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Message: min
aug 09/11
xcelsior reaches 1st Milestone successfully
Shortly after our last article on Excelsior Mining Corp. (TSX-Symbol: MIN) on July 19, the company published the updated NI43-101-resource of its Gunnison deposit within the prolific porphyry copper belt in southern Arizona (USA) respectively 105 km south-east from Tucson and only 2.5 km away from the historic Johnson Mining Camp.
The southern part of the deposit (“South Star”) was not tested during the last drill-program (10,300 m); hence the “inferred”-resource remains unchanged at 0.38 billion pound copper-oxides (62 million t @ 0.30% Cu; Cut-Off-Grade: 0.1% Cu).
At the „North Star“ deposit, the last drill-program resulted in a successful upgrade of the „inferred“-resource (2.86 billion pound copper-oxides) into the “indicated”-category now standing at 3.21 billion pound copper-oxides, whereas another 0.88 billion pound stands at the “inferred”-category (both resources are based on a cut-off-grade of 0.1% Cu). Even at a cut-off-grade of 0.3%, the “North Star” deposit still contains 2.1 billion pound copper-oxides (“indicated”), besides another 0.5 billion pound from the “inferred”-category. This new NI43-101 “North Star”-resource is based on a total of 109 drill holes over 43,000 m.
Since Excelsior plans to put the Gunnison deposit into production using the cost-effective and quickly developable ISR mining method, only the copper-oxide resource is mineable leaving the (smaller) copper-sulphide resource behind.
The ISR mining method has been already used in Arizona numerous times successfully to mine-out copper-oxide deposits cheaply and environment-friendly, such as for example the productive San Manuel Mine (approx. 110 km north-west of Gunnison). Besides Gunnison, the Florence copper-oxide deposit from Curis Resources (a Hunter Dickenson company) is currently being developed towards ISR production, whereas a positive PEA (“Preliminary Economic Assessment”) was already received (capital costs: $240 million; operating costs: $0.68/lb Cu; after-tax NPV: $550 million; copper price: $3/lb; discount rate: 7.5%; output: 77 million lb. Cu per year; life of mine: 19 years). Curis plans the commencement of production in the 3rd quarter 2011.
Since the Gunnison deposit has virtually the same size, grades and strongly fractured ore, we anticipate that Gunnison will soon also be classified as “mineable”, especially against the background that the geologic setting of Gunnison is even more favorable for the ISR mining as the Florence deposit.
Thanks to the recently published “final” Gunnison resource – which was successfully upgraded into the “indicated” category besides expanding the total resource – we anticipate further share-price potential thanks to new institutional investors that predominately buy stocks of companies with “indicated” resources.
Furthermore, we expect shortly the publication of the important hydrological study (2nd milestone). We are confident that it will result with a “positive” conclusion, since management already conducted initial (not official) hydrology studies making management confident of Gunnison being a high-potential ISR mine. We even think that the hydrological setting will be even more advantageous as the Florence deposit. In case of a “positive” hydrological study, the share-price shall appreciate strongly as the highest hurdle towards production will be overjumped successfully.
In August, we expect the publication of the metallurgy study that was commenced in February, whereas initial studies also already indicated that the rock is favorable for ISR.
After receipt and publication of these 3 important milestones (1. resource upgrade; 2. hydrology study; 3. metallurgy study), all results will be summarized by an independent company evaluating the deposit officially and for the first time in terms of a potential mineability. Thus, the PEA may be released as early as September. In case of a “positive” PEA (dependable on those 3 milestones), the probability of developing the Gunnison deposit quickly into an ISR mine has advanced to the “high potential” category.
Technically, a so-called „breakout“ started in end of June when rising above the red triangle leg at $0.55 to >$0.60, whereafter a so-called „classical pullback“ occurred resulting in a “correction” to the (blue-red) triangle apex at approx. $0.43. In early July, another breakout to the upside followed reaching the $0.60-level again. Since no holding above this important level was accomplished, another pullback followed landing at a (blue-red) intersection again yesterday. We anticipate that the currently reached support will hold (sell-signal until the red support currently at $0.36 when breaching this support) and that the final triangle movement (a so-called “thrust”) will soon commence to the upside having the goal of not only transforming the resistance at $0.60 into a new support, but to rise above the high of the triangle ($0.80).
The trading volume at the TSX initiated a breakout as well in early July typically ending the consolidation period by increasing sharply again. We anticipate further above-average trading days that go in hand with rising share-prices. At the bottom of the chart is added the share-price development of Excelsior relatively to the HUI mining index. Here as well, a breakout above the red downward-trend was accomplished being followed by the most recent pullback. We expect the stock to rebound from this red resistance shortly generating an immediate buy-signal (as we then would anticipate the start of a longer-termed period meaning that the MIN-stock will perform better than the HUI-index). Another buy-signal is given in case of arriving and holding at the (blue) support (sell-signal when breaching it).
The MACD-indicator generated a sell-signal recently (as the black curve trades below the red curve), whereas a distinct buy-signal is issued when both curves cross eachother again).
In the research-section of www.rockstone-research.com one can download our previous articles on Excelsior Mining Corp. and other companies as well. With the free and non-binding Newsletter, Rockstone can notify you immediately once new publications have been released.
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