Focus Ventures (TSX.V:FCV) Drilling in Elephant Country

By James West
MidasLetter.com
Friday, October 9, 2009
Having just returned from a trip to Peru last week to visit Focus Ventures Ltd.’s (TSX.V:FCV) Nueva California project, I feel compelled to state right at the top that standing outside one of the main adits of this mine, another was visible across the valley some 35 km distant.

That mine is called Pierina, and it is operated by Barrick. (NYSE, TSX: ABX). The Pierina mine is located in the Andean Cordillera in the Department of Ancash in north-central Peru, approximately 10 kilometres northwest of the city of Huaraz, at an altitude of approximately 4,100 metres. In 2008, Pierina produced 400,000 ounces of gold at total cash costs of $284 per ounce. Proven and probable mineral reserves as of December 31, 2008 are estimated at 683,000 ounces of gold.

Although the geology on that side of the valley differs significantly from that underlying the Nueva California property, there are similarities in both host rocks to suggest the possibility of the presence of Pierina type mineralization beneath the Nueva California.

And despite the fact that the geochemistry is similar to Pierina, the rocks and style of mineralization is different, probably the setting at NC s deeper than what it is at Pierina, but the target is a disseminated deposit that can be bulk mined is the same.

The Nueva California mine is run by a local Peruvian on a small scale (170 tonnes per day), and it was apparent that the application of modern engineering and exploration technologies had never been applied at this operation. They were leaching ore that should have been treated via gravity floatation, and underground mining what should have been an open pit. Focus has no interest in operating the mine as is, and will only fully exercise its option to acquire the property should their “best practices” exploration program prove the existence of a large tonnage deposit.

David Cass, CEO of Focus, stated unequivocally, “Our goal is to find a bulk-tonnage gold deposit on the scale of at least a million ounces.”

That kind of focused approach is a benefit to shareholders. As a single project company (now), it will be a relatively short period of time before we learn whether the company’s theories are sound. Drilling is underway, and the several holes planned will plumb the depths underneath high grade adits of the existing mine.

Considering the relatively low share issuance, even if the current drill program doesn’t bear fruit, the company has a portfolio of over 50 properties under examination, and so it won’t be a lost bet should round 1 not immediately gratify.

One could argue that the company is fully valued at a market cap of $16.8 million, but there is a tailings pile sitting right at the top of the road that has an estimated 800,000 + tonnes of rock with an average grade of 3 grams per tonne gold counting silver credits, and since the mine has been in operation for 28 years without never having an exploratory hole drilled, there’s no reason to be disappointed if the first two holes are not boomers.

If you’re wondering why the company is only drilling a few holes at this point, it is the belief of management that raising funds for a subsequent drill program at much higher levels is the best case scenario for existing and new shareholders – a strategy that will be vindicated in the first two holes constitute a discovery. Personally, I think, considering the pedigree of the management team and the obviously high grade ore dispersed among much more prolific lower grade ore, this is a good bet for the higher risk portion of the portfolio.

The company is marketed by Warwick Smith, a serial entrepreneur who specializes in bringing experienced management teams together to exploit quality mining projects, and in partnership with Simon Ridgeway, sees them properly financed and listed on the Toronto stock exchange.

Management

David Cass
President, CEO & Director

Mr. Cass is a geologist with over 21 years' international experience in mineral exploration and mining for precious and base metals. Fifteen years of his career were spent with major mining company Anglo American plc, where he held positions of increasing responsibility in jurisdictions such as Turkey, Iran, Eastern Europe and the America's, including 4 years as Senior Geologist in Peru, and 6 years as Exploration Manager for North America where he was responsible for Anglo's exploration programs throughout Canada, Central America, Mexico, mainland USA and Alaska. Since 2006, Mr. Cass has worked for junior exploration companies exploring in Canada, Mexico, Central America and Peru.

Mr. Cass holds a Masters of Science degree in Mineral Exploration and Mining Geology from the University of Leicester, UK (1990). He is a practicing member (P.Geo) of the Association of Professional Engineers and Geoscientists of British Columbia.

Mark Slauenwhite
Exploration Manager

Mr. Slauenwhite has 25 years' international experience including 13 years in Peru. From 1995 -- 2006 he was responsible for all aspects of Barrick Gold's exploration program in South and Central Peru. Mr. Slauenwhite was involved with the discovery of the Pierina and Alto Chicama mines with Barrick, and has developed expert knowledge of Peruvian geology and mineral deposits. He has extensive knowledge of high and intermediate sulfidation gold deposits, in particular on the resolution of high level geochemical and alteration signatures over buried high sulfidation deposits and 3 dimensional alteration zoning. Before his tenure with Barrick, he spent 11 years with Inco in Canada and South America.

Mr. Slauenwhite holds a BSc. Degree in Geology from Acadia University, Nova Scotia, Canada (1984) and he is a practicing member (P.Geo) of the Association of Professional Engineers and Geoscientists of British Columbia. He has been resident in Peru since 1995.

Simon T. Ridgway
Director

Mr. Ridgway is the co-founder of the Gold Group with over 20 years of mining and exploration experience worldwide. He has been integral in financing a stable of junior mining and exploration companies, raising over $150 Million between 2007-2009.

Mario Szotlender
Director

Mr. Szotlender holds a degree in international relations and is fluent in several languages. He has successfully directed Latin American affairs for numerous private and public companies over the past 20 years, specializing in developing new business opportunities and establishing relations within the investment community.

CONCLUSION Focus Ventures is a speculative risk investment that could pay off in the very near term or not until much later in the future. Considering the considerable fund raising and organizational skills of the management team, there will be no getting stranded with an inactive investment with Focus. The proximity to major gold operations bodes well, and the fact the company is drilling now makes this an easy bet for the risk tolerant.

About The Midas Letter
Midas Letter is a publication of Midas Publishing, LLC, an independent financial publishing company owned and operated by James West, a twenty year veteran of capital markets with a focus on small cap companies.

The information provided herein is derived from sources believed to be reliable but no warranty as to accuracy is express or implied. Midas Publishing and its employees have received no compensation for the authorship and/or distribution of this letter, though the company and/or its employees may from time-to-time purchase shares in the open market, or may participate in private financings at discounted prices.

This document is provided for information purposes only, and is not to be construed as investment advice to either purchase or sell securities in any company herein mentioned. Mining investment involves high risk and you could lose your entire investment. James West has no professional designations to qualify him to give investment advice or analysis. Always consult a registered investment advisor in your area prior to making any investment.

James West has no shares or options in Focus Ventures at this time, though was compensated for expenses associated with visiting the Nueava California mine.