to restart the

manganese mine, which would revitalize

the infrastructure in that area.

Argus plans to test the Kaituma uranium

project with drilling. In view of the broad

scale of the geological system and the

widespread uranium occurrences, favor-

able drill results would be extremely sig-

nificant.

In addition to the uranium potential, the

western part of the Kaituma concession

hosts widespread gold occurrences and

artisanal mining. The company also plans

to drill the gold targets at the Kaituma

while the drill is on site for the uranium

project.

Argus has just raised C$1.89 million with

which to continue its exploration projects.

In summary: Argus is involved in two im-

portant emerging gold exploration regions.

Increasing investor knowledge of the sig-

nificance of both of those regions and of

the Argus involvement should attract con-

siderable investor attention. Both projects

have had previous work that demonstrates

the potential for large-scale discoveries.

Positive results from the exploration pro-

grams soon to be underway could have a

very significant impact on the share price.

Price December 10, 2010: C$0.16 Shares Outstanding: 22 million Shares Fully Diluted: 37 million Market Cap: C$3.5 million Contact: Investor Relations 604-687-2471 www.argusmetalscorp.com



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Conferences

Below is a list of upcoming conferences I will be speaking or sponsoring. I encourage you to

attend, as it provides an excellent opportunity to meet face to face with

company management.

Vancouver Resource

Investment Conference Vancouver Convention Centre

Vancouver, BC January 23-24, 2011

“Cambridge House International Inc. is a world leader in producing investment

conferences that bring together acclaimed speakers, dynamic emerging public com-

panies and individual and professional investors.”

www.goldshow.ca

PDAC 2011

Metro Toronto Convention Centre

March 6-9, 2011

“The PDAC International Convention,

Tradeshow and Investors

Exchange has become the most

important event in the world of

exploration, bringing together a

wide-range of players involved in the

fields from all over the globe.”

www.pdac.ca

Mines and Money Hong March 22-25, 2011

Hong Kong Convention Centre “This is a spectacular event that serves as a bridge for companies, financiers,

and investors in the mining industry. It is an excellent opportunity for those from different backgrounds to share

profitable investment ideas in a recover-ing market.” www.minesandmoney.com/

asia

Metal Prices - Dec 10, 2010

Gold 1386.2 $/ounce

Silver 28.67 $/ounce

Platinum 1677 $/ounce

Palladium 732 $/ounce

Rhodium 2260 $/ounce

Copper 4.1 $/pound

Nickel 10.82 $/pound

Aluminum 1.02 $/pound

Zinc 1.02 $/pound

Lead 1.07 $/pound

Uranium 42 $/pound

Cobalt 16.29 $/pound

Molybdenum 14.75 $/pound

Tungsten 17.73 $/pound

Tin 11.68 $/pound

Indium 525 $/kilogram

guyana – a golden opportunity - stocks and speculations · 2011. 1. 20. · simple sluicing...

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