Howard Katz, CEO of Tamaka Gold Corp. (PRIVATE) is James West’s guest on Midas Letter Money today. Howard enlightens James on the company’s million ounce + Goldlund Project in Northwestern Ontario, and its plans to go public in 2012.

The Goldlund Proejct is a 22,000 hectare property covering over 30 kilometres in strike, including the Goldlund deposit which hosts a 43-101 compliant resource of over a million ounces gold at a cut-off of 0.5 grams per tonne gold. Exploration is ongoing, and the company anticipates listing on a major exchange in the second half of 2012.

TRANSCRIPT:

James West: Hi I’m James West. This is Midas Letter Money. My next guest is developing a gold project in Northwestern Ontario. It’s in a company that is not yet public but is going to be very soon. Howard Katz is the President and CEO of Tamaka Gold Corp. Howard, thank you for joining us.

Howard Katz: Thank you for having me.

James West: Howard, how is it that a project in Northwestern Ontario in your own backyard gets to a million ounces and is still private?

Howard Katz: Very good question. We had a significant private investor who invested about $15 million into the company over the last several years. And by doing so, I was able to take a substantial project and grow it while remaining private. It was a significant investment by a committed shareholder. And so by doing so, he created a project that has a million ounces today and has uncovered a whole bunch of potential to make this substantially larger in the near term.

James West: So you’ve got to go public strategy in place.

Howard Katz: Yup.

James West: You’ve got cash in the bank.

Howard Katz: Yup. We have it closed to $10 million and we’re well capitalized. Since I joined the company in June of last year, I did a couple of institutional raises, raised approximately $18 million and from a combination of institutions and high net worth individuals and so we’re strongly positioned and ready to go after the market.

James West: Okay, so you call this the Goldlund Property and it’s exactly where?

Howard Katz: It’s situated just on the same green-stone belt as Rainy River so that’s how I usually orientate people to understand the project. We’re on the same green-stone belt as Rainy River and it’s significant and that we have the same bulk tonnage potential as Rainy River so that’s how I like to sort of position our company in investor’s minds.

James West: Okay. So I’d looked at some of your data and it looks like you’re sitting within up to 30 km trend up there.

Howard Katz: Yeah, it’s quite a large land package that we’ve mast. As you know we are private. And because we were, we didn’t have to advertise some of our staking operations. And so by doing so, we were able to really accumulate a very large land position, something that really can’t be recreated today and so we have about 270 square kilometers in total and you’re right, we have a strike of about 30 kilometers from tip to tip.

James West: Okay. Tell us a bit about the grade.

Howard Katz: Grade is good for an open pit. We have several classifications. We have an MNI(ph) of about 365,000 ounces grading at just over 1.7 grams per ton and the balance is about 650,000 ounces are grading at just over a gram per ton. These are good open pit grades.

James West: Sure. And does it start in your surface?

Howard Katz: Yes, it starts from surface and continues down.

James West: Okay. Tell us a bit about infrastructure in the area?

Howard Katz: Infrastructure is excellent. I mean, it’s actually beyond excellence. We literally have two airports, commercial airports that flank our property. We could fly from Toronto and be at that airport within three hours.

From the airport, we could take a half hours drive and literally be on our project via public highway. The infrastructure, the access is fantastic. There is a power lines that are just about 10 kilometers away and we have two railway lines that also are fairly close by. So, the infrastructure is about as good as it can possibly get.

James West: Okay. So tell us a bit about your Board of Directors. I see some rather familiar faces there.

Howard Katz: Yeah, we have a very strong board and we’re really pleased to have. The founder Frank Zoebelein is our Chairman. We have also a very experienced board coming on as we go public. We have Ken Stowe, who is going to be the Lead Director. Ken was most recently the President and CEO of Northgate Minerals. They were acquired by AuRico Gold for $1.6 billion and these were based off for the projects that can really develop under his stewardship.

We also have Farokh Hakimi. Farokh was formally the CFO for Inco and he is becoming on to our board as the Chair of our Audit Committee so we’re going to have a very strong corporate governments there. As well as we also have a very well known mining executive Abraham Drost joining us.

And Abraham is just highly regarded in the exploration world and is a good friend and a former colleague in mining so we’re very pleased to have him on board as well because he’s created a lot of shareholder value for junior export host like ours.

James West: Okay, what about yourself?

Howard Katz: Myself. Formerly I’m an investment banker. I was been fortunate to have run the mining practice at a large boutique here with the National Footprint in Canada. I’ve really authored a lot of transactions in the — you call it the small to midcap space and really specialized in creating value for shareholders, some taking — we call it $15 million market cut companies and transforming them into the three to five hundred million mid cap companies and have taken them beyond in fact.

00:05:07

So I highly specialize in the mining space and I’m really focused on a specific market segment. And so, what I decided to do was take the skill sets I had acquired as an investment banker and really transplanting as the CEO of Tamaka.

James West: Okay. Well, looking forward to the IPO.

Howard Katz: Thank you.

James West: Thank you for joining us today, Howard.

Howard Katz: Thank you for having me.

James West: If you’d like to learn more about Tamaka Gold, you can visit them online at tamakagold.com. That’s T-A-M-A-K-Agold.com. And if you’d like to learn more about companies like Tamaka Gold before they go public, visit midasletter.com.

I’m James West and this is Midas Letter Money.

00:05:57
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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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Aroway Energy (TSX.V:ARW) (OTCQX:ARWJF) (Frankfurt: A7X1) CEO Chris Cooper is the guest on Midas Letter Money in this segment shot in Vancouver, BC. Cooper describes how Aroway’s goal of achieving production of 2,000 barrels of oil per day is right on track. The company has met or exceeded its stated milestones virtually every step of the way.

Aroway is focused on the Peace Arch basin of north central Alberta, and is surrounded on all sides by much larger intermediate and major producers such as Birchcliff Energy Ltd. (TSX:BIR), Canadian Natural Resources (TSX:CNQ), Crescent Point Energy (TSX:CPG) and Shell Canada (NYSE:RDSA). Aroway expects to exit 2012 with production of at least 1,200 BOE/d.

Transcript of Interview:

James West: Hi I’m James West this is my Midas Letter Money. Today, we’re going to look at oil and gas company that’s producing oil in the piece arch region of Alberta. My guest today is Chris Cooper and he’s the CEO of Aroway Energy Inc Trades on the TSX Venture Exchange under the symbol ARW. Chris, thank you for coming today.

Chris Cooper: Thank you.

James West: Chris, you’ve finished 2011 with 650 barrels per day exit production. Tell us a bit about 2011 and what we’re going to see in 2012.

Chris Cooper: In 2011, we communicated to the market. We wanted to exit at 600 BOE a day. We exited at 670 BOE a day, so we really pride ourselves on making targets that we can meet and then actually we surpassed these one, so we’re very proud of that. For 2012, our 2012 guidance is to exit 1200 barrels a day. We are on target for that right now. It’s still very early in the year, so we’re pretty confident that we will meet and hopefully we’ll be able to exceed that target again.

James West: Okay, you are 50-50 joint ventured with another partner and if I read correctly your partner actually controls all of the distribution on the land where you’re drilling as well as is the underlying owner of all of the oil and gas concessions upon what you’re drilling, correct?

Chris Cooper: Partially correct, yes. So, we are the non-operating partner in the joint venture. Our partner when we’ve first got involved in the joint venture partnership, they had access to 40 sections of land which they owned. Since then, together as the two of us have acquired — and we built that land position up to 101 sections, so more than 50% of the lands that we have accessed to, we’re 50-50 partners. So, we’ve really grown from September 2010, we had a four-section farm and now we have accessed to over 101 sections.

James West: So, a 101 sections that’s like 68,000 acres?

Chris Cooper: It’s around 64,000 acres, yes.

James West: Twenty nine thousand hectares. Now, how much of that are you going to drill in 2012?

Chris Cooper: For 2012 program, we anticipate drilling nine wells, mostly targeting the Leduc Formation which is a pinnacle reef that we’ve been targeting in the past. Lot of those reefs have a lot of oil in them or oil focus company. So, our 3D seismic and the new 3D seismic that we’re currently shooting right now should identify a number more locations and prospects for us to continue to drill.

James West: Okay so let’s touch on the fact that you’re oil-focused right now, because that’s interesting. We’ve got gas prices that are falling, oil prices are rising. What percentage of your exit production was oil?

Chris Cooper: Seventy five percent of our 2011 exit production was oil.

James West: Okay and the rest was gas?

Chris Cooper: The rest was gas, yes.

James West: Interesting. Now, you’re in a prolific region, as I recall your neighbor is Birchcliff Energy directly to the west?

Chris Cooper: Yes.

James West: And they were the recipient of two unsolicited offers for a takeout. They haven’t reached any conclusion of that. We don’t how much the offers were for, but how much oil and gas were those guys producing?

Chris Cooper: So, Birchcliff is — I believed they’re producing a little over 17,000 barrels a day. I think they want to exit 2012 at 19,000. I’m not sure. But yeah, they were approached several months ago. They had two unsolicited offers and therefore put themselves up for sale. The market has yet to hear what’s going on there, but Birchcliff is just one of the majors that surround us. We’re surrounded by Canadian Natural Resources, Crescent Point Energy, Shell Canada, so we’re in a very, very hot area right now and surrounded by several major companies.

James West: So, in fact all of the companies that you’ve just mentioned there are well in access of a billion dollar market cap?

Chris Cooper: Yes.

James West: And that they are all contiguous with the border of the ground that you’re working right now.

Chris Cooper: That’s correct, yes.

James West: So, theoretically we could see a lot of interest should you developed a lot of 3D seismic targets as well as some producing wells?

Chris Cooper: Yes, so we’ve had some good production. We’re drilling a number of bigger wells. We’ve undertaken a big seismic program of 55 square kilometers. We expect to generate about another 30 to 40 Leduc prospects through that seismic and it’s just part of our strategy for the end of the day in one of these bigger companies to hopefully buy us out.

James West: Sure. Now, you closed the year out. You made two cents per share?

Chris Cooper: Yes.

James West: So, that indicates you’re cash flow positive?

Chris Cooper: Yes. We are Q1. Numbers came out in December and we did just around 3.4 million in revenue. We had a net income of just under 700,000 and earned 2 cents a share.

James West: Okay, so you don’t need to raise anymore money at this point?

Chris Cooper: We don’t need to raise anymore money.

00:05:00

Our last financing was in December 2010. We raised $5 million and we had a number of share purchase warrants associated with that financing which all we’re exercised in December 2011. So the cash that we generated from our warrants along with our monthly cash flow and our bank line with 4.5 million, we have enough money to proceed and drill right through our 2012 drilling campaigns.

James West: In 2012, what are the investors got to look forward to that might involved themselves with their way at this point?

Chris Cooper: Well in 2012, we have — again, we have nine wells that we planned on drilling. We’re going to be processing our 3D seismic that we’re shooting right now. I think there’s still a lot of growth for the company, a lot of growth in the stock right now. We’re trading around 72,000 of flowing barrel. I think there’s been seven transactions in 2012 thus far, at an average of over $82,000 of flowing barrels, so I think there’s still lots of growth for us. Again, we’re oil-focused so I think we have — there’s a lot of opportunity for us to continue to grow.

James West: Okay. So Chris let me ask you, Is this your strategy to continue as a producer, or are you looking for the big takeout?

Chris Cooper: We’re looking for a takeout. Along with our joint venture partner, we control a 101 sections of land. We’re surrounded by major companies. Our joint venture partner owns all the infrastructure in the area. If you’ve taken into account our production, 670 BOE a day, you have to double that because we’re only 50% of the production as joint venture partners, the other 50%. We’re at level right now were companies are starting to take a peak at us, so I think maybe after our summer drill program hopefully there’ll a lot more people looking.

James West: So, what’s the kind of production exit wise in total from your land position that would trigger the kind of a takeout offer?

Chris Cooper: That’s tough. It’s hard to predict what companies are looking for. I just look at our situation is very unique because we have very strong production. We’re oil-focused and we have all the infrastructure there. For lack of a better turn, we’re a turn key acquisition. Somebody can walk right in and take over and everything is there. They don’t have to build their own infrastructure where everything’s built for them.

James West: Interesting. So, you’ve got nine wells being drilled. You don’t need to raise any money, grow in production, oil-focused, huge land positions, surrounded by majors. Chris, I want to leave it there and that sounds really interesting. We’re going to be watching with interest. I’d like to thank you for joining us today.

Chris Cooper: Thank you.

James West: If you’d like to learn more about Aroway Energy, feel free to visit them on the web at arowayenergy.com. That’s A-R-O-W-A-Y energy.com. And if you’d like to learn more about companies like Aroway at the earliest part of the value creation curve, visit Midasletter.com. I’m James West and this is Midas Letter Money.

00:07:43

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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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Standard Graphite Corp. CEO (TSX.V:SGH) Chris Bogart talks about the forces driving the graphite price higher in this interview with host James West. Standard has a portfolio of projects throughout Canada and is fast-tracking exploration with the objective of becoming a near-term producer of graphite.

Other graphite companies in Canada are earlier stage, and in many cases, much more prospective for graphite than Standard Graphite, which makes it one of the most intriguing companies in this rapidly evolving space. There are many uses for graphite, from lithium ion batteries to next-generation pebble bed reactors.

TRANSCRIPT:
James West: Hi, I am James West. This is Midas Letter Money and my guest today is Chris Bogart who is the President and CEO of a new company called Standard Graphite Corporation, it trades under the symbol SGH on the TSX Venture Exchange. Chris thanks for joining us.

Chris Bogart: Thanks for having me James.

James West: Now Chris, Graphite, that’s a relatively a new metal in the Lexicon of resource inventors around the world. What is the big deal with graphite?

Chris Bogart: Graphite we believe will be the next big strategic metal and I’m sure your audience is well aware of the strategic metals lithium. Rear earths have had the big run over the last five years.

James West: So basically, they go up and straight down again?

Chris Bogart: Not quite. We believe the fundamentals behind graphite are equally important in the demand, but the ability for the market to supply that demand is extremely limited. We believe there’s a long-term price appreciation happening in graphite based on this extreme supply demand scenario.

James West: Okay. So, demand is rising, supply is finite. Where does all the supply come from now?

Chris Bogart: So, supply predominantly is China, but 70% of the world’s graphite comes from China. The key to that number is a few things. Number one, flake graphite which is a very specific type of graphite, China does not have in large quantities. The growing demand, world demand in graphite is this very precious flake graphite that is not presently in abundance of quality in general.

James West: And so, what’s driving the demand for this big flake graphite?

Chris Bogart: So, two things. Number one, you’ve got traditional demand and look at metals in general. You’ve had a big commodity boom in the metals, nickel, copper, gold, pick your metal. Graphite has not had that run within this commodity super cycle and that’s traditional demand. Demand from China, India, Russia, Brazil, typical demand drivers.

Flake graphite in particular then is on top of that and that’s the technology, great graphite, the flake demand of fuels, fuel cells, nuclear reactors, wind power. And most importantly, we believe is the lithium ion battery in which graphite has 20 to 30 times more graphite by weight than a lithium in a lithium battery.

James West: So, graphite is more important to a lithium ion battery than lithium.

Chris Bogart: It should be a graphite lithium battery.

James West: Well, we have to invent something along those lines. So, let’s talk a bit about where you’re going to find your graphite. You’ve got some mineral claims in Quebec as well in Ontario. What’s drawn you to either of those and which one is your flagship?

Chris Bogart: So, we are in an area called the Grenville Province of Canada and Canada is well-known as the world’s best graphite exploration country, predominantly because it is a host to numerous flake graphite deposits and we are in that region.

So Quebec, we have nine properties currently, all within these very prolific districts. And we have three very large quality flake graphite projects in Ontario, which is again surrounded by either well-known graphite deposits or producing assets.

James West: So then, you’ve already done some drilling and metallurgy on your deposits at this point?

Chris Bogart: I’m happy to report, not yet but coming soon. So, we have acquired these projects based on the historic work that’s done on them. And we believe that our geologic team’s pedigree of success in the past which they have founded significant graphite deposits.

James West: Okay.

Chris Bogart: The opportunity within our current host of property is going to unlock a lot of value for investors.

James West: So, there is a historical non-43-101 compliant work has been done to identify these deposits as perspective for graphite deposits of economic grade?

Chris Bogart: Absolutely.

James West: But at this point, no drilling and early stage ground work, geophysics?

Chris Bogart: We have trenching done, ground sampling completed. We have historic drilling on some of our properties and we have just commenced an electromagnetic survey on all our properties in Quebec and Ontario. The Ontario projects have been completed and we’re expecting Quebec to be done within the next 30 to 45 days.

James West: Okay. So, let’s talk about now the next 12 months, 24 months going out. What would compel an investor to participate in standard graphite at this point and if they did, what do they get to look forward to?

Chris Bogart: So, I think the compelling reason is if you love the graphite sector, you’re looking for a project and a team that can deliver on successfully exploration results. We have very aggressive exploration strategy plan for 2012. We have already begun the implementation of it and in particular graphite, just by the nature of its very properties which is extremely conductive.

The projects are fairly homogenous in nature, so our ability to turn those projects into a developmental style project within the next 12 months is very real and very achievable.

James West: Okay. So, you’ve got multiple projects, electromagnetic surveys going on.

Chris Bogart: Correct.

James West: You’re going to start drilling at some point in 2012.

Chris Bogart: Our target plan is to start drilling in test targets on five to six of our best targets within the early part of the summer. Pick a flagship asset whichever the project has the best result and start a developmental aggressive developmental program by September of 2012.

James West: And cash in the bank right now?

Chris Bogart: We just raised $1.5 million. So, we’re currently at $1.7 million in the bank and we will need to go back to market at some point this year to fund an aggressive drill program.

James West: Okay. Well, lots to look forward to. Chris, we’re going to leave it at that. Thanks for joining us today.

Chris Bogart: James thanks for having me.

James West: If you like to learn more about Standard Graphite, go and visit them on the web at www.standardgraphite.com and if you want to learn more about early stage opportunities like Standard Graphite, visit www.midasletter.com. I’m James West. This is Midas Letter Money.

00:06:00
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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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Western Pacific Resources Corp (TSX.V:WRP) (OTCBB: WRPSF) CEO Warwick Smith discusses the merits of the company’s various projects in Idaho and Nevada in this interview with James West on Midas Letter Money. Western Pacific is drilling on the project and has seen recent success from drilling, such as 12.2m of 1.37 grams per tonne gold at Mineral Gulch, including 7.6m of 1.88 grams per tonne gold.

A recent magnetic survey returned encouraging results.

“This survey is the first of its kind, in scope and magnitude, to be performed in the Mineral Gulch area. It substantiates and justifies the additional geochemical and structural data generated by Western Pacific. We are highly encouraged by the final products,” stated Eric Saderholm, Western Pacific President. “We hoped that the old leach pad material and pits would have unique magnetic “signatures” that we could use to identify other altered and prospective targets and they certainly do. The pits and leach pad show rock with strong magnetic “depletion” interpreted to be related to emplacement of the gold systems. The most exciting thing is how large these areas are within the land package and how far out they extend from past mining activity. This magnetic survey extends these “depletion signatures” approximately 2500 meters south of the E Pit, 2500 meters SW of the C/D Pit and 1000 meters northeast of the A Pit, clearly highlighting the important northeast and northwest-striking faults. This opens up a very large area for additional exploration and potential discovery.”

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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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Sprott Inc. (TSX:SII) Chairman Eric Sprott talks with James West, host of Midas Letter Money, about the European debt crisis, credit default swaps, and how its bullish for precious metals going forward.

Eric articulates succinctly the process whereby major institutions abuse the futures markets for profit, and how the regulatory process in the United States has failed to enforce an equitable and transparent marketplace.

INTERVIEW TRANSCRIPT:

James West: Hi, I’m James West. This is Midas Letter Money. My guest today is Eric Sprott. He’s the Chairman of Sprott Inc. Eric, thank you for joining us today.

Eric Sprott: James, I’m glad to be here.

James West: Eric, let’s talk first a bit about the situation you’re up and how it’s affecting markets. What do you see happening?

Eric Sprott: Well, it’s very difficult to know exactly what’s going to happen. We have various choices here that the agreement with the Greek lenders may not go through. If it doesn’t go through, I think the big question is, does the International Swap Dealers call it a default? If they call it a default, then you’ll start the whole domino effect of — well okay, now, Greece has gone down. Who’s next? I suspect the bond vigilantes who will go after Portugal or Spain something like that next because they sort of sense that there’s a weakness.

If the Swap Dealers says it’s not a default even though 99.9% of the people in the world know it’s a default, then you have a very different outcome because all the credit-defaults swaps that are now withstanding — everyone questions their merit. You know, you’re supposed to buy these to ensure against default when you lose 70% on the dollar, you’re supposed to recover it through the credit-default swap.

James West: Sure. Do they have the money though? That’s the question.

Eric Sprott: Do they have the money. So, if they say it’s not a default then all of a sudden you’ve got credit-default swaps on Italian paper, Spanish paper, what do those guys do? That could be more catastrophic than a default, quite frankly.

James West: Okay. So now in terms of the equities markets that is primarily responsible for the weakness proceeding recently?

Eric Sprott: I think so. I think the fact that it looks like there is resistance to this deal, the Greek deal, there’s enough people that can block it, that there’s a suspicion that it’s not going to go through and the evidence comes out. Looking at the Spanish Credit-Default Swaps which have gone up to something like 76 hitting a new high which means people are putting value on those credit-default swaps, i.e. they think there’s going to be a default. So that’s what’s I think concerning about it. The thing we’re all not assertive is what happens out of this. What spirals into this? What are all the unintended consequences of the default?

James West: Sure. Do you think the general situation should be bullish for precious metals?

Eric Sprott: Well of course it should be. I mean reading everyday that the world, the financial world does whatever it’s doing is really more and more beneficial to precious metals all the time, notwithstanding the fact that it comes down from time to time but they can continue all the basement, the government programs, the central bank interference, all of it is positive for precious metals.

James West: So how do you explain $100 takedown in the price of gold in a phase of such bullish news for gold?

Eric Sprott: Well typically, gold and silver are not allowed to react as they should to events that go on. So that was the day of the LTRO $750 billion injection into the European banking system.

When you look at what transpired that day, for example, in the silver market, within a space of an hour, there are 225 million ounces of paper silver that were sold and as you point it out to your viewers, there’s a big difference in physical and paper.

Two hundred and twenty-five million ounces would represent about 1 quarter of a year’s production of silver and it was sold in one hour and that determines the price of silver. Unfortunately, it’s not really relevant to the physical market but it takes a little while to digest that sort of thing and I think there’s — I happen to be one of those people that believe that the precious metals are manipulated. Even through the LTRO really should have been positive for gold because there are just continual debates about the currencies. It gets knocked down that day and kind of sets the precious metal guys back a notch.

James West: Okay. Let’s zero in on that. You asked all our interest in the mainstream American financial press predominantly categorized the idea that the gold market is manipulated, the future’s market as conspiracy theory. How do you address that?

Eric Sprott: Well, I mean I just look at the actual data. Now for example, when silver was at 4950. We traded a billion ounces of silver those days in the paper markets which there is no relationship to the physical market. What are these people doing? Who’s trading a billion ounces? It has nothing to do with somebody who says, “I’m going to deliver you some silver.” It’s just people abusing a paper market, knows what deep pockets, deep financial pockets can affect the price.

James West: So, why don’t you explain exactly how that happens for example, first of all, what motivates a financial entity to manipulate gold and silver and exactly what are the mechanics of that process?

Eric Sprott: All right, okay. It is easier to explain in the silver market because in the silver market, when we went from $20 to $50, there were some big financial participants who are short silver. They were probably short 500 million ounce of silver. Price of silver goes up to $30 or down 15 billion, they’re down 15 billion, silver is about to break out. If it ever breaks to 50, how much are we going to be down then? So why don’t we organize it, we’ll get it to go down. So as you may remember back in the spring of last year, on a Sunday night, 9:30 Eastern time, the price of silver falls $6 in 13 minutes.

00:05:11

Then in the next eight trading days, the CME raises the margins on silver. So that the guy who was, let’s say hedge fund who is long in million ounces of silver going into it, he had to put up something like a million and a half dollars. Two weeks later, I had to put up $17.5 million to maintain this position. Well, nobody is going to do that, okay, so they’re forced to sell. Money can make that happen.

James West: Sure. Would you say that this process is facilitated by a breakdown in the regulatory process that permits this or would you even go so far as to say that the regulators are in collusion with the financial entities that run this enterprise? What do you think about that?

Eric Sprott: Well, my view would be this, how would the Chicago Mercantile Exchange explain that we need to trade a billion ounces of silver in a day when the total annual production is 900 million? I mean there must be people trading it who have no vested interest in the physical product of silver.

They care about the paper product of silver. There’s been an ongoing investigations of the silver manipulation issue or I know they are not aware, there’s been lawsuits filing as J.P. Morgan and HSBC accusing them of manipulating the price of silver down in 2008. It’s in the public records anybody can go and view that lawsuit.

There has been an ongoing investigation at the CME which is now in its fourth year, about ongoing manipulation of silver without any result. So, a lot of people would speculate that the CME has been laggard because the guys who run the CME tend to be the dealers. It’s almost like the example of the International Swaps Dealers are so shaking, deciding no default on grace(ph). Well those are the banks who are ready to credit-default swaps.

James West: True.

Eric Sprott: So as a group they agree it was not a default. Well, it’s a bias.

James West: So how can we advocate for the accumulation of gold and silver as reserve assets when these markets are arbitrarily manipulated for somebody else’s program. I mean, how can you tell somebody, “This is a safe investment,” when you’ve got these manipulators driving the price back and forth?

Eric Sprott: Well, I always look at the physical supply and demand for gold and silver. If I use the silver example from 2005 to 2010, I can identify about seven sources of change in demand and supply that add up to about a net positive change in demand of 380 million in a 900 million ounce market.

I keep thinking, “How do you inject an extra 380 million of purchases in there and not have the price go crazy?” But it has gone crazy as you know, I mean, having gone to $49.50 was a pretty good move for silver. I think ultimately the physical buyers are going to win the day. Someday, one of those people who short the paper is going to get a call for delivery. By the way, there are a lot of calls for delivery today on the CME. Everyday, we get calls for silver which is very unusual. I suspect that someday the physical buyers will win the day.

James West: Sure. Okay, now let’s talk a bit about the U.S. dollar and the quantity of U.S. dollars. Surely as you measure an ounce of gold in U.S. dollars in an increasing quantity of U.S. dollars dictates a higher price for gold. So where does this end for the United States? In Europe and in Greece we’re seeing a default, technically or philosophically, whichever it is. But for the United States it seems they are able to perpetuate the idea of debt without any sort of reconciliation. Where is the reconciliation inflection point?

Eric Sprott: Well, essentially you’re looking at Greece, and I always say that people would just imagine the year, a Greek citizen who has a fair amount of money in the bank. What would you be doing with your money? I’m sure that the good news is nobody’s going to leave their money in a Greek bank. You have so many other choices, move your Euros anywhere else or change them to dollars and move them anywhere else and all the data supports, that’s exactly what’s happening.

We so far, have been able to tone down the fear of U.S. banks having financial problems. We did it by having TARPs and TALF and QE1s and QE2s in various unlimited lending against a questionable collateral in the banking system. I’ve always been of the belief that the banking system all over the world is way too levered and it takes a very little decline in asset values before that capital is gone.

I think the reason they brought out the LTRO on November 30 — I guess, it was October 29th or 30th when the G6 banks that will give unlimited loan, is because banks were going to go down, because the deposits were leaving. There’s only one reason that you need the LTRO. Why did banks need $750 billion? I mean, the bank only needs money for one reason, somebody’s asking for his money back.

00:10:06

Because if you just left it the way it was, buying the bank’s got us loan outstanding, he’s generating interest. He doesn’t need money. He doesn’t have to make another loan. But the fact is the deposits were leaving and the bondholders who own the bank bonds had some redemptions coming up. But where are we going to get the money without selling an asset into the market and that’s I think — this not allowing a liquidity event is really what the LTRO is all about. Because if the banks had to sell their sovereign bonds or their domestic stocks or whatever, I think it would bring chaos in the financial market.

James West: Okay. Eric, fascinating conversation as usual. Thank you for joining us today.

Eric Sprott: James, my pleasure.

James West: If you like to learn more about Sprott, visit sprott.com and if you’d like to learn more about companies like Sprott, visit midasletter.com. I’m James West, this is Midas Letter Money.

00:11:04

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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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Avino Silver and Gold Mines’ (NYSE AMEX:ASM) (TSX.V:ASM) CEO David Wolfin is the guest on this Midas Letter Money interview from the Toronto studios. David talks about the company’s re-activation of one of Mexico’s oldest silver mines, and the company’s strategy for becoming one of the few multi-million ounce pure silver producers in the world.

Avino continues to expand resources with ongoing definition drilling, intersecting veins with assays such as 76 grams per tonne silver over 30 metres, and 100 grams per tonne silver over 24.65 grams per tonne silver. Gold and copper credits improve the overall economics of the operation.

INTERVIEW TRANSCRIPT:

James West: Hi, I’m James West. This is Midas Letter Money. And my next guest is producing silver at one of the oldest silver mines in all of Mexico. David Wolfin is President and CEO of Avino Silver & Gold Mines, trades on the NYSE and the TSX Venture under the symbol ASM. David, thank you for joining us.

David Wolfin: Thank you for having me.

James West: David, this mine has been in production since 1515, you were telling us.

David Wolfin: They found it in 1558. It was the first mine discovered in Durango. Francisco de Ibarra from Cortes’ Army found it.

James West: Is that right?

David Wolfin: Yeah.

James West: That’s interesting. Now, so you’ve been producing increasing amounts of silver from this mine. Why don’t you tell us exactly where you’re at with the evolution of the mine and what immediate future holds?

David Wolfin: Okay. Well, Avino has been around since 1969. It’s been a public company for that long. The mill was built in 1974. It operated for 27 years, closed in 2001 and it was operating a thousand tons per day. We reopened it in 2010 while we’re doing a ramp up and the goal is to reach full commercial production in the fourth quarter of this year.

James West: How much will full commercial production be?

David Wolfin: In the first year, it will do about a million ounces of silver equivalent but we have two areas of expansion that we’re planning over the next two to three years and we hope to produce in the neighborhood of two to three million ounces of silver equivalent in that time.

James West: Okay. Now, I’m looking at your online documentation and I don’t see a lot in the way of resources or reserves there. So, how are you going to get there?

David Wolfin: Well, we’ve got 15 million ounces of silver, about 20,000 ounces of gold. And recently, we’ve just announced an extension to a royalty agreement on the old existing Avino vein. So right now, we’re drilling that. We’re going to do a resource estimate on that. So, that’s going to add quite a bit. We’re going to use cash flow and we’re going to do a lot of exploration. We did 80 kilometers of IP geophysics so we’ve got deep penetrating anomalies that haven’t even been tested yet.

James West: So, you don’t really have to worry about proving up resources according to 43-101 because you’re going to pay for further development, another cash flow.

David Wolfin: That’s right.

James West: That’s a good strategy. So, tell us a bit about the royalty agreement. What does that do for the company and what does that mean to shareholders?

David Wolfin: It allows us to do our expansion plan. We can go now de-water the old mine and the royalty is 3.5% NSR to the family, the Mexican family. And so we’ve already started the process of putting together our mine reopening plan. So, this is an expansion from what our current operation is. We’ll be operating two separate circuits within the mill. One will treat the ore from San Gonzalo at 250 tons per day and the other one we’ll do a thousand tons per day from the Avino mine. So collectively, it will be doing 1,250 tons per day.

James West: Now, what about security in the area? Mexico, the news, is full of Mexican violence and problems. Have you got any of that?

David Wolfin: We’ve never had a problem because of the infrastructure that exists around the property. It’s a one-hour drive on a paved road right to the doorstep of the mine. It’s a busy road. The problem areas are in the remote regions where you can get hijacked. We’ve never had a problem. We actually have the retired colonel that comes to their property once a month for lunch and they bring some of the military people with them. We fill up the gas tank and feed them and they drive through the towns with their guns, so we’ve never had a problem.

James West: Interesting. Let’s talk a bit about your share structure. For a company that’s been around so long, you’ve only got 27 million shares out?

David Wolfin: That’s correct. There was a share consolidation about 20 years ago. So since that time, we’ve been very mindful of issuing shares.

James West: So, you haven’t had to raise a lot of money because you’ve been cash flowing.

David Wolfin: Yeah, yeah.

James West: Okay. So, if I was to look at the company now as an investor, what would I have in the next 24 months that might deliver share price appreciation to me?

David Wolfin: Well, we’re coming out in the next few weeks our results for scoping study on the tailings. That’s going to be a standalone project and we’re going to look to heap leach — agglomerate and heap leach, the old oxide tailings, so that’s an area of expansion. So, expect to see those results. Originally, we did a study in 2006 using $8 silver and 500 gold and it made sense back then. So, you can imagine what it’s going to look like when it comes out. Also, we’re drilling — we own our own drill. We have a Longyear 44. We drill for about $70 a meter, which is half price.

James West: Right.

David Wolfin: So, we’re getting that done. We’ve just recently bought an underground drill so we can move our inferred resources up the category chain as we ramp down. So, there’s a lot of news flow coming.

James West: Sure.

David Wolfin: Production numbers, exploration results.

James West: Wow!

David Wolfin: Yeah.

James West: Great. So, what about exploration upside in immediate area?

David Wolfin: Well, next door to us is Pan American Silver. They announced last year they’re going to build or they’re going to work towards building a $275 million operation on the Martha vein, which brings me to the potential, is the Martha is a big vein system that has north of a hundred millions ounces. We sit on a volcanic caldera and the two big veins that sit on there are the Avino vein and the Martha vein. The Avino vein is a mile long and 500 feet wide on surface.

So, common sense tells us that these veins didn’t fall out of the sky, so chances are we’re going to find more mineralization as we go down deeper because it’s never been explored at depth on our property.

James West: Wow! Fascinating stuff. And tell me about — do you have any major institutional shareholders involved?

David Wolfin: Well, just one at the moment, Mr. Eric Sprott who’s kind enough to come in and he is our largest shareholder.

James West: Okay, big and silver enthusiast there.

David Wolfin: Yes.

James West: Okay David, we’re going to leave it there. I’d like to thank you for joining us today.

David Wolfin: Thank you very much.

James West: If you’d like to learn more about Avino Silver and Gold, visit them online at avino.com, that’s A-V-I-N-O.com. And if you’d like to learn more about companies like Avino, visit midasletter.com. I’m James West. This is Midas Letter Money.

00:06:18

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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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TNR Gold Corp. (TSX.V:TNR) Executive Chairman Gary Schellenberg talks about his company’s flagship Shotgun Project, located 175 kilometres south of Donlin Creek within the Kuskokwim Gold Belt in Southwestern Alaska. The company acquired the remaining 50% of the project from Nova Gold Resources Inc, and so now controls 100% of the project.

The company is also embroiled in a court dispute with Minera Andes over that company’s claim to 100% of the Los Azules project, a large copper project which TNR lays claim to two thirds of the project area.

TRANSCRIPT:

TheJames West: Hi. I’m James West. This is Midas Letter Money.

My next guest is Gary Schellenberg. Gary is the President and CEO of TNR Gold Corp., trades under the TSX Venture Exchange under the symbol TNR.

Gary, thank you for joining us today.

Gary Schellenberg: Thanks for having me.

James West: Gary, we’re going to jump right into a TNR Gold spinoff, TNR Lithium.

Gary Schellenberg: Yeah, that’s correct. So International Lithium Corp. is part of our major business plan of creating well through generating new projects.

James West: So Gary, tell us a bit about your flagship project?

Gary Schellenberg: Well, that’s the Shotgun Project which we have in Alaska. It currently has a non compliant resource of about a million ounces made up of about 33 million tons of one gram.

The last time this property has actually worked was back in 2006.

James West: We’re talking gold here?

Gary Schellenberg: Yes. We’re talking gold. And it’s one of these intrusive related gold systems that has a big look very similar to the Donlin Creek. And so again, the last time we worked on this property was in 2006. We’re earning in our 50% from NovaGold it’s operator. And since that time once we earned our 50% the work was done.

Late last year we’re able to finally cut a deal with NovaGold, acquired the other 50% so now we have 100% of this asset which we think has a lot of earmarks very, very similar to Donlin Creek.

James West: So is it continuous to Donlin Creek?

Gary Schellenberg: It’s what, 80 kilometers away and it’s also about 80 kilometers to the west of Iliamna which of course hosts the Pebble deposit.

So, it’s in a very, very prolific gold area. We think it has a potential not just for one or two million ounces but again very similar type of deposit that Donlin Creek where we hope it’s going to host in the tens of millions of ounces.

James West: Great. Are you going to drill it this year?

Gary Schellenberg: We certainly hope so. Yes. And this is one of our projects where we want to be able to bring in a good partner to help us get to that.

James West: Okay. And so now it appears that TNR is a bit in a holding pattern and I’m just going to make reference to the press release of January 13th 2012, “TNR Gold offers to sell Los Azules litigation with Minera Andes for $125 million,” can you tell us a bit about what’s going there?

Gary Schellenberg: Well, it’s one of the projects that we generated many years ago and we’ve discovered a significant copper deposit, probably one of the largest copper deposits now in South America that’s undeveloped. It’s currently being developed by McEwen Mining.

The dispute started about four years ago over some land ownership and has essentially escalated to a point now where four years later we now have been granted leave to amend our claim against the parties to actually include the return of the deposit, the portion of the deposit of disputed land.

What’s interesting is that from the data that’s publicly available, 2/3 of the deposit lies within the dispute of the land. We have at least two different appraisals of this evaluation that’s done one by Mechanic Org(ph) back in August stating this deposit was worth 540 million. Most recently, the McEwen Mining, the Info Circular had a discounted rate. Our evaluation was deposited being 185 million.

So as you can see, it’s something that we take very seriously. It could have a significant impact on our company moving forward and yes, it has put us in a bit of a holding pattern over the last number of years but we’re looking forward to having our case heard in November of this year.

James West: Okay. So is there other exploration activity into the company right now?

Gary Schellenberg: Exactly, yeah. We’re going back to our project generation roots. We’ve just recently acquired an iron ore property in Ontario. We’ve got two Rare Earth Properties also in Ontario which we hope to aggressively start to develop and bring in partners.

We also have our host of asset still in Argentina. We have our El Tapau and El Salto projects which again is part of our model. We’re looking to bring in partners and develop these assets.

James West: So as an investor looking for something to invest in TNR offers a diverse project portfolio across a wide variety of commodities or is it just precious ones?

Gary Schellenberg: No. Exactly, we do all the commodities and that’s something. As a project generator, we like to just look at various commodities, what’s the next up and coming commodity and then put our exploration team developing new assets and acquiring these things and hopefully ahead of the curve and that’s what makes this a success.

James West: I see. Tell us a bit about your background.

Gary Schellenberg: I’ve been a geologist for many years — going on now 30 years. I’ve been early-stage project generator all of my life. We’ve had some successes in the past. We’re one of the first groups involved in diamond exploration in the Northwest Territories. I was one of the founding directors of Winspear Resources which got bought out for about $385 million in the late 1990s.

I also got involved in oil and gas at a very early stage as well back when oil and gas was $10 a barrel if you can remember back that far.

00:05:01

But it was going sometime and that was back in 1992. That company is currently now Providence Energy which is now being merged with Pembina.

James West: Wow! So you got lots of track records of success there.

Gary Schellenberg: Yup.

James West: Okay, great. So then what kind of budget does the company have for exploration right now?

Gary Schellenberg: This year’s exploration we would hope to put together a small budget of about a million dollars to essentially groom up both our iron ore and our precious metals properties in Argentina.

James West: Okay. So it’s the model in to generate projects for joint venture or is outright sale to other companies?

Gary Schellenberg: Exactly. That’s been our model over some time that various successes. We have some 13 projects in Argentina all of which three have joint ventured.

James West: Okay, and so across what commodities?

Gary Schellenberg: Well, we have copper, gold, rare earths, iron ore and expanding every word from Alaska right through to South America and Ireland.

James West: Okay. That’s great Gary. I’d like to thank you for joining us today.

Gary Schellenberg: Well, thanks very much.

James West: If you’d like to learn more about TNR Gold, you can visit them online at www.TNRGoldCorp.com. And if you’d like to learn more about companies like TNR Gold at the earliest part of the value creation curve visit www.midasletter.com.

I’m James West and this is Midas Letter Money.

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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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Automated Benefits Corp. (TSX.V:AUT) Chairman G. Scott Paterson is the guest on Midas Letter Money in this segment recorded in Toronto. Paterson talks with host James West about the next wave in Cloud computing, and outlines how Automated Benefits is poised to capture market share in the drive towards insurance claim process automation.

Automated Benefits, with two distinct products serving two distinct markets, expects to drive its product suite’s success through partnerships with major insurance providers such as Farmer’s Insurance Group, a wholly-owned subsidiary of Zurich Financial Services Group, and others. The market that management expects to capture is worth billions of dollars.

TRANSCRIPT OF THE INTERVIEW:

James West: Hi, I’m James West and this is Midas Letter Money. My guest this afternoon is G. Scott Paterson. Scott is the chairman of the board of directors of Automated Benefits Corp. It trades under the symbol AUT on the TSX Venture Exchange. Scott, welcome to the show.

G. Scott Paterson: Thanks for having me.

James West: Now Scott, the thing buzz word in technology these days apart from destination social networking sites like Groupon and Facebook is companies that are operating in the cloud and your company operates in the cloud. What exactly does that mean?

G. Scott Paterson: You know it’s a great term that people are talking about it on Wall Street. The reason that companies that are involved in cloud computing and softwares and service like ours is because the margins tend to be so high. Really what’s happened is Corporate America and really the rest of the world is taking their databases for whatever they’re using them for. And really moving them from inside their premises and their operations and their cost and outsourcing them to other people so they can aggregate them, they can spend the money in updating them new technology et cetera.

Automated Benefits Corp has a principal business we call symbility and we service the insurance industry where we feel like a new company. We’ve been at this since 2004 and we thought what’s now happening to us was going to happen in two or three years. It’s taken eight years what we think will look like an overnight success in the next two or three years has really taken so long time.

And what we’ve done is we’ve developed the next generation of software for insurance companies to process property claims and we’re in the cloud and its software’s service. In other words, the insurance company can pay us every time they process a claim and we’re handling all the data on our network, on our servers and making it much more efficient for the insurance companies.

James West: It sounds like they’re indeed quite a development curve in gaining the trust of your business partners in trusting all that sort of mission critical data to you. So how do you protect their data and in an effort to protect them as clients.

G. Scott Paterson: It’s a great question James and it contributes to a very long sale cycle but it also contributes to a very high area of entry when you do get a customer. I’ll give you an example that something that we’re very, very excited about and we’re just so delighted that they’ve entrusted us in the way that you just described. But Farmers Insurance is one of the largest insurance companies in the United States and they recently struck a deal with us which we publicly announced that we’re going to be rolling out through their entire network, our Symbility Solution.

So this means that the — everybody that’s involved in Farmers whether you’re the flooring guy or the tile guy or the adjustor or anybody involved in the insurance business, you’ll be using our work full product and every time a claim is processed, we will make some money from that and the solution is so powerful, Farmers expects to save themselves considerable sums of money. So it’s a win-win for the insurance company, which means it’s a winner for the consumer and for our business, we think we’re going to grow quite dramatically.

James West: So revenue is going to scale with each new major customer like that and so then in terms of immediate growth in the future, what is the growth strategy for Automated Benefits going for Automated Benefits going forward?

G. Scott Paterson: Well, we’ve been on the ground now for several years. We do have a number of very high profile anchor customers and now the job is to get real scale and to get into as many insurance companies as possible. We did just recently now it’s the acquisition of one of our competitors which is really going to be fantastic for us and the dynamics of the industry. And we think not just in North America, we have customers in the UK.

We recently signed up two customers including AXA(ph) in Germany recently. We have pilots going on in South Africa right now. We think we have the best software solution in the world. We think it saves insurance companies in an enormous amount of money and we think the two or three years for this company are going to be — certainly, the promise for us to the opportunity is high growth in both revenues and profitability.

James West: Scott, why don’t you tell us a bit about how the revenue model works for Automated Benefits?

G. Scott Paterson: Well, it’s a software of service. So this back to being in the cloud and software of service we’re charging most of our insurance company customers every time they process a claim and yet our costs don’t change. So if you process one claim or a million claims, sure we buy some more servers. We have a little bit more in customer support but the reality is it’s 99% gross margin.

Right now, we are marginally profitable. We think it’s the result of the Farmers Insurance transaction that we successfully concluded in the number of other customers that are coming on stream. We think we’re going to be quite profitable this year and if we continue to stick to our knitting and sign up customer after customer and add value to them, save money for themselves and for their end customers, the potential for growth is very, very high for a business.

James West: Okay, Scott, we’re going to follow that with interest. We would like to thank you for joining us today.

G. Scott Paterson: Thank you.

James West: If you would like to learn more about Automated Benefits, you can follow them online at automatedbenefits.com and if you would like to learn more about companies like Automated Benefits at the earliest part of their value of creation curve, visit midasletter.com. I’m James West. This is Midas Letter money.

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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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Ironstone Resources (Private) CEO Barry Caplan describes the billion tonne (historic) Clear Hills iron-vanadium project in northwestern Alberta on Midas Letter Money . The company has raised $25 million thus far and spent $10 million on drilling.

The company plans to produce a high value iron ore concentrate (95%+) for sale in the secondary market, and vanadium pentoxide for strengthening steel and for use in next generation batteries.

TRANSCRIPT:
James West: Hi. I’m James West and this is Midas Letter Money.

My guest today is Barry Caplan. Barry is the CEO of Ironstone Resources Ltd. It’s a private company that may go public one day but we’re not too sure about that.

Welcome to the show Barry.

Barry Caplan: Thanks very much, James. It’s my pleasure.

James West: Give us an overview of the project. Where is it and what’s it going to become?

Barry Caplan: Well, it’s in the Clear Hills of Alberta which is approximately two hours drive north of Grande Prairie in the northwestern part of the province.

There has been a historical recourse here about a billion tons so we’ve endeavored to basically drill the resource. We currently have 557 million tons of indicated iron about 33%, a seven million tons inferred, 34% and 2.5 billion pounds of V2O5 or vanadium pentoxide.

James West: Vanadium pentoxide. That’s a mouthful. What are we going to use that for today?

Barry Caplan: Well typically, vanadium you use in strengthening steel. It makes steel much stronger and lighter weight but 80% of vanadium used today is in steelmaking but there’s a lot of impetus to actually start to use vanadium in this new green technologies, battery technologies such as vanadium flow and they use a lot vanadium.

So, we’ll actually become a very reliable and secured supply of vanadium in North America.

James West: Okay. What’s the cost per ton of vanadium?

Barry Caplan: Well, currently vanadium sells for about 6 to 6.50 a pound today. It’s basically forecast to possibly double in the next five or 10 years so it actually is quite a significant asset for us.

James West: Wow. Fascinating. So how much money has gone into this project so far?

Barry Caplan: Well, we’re again a private company. We’ve been very successful raising funds. We’ve raised about $25 million to date. We’ve put about $10 million into the ground. We’ve drilled 230 holes, about 15,000 meters a core but today we’re actually dedicating most of our funds to engineering and process development.

James West: I see. What do we got in the way of infrastructure up there? You got water, power and others?

Barry Caplan: Well, Northwestern Alberta is actually — I’ve been blessed with a lot of infrastructure development. The oil and gas industry is probably pumped about $60 billion into infrastructure development. We’ve leveraged a lot that infrastructure. We have solstice and roads that takes us right up to the property, natural gas right at the mine site, a coal deposit overlying the iron ore which we can use as a carbon source to beneficiate the iron into a 95% metallic iron.

James West: I see. And that’s the game plan then.

Barry Caplan: The game plan is to produce some very high value iron product. It’s basically in the alternative buyer market and a lot of projects today are basically looking at producing a high value iron as sensuous scrap replacement.

The U.S market today is there’s still that uses electric cart probably 75% they’re still making — is using electric cart and our iron product is actually targeting to that type of market.

James West: So are you going to put this project into production yourselves, you’re looking for strategic partner?

Barry Caplan: Ultimately, we’ll probably bring on strategic partner in the next 12 to 18 moths. We are a small company, small private company in Calgary and — but we have a very huge asset and excellent mining jurisdiction and I think that ultimately we’ll team up with a strategic.

James West: Okay. Tell me a bit about the team behind you.

Barry Caplan: Well, we’re a number of resource professionals, slightly biased to the oil and gas side but most of our team is actually — probably have 30 years of experience in managing large projects. We have geologists. We have financial people and we have engineers in our staff.

James West: So it’s a turnkey operation one day.

Barry Caplan: It’s a turnkey operation but we actually — basically develop relationships with a lot of third party companies like Hatch, Hazen Research in Colorado, FLSmidth in Pennsylvania so we actually bring Tier 1 companies to help us manage this project.

James West: Okay. So what is the strategic partnership included in off take partner?

Barry Caplan: Ultimately, a lot of project like ours typically they’ll develop the resource up to a certain point, bring our strategic in to actually help beef up our team. Ultimately we’d like to source a company that where they can provide off-take for us.

James West: Okay. Fascinating story. We’ll follow with interest. I’d like to thank you for joining us today.

Barry Caplan: My pleasure, James.

James West: If you’d like to learn more about Ironstone Resources, you can visit them online at www.ironstoneresources.com

Barry Caplan: That’s right.

James West: If you’d like to learn more about companies like Ironstone, before they go public, visit www.midasletter.com.

I’m James West and this is Midas Letter Money.

00:04:30
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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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Platinum Group Metals (TSX:PTM) (NYSE AMEX:PLG) CEO Mike Jones joins James West for a discussion about his company’s progress in the construction of the Western Bushveld Joint Venture Project 1 platinum and palladium mine.

The company has funded $100 million of the project which will require a total investment of $443 million. The company has a robust portfolio of projects in both Africa and Canada.

TRANSCRIPT:
James West: Hi I’m James West and this is Midas Letter Money.

My next guest is developing a Platinum Group Metals project in South Africa. Michael Jones is the president and CEO of Platinum Group Metals trades on the TSX under the symbol of PTM and on the NYSE under the symbol of PLG.

Michael, thank you joining us today.

Michael Jones: It’s great to be here.

James West: Mike, why don’t you give us a quick overview of the status of the project, where we’re at, what’s happening?

Michael Jones: Oh we’re building the mine so it is a very exciting time were in a $100 million equity phase investment in the project, we’re about $50 million through that and we are driving a decline underground into the deposit and the next phase of finance with the project is a bank loan with a syndicate of banks which is arranged and we’re scheduled for production in the fourth quarter of 2013.

James West: Okay. So in terms of feasibility, what’s the IRR expected to be?

Michael Jones: The feasibility level of IRR was 19% after tax and has an NPV for the project of $583 million. That’s on a 100% basis. We own 74% of the project and that was done at 1343 platinum price and of course we’re sitting even now over 1,700. So, there are lots of upside there.

South African government has also improved the tax regime. There’s another 5% kick of gross revenue and the improving tax from the feasibility. So yeah, it is a very robust project. It can be one of the lowest cost producers in the world.

James West: Okay. When are we going to see it commissioned?

Michael Jones: So, the fourth quarter of 2013 is our commissioning and we’ll ramp up through 2014. It’s a big mine. It is 275,000 ounces a year so our share is 200,000 ounces a year of PGMs.

James West: Wow. Have you got any partners helping you out there?

Michael Jones: We have a partner called Wesizwe. It’s a JSE listed company and the backing for with Wesizwe is Jinchuan of China, the Chinese state company. They own 26% of our project. They also own in a joining mine that they are building for $900 million.

But one of the interesting things we are doing is doing a synergy study with them to look at what would happen if we built one plant and one processing complex. We think there’s going to be a lot of potential capital savings there.

When you look at the overall project together you’ve got $1.4 billion being spent in a small area and even at 10% synergy be a lot of money$140 million potentially.

So, we see lots of room for improvement from our baseline feasibility study and we are actually negotiating and discussing that with our Chinese partner right now.

James West: That very interesting. Why don’t you give us a snapshot of the revenue flow as the mine goes into production?

Michael Jones: Basically our end after tax and the feasibility study model, I think that’s what really people want to know is what’s our end after tax.

It generates $100 million to $140 million, our share after tax at full production. So you know, this is a big, big project and the capital cost is $443 million. You know, it is very robust.

James West: Sure. So, the 440 million is coming from a combination of debt and equity?

Michael Jones: Right. And we’re putting $100 million in now which is fully funded. We’ve got about $90 million on the balance sheet. We’ve got a syndicated loan arrangement with the syndicate of banks, Barclays, Standard Bank, WestLB of Germany and Caterpillar Finance out of Zurich so it is a strong international syndicate of banks.

The plan is for them to provide a secured loan facility, $260 million. We’re just in the final stages of that now in the final documentation and then there is a final equity top of $80 million to $83 million that will finance with the last equity charge. But we’ve got some really important milestones right in front of us which are our final mining rights from the government is due literally any day.

We’ve got five different off takers interested in mine concentrate and we are going to finalize that arrangement and then we do the final equity top up after we crossed those milestones so we want to put those milestones up in the board in the next couple of quarters.

James West: Okay. Who are the key players on your team?

Michael Jones: My Chief Operating Officer is Peter Busse he is es- Placer. He developed mines for Placer. He ran mines. He is on the ground most of his time in South Africa.

Frank Hallam is my partner of eight years in many businesses who you know. Frank is a CFO of the company. He is an ex feared auditor of Coopers and Lybrand.

So yeah, we’ve got a very strong team and we’ve got an excellent group on the ground. We are very proud of our safety record in South Africa. We’ve had 300 people on site. We’ve worked 450,000 man hours without a loss time accident.

So, that’s tells you the place is well run and it’s growing very well.

James West: Sure. It sounds quite advanced now. Where do you get push back from investors?

Michael Jones: There’s been a lot of rhetoric about South Africa that it’s a poor operating environment and actually we’ve had nothing but great experience there.

The government has been very straight forward to deal with. Permitting has been very regimented and straight forward and it’s a mining country. We are surrounded on three sites by mines so really in terms or risk, permitting risk or something.

There’s a lot of perception about South Africa being risky but the reality on the grounds is very different so I think that’s the number one thing that investors worry about.

And quite often we get asked, how can this be true? It’s almost too good to be true. How could you walk in to the major platinum fields of the world were 80% of the world’s platinum come from is a Canadian company and end up with–

00:05:06

James West: As suppose to–

Michael Jones: Yeah. And end up with a major position.

James West: Sure.

Michael Jones: And the short answer to that question is we were there at the right time. The mining act changed in 2004 and we were there right when the whole mineral’s regime changed. That opened up a lot of opportunities. And quite frankly, we asked.

We had an original partnership with Anglo Platinum. We bought them out of their share, increased our state and it’s been a long road. We’ve work at this for eight years to get here.

James West: Mike, tell us a bit about the future price of platinum supply and demand metrics.

Michael Jones: Well, we think that platinum has a very solid demand curve. You know basically if you are going to drive and breathe, you have to have platinum. It’s in the tail pipe of your car as the big demand.

We’re watching the Asian auto markets very closely. That’s a growing area obviously. Jewelry as well in Asia, platinum is important but really it’s the car market that’s driving the demand.

And over the long-term and I’m talking not long-term in terms of most traders like this morning, this afternoon like 25 years, we see a very steady demand in cars around the world more and more cars in the road and that creates more demand for platinum.

And it is really a legislated demand. It’s not optional you have to have this stuff. A lot of people ask about substitution for platinum. If nonetheless, you can move it on the periodic table you’re stuck with it.

James West: Right.

Michael Jones: So it is very essential.

On the supply side, the mines are getting very deep. We’ve been mining the same complex for platinum for the last 90 years. A lot of the mines are down a thousand meters deep and they’re really straining now under temperature. It’s 65 degrees celsius down there.

The seam is one meter thick so it is very difficult in mining conditions. Labor is not finding that easy to deal with and so we see a big trend in changing to either shallow deposits like what we have just 100 meters from surface or looking for something that’s thicker. And those developments are really just starting to get going.

There’s an exciting new development as part of the Bushveld Complex on the North Limb. Robert Friedman is actually involved in this area who’s done a major deal with the Japanese and we’re exploring there now and made a new discovery.

So, we think that there are new areas to be developed. But in the medium term, we’re going to see a very, very tight market because of the historic mines and the growing demand.

James West: Wow, great story. We’re going to keep an eye on that one. Mike, I’d like to thank you for joining us today.

Michael Jones: My pleasure.

James West: If you’d like to learn more about Platinum Group Metals, you can visit them online at www.platinumgroupmetals.net.

And if you’d like to learn more about companies like Platinum Group Metals, visit www.Midasletterl.com. I’m James West, this is Midas Letter Money.

00:07:50
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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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Prophecy Coal Corp. (TSX:PCY) (OTCQX:PRPCF) (FRANKFURT: 1P2) co-founder and director Greg Hall discusses the company’s progess at the Chandgana mine-mouth power plant development in Mongolia with James West on Midas Letter Money. The 600 megawatt coal-fired electrical generation plant is now permitted and the Power Purchase Agreement is all that remains to be determined.

Mongolia is one of Asia’s fastest growing regions, and its electrical power generation systems are antiquated and in varying stages of disrepair, making Chandgana a very important project both for Prophecy Coal and for the people of Mongolia.

TRANSCRIPT:

James West: Hi, I’m James West. This is Midas Letter Money. And my guest this afternoon is developing a Mine-Mouth Power Plant in Mongolia. Greg Hall is the Director and Co-founder of Prophecy Coal Corporation, trades under the symbol PCY on the Toronto Stock Exchange. Greg, thanks for joining us today.

Greg Hall: A pleasure to be here.

James West: Now, Greg you’ve finished your preliminary economic assessment of the power plant. You have 1.4 billion tons of coal at the mouth of the power plant essentially. You’re going to be generating 600 megawatts when all four units are online and I looked at the market cap of this company, which is about $90 million today?

Greg Hall: That’s correct!

James West: And that strikes me as awfully undervalued considering what the company is about to do. So, now tell me why do you think that the company is trading at this level when it’s about to start generating and tell us what it is about to start generating in terms of cash low.

Greg Hall: Sure and thanks very much. So, Prophecy Coal is really developing the first, as you said Mine-Mouth, a thermal coal power plant in Mongolia in roughly 15 years. Really, since the Soviets withdrew from the country and they became a democracy. There is a desperate shortage of power in the country. There is about a 744 megawatt deficit over the next three years.

James West: Just in Mongolia?

Greg Hall: Just in Mongolia. We’re talking domestic power supply not supplying power to the Ivanhoe Project or the Togo — no, we’re only talking about the domestic market. So if you had on the other super giant projects that are coming on stream, they’ve announced already their buying power from China at least over the next five years, until they can build their own power plant to service their own town, freelance building basically a village of about I think roughly 20,000 people plus the mine, and they’ll need a power plant for that.

James West: Wow!

Greg Hall: And we can’t service that. We’re just dealing with the deficit in the country, but you asked why is it so undervalued? I think it’s simply that people perceived Mongolia as exotic and far away and a really, really third world developing country. They don’t realize when you look at just the Ivanhoe Project alone, that’s 10 billion in new investment going in over the previous and the next couple of years. The country has about $6 billion GDP and once that project comes online, it’s going to increase that GDP by about a third.

James West: Okay, so you’re just telling me that there’s a perception of risk there that is probably unjustified.

Greg Hall: We believe so. It’s really a very modern developing democracy, but it’s perceived otherwise.

James West: Yeah, okay. So I look at the preliminary economic study and I see an internal rate of return based on a sliding scale what you actually sell the power for upwards of the average looks like it’s going to be about 40% or better?

Greg Hall: Well, it depends. That’s towards the upper range were using in the low 20s –

James West: Okay.

Greg Hall: — which for a project of this duration 30 to 40 years is an outstanding internal rate of return.

James West: So you got a more than a lifetime supply of coal.

Greg Hall: Oh, yes!

James West: You’ve got the power plant permitted and approved and ready to start construction?

Greg Hall: Visibility done.

James West: You’ve got commitments from debt financiers for the 70% portion?

Greg Hall: Yes, at least 70% debt will be a consortium of engineering and construction companies putting up equity, some probably is Chinese State-Owned Enterprises, not the Mongolian government. We have a tariff arrangement with them. We have guidance as 6 cents per kilowatt hour. Right now, they’re buying power from the Russians at 8 cents.

James West: So you concluded the agreement into a price per kilowatt hour problem.

Greg Hall: With guidance that were hoping to conclude sometime in cue, too.

James West: So if this power plant was being built in let’s say Toronto, it would be largely direst and we would think trading at a better evaluation.

Greg Hall: Oh, yes! And also, this is 600 megawatts which the rule of thumb is roughly that would power about 600,000 North American homes.

James West: Okay.

Greg Hall: So it’s a very large project.

James West: Yeah. So when is it going to start generating power?

Greg Hall: We’re looking at mid to late 2016.

James West: Okay, isn’t it without bringing all four units on? And I believe you’re developing 450 megawatt units.

Greg Hall: The first unit comes on mid to late 2016 and a 150 megawatts and then each of the four components over a two year period. So by 2018, fully up and running. And the key will be of course the finalization sometime in the next few months of the Power Purchase Agreement, the tariff with the government and then of course, leading towards completion of the financing by the end of 2012. Constructions later to start April of 2013.

00:05:00

James West: And so you’ve also owned a large share position in Prophecy Platinum as I understand.

Greg Hall: That’s correct! That’s our sister company. It’s also listed on the TSX, at the TSX Venture and basically, the portfolio value of our 22 and half million shares of Prophecy Platinum is roughly $90 million, which again equates approximately or very close to the total value of Prophecy Coal.

James West: So you’re essentially getting the power plant for free? That’s very interesting.

Greg Hall: Exactly! Over a billion tons thermal coal fully primitive for a power plant and it has no evaluation.

James West: If you would like to learn more about Prophecy Coal, visit them online at prophecycoal.com. And if you’d like to hear more about companies like Prophecy Coal at the early part of their value creation curve visit, midasletter.com. I’m James West and this is Midas Letter Money.

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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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Edgewater Exploration Ltd. (TSX.V:EDW) (OTCQX:EDWZF) CEO George Salamis is the guest on Midas Letter Money in this segment. James and George discuss the company’s most recent drilling success at both Corcoesto in Spain and at Enchi in Ghana. The company announced an infill drill result of 66.5 metres grading 2 grams per tonne gold at Corcoesto on March 29.

Edgewater, according to Salamis has “a program scheduled for this year, roughly speaking about 25,000 meters of infill, then that will — and the purpose of that is to bring inferred to a measure that it indicate a category as we move into a bankable feasibility study this year on the project.”

The company has since announced the retention of Tetra Tech for the feasibility study at Corcoesto.

TRANSCRIPT:
James West: Hi, I’m James West and this is Midas Letter Money. My guest today is George Salamis. George is the President and CEO of Edgewater Exploration Limited, trades under the symbol EDW on the TSX Venture Exchange. George, thanks for coming.

George Salamis: James, thank you for having me.

James West: Okay, George I’ve been following Edgewater for a long time. Our subscribers, our holders of Edgewater stock, you’re starting to see some great results on both your projects. One of which is the Corcoesto Project in Spain. Do you think I know how to say that by now? And the other is the Enchi deposit in Ghana. Why don’t we start with the Enchi deposit in Ghana? That’s a project that you picked up from Kinross?

George Salamis: Red Back originally and now Kinross is the partner there. So we spent the last year drilling the project intensively and we’ve completed about 25,000 meters of drilling. So what you’re seeing now is the culmination of all these assay results coming in now, is the fruits of the labor, years worth of workout in Ghana.

James West: Okay, so we’ve seen four or five press releases recently. How many more results can we expect to see in the near future?

George Salamis: We’ve got, roughly speaking about 10 more holes to come in out of the 60 that were pending out of the big major backlog and what that will do is that we’ll then funnel into the resource model, which will be put in together in February and that then culminates in the resource estimate, the very first one that made the resource estimate on Enchi towards the end of the first quarter of this year.

James West: Oh, okay. That’s interesting. So just for a bit of context now, you picked up the Enchi deposit from Kinross because they bought Red Back Mining and this was a joint venture that Red Back Mining had with you and Kinross bought Red Back for — was at $7.1 billion?

George Salamis: Correct, yes.

James West: Based on the fact that they had this other project which was called Tasiast and then the Chirano Mine, which is just up the road from us in (00:01:58).

James West: So you’re very close to the mine that caused or triggered this purchase from Kinross.

George Salamis: That’s correct, one of the two assets that they bought — the reason why they bought Red Back was for the Tasiast Mine and for the Chirano Mines. So we’re on the southern extension of Chirano, which is a very lucrative mining operation for that.

James West: Right, so then is the geological concept for Edgewater at the Enchi deposit that this is more or less the same thing as you’re going to see at the Chirano deposit?

George Salamis: It is indeed. We’re seeing the same geological and structural characteristics that you would see at Chirano. We’re seeing them on the Enchi project to the south.

James West: Okay. I noticed that you’re also doing an infill drill program on the Corcoesto Project in Spain and you’ve got a resource already there, don’t you?

George Salamis: Correct. We’ve got about 1.5 million ounces of resource at all categories currently at Corcoesto.

James West: 1.5 million and so how much infill drilling are you doing presently?

George Salamis: We’ve got a program scheduled for this year, roughly speaking about 25,000 meters of infill, then that will — and the purpose of that is to bring inferred to a measure that it indicate a category as we move into a bankable feasibility study this year on the project.

James West: Oh, okay. So that’s going in the production?

George Salamis: Yes, that’s our plan.

James West: And so the model of Edgewater is to become a producing company?

George Salamis: It is, indeed. Yeah, we’ve done it before and our group has done it before and we have a strong desire to do it again.

James West: Okay, why don’t you tell me about some of your other past affiliations?

George Salamis: I worked for Placer Dome for eight years, touring the world looking for great assets. It was probably the best education a young geologist could ever have. Then, I went on to work for a chemical corporation on the gold side four years doing basically the same thing project development site, corporate development work if you will. And then, I joined the wild world of junior mining in about 2000 and Dr. Buck formed a small junior mining company based in Sweden which went on to become (00:03:56) primary asset in Finland, the deposit. I enjoyed doing that. I enjoyed making money for shareholders and enjoyed taking assets that were unloved, unwanted and de-risking them, bringing them up the profile. And that’s essentially what we’re doing in Spain at the moment.

James West: Oh, so you’re a pro at this. You’ve been –

George Salamis: I enjoy doing it.

James West: Okay, great! Okay, so now let’s talk about the next 12 months for Edgewater. Why should investors hang on, why should potential investors look at Edgewater now and perhaps think about getting involved?

George Salamis: Well, right now the opportune time obviously with the market weakness that we incurred towards the end of last year. Obviously, the price is right, right now. We’ve got a lot of great news coming up the pipeline. We’ve got a new resource estimate coming out in Ghana, which will be the very first resource quoted on that project and that’s going to be — what we think is a pretty big number. And in addition to that, we’ll be marching Corcoesto forward at a feasibility level this time and we are serious about moving this project into production. The PA that we released last year showed some strong economics and we’re looking to prove that by putting the mine into production basically in the next three years.

00:05:02

James West: And so regionally, is there a general sense that the local people surrounding the mine want to see it go into production?

George Salamis: They do, indeed. In fact, our biggest supporter is the mayor of the community surrounding the project, if you will, in Spain. That the mayor together with the Ministry of Environment to the Ministry of Mines what I collect to call the Holy Trinity that you have to satisfy in Spain. They’re all alongside of the project. We just had an analyst trip out before Christmas and the analyst heard for the first time not from my lips, but from the lips of the ministers up there are firmly behind this project.

James West: So we’ve got — were there results coming from Enchi?

George Salamis: Correct.

James West: You’ve got a resource calculation coming at Enchi, the first one.

George Salamis: Correct.

James West: Continuing results coming from Corcoesto?

George Salamis: That’s right.

James West: So lots in the bag, lots of bullets in the chamber, is it?

George Salamis: Indeed!

James West: All right George, I think we’re going to leave it there. I would like to thank you very much for joining us today.

George Salamis: Thank you, James.

James West: If you would like to learn more about Edgewater Exploration, you can visit them online at edgewaterx.com and if you want to learn more about companies like Edgewater Exploration at the earliest stage of their value appreciation curve, visit midasletter.com. I’m James West. This is Midas Letter Money.

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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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Digital Shelf Space (TSX.V:DSS) (OTCQX:DTSRF) CEO Jeff Sharpe talks with James West about RUSHFIT, the company’s flagship digital product.GSP RUSHFIT, starring mixed martial arts World Champion Georges St-Pierre, is one of the most intense DVD workouts ever made. Created and produced by Digital Shelf Space, the 6 DVD set retails for $99.99.

Digital Shelf Space recently announced a partnership witrh Goldf Experiences, LLC, operator of the PGA Tour’s TOURAcademy, which includes the production, marketing, and global distribution of a direct-to-home DVD golf instructional series, will be marketed under the TOURAcademy® brand name. The product is slated for release early this summer.

TRANSCRIPT:
James West: Hi. I’m James West and this is Midas Letter Money. My guest today is Jeff Sharpe, President and CEO of Digital Shelf Space Corp., which trades on the Toronto Venture exchange under the symbol DSS. Jeff, welcome to the show.

Jeff Sharpe: Thanks for having me James.

James West: So Jeff, normally in Midas Letter, we cover mining deals, oiling gas deals, but we’ve never covered a deal quite like yours. Maybe you could tell us exactly what Digital Shelf Space does.

Jeff Sharpe: Sure. Thanks again for having me and what we do at Digital Shelf Space is we create, produce and distribute entertainment content. Our strategy is to partner with global brands in the creational of that content.

James West: I see.

Jeff Sharpe: Currently, we specialize in the fitness and sport instruction media segment of the vertical, an a la sort of Georges St-Pierre being our global brand on our flagship product that you see here on the table, which is Georges St-Pierre RUSHFIT.

James West: Okay. So this is the product?

Jeff Sharpe: This is the first product. Yes.

James West: And tell us a bit about the product. What exactly is it?

Jeff Sharpe: It’s a complete home-based, eight-week fitness series. There are seven different workouts that are on six different DVDs. There is an eight-week training calendar. One for a beginner, an intermediate and an advance and it comes with a complete nutrition guide. It takes very little equipment. It’s very intense, but all it requires is a set of dumbbells.

James West: Okay. Now, Georges St-Pierre, that’s a relatively well-known household name in the UFC category.

Jeff Sharpe: Yes.

James West: Is that sort of part of the strategy for DSS going forward?

Jeff Sharpe: It absolutely is and that’s the type of global brand we’re looking to partner with. So Georges St-Pierre, as you mentioned, is the World Welterweight Champion. He’s the number one guy in the fastest growing sport in the world, which is mixed martial arts. As we’re speaking about previously, George has over 2.5 million fans on his Facebook as far as his global reach. So that’s the type of partner we’re looking for with the content we create. It’s having the ability to reach international market places beyond North America.

James West: Okay. So where do I buy this?

Jeff Sharpe: Pretty much anywhere right now. Specifically, we’ll start at gsprushfit.com on the web platform as well as you can see it on TV periodically, at late night commercials where we advertise and the call centers on the 1-800, and then finally, in a traditional retail place. We’re currently in over 4,000 doors across Canada from every major retailer you can think of for the most part as well as broken into the U.S. Retail Distribution and now, into the international marketplace.

James West: Okay. So I can buy it at London Drugs?

Jeff Sharpe: Pretty much, the Walmarts of the world, you name it, it’s in there.

James West: Can I buy it at Amazon.com or Amazon.ca?

Jeff Sharpe: Yes, you can.

James West: Okay. That’s great. So then how have you done for sales since you’ve launched this product?

Jeff Sharpe: We launched it for sale in January 2011 and as of September 30, our nine-month mark, as far as the financial goes, we did just an excess of $1.8 million in top line revenue.

James West: Okay. So what kind of margin are you dealing with her?

Jeff Sharpe: There are two different margins. So our gross profit margin when we sell direct through the internet or TV is about 65%. The retail price point is $89.99 and when we sale wholesale through to the Walmarts of the world, our gross profit is about 55%.

James West: Okay. So I guess that’s the opportunity for investors in terms of participating in shares of DSS is that you’re going to grow the product line. You’re going to grow the distribution of the products and over time, you’re going to increase sales. Do you have any projections on what kind of sales you’re going to do in the next two to three years out?

Jeff Sharpe: Absolutely. Again, there’s very much a direct correlation to the money spent on advertising. For us, we’ve achieved, developed $3 back for every $1 we’ve spent on our ads, spent in the first nine months of 2011. Going forward, as a comparable in the industry, it’s probably the best way to give you an idea of sort of the upside and the lucrative nature of the business. There are products in this category, in this Health and Fitness category that sell direct that have done a half billion dollars lifetime in top line revenue.

The likes of P90X, which most people will see on late nigh TV. It’s a company by the name of Beachbody out of Beverly Hills, California. They’ve got a suite of products and again, it’s very lucrative. Most people probably remember Jane Fonda, but most people probably don’t know she’s got over $300 million empire from her fitness media.

So, that’s the type of space that we function in. It’s a multibillion dollar space and not too much unlike traditional entertainment content, movies, Mission Impossible. It’s really a business that hits.

James West: I see. So, how did the company get started? Where did the idea come from for this?

Jeff Sharpe: Originally, it came from my background, which is — I cofounded a company, a privately held fitness organization called Innovative Fitness. It’s strictly private training. It’s also headquartered in the Vancouver, BC and really, we’re looking to try and take in that category. It’s all by appointment only. We’re serving less than 5% of the population, very much a disposable income service.

So we’re looking to find a way to take the concepts of our training philosophies to the masses and we ended up looking at the internet as the new sort of medium for delivery, new media and then looking at it, really researching the business, in particular, the company Beachbody and how it was being done and really put around, spin on it by attaching ourselves to global brands. So we’re really accelerating our speed to market.

James West: So global brands in the form of household names in the athletic sector.

Jeff Sharpe: Yes.

James West: I see. Any plans to branch outside of the athletic sector?

00:05:00

Jeff Sharpe: In near-term, we’ll stick within our specialty, but we definitely have the opportunity as we move forward. We’re not going to say no to a good deal, but in the near-term, our plan is to stick within the fitness and sport instruction category, which are new deals that we have in development are in for 2012.

James West: Okay. How soon until we see a new product?

Jeff Sharpe: We should see one in the market within the third quarter of 2012 and we should see it going into production probably by the end of Q1.

James West: Okay. We’re going to leave it there, Jeff. I’d like to thank you for joining us today.

Jeff Sharpe: Thanks very much again for having me James.

James West: If you’d like to learn more about Digital Shelf Space, visit them on the web at DigitalShelfSpace.com. And if you’d like to learn more about companies like Digital Shelf Space at the earliest part of their value appreciation curve, visit MidasLetter.com. I’m James West and this is Midas Letter Money.

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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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DNI Metals Inc. (TSX.V:DNI) CEO Shahé Sabag talks with James West about the massive Alberta Black Shales Metal Project, a 2,700 square kilometre polymetallic development project with an inferred resource of 250 million short tons delineated over a 5.7 square kilometre section of the land area. The deposit contains Molybdenum, Nickel, Uranium, Vanadium, Zinc, Copper, Cobalt, Specialty Metals (Scandium, Lithium and Thorium) and Rare Earth Elements.

James and Shahé talk about the challenges of funding the construction of such a massive project in the current economic environment, and strategies that the company plans to deploy to attract major offtake partners who may also provide financing.

The full transcript of the interview is here:
James West: Hi, I’m Jest West and this is Midas Letter Money. My guest today is Shahe Sabag. Shahe is the President and CEO of DNI Metal which trades the TSX Venture Exchange under the symbol DNI. Shahe, welcome to the show.

Shahe Sabag: Thank you.

James West: Now, you’re developing a deposit that’s unconventional relative to what we’re used to seeing in the space and on Midas Letter Money. Why don’t you first give us a brief overview of the project you’re working on?

Shahe Sabag: Well, we’re exploring and developing black shells that carry multiple metals in them in addition to our rare Earth’s Lithium, Scandium, specialty metals. These are in Northeast Alberta. We hold a property that’s 2700 square kilometers and it’s got six zones or mineral systems on them. One of them is the most developed that’s being drilled off when we start publishing resources from them. Typically, these are low-grade base metals in the black shell that can be mined in the (00:01:03) that surface. It can’t be mined in open pit at high volumes, at high speed. It’s much the same way as all sands are. So you’re looking at very high mining speed, mining throughput in the 50, 60, 70 million ton a year kind of range.

James West: Okay. So it’s the size of these deposits and the broad mineral content type that makes it unconventional?

Shahe Sabag: Yes. And also up until the mid 2000s, we’ve known about these deposits forever but they made on the radar in 2005 and 2006 because —

James West: How many are they in the world?

Shahe Sabag: There are only about four projects like this in the world and only one of them has made to production in Kuwait and they are producing half a dozen different metals in addition to coal products like Manganese and Uranium, which are in very low-grades in the rock(ph). There is the size and the high (00:01:49) that make these grades work economically.

James West: So these companies had been around if I’m not mistaken since the ‘50s and you’re beyond the discovery phase with this thing, you know you’ve got up words of a billions tons to work with in black shells and you know the mineral content type, what is it exactly that the company is doing at this point?

Shahe Sabag: Well, what we’re doing right now is we published our first resource for the base metal content for things like Molybdenum, Nickel, Uranium, Vanadium, Zinc, Copper, Cobalt, and Lithium believe it or not in October. About a week ago, we start publishing data from our next resource study to come but mostly about the rarest content of the initial resource we have. So most of our work right now is R&D work to optimize our leaching parameters and to also start looking at the rarest content, lithium content and special metal content and the waste rocks above the zones which are developing for home pit extraction. This is a whole new twist of the story which was still slowly digesting.

James West: Right. So then if you find that the surface rock which you’ve traditionally categorized this waste rock is not in fact waste rock by virtue of its high rare earth in associated metal content then what is roughly the metal value per ton of this type of deposit?

Shahe Sabag: On October initial resource for the value of about $21 recoverable value in the ground for the base metal (00:03:18) of the elements and the rarest elements specialty metal resource study we just published for the content of these metals in the inferred resource, put additional value of another $51 to $52 on top of that.

James West: So we’re talking $72 to $74 per ton?

Shahe Sabag: Yes, above of benchmark of somewhere run $10 all up money cost.

James West: So the back of napkin calculation, we’re looking at almost trillion dollars in metals.

Shahe Sabag: The numbers get pretty funky pretty quickly. James, as you start multiplying numbers, but you deal with deposits that are one, two, three or four billion tons in size and you can see where these numbers go. It’s the same kind of equation when you’re dealing with oil sands deposit. You start cranking the numbers through the tons they get very large.

James West: So how is a small company with a $35 million market cap going to put this behemoth into the production?

Shahe Sabag: We don’t intend to become miners. Mining is a completely different business from my exploration. Our objective is to develop one of ultimately all six of this as one by one and basically spend them out into offtake agreements to third party, miners or end users typically.

James West: I see. Can you point to an example of that model that’s in use today?

Shahe Sabag: Well, oh, yeah. Talvivaara mine in Finland, which is the first bioheap leaching operation that’s mining black shales with many metals in them. They are funded at least 50%. They’re (00:04:44) was fund at least 50% through offtake. (00:04:48) with groups such as (00:04:50) for zinc, groups such as Norilsk Nickel for some of their nickel and cobalt. And more recently in February of this year chemical signed up an offtake for the uranium coal product that’s coming out there.

00:05:00

James West: So these are very large companies. Have you initiated any type of discussion with that kind of scale of company at this point for your project?

Shahe Sabag: We’ve had interest from a number of offshore oriental groups and they’ve also set the same thing, get a preliminary economic assessment or Porphyry report together and then we will talk further. We were in contact with the battery or motor manufacture out of the US and after about a month and a half negotiations just want to pick their own grounds surrounding our properties. So there’s a lot in the pipeline and I’m pretty sure by next year we’ll be having a scope study done. We’ll be able to go back to some of the Chinese groups or Korean-Japanese groups and follow-up discussions from last year.

James West: Okay. Well, thank you very much for that, Shahe. I’m going to leave it there. I’d like to thank you for joining us today.

Shahe Sabag: Thank you.

James West: If you would like to learn more about DNI Metals, you can visit them on the web at dnimetals.com and if you’d like to learn more about companies like DNI Metals at the earlier stage of their value appreciation curve, visit midasletter.com. I’m James West. This is Midas Letter Money.

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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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ICN Resources Ltd. (TSX.V:ICN) president Dr.Carl Hering talks about the company’s Goldfield Bonanza project Nevada’s Goldfield District, and the extraordinarily high gold grades intercepted there, such as 2.9 metres grading 1,400 grams per tonne gold.

The company has finished its most recent drill program and will look to begin another one soon. ICN is on the lookout for more acquisitions based on Carl’s deep experience within the industry where he has been instrumental in the discovery of millions of ounces.

The full transcript of the interview is here:
James West: Hi I’m James West and this is Midas Letter Money. My guess this afternoon is Dr. Carl Hering, a household world in the exploration industry. He is the President of ICN Resources which trade under the symbol ICN on the TSX Venture Exchange. Carl welcome to the show.

Carl Hering: Thank you James.

James West: Okay Carl so besides being the consultant geologist, the qualified person for numerous other companies, now you’ve got your own company. And I believe the focus of ICN at this point besides the satellite projects you’ve acquired recently is the Goldfield’s project.

Carl Hering: Correct.

James West: What attracted you to that?

Carl Hering: It took a while to do it. I’ve been only involved for ICN for a little bit less than two years now. We built an exploration portfolio. Get raise and then part of my interest in joining ICN was because I have some ideas on some other projects. Primarily in Nevada but I’m not restricted to anything and other viable knowledge in environments within the US. Goldfield is a private company. They had spent approximately $5 or $6 million in sales over the last 12 years at least two dozen other companies are trying to do a deal because of some attractive property. It took me a year to do it but I put a deal together and we begin our first drilling starting last March, April.

James West: Okay. So now, I saw in Intercept when I –- you got to tell me if this is a type or not but 2.39 meters of 1.5 kilograms per ton gold.

Carl Hering: Roughly. What the claims we’re exploring have show post-mineral cover 15 to 150 feet right adjacent to the historic main Goldfield District which produced over four million ounces. Our third hole, we drilled through 50 feet of post-mineral cover and it intercept at 2.9 meters of 1.45 kilos of gold. But that was followed by an additional 43 meters that average four grams and the other of these first four holes that were release since they were material, we just release four. Normally, we release more also had some good intercepts and in a real simple sense. This was ore outcropping at the surface. Had not been covered by the post-mineral cover or had been mine by the old timer since turn of the century of the century or turn of the last century when the majority of production came from the district.

James West: Okay. So then at this point you have a drill program ongoing on Goldfield’s project?

Carl Hering: We completed our second phase of drilling late last year. Typically, we bring in a reverse circulation rate to drill what we drill for tomorrow is exploration holes. We followed up the high-grade intercepts setting with the core. The core is more representative when you have high-grade intercepts like this.

James West: Sure.

Carl Hering: Currently, there are I’d say for three core holes that’s still outstanding. We should be able to release that information in two to three weeks. We’ll put a release out for the remaining RC holes sometime this week and we continue to our drill programs. Yes some good, some great and some not so good.

James West: Right.

Carl Hering: So we always have a mix.

James West: Sure.

Carl Hering: But we release the first RC programs. I think in the end of November or early December. And those included holes with I think 36 meters of 1.7 grams, 21 meters of 2.3 grams in a whole new area that we hadn’t drilled before just 12 meters below the surface and an intercept and included 13 meters to 6.7 grams. So additional high-grade was found in another area and we’re continuing to have success. We’re just learning.

James West: Great.

Carl Hering: That’s about the project now.

James West: Okay. So now you’ve got a press release that came out last week. It talks about do you issued shares and the acquisition of Silver Cliff property. Now, what’s that all about?

Carl Hering: That’s a new acquisition that we’ve added. I’ve been talking to geologist who had claims in the area for quite sometime. It’s a historic Silver District located in Central Colorado. And fundamentally there are several deposits that have been drilled there historically by quite of number of companies from the ’70s all the way in the early ’90s silver price at that time made this on economic. These of course are non 43-101 and will have to verify that data on which we’ll plan to do starting later this year when the weather is a little bit at 9,000 feet.

James West: Sure. Okay. So then you’ve also got some other projects. I see that you’ve issued shares to Seabridge Gold. Is that for the acquisition of the project?

00:04:57

Carl Hering: Actually two projects came from Seabridge. The old historic Hog Ranch mine or not really historic, it was mine from ’86 to ’93, produced approximately 300,000 ounces of gold. That project was vented by Seabridge into the predecessor company which was called Icon Industries. I had actually worked on that project for Noranda back in 1984. Drilled, got eight holes, two of those of holes are now pits. So I had a history with the project and it’s been great part of Nevada where they have been running them.

James West: So how many projects all together in ICN?

Carl Hering: We have six projects. Hog Ranch is currently now, we joint venture it out to Pacific Rim. Pacific Rim I think is an ideal partner there. They want to be focus there. One of their geologist, both of their geologist of — and including Tom Shrake the president, I have all worked with in the past but they weren’t — one of the geologist is the one who actually was saying discovered Hog Ranch for Noranda joint venture at that time. So, is keenly interested on that. We have another project closer to Reno called — it’s in a Pine Grove Rockland but we just called it the Rockland District that has two different targets approximately two miles apart.

One of them hired up in a range was drilled by BHP in the 1980s. One of those drill holes had 37 meters of 1.08 grams per ton and deserving a follow-up closer down in the range front as a whole another area then includes one drill hole from about 2002 that had 87 meters of 1.1 grams per ton. We’re going to follow this up. This year, we just went back and did the fundamental early geology, rock sampling and complete the geophysics project later this fall.

James West: Okay. So the next 12 months, what’s going to drive the stock higher?

Carl Hering: Well, I think we’ll continue to drill at the Goldfield project. We’ve had great results so far. We saw have a lot to put together. We have to permit the Rockland project so I can’t really predict the time on that. The Silver project, well, I haven’t said much about it and there’s no information currently on our website. We have to assemble more land and acquire the historic data. And then we would verify some of the past drilling so that would be in a position to do 43-101 resource on that.

James West: Okay. So let’s look forward to lots of bullet in the chamber. I’m going to leave it there Carl. I’d like to thank you for joining us this afternoon.

Carl Hering: My pleasure.

James West: If you’d like to learn more about ICN Resources, you can visit them online at ICNResources.com. If you’d like to learn more about companies like ICN Resources at the early part of their value appreciation curve, visit MidasLetter.com. I’m James West and this is Midas Letter Money.
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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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Malbex Resources Inc. (TSX.V:MBG) CEO Tim Warman talks about the opportunities for a major discovery embodied in the company’s project portfolio in the El Indio Gold Belt near the border with Chile.

Outstanding drill results, such as 109 metres grading 2.05 grams per tonne gold and 7.3 grams per tonne of silver, are representative of the size and potential of the near surface deposit at its flagship Del Carmen Project. The company has three projects in Argentina, and one in Perú.

TRANSCRIPT:

James West: Hi, I’m James West and this Midas Letter Money.

In 2011, we held on to only five TSX Venture Stocks and my next guess was one of them. Tim Warman is the CEO of Malbex Resources traced under the symbol MBG on the TSX Venture Exchange. Tim, thank you for joining us today.

Tim Warman: Thank you.

James West: So Tim, tell us a bit about your projects. You’ve had some spectacular drill results but tell us first about your project portfolio, your flagship, et cetera.

Tim Warman: Sure. Well, our flagship project is in Argentina. It’s in the El Indio Belt. It’s a very prolific belt that also hosts Barrick’s Veladero and Pascua Lama mines.

James West: How big are those?

Tim Warman: They are — between the two of them, 30 million ounces plus and then of course just across the border in Chile, you’ve got the old El Indio mine which is the namesake mine for the belt. It’s closed now but it produced 4.5 million ounces. So, when the small mine in the belt only produced 4.5 million ounces, you know you’re in the right territory.

James West: Elephant country.

Tim Warman: Yeah, exactly.

James West: Great.

Tim Warman: Yeah, so it’s a big, high sulfidation gold project which means that’s it’s a shallow project. It’s a near surface. It’s oxidized, very, very simple to treat, very much like Barrick’s Veladero project.

James West: You’re talking about your flagship property?

Tim Warman: Yes, this our Del Carmen project.

James West: Del Carmen.

Tim Warman: Yes.

James West: Okay, great. And then — so what’s the status of the Del Carmen project right at this point?

Tim Warman: Del Carmen is basically an advanced exploration project. We’ve put up the first ever resource on the project last year. It came in just under a million ounces so we were at 816,000 ounces of gold that had a grade of one gram per ton which should actually for oxide heap-leach type deposit. It’s a very good grade.

There’s also 10.8 million ounces of silver in there that have a grade of 13 grams per ton and it look like from some of the preliminary data that we have that it will leach as well.

Right now, we’re looking to grow that project so we’re on our second major drilling campaign right now on Rojo Grande. We’re looking to do somewhere in the order of 10,000 meters drilling on it. Expand that resource. Get it up through what we think is probably an economic threshold somewhere in the two to 2.5 million-ounce range not just at Rojo Grande but within that larger Del Carmen system. We’re looking at a number of other promising targets so that putting together a series of different zones within that larger alteration system, we think we can get up past that to 2.5 million ounces economic hurdle.

James West: Okay. So there’s going to be quite a series of news coming this year with results.

Tim Warman: Absolutely. Yeah.

James West: Okay. Tell me a bit about some of these great intercepts you’ve had. They seem to consistently come in at over 100 meters and over a gram per ton gold and is that characteristic of all of the mines in the area that surround you?

Tim Warman: Yeah. If you look at some of the other mines in the area so for instance Veladero is probably the best analogue. It’s an oxide, open pit, heap leach type deposit, very, very simple, low capex, low operating expenses, not a lot of risk involved and Veladero is one of the Barrick’s biggest mines.

In 2010, it produced over a million ounces of gold. It had a cash cost of $250 an ounce. This year, the cash cost have gone up somewhat to $350 an ounce but that puts them at the lowest quarts out of any mines globally.

So, interestingly at Veladero, their greatest point eight grams per ton. That’s Rojo Grande right now. Within Del Carmen system, we’re looking at a grade of gram per ton so a little bit higher, plus we also have some silver credits in there that we likely to get as well.

James West: Okay, and tell us about some of the other projects you’ve got in the portfolio.

Tim Warman: So just today, we pressed release that we have two new projects added in Argentina, one in La Rioja Province, one in Catamarca province, adjacent to San Juan province where our flagship property is. These are again pro-mining provinces with the history of mining in them. In fact, Catamarca hosts Minera Alumbrera which is Xstrata and the Gold quartz large copper mine. It’s one of the largest mines in Argentina.

We’re all along the same structure with our Quebrada Seca project somewhat about 70 kilometers along that same structure from it, very promising project. Tech had it in the early part of the 2000s, looked at it. I was very, very impressed with it but then Tech pulled out of Argentina wholesale and the project returned to the owner. We’ve just picked it up and we’ll be beginning to work on that in the next couple of months.

Another project, Chalchalero a similar copper-gold perfect target in La Rioja Province in an area that there are number of other new discoveries including NGEX’s project that belong to San Juan border.

We also have a project in Peru, in Southern Peru in Ayacucho Province called Grace. It’s a project that we’re earning into. It’s a high sulfidation gold system. It’s very, very interesting for Peru because it’s a good alteration and surface, good gram samples at surfaces. It actually is a road running right through the middle of it and yet it’s never been drilled. And to find a high sulfidation project in Peru that’s never been drilled, it’s actually bit of a fine.

And so we’ll begin working on that probably in March or April in this year so lots of news flow coming from those other projects as well.

James West: Sure, okay. So then you have good amount cash on hand to finance all of this, Tim?

Tim Warman: Yeah. We raised $15 million last year and I bought a deal with Bank of Montreal. We have about $8 million left this season so that will carry us through the end of our physical year which is the end of September of 2012. We also have about $8 million in warrants that are verging on being in the money so that can bring in like I said, about another $8 million. That would take some of the pressure off of us on the physical point of view but–

James West: Okay, sure. Well, why don’t you tell us a bit about your board of directors?

Tim Warman: The board of directors is kind of interesting. I mean, you know for a company with a $40 million to $50 million market cap, we have guys like David Garofalo who is the CEO of HudBay, Patrick Anderson who is the founder and the CEO of Aurelian Resources, obviously it’s a big success story.

00:05:04

Terry MacGibbon who is the Chairman of Quadra FNX and I think that deal just close to sell Quadra FNX to the Polish for $3.5 billion and then Joe Hamilton who is one of the Aurelian board member as well is with us. And one of the really interesting guys we have, he’s not on the board but he’s on an advisory committee to the board. He was one of our founders, a guy named Hernan Celorrio.

And Hernan is a Buenos Aires based semi-retired mining lawyer but he was the president of Barrick Argentina for seven years while they were building and permitting Veladero. He’s incredibly well-connected in Argentina and of course in Argentina, it’s very important to be on top of things both on the political side and on the mining side so it’s a very, very I guess a strong board specifically for a small company like ours.

James West: Sure. So, lots of drill results coming and property acquisitions continuing and expanded project universe. It’s a fascinating story. Thank you for joining us today.

Tim Warman: Thank you.

James West: If you’d like to learn more about Malbex Resources, visit them online at malbex.ca. That’s M-A-L-B-E-X.ca. And if you’d like to learn more about companies like Malbex, visit www.midasletter.com.

I’m James West and this is Midas Letter Money.

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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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Curis Resources (TSX:CUV) CEO Michael McPhie and James West, host of Midas Letter Money, talk at length about the company’s Florence Copper Project, an advanced-stage ISCR project in central Arizona. Located midway between Phoenix and Tucson near the community of Florence AZ, the company’s land holdings total 1,342-acres including 1,182 acres of patented claims and 160 acres of state mineral leases.

Michael outlines Curis Resources’ path to production, which is in the feasibility stage with pilot production expected to commence by Q3 2012. Curis is a Hunter Dickinson company.

The full transcript of the interview is here:
James West: Hi, I’m James West. This is Midas Letter Money. My next guest is going to be producing copper before the end of the year and what is arguably one of the world’s safest jurisdictions. Michael McPhie is the president of Curis Resources Limited, trades on the TSX under the symbol CUV. Michael, thank you for joining us today.

Michael McPhie: Good morning. Good to be here.

James West: Tell us a bit about the project that you’re working on. It’s a near term production scenario in Arizona.

Michael McPhie: Yeah. Well, we acquire this project the end of 2009. Curis Resources is part of the Hunter Dickinson Group, companies which been around almost 30 years. And what we started here was a tremendous opportunity to take an asset that VHP copper had advance to a full feasibility study. They received production permits and undertake a polytest on this copper oxide deposit in Central Arizona. It’s a 429 million ton measured and indicated resource and we hope bring in on stream here in the next few months with the lowest cartel kind of operating cost and make a real winner out of it.

James West: So, you bought it basically a turning key copper operation off for VHP?

Michael McPhie: Well, we didn’t buy it off VHP. VHP sold it in 2001 to a larger real estate group because they have a large land position in Central Arizona but they were exiting the US market at the time when copper prices were really. So what we ended up buying in 2009 for a competitor process was a 1,400 acre land package with this large buried oxide copper deposit underneath. And you’re right. Turn key is a good way to look at it.

James West: And so, tell us how you going to get to production and what you’re going to be producing and how you’re going to be producing.

Michael McPhie: Sure. So, like what I said. You got a 3 billion pound approximately oxide copper resource in the ground. It’s a leaching project so we’re going to be leaching the copper off the rock. It’s a little bit of a technology story in here in the sense that we’re actually going to be using in-situ recovery. In-situ recovery is a term Latin for in place. So we’re not digging any open pits. There are no underground workings. We’re going to be injecting a very, very weak acidic solution deep into the ground dissolving the copper, bring it up and putting it through a solid extraction-electrowinning plan.

Our production profile is 76 to 80 million pounds of copper cathode a year. So those are the 99.99% pure copper cathode sheets that get turned into wire and pipes and all the stuff we used in the society. What’s so amazing about this project is, our footprint on the ground is so small. We have a series of three foot high wells that’s set above the ground. You’re injecting and recovering it, putting through a very tried and true process. At the end of the day, you’re ending up with pure copper cathodes. So it’s really good.

James West: That’s interesting. So being I guess part of the Hunter Dickinson Group raising capital is not the biggest challenge out there.

Michael McPhie: No. We did a very successful oversubscribed IPO in November 2010 and we’re fully funded now for the completion of a bankable feasibility study and our project permitting and ultimately we’re going to have to go to the market to the banking and other debt facilities and things to fund — essentially will be ultimately about $300 million project. But we don’t see that as a big concern. It’s a great project and lowest cost cartel operating cost in the world and very low CAPEX.

So, at a time when we’re seeing capital cost in the industry going up on always big, big projects, here we are coming in it something that is relatively low CAPEX. Very, very low operating cost and yeah, we don’t think we’re going to have any trouble financing it.

James West: Okay. Why don’t you tell us a bit about your background?

Michael McPhie: Well, so I’m the CEO or Curis and I’ve been an out rolled a little over two years. I was responsible of taking it in private, in public and then in advancing and engineering team and then where we are. I’ve been in the business a little over 20 years, started my carrier actually looking for diamonds up in the Arctic. Had a bit success with that back in 1990s and then spent five years up in Timmins an underground operation and made my way through the industry up until the point where I’m the CEO of this company and taken it forward. So, background, physical geography and science and now spent the last 10 years really on financing companies and bringing them to market.

So, good experience level for this kind of thing and excited to take something forward at the time when copper market are so strong. I mean this is a great time to be bringing copper on the stream.

James West: It sounds like it was essentially a gift wrap for you. Where is the challenge in getting this thing in the production?

Michael McPhie: Well, when you’re building, it doesn’t matter if it’s a billion dollar project or a $300 million project. It’s all about execution. Can you — establish timelines, you set expectations in the market place are really our key focus now is meeting the expectations that we’ve set for ourselves which is to bring this on to production relatively, quickly and produce it real world-class asset and operating profile. So it’s the thing that keep me up at night is focusing on those timelines and making sure we can execute them in the time that we’ve set for ourselves.

James West: Well, that’s a great story, Michael. We’re going to follow with interest. I’d like to thank you for joining us today.

Michael McPhie: Yeah, it’s great to be here. Thank you.

James West: If you would like to learn more about Curis Resources, you can follow them online at curisresources.com. That’s C-U-R-I-S resources.com and if you would like to learn more about companies like Curis Resources, visit midasletter.com I’m James West and this is Midas Letter Money.
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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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Tim Bergen, CEO of CanAm Coal Corp (TSX.V:COE), joins James West, host of Midas Letter Money in an infomrative and revealing discussion about that rarest of TSX Venture companies – a profitably producing coal company. CanAm Coal operates four mines and a port facility, and has all of its coal sold until 2015.

James asks Tim about the disconnect between the market cap and the share price in view of $13 million in projected EBITTDA in 2012 and $25 million in 2013. The company is producing about a million tonnes per year.

The transcript of the interview is here:
James West: Hi. I’m James West and this is Midas Letter Money. My next guest is a co-producer in the State of Alabama in the United States. Tim Bergen is the CEO of CanAm Coal Corporation which trades on the Toronto Venture Exchange under the symbol COE. Tim, thank you for joining us today.

Tim Bergen: Thanks for having me, James.

James West: So Tim, you’re producing from four mines as I understand in the State of Alabama. You’ve got off-take agreements in place. Tell us a bit about your production profile.

Tim Bergen: Okay James, we got four mines operating, one wholly owned on a port facility, so we have access to seaborne market, and we have three mines that are 50% owned with an option to purchase the other 50%.

We currently have 85% of our coal sold out to 2015, which is kind of unique for a micro-cap such as we are. That’s about a million tons production a year. We’ve been growing rapidly since we structured the company to become a production acquisition and development company in 2009.

James West: Okay. So what does the EBITDA revenue look like?

Tim Bergen: Our EBITDA for this year is forecast to be $13 million and if we take out the exercise, the option of our partner, we’ll do $25 million in EBITDA next year and a million tons of production. That positions us — you know, in our market cap right now, it’s only $18 million. So there’s a definitely a disconnect between our market cap and our true EBITDA story and our growth portfolio with contract and sales.

James West: So the opportunity for investor looking at the company now is the disconnect between earnings and market cap.

Tim Bergen: Yeah, absolutely. Some people do some different measurements of how trading should go by, by EBITDA. We think four times EBITDA is realistic. Future EBITDA and —

James West: Four times earnings is the industry standard?

Tim Bergen: Four times EBITDA, yeah. It seems to be the industry standard in coal that we’ve seen looking across now. We’re kind of unique as a micro cap. There are not a lot of micro cap producers, so we have to compare ourselves to the big boys out there. So they’re trading it four times. We’re a producer and if we can get four times, we should be a hundred million dollar market count.

James West: Okay.

Tim Bergen: Compared to the $18 million where we are.

James West: Sure. Tell me a bit about the life of mine in these four instances.

Tim Bergen: So we’ve got a 43-101 with six million tons of proven production on 3,000 acres and we have 7,000 acres held in permit or in our control. Our current production, we have 10 year lifeline at future production expanding at our 43-101. We think we have a lot more than that.

James West: Okay. So there’s a lot about exploration upside in the company as well.

Tim Bergen: Yeah. And our partners in Alabama that we teamed up with, they have 30 years experience down there and they’ve done everything through organic growth, tie up a property, permit it, put it into production. So that’s why we have a high growth portfolio in our organic growth but we’ve also got an acquisition strategy to build out the three million tons of production. And as I said, our current pipeline is one million tons.

James West: So then you don’t plan to be a market cap for very — a micro-cap for a very long –

Tim Bergen: No, we don’t plan to be a micro-cap. We think there’s a lot of upstate side. We’re very bullish on not only the local markets for high quality coal in Alabama but also we have access to seaborne markets, which with the growth and steel production, with the growth in energy production worldwide that there’s going to be a super cycle on coal to continue to go for the next five to ten years.

James West: Okay. Why don’t you tell us a bit about your management team?

Tim Bergen: We have an incredible management team. I grew up in the mining industry in British Columbia and then got into public businesses in 2002 and been an officer and director of a number of public companies. And our team down in Alabama has really got 25 years experience in mining and development of projects. It’s Bob and Tom Lewis, the Lewis Brothers and it was a quite cue for us to buy 50% of their company with an option to buy the other 50% last May.

They’re just a well-respected pair of professional brothers that run very clean mining operations in Alabama, lots of Sentinels of Safety Awards and proven history of profitable success. From the Board of Directors, we have just an exemplary group of guys with a broad professional landscape. Our chairman is the former president of RBC U.S.A and then we have Blakes and Cassell co-leader of their energy practice, and a former — our audit committee leader is a former vice president of PricewaterhouseCoopers, and our CFOs is PricewaterhouseCoopers as well. So it comes down to the numbers when you’re really understanding the numbers, when you’re growing at a company like this.

James West: Sure. Okay. Now, there’s been some resistance in some areas of the United States to coal mining. Is that a problem that you’ve encountered?

00:05:00

Tim Bergen: When we went into an acquisition strategy, we looked all through Appalachia — Southern, North and Central — and we really focused on Alabama because they don’t have the mountaintop issues for surface mining, and we really specialize in surface mining. We know how to do that. Well, it’s my background and it’s our partner’s background in Alabama.

So Alabama doesn’t have mountaintop mining, which is valley fill for our permit issues, cut and fill. So it’s contour mining so it doesn’t come with a lot of reclamation liability and for a permitting standpoint, it’s a lot easier to permit in the mountaintop-type mining, surface mining that’s going on in Virginia and Kentucky.

James West: Okay, so how many shares out in the company?

Tim Bergen: There are 120 million free trading shares roughly and about 170 million fully diluted.

James West: But you’re not going to need to raise any money for exploration?

Tim Bergen: No, we’ll just organically grow exploration and we need to — as we move forward, we’ll raise the money for taking out the balance of the 50% of our partners, but we’ve got strong cash flow. We can — we don’t have any senior secured debt on our books or we don’t see us being very dilutive from this point to get to our next stage.

James West: Wow! Fascinating story, Tim.

Tim Bergen: Thanks.

James West: Thank you for joining us today.

Tim Bergen: Well, thanks a lot, James. We appreciate you taking the time to talk to us.

James West: It’s a pleasure. If you’d like to learn more about CanAm Coal, you can visit them online at canamcoal.com.

Tim Bergen: Yes.

James West: And if you’d like to learn more about companies like CanAm Coal, visit midasletter.com. I’m James West and this is Midas Letter Money.

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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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Tosca Mining Corporation’s (TSX.V:TSQ) (OTCQX:TSMNF) (FSE:TQ4) Dr. Sadek E. El-Alfy talks with James West about the company’s strategy to put the Red Hills Copper-Molybdenum project into production, and the future price of molybdenum.

The company recently issued a 43-101 resource calculation is based on a database of 121 drill holes totaling 60,131 feet (18,328 m) which includes 53,947 feet (16,443 m) of diamond drilling.

TRANSCRIPT:
James West: Hi, I’m James West, this is Midas Letter Money and my next guest is a going to change your mind about molybdenum. Dr. Sadek El-Alfy is the chairman and CEO of Tosca Mining Corporation trades under the symbol TSQ on the Toronto Venture Exchange as well as TQ4 in Frankfurt, and TSMNF on the OTC Bulletin Board. Dr. El-Alfy, thank you for joining us.

Dr. Sadek El-Alfy: Thank you very much James, a pleasure to be here.

James West: Dr. El-Alfy you are developing a molybdenum and copper project in Texas, which threatens to become possibly the third largest in the world if you accomplish your objectives. Now, first before we get into the project itself, I’d like to address the molybdenum market. The general perception in the market is that there’s very little excitement around molybdenum and why is that?

Dr. Sadek El-Alfy: That perception is based on the premise that four or five large projects are going to be financed and put into production all within the next two or three years. These projects are good projects but they have a very high capital attached to them and in the several of these cases the feasibility full bank of the feasibility studies have been sitting there for at least three or four years.

James West: And so what kind of CAPEX are we talking in their cases?

Dr. Sadek El-Alfy: In their cases, they’re talking between $800 million and $1.2 billion.

James West: I see and so you have a different approach and you believe you can put a mining production for around $200 million or $300 million?

Dr. Sadek El-Alfy: Well, we have a different approach. Our approach is a phase approach to start small and build the extensions out of cash flow. We have Benchmark against two large operations who have done the same and who have managed to get into the size of production which we’re aiming for at around $200 million to $300 million. And this is what we are going for at that stage.

James West: So there are examples of companies that have been there and done that before.

Dr. Sadek El-Alfy: Absolutely. One large molybdenum operation in Northern Arizona and another one a large gold company in Egypt.

James West: Okay. So you’ve got debts of experience. You’re a mining engineer that’s what you’ve doctored is in?

Dr. Sadek El-Alfy: Yes it is.

James West: Okay and so where have you been in the mining industry in the past?

Dr. Sadek El-Alfy: I spent many years in Northern Canada. I run the Iron Ore Company of Canada in Labrador. I was up north in Baffin Island. I lived for eight years in Yellowknife in the underground gold mines there. I’ve been in Timmins and more recently I spent 12 years in Venezuela developing a large gold mine there.

James West: Oh, okay. So you’ve got a wide range of experience around the world. Then let’s focus a bit on the deposit itself. You only option this project a year ago and you told me you’ve gone in one year from essentially zero to 300 million pounds of moly and 100 million pounds of copper?

Dr. Sadek El-Alfy: Yes. We signed the deal in March or April of 2011 and raised finance $5.5 million and within eight months we had completed the resources document. We’ve completed 80% of the metallurgy that is required for a feasibility study. And we’ve worked with consultants to look at the future permits. And basically, we just posted our resource document online and on SEDAR.

We are working advance to these projects very rapidly because we find it’s a very good project and it has a potential of going to production quite rapidly. There’s being a lot of interest around that copper pillars or people have approached us and ask us for the copper and we’ve been in discussions on the moly.

James West: Okay. So you’ve got this and you’ve got an existing resource then and it doesn’t sound like it’s one of the top three in the world. So how are you going to get to that with that size?

Dr. Sadek El-Alfy: Well, we know where the down deep extension is but we haven’t drilled it. The deposit is almost cutting half by an east-west fault. We have found the southern portion of our own value. We know where it is but we haven’t had a chance to drill it. This is part of the 2012 program to first of all expand the resource and make it up there with one of the biggest money deposits at that time familiar with anyway. And the number two would be to develop a mining plan with an in pit resource or reserve around what is known today.

James West: Okay. So you can get yourself in the production quickly, cheaply, continue to explore, filled up the resource, increase the size and the capacity of production as you grow.

Dr. Sadek El-Alfy: All of these things that you mentioned in 2012, we have a three-pronged program which will yield us, yield a full bankable feasibility study by the end of the year.

00:05:06

James West: By the end of 2012?

Dr. Sadek El-Alfy: Yes.

James West: Okay, so you must have lot of drilling plan this year?

Dr. Sadek El-Alfy: We have 60,000 feet of drilling plan for this year.

James West: And is that all permitted in Texas?

Dr. Sadek El-Alfy: Yes. Texas is a very friendly jurisdiction. The exploration requires a minimum permitting in Texas. We have managed to drill last year very quickly after we signed the deal.

James West: So permitting is not an issue?

Dr. Sadek El-Alfy: No, it’s not an issue.

James West: Okay. Let’s talk about infrastructure assuming that you are able to get this resource into production within the next five years or so, there’s roads, power, water.

Dr. Sadek El-Alfy: Yes we hire — I always like to say that mining engineer needs a bit of luck too because if this resource was in the middle of the jungle somewhere then we’ve have to put a highway. We have to spend hundreds of millions of dollars in power lines. We have highway 67 that comes right to the gate of the property almost three miles. The property is three miles away from highway 67 in southern Texas. We have a high voltage power line that comes through the property. So the high voltage transformer would be set up right on the property and –

James West: Can you get water?

Dr. Sadek El-Alfy: Water will have to come from Presidio. Water in Texas is a — we have higher consultants gold associates to do the geo-environmental work for us and water permitting, and water licensing is done. I don’t expect there would be.

James West: Okay great. So then let’s talk about in terms of financing this, what’s your cash position presently?

Dr. Sadek El-Alfy: Currently we have a million dollars in the bank and we are raising funds. We will be going out to raise funds for the exploration program and to get the feasibility study completed by the end of this year.

James West: Okay. So you’ve got 60,000 feet of drilling, full feasibility underway. You’re looking to double the resource and you’re going to come in as a lower cost producer than any of the other big projects out there. At least that’s your intention, so lots to look forward to.

Dr. Sadek El-Alfy: Yes for sure, the lower capital than the other folks.

James West: Okay.

Dr. Sadek El-Alfy: The operating cost, we have to — I mean the price of line is the same for me as this for the other producers. These are the same for me, but where we will be a part is in the capital to get this thing going. It will not be a billion dollars. It will be a lot less and we’re looking at around $200 million.

James West: Interesting, thank you for joining us today.

Dr. Sadek El-Alfy: Thank you James.

James West: If you’d like to learn about Tosca Mining you can visit them online at ToscaMining.com and if you’d like to learn more about companies like Tosca Mining at the early part of the value creation curve visit MidasLetter.com. I’m James West, this is Midas Letter Money.

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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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Cuoro Resources Corp. (TSX VENTURE:CUA) (FRANKFURT:6BC) CEO Robert Sedgemore is interviewed by James West on Midas Letter Money. Robert outlines the company’s success so far and its plans to fast track drilling on the Santa Elena deposit in Colombia. Recently reported intercepts include a 6 metre section grading 9.42% copper.

The company went public last year and since then has raised over $33 million and still has $18 million in the treasury. According to sedgemore the comapny will continue drilling in an effort to develop a 43-101 resource calculation in support of a preliminary economic assessment.

TRANSCRIPT:
James West: Hi! I’m James West and this is Midas Letter Money. My next guest is developing resources in Colombia. Robert Sedgemore is the President and CEO of CuOro Resources, trades on the TSX under the symbol CUA.

Robert, thanks for joining us today.

Robert Sedgemore: James, thanks for having us.

James West: Okay. Robert, I’m going to jump right in to this press release that came out in January 2012 just because it was such a substantial game changer to what the potential for CuOro was, at least in our estimation. You announced a 102.9-meter hit 1.44% copper within which there was a 30-meter hit at 2.06% copper. By any account, that’s a homerun. Tell me about how you came across the Santa Elena deposit and how you knew to drill a hole in that spot to begin with.

Robert Sedgemore: Well, the Santa Elena Project, it’s VMS. On the property, there are geochemical anomalies, these large outcrops that back in 1997 Noranda was on site. They conducted a geophysical TEM anomaly — TEM survey, transient electro-magnetic survey and identified a large anomaly that extended 900 meters north-south and 400 meters east-west. So contained in that survey is also these large outcrops, which is like a wall of metal sticking out of the ground. It’s very high grade, 10 to 15 meters wide, 10 meters high and it extends over 70 meters in length.

So we started targeting in around that area, conducted other geophysics surveys, IP, as well as we’re now conducting down hole pulse EM surveys.

James West: What exactly is that?

Robert Sedgemore: Well, you’ve got — in a VMS, they occur in lenses and there’s a mass of sulfide, so it means it’s almost pure metal. And the polymetallic, it’s a mix and a host of several different metal types. We’ve got very high grade copper, zinc, gold and silver. So a company like HudBay, our strategic partner, they have been following us and invested in our company.

James West: Polymetallic miners.

Robert Sedgemore: They like polymetallic and with that, it’s very low cost operation. They get credits for secondary metals.

James West: So tell me what it’s like operating in Colombia. There is still some residual sort of skepticism about the safety and the security issues about operating in Colombia. Are you experiencing anything there?

Robert Sedgemore: No. We’ve been in the business now over a year. We’ve set up at ground zero. We had no employees. We’re operating now with about 80 people. We have our base camp right at site. We have a core login and storage facility in Medellin(ph). Operations are very smooth. I think there have been a lot of changes in Colombia over the last four or five years since President Uribe took a strong arm against the criminal elements, a lot of improvements.

James West: So you haven’t been kidnapped?

Robert Sedgemore: No, I’m still here and I live there with my family in Medellin.

James West: Oh, is that right?

Robert Sedgemore: Yes.

James West: Okay. So then now looking at the feature for CoUro, what is the immediate game plan for the near term that’s going to drive shareholder value going forward?

Robert Sedgemore: Well, we started — we’ve got our fourth drill rig on site now. So we’ve got four rigs spinning. We’re targeting 25,000 meters this year. We’ve drilled 42 holes over 8,000 meters out of which 18 has come back mineralized and we’re getting these fantastic intercepts 40-48 meters in around 2% copper, and of course hole 39 returned 1.44% copper at 102-103 meters. So we’re very pleased. We’re getting continuity and it looks like it’s holding together over TEM-1, TEM-2. We’ve discovered new outcrops. We’re sampling them, channel sampling. We’ve also discovered some new adits. We’ve been focusing primarily in and around the outcrops areas where the large VMS deposit is, but now we are mapping our whole property. That takes up about 15% of our property. We’ve stepped out and started doing surface mapping, more surface exploration.

James West: So basically, lots of results that come from the lab throughout the year.

Robert Sedgemore: Well, absolutely and we’ve found a number of historical mine adits on the property that we haven’t — we’re just getting into now, cleaning them out and mapping and sampling.

James West: Okay, so this a property that’s been mined in the past?

Robert Sedgemore: Well, yes. There has been some very small scale –

James West: Artisan type?

Robert Sedgemore: – artisan type looking for gold. We have an exploration tunnel that’s over 115 meters. That’s a long strike of TEM-1 that validates continuation, the mineralization, the depth and the long strike of where those large outcrops are.

00:05:01

James West: Sure. Okay. Now, tell us a bit about your background because that I found interesting that somebody like you would come from more or less large producers to work in the junior space and we see that more and more these days.

Robert Sedgemore: Well, my background, I graduated from the Haileybury School of Mines.

James West: Right here in Ontario.

Robert Sedgemore: Right here in Ontario, Northern Ontario. I’ve been working in mining for over 25 years. In around ’95, I moved down to Chile as a chief engineer at BHP at Escondida, the largest copper mine in the world.

James West: BHP Billiton.

Robert Sedgemore: BHP Billiton now, yeah. And then I was working also with Placer Dome in Chile and is a director in South America for Outokumpu Technology. It’s now Outotec. And up to about two years ago, I was the former global mining specialist with the IFC, which is the private sector of the World Bank and I’ve started into the junior mining game.

James West: Sure. Now you’re going to make some money.

Robert Sedgemore: Well, our shareholders, we’re holding up very well. We’re in a strong cash position. Back in March last year, we raised $10 million.

James West: Actually, I want to — sorry for interrupting. I wanted to talk to you a bit about that. One of the real differentiators in this company that I have noticed and why we participated from day one is that all of your financings have been done at what would be considered a premium to where you are in the evolution of the company and you’re even able to raise money and hold a strong share price throughout market weakness in 2011.

Robert Sedgemore: Well, a lot has happened over the last year and back in March, we’ve raised $10 million at a dollar and then in April, $15 million at $2. Now, currently we have $18 million in the treasury and our work program at the end of the year will leave us with about $8 million in the bank.

Now, our company is — I think the project speaks for itself. HudBay is very, very pleased with the results as well as a lot of other investors, and people have come to the site. They’re very excited about the outcome.

James West: How much does HudBay own?

Robert Sedgemore: We have 30 million shares that are issued, plus warrants. HudBay is in for about 13.5%, so they’re a significant shareholder. But it’s not just straight equity. They have a non-dilution, so they’ll continue to participate as we move forward.

James West: Wow! That’s a good partner. Okay. Robert, we’re going to leave it there. I’m going to follow this story with a lot of interest and I’m sure our subscribers will as well. I would like to thank you for joining us today.

Robert Sedgemore: James, thank you very much, pleasure.

James West: If you’d like to learn more about CuOro Resources, you can follow them online at CuOroResources.com. If you’d like to learn more about companies like CuOro at the earliest part of the value creation curve, visit MidasLetter.com. I’m James West and this is Midas Letter Money.

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Midas Letter is the Journal of Investment Strategy of the Midas Letter Opportunity Fund, a Luxembourg-based Special Investment Fund that specializes in Canadian-listed emerging companies in the resource sector with a focus on precious metals explorers and miners. James West is the Portfolio and Investment Advisor to the fund.

Subscribe now for $49 per month, or $499 for one year, at http://www.midasletter.com/subscribe.php. 30 day instant refund period from your first subscription day if not 100% satisfied.
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