Jan 12
11

Grandich Client Excelsior Mining

Excelsior Flexes its Economic Muscles in Arizona

Building on the even better than expected Preliminary Economic Assessment numbers I mentioned early last month, Excelsior’s Gunnison Copper Project continues to impress with the publication of an Economic Impact Study (EIS) that shows significant positive impact through job creation and government revenue generation.

So… the project appears it can generate lots of jobs and tax revenue for the state – what does this mean to a potential investor or a shareholder?

1. Firstly, this is another demonstration that this is a highly viable project. Based on operating costs of $0.68 per pound, among the lowest in the world, the Gunnison Copper Project continues to demonstrate superior economics. It’s very rare that a junior mining company would talk about the economics of their project but in Excelsior’s case; the economic story IS THE STORY.

1. Secondly, the sheer magnitude of the economic benefits of Excelsior’s project can go a long way to convincing government officials and public leaders that this mine should be permitted in as timely a manner as possible. With the release of these economic numbers, all of the surrounding communities seem to have a vested interest is seeing this project advance to commercial production. I should reiterate here that one of the key attributes for Excelsior is the remoteness of the Gunnison project; there are no communities in the immediate area that could be adversely affected by mining operations – in fact, the only neighbor is an open pit copper mine sitting just over one mile away to the northwest. However, communities such as Benson and Wilcox, each approximately 12 miles from the project, seemingly would derive remarkable economic benefits from Excelsior’s copper mining operations.

The Economic Impact Study, completed by researchers at Arizona State University, reveals that an annual average of 704 new jobs can exist in the State as a direct result of the project. All this increased economic activity is projected to add US$2.35 billion to Arizona’s Gross State Product and add US$214 million to State revenues through taxes and fee collections.

The numbers I have quoted above span the entire 28 year life of the project and assume that Excelsior builds its own acid plant. Although Excelsior fully intends to build its own acid plant, the results of the study, as illustrated in the following two tables, clearly show that no matter what decision Excelsior makes concerning the acid plant, either scenario creates significant positive benefits for the State, as well as Cochise County. Table 1 displays the significant employment benefits that the project could generate. During the project’s 28 year life span, it is forecast to create an average of 704 jobs per year in the “acid plant” scenario and 715 jobs per year in the “base case” (no acid plant) scenario, state-wide. With respect to the annual average of 704 jobs created in the “acid plant” scenario, 131 jobs are direct employment on-site and the remaining 573 are “secondary” jobs created in support of the project or due to the economic benefits the project brings to the State and the County. Thus, every direct job created by Excelsior creates an average of 4 indirect jobs in other sectors of Arizona’s economy. These are numbers that the Arizona government can definitely get behind!!

Table 2 shows that both the State and County can see a significant increase in revenue over the 28 year life span of the project. The model estimates that the Gunnison Copper Project will contribute US$2.4 billion to Arizona’s Gross State Product (GSP) in the “base case” scenario and US$2.35 billion in the “acid plant” scenario. GSP is defined as a state’s contribution to the nation’s Gross Domestic Product (GDP). Cochise County’s GSP is the contribution of Cochise County economic activity to Arizona GSP, and hence to U.S. GDP. With respect to State revenues, in the form of taxes and fee collection, the project will add an additional US$221 million to the State Treasury in the “base case” and US$214 million with an “acid plant”. Cochise County alone will see an average annual increase in its revenues of US$3.2 million in the “base case” scenario and US$3.1 million in the “acid plant” scenario.

These numbers are all based on a 28 year mine life (3 years pre-production, 20 years of production, and 5 years of reclamation and closure) for the project at an annual copper production rate of approximately 85 million pounds, a copper selling price of US$2.50 per pound, a state tax rate of 6.97% and a federal tax rate of 35%.

Table 1. Employment Highlights of the Economic Impact Study for the Gunnison Project.

Source: REMI Model of Arizona and Cochise Co. economies

Table 2. Revenue Highlights of the Economic Impact Study for the Gunnison Project.

Source: REMI Model of Arizona and Cochise Co. economies

Bottom Line

As a person that values his own neck, I don’t make a habit of sticking it out. I’m doing so with Excelsior because I believe in the project and in the management team behind it( I control about 3 million shares). The specifics behind this Economic Impact Study show me that my confidence is well placed.

In addition to a management team with its head screwed on straight, the project itself has solid fundamentals. The Gunnison Copper Project, which includes both the North Star and South Star deposits, currently has a total NI 43-101 indicated resource of 3.21 billion pounds of oxide copper (511 M tons at 0.31% at the North Star deposit) and an inferred resource of 1.26 billion pounds of oxide copper (221 M tons at 0.29%; 159 M tons at North Star and 62 M tons at South Star). And, in my mind, what really elevates this project is that these oxide resources have the potential to be mined using in-situ recovery methods, greatly reducing the financial investment required to begin production and the environmental impact of the operation.

The pieces continue to fall into place for Excelsior and its Gunnison Copper Project and I continue to believe that this could be one of the top stories of 2012 and beyond.

Jan 12
11

Grandich Client Sunridge Gold

No junior resource stock I know of seems more out of whack between fundamentals and share price than Sunridge Gold. Most exploration and mining people would love to have these projects in various stages of development. There’s no doubt the location of the projects have had a direct impact on the disparity and even Nevsun Resources remains very undervalued despite being a cash cow.

I own over 2 million shares of SGC as of today. One of these days please God, a serious re-rating shall occur. Here’s to me living long enough to witness it!

Jan 12
11

Grandich Client Zone Resources – Interview With The CEO

Peter Grandich: How would best describe Zone Resources Inc.?

Charles Desjardins: Zone Resources is a mineral exploration company that has assembled an extensive iron property portfolio in the Labrador Trough in northern Quebec. The properties amount to approximately 36,000 hectares and have produced significant historical results, including 42.9% iron over 60.05 metres on the Moore-Ross property and 35.77% iron over 243 metres at our Girard Lake property. As a relative newcomer to the area, it is important to note that Zone is also one of the few remaining companies in the Labrador Trough without major partners.

Peter Grandich: Could you tell us about your main properties?

Charles Desjardins: Our land package consists of three major properties: Girard Iron Ore Property (27,200 hectares), Moore-Ross Iron Ore Property (6,900 hectares), and Knob Hill Iron Ore Property (2,000 hectares).

Peter Grandich: Can you speak about your management team and their ability to move this Project forward?

Charles Desjardins: The most prominent members of our management team include Mike Magrum, Dr. Colin Bowdidge, Peter Dickie, and Doug McFaul.
Mr. Magrum has over 30 years of experience in designing and implementing exploration programs worldwide. He is a director of a number of public companies and was an original director of Seabridge Gold, which acquired a major gold property portfolio containing a multi-million ounce gold resource. He is a graduate of the famed Haileybury School of Mines and the University of Alaska. It is worth noting that Mr. Magrum, the head technical person in the company, subscribed for 2,000,000 units in the last financing.

Dr. Colin Bowdidge is the vice-president of exploration. He has a degree in geology and mineralogy from the University of Cambridge and a Ph.D. in geology from the University of Edinburgh. He has over 35 years of practical experience in mineral exploration, discovery and mine development. Based in Canada, Dr. Bowdidge has also handled projects in Europe, Latin America, Africa and the United States. He has managed and executed mineral exploration programs for uranium, gold, silver, base metals, iron ore and industrial minerals.

Mr. Dickie brings over 20 years of business experience with both public and private companies holding numerous senior management positions. A graduate of both the University of British Columbia, and the University of Victoria (B.C.), his background includes four years in the Securities industry with Jones, Gable & Co. Currently, he sits on the board of a total of six public companies and four others in a fiscal and management advisory capacity.

Mr. McFaul has 17 years experience with companies involved in the public markets. He has acted as a director and held senior management positions with various public companies. Mr. McFaul completed the Canadian Securities Course in 1994. He also obtained a degree in finance from the University of Alaska in 1989.

Peter Grandich: Why Quebec?

Charles Desjardins: Quebec, and in particular northern Quebec, is alluring simply because much of this area has yet to be extensively explored, let alone developed. The Quebec provincial government has recently put together an $80 billion plan (“Plan Nord”) to develop this area with infrastructure and investment in mineral exploration. This makes it extremely appealing for smaller exploration companies, particularly Canadian exploration companies, to invest their money in the province and a region with such amazing untapped potential.

Peter Grandich: What are your main challenges going forward and how do you plan to fund your plans going forward?

Charles Desjardins: In northern Quebec, one of the major challenges is a transportation network. This is an issue that is currently being addressed by the Quebec provincial government through Plan Nord, an $80 billion infrastructure and investment plan for northern Quebec that will unfold over the next 25 years.

Zone specifically, will be concentrating on raising capital in the financial markets to fund its exploration programs.

Peter Grandich: Who are you competing with?

Charles Desjardins: The direct competitors for Zone Resources are those established in the Labrador Trough already, namely: New Millennium Capital Corp./Tata Steel Corp.; Adriana Resources/Wuhan Iron and Steel Company; Labrador Iron Mines; Alderon Iron Ore and the company that is perhaps most comparable to Zone — Cap-ex Ventures Ltd. The interesting thing about this region is that although Zone is competing with these companies for the resources in the area, we all have a mutual interest in the continued success of the region as a whole. The infrastructure proposed by the provincial government, along with the investment by foreign Multi-National Corporations (Tata, Wuhan etc.) will only increase the value of the area and the companies invested in it in the long term. It will require the critical mass of all of the companies in the Labrador Trough to justify the expenditures in Plan Nord.

Peter Grandich: Some have commented that your grade is substantially lower than that of Cap-Ex. Can you explain why this should not have a bearing on the development of your Project?

Charles Desjardins: The two types of iron deposits found in the Labrador Trough are the smaller DSO (hematite) deposits grading more than 60% iron and the larger magnetite deposits grading 29-35% iron. The larger magnetite deposits have the greater potential to be a stand alone project, supporting its own transportation infrastructure. Just like Cap-Ex, Zone has the potential to host both types of deposits. Zone made the decision to explore for magnetite deposits first.

Peter Grandich: What would you like your shareholder and the investment community to take away from this interview?

Charles Desjardins: As mentioned earlier, Zone is a relative newcomer to this emerging area. Considering Zone has assembled an extensive iron property portfolio to date, combined with some very encouraging initial drill results, we believe the company offers the investment community significant upside potential.