I talk to mining and oil people on a daily basis as part of my ongoing research – these are the “interviews.” I put a fraction of the information into my radio commentaries and a bit more into my speaking engagements. But there is still a lot more information and some people like to see exactly what the person said/wrote. And given I do a lot of my work by email, posting the text – with the writer’s permission – is a fairly easy thing to do.
So, below you will find these “interviews” (actually answers to emailed questions).
February 6th, 2013
Tim Termuende regarding Eagle Plains and Omineca/CVG (he is the President and CEO of both).
- Eagle Plains recently staked some land in Saskatchewan – what are the plans? How did Saskatchewan’s new staking system work for you?
We were happy to see the MARS system implemented in Saskatchewan. BC has had a similar system in place for years and it has proven to stimulate exploration activity and result in more money actually put into the ground (instead of cutting trees and flagging claim lines). We acquired a number of large blocks of land based on in-house research prior to MARS coming online and had a number of people acquiring tenures immediately upon getting the green light. Our next step will be to do a thorough data compilation and make preparations for putting boots on the ground.
- Tell me about Omineca and why you like the CVG project?
I have been aware of CVG’s Wingdam project since 2009, when I was invited by Tom MacNeill to join him on a site visit. I was immediately intrigued with the project and its storied history. I have to admit that I was a little skeptical at first, particularly in light of past misadventures on the project. I followed the progress of CVG in utilizing freeze mining technology to successfully complete a bulk sample across the Lightning Creek channel, which significantly de-risked the project, in my opinion.
In 2011, Omineca was formed as a result of a merger between NovaGold Canada and Copper Canyon Resources (a company related to Eagle Plains). I became President and CEO of Omineca, and was tasked with seeking out a significant project to help move Omineca forward. CVG was a natural fit.
- Where is the Wingdam project located?
35km east of Quesnel, BC in the Cariboo goldfields, an historic gold mining region of the province.
- What exactly is an underground alluvial gold project? How does this compare to what we have in Saskatchewan?
An underground alluvial project is essentially a placer gold recovery operation which consists of mining gold material that has been liberated from its host rock by erosional forces and concentrated at the base of a deep gravel pile. Because the gold is already separated from its hard-rock host, no crushing or grinding of material is required, which greatly reduces operating costs. Gold mining in Saskatchewan consists of hard-rock or “lode” mining, which requires the exploration, location, development extraction and liberation of gold from its source host-rock, usually found at much lower concentrations than those of placer deposits.
- How many ounces do you think that can be recovered?
Based on the amount of gold recovered from the bulk sample, it is reasonable to estimate that between 150,000 and 200,000 may be present at Wingdam. However, natural forces are very unpredictable and these estimates may fluctuate wildly one way or the other.
- What do you expect for grade?
Again, based on the CVG’s 2012 bulk sample, the grades recovered over the entire tunnel length of 23.5m averaged 1.24 ounces per cubic meter. Using a conversion formula to estimate a hard-rock grade for comparison, this would equate to approximately 0.438 ounces per ton or 13.63 grams per tonne. The central part of the tunnel (over the very bottom of the creek channel) averaged 0.652 ounces per ton or 20.28 grams per tonne over 14.8m
- Were you involved in the bulk sample?
I was not.
- How long do you think the mine life is?
Preliminary plans indicate a mine life of 4-5 years.
- Is there a mine plan in place?
There is a preliminary plan in place, but will be beefed up substantially before development work will take place.
- When do you expect production to start? Permitting done?
Permits are in place but need to be amended to accommodate a larger operation as is now envisaged. The start of production will be dependent on the ability to finance the start-up. Despite these challenging markets, we have had very positive feedback to date. We intend to make a trip to Europe later in February to gauge investor interest there.
- At $1600/ounce, what do you think the profit margin is?
It’s too early to say. It would be a little too “forward looking” on my part, given the relatively preliminary stage of the feasibility studies to date and the lack of a NI 43-101 resource for the deposit. I think it is safe to say that given the information presently at hand, projections are for potentially robust returns.
- How much cash do you have on hand?
Omineca currently has approximately two million dollars in its treasury.
- How much cash do you need to raise to get into production? Where are you going to get it?
At this stage, we estimate start-up costs of approximately $10M. This figure may change as more detailed planning work is undertaken. We have not yet started financing efforts in earnest, but again, a trip to Europe later this month is planned. There are various financial mechanisms we could use to source funding. These include equity financing (selling shares of Omineca), debt financing, forward selling of gold production, or production off-take agreements, to name a few. At this point, all options are on the table.
- I know you have been doing some ‘soft marketing’ – what has the response been like?
So far-very enthusiastic. This is a very unique project and has already turned a few heads. With the general consensus projecting rising gold prices, projects like this that offer near-term production with low start-up costs and relatively low production costs in stable jurisdictions are few and far between. We are very enthusiastic about moving it forward.