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Message: Donner Metals: 'It's only logical'

Donner Metals: 'It's only logical'

posted on Mar 05, 2010 10:39PM

Donner Metals: 'It's only logical'

Published 3/4/2010
As many of my readers know, I'm not the biggest fan of the talking heads that usually parade through BNN on a daily basis. Sometimes, however, something catches my eye.

One such occurrence was not too long ago - when an American market commentator by the name of Peter Grandich came on to respond to viewer calls and comments. During Mr. Grandich's segment a caller asked him about a TSX-Venture-listed company by the name of Donner Metals (TSX Venture:DON). The caller's request for a price target sparked an interesting exchange between Mr. Grandich and, the show's host, Pat Bolland that I thought I would share with you.

Grandich: As you can see the stock has come way off a bottom. The stock I think compared to some of its peers is still grossly undervalued....

Bolland: And as we saw in that 3 year graph, it's still not up to the levels that it was at 2.5 to 3 years ago.

Grandich: Right. And that would be a logical target to say that it would get back to its old highs.

Bolland: Ok, so we didn't get a price, but we got a logical target.

Grandich: There you go!

While this conversation was brief, Mr. Grandich and Mr. Bolland were bang on: it's only "logical" to be intrigued by Donner - the company is just a few short months away from a production decision on an asset that sits right beside a working mine - and the operator of that mine is its partner. Donner also has 8 drill rigs turning - no other junior zinc company is doing that.

Donner and joint venture partner Xstrata Zinc Canada (Xstrata) have discovered, delineated and are now doing a full blown feasibility study on their jointly held Bracemac-McLeod deposit.

The project has a 43-101 compliant indicated resource estimate of 3.62 million tonnes, grading 11.52% zinc, 1.60% copper, 31.55 g/t silver and 0.49 g/t gold. Donner is expecting the results of the feasibility study to be out in June. And, if everything's a go, then the mine could be in construction as early as July.

A large reason why Xstrata has moved this process along so quickly, is because they already have infrastructure in place in Matagami. Bracemac-McLeod is only a few kilometres away from Xstrata's fully functioning mill. The project also benefits from being beside a large tailings pond, a town of 2,000, an airport, and a rail line that ends inside the mill.

Donner got its start back in 2006 when the company won a competition to sign a 50-50 joint-venture agreement with mining giant, Xstrata. As part of the deal, Donner must earn into its interest by spending $25 million over 5 years - which should be complete by May 2011.

Xstrata is now earning back 15% by spending up to $20 million on a feasibility study - leaving DON with 35% of the deposit.

Since 2006, Donner has raced past exploration, definition and delineation drilling, and breezed past a scoping study on its principal Bracemac-McLeod project

A few weeks ago the company announced a 21.6 metre intercept grading 6.05% zinc, 1.85% copper, 65.5 g/t silver, and 1.56 g/t gold, located just a few hundred metres below Bracemac-McLeod. Last week, a follow up hole hit 7.5 metres grading 10.27% zinc, a whopping 3.44% copper, 50.71 g/t silver, and 1.12 g/t gold. Drilling is continuing, and I am excited by what this could mean for the old resource estimate at Bracemac McLeod.

As we draw nearer to Donner's production decision date in June, Mr. Grandich's and Mr. Bolland's "logical target" may prove accurate.

As many of my readers know, I'm not the biggest fan of the talking heads that usually parade through BNN on a daily basis. Sometimes, however, something catches my eye.

One such occurrence was not too long ago - when an American market commentator by the name of Peter Grandich came on to respond to viewer calls and comments. During Mr. Grandich's segment a caller asked him about a TSX-Venture-listed company by the name of Donner Metals (TSX Venture:DON). The caller's request for a price target sparked an interesting exchange between Mr. Grandich and, the show's host, Pat Bolland that I thought I would share with you.

Grandich: As you can see the stock has come way off a bottom. The stock I think compared to some of its peers is still grossly undervalued....

Bolland: And as we saw in that 3 year graph, it's still not up to the levels that it was at 2.5 to 3 years ago.

Grandich: Right. And that would be a logical target to say that it would get back to its old highs.

Bolland: Ok, so we didn't get a price, but we got a logical target.

Grandich: There you go!

While this conversation was brief, Mr. Grandich and Mr. Bolland were bang on: it's only "logical" to be intrigued by Donner - the company is just a few short months away from a production decision on an asset that sits right beside a working mine - and the operator of that mine is its partner. Donner also has 8 drill rigs turning - no other junior zinc company is doing that.

Donner and joint venture partner Xstrata Zinc Canada (Xstrata) have discovered, delineated and are now doing a full blown feasibility study on their jointly held Bracemac-McLeod deposit.

The project has a 43-101 compliant indicated resource estimate of 3.62 million tonnes, grading 11.52% zinc, 1.60% copper, 31.55 g/t silver and 0.49 g/t gold. Donner is expecting the results of the feasibility study to be out in June. And, if everything's a go, then the mine could be in construction as early as July.

A large reason why Xstrata has moved this process along so quickly, is because they already have infrastructure in place in Matagami. Bracemac-McLeod is only a few kilometres away from Xstrata's fully functioning mill. The project also benefits from being beside a large tailings pond, a town of 2,000, an airport, and a rail line that ends inside the mill.

Donner got its start back in 2006 when the company won a competition to sign a 50-50 joint-venture agreement with mining giant, Xstrata. As part of the deal, Donner must earn into its interest by spending $25 million over 5 years - which should be complete by May 2011.

Xstrata is now earning back 15% by spending up to $20 million on a feasibility study - leaving DON with 35% of the deposit.

Since 2006, Donner has raced past exploration, definition and delineation drilling, and breezed past a scoping study on its principal Bracemac-McLeod project

A few weeks ago the company announced a 21.6 metre intercept grading 6.05% zinc, 1.85% copper, 65.5 g/t silver, and 1.56 g/t gold, located just a few hundred metres below Bracemac-McLeod. Last week, a follow up hole hit 7.5 metres grading 10.27% zinc, a whopping 3.44% copper, 50.71 g/t silver, and 1.12 g/t gold. Drilling is continuing, and I am excited by what this could mean for the old resource estimate at Bracemac McLeod.

As we draw nearer to Donner's production decision date in June, Mr. Grandich's and Mr. Bolland's "logical target" may prove accurate.

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