Chat with ES

Spoke with ES this week. Here are some notes from the top of my head:

I asked him did we deliver the FS to Teck: Yes it was delivered Feb 4th.

Does that mean we are over 120 days?: Yes we are over the 120 limit. And he is surprised they are taking this long, (sounded a little frustrated). However, he is hopeful because historically Teck lets you know immediately if they are NOT interested. But Teck is still very interested, constant communications.

Has CUU earned the Liard Shares Interest? : Yes, however he has not pushed for them as discussions are ongoing and some small portion of the Liard Shares language can be a little complicated to interpret legally so it’s better to just wait and see what Teck does.

Are discussions with Teck progressing? : In every negotiation process, there are sometimes daily ups and downs, so it remains a fluid situation. Therefore it is also difficult to report out on the daily discussions as things are always changing, back and forth Q’s & A’s. (forgot to ask if in a blackout)

When will the EA be complete? Set for Q3, and ES was in Vancouver for a few days working on it recently. I asked if Teck would prefer to wait for the EA approval? : Teck is fully aware of all the work CUU does and therefore can decide what to do whenever they are ready, if EA is approved then you have substantially de-risked the property (which means it’ll be worth even more if they are willing to wait and pay more)

Is there a Drilling Plan for 2013? Yes, still working on that. But no need to announce a multi-million dollar drill program until Teck makes their move. Why spend all that money when CUU might not have to. Especially since we have a enourmous “DISTRICT” and he used that word often to describe CUU’s property, it is definitely a DISTRICT. He said going forward ONLY a major would be able to handle this property. It is far too big a project for CUU to move forward or any other small-medium sized company. I got the feeling that CUU wants to be done with SC, there isn’t much more it could do other than continue drilling, which would expand the resource but continue costing more money.

I asked about the short drilling season since it is already July. ES explained he can drill into December if he has to, so no immediate rush to start drilling while Teck mulls things over.

AZ properties: Huge potential there, water is not an issue (and I agree) look at all the multiple mega mines in AZ and NV where each year another goes into production, there are ways to work this out and utilized new leaching techniques. The recent Van Dyke/ SB properties have tremendous potential, especially when looking at neighboring properties... I have done my research on them and I agreed that there could be a chance to find the “source” from where the breccias pipes branch out. ES is more concerned about finding the BIG source rather than pipes (as demonstrated by SC where numerous zones and sources have been found). The grades also look good when looking at neighboring properties. The other great aspect of AZ is there is no contract like at SC, so you develop as you choose rather than try to complete a FS. He said the FS at SC was originally supposed to be $15M. Now look, it has cost many times that amount due to the vast scale. ES seems more excited about AZ because SC had to complete a cumbersome FS, and has to meet the Teck contract agreements (much more freedom).

Overall, I can see why waiting for Teck is the best strategy. Because otherwise CUU will start another drilling season, improve the economics, approve the EA (which we discussed should have little problems due to the non-fish bearing lake and perfect Topography) (plus friendly govt’s elected) but also CUU would need to wait to start new discussions with another Major which could drag out even longer. Makes sense to plough through now and get ‘er done as the whole purpose for CUU was to complete its end of the contract and drop it on Teck’s desk.

Based on the discussion, I think Teck could take a few more months or call tmrw and make a deal. It is crunch time and I think the EA will be completed way before any new drilling gets complete with a new RE. I think the EA process and submission is what will really make Teck make a move on this thing. If that EA gets approved, then shopping for a partner gets much much easier (my interpretation).

Didn’t have much time to write this out properly. I will try to answer other Q’s, but my time is limited this week.