via King World News - James Turk

James Turk discusses mining closures due to undue excessive pessimism in the gold mining sector:

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2013/3/10_James_Turk.html

Once 'The Road To Golden Heart' is built, company production should resume. They will be employing waste rock from the Komis overburden since the existing road will require a road bed to prevent sinking into muskeg and that the road bed can support heavy traffic.

You would think that they are building the road in desperation since they ran out of sub-cutoff grade material elsewhere and are in a panic to access more.

They have one year's worth of ore grade material from the Komis deposit stockpiled, and they have two year's worth(or more if they use Komis deposit ore) of high grade glacial till ore grade material from the EP Zone stockpiled. The company could run at full production if they wanted without incurring any costs such as depletion of ore, causing too high a rate of earnings depletion.

The company intends to operate at a loss by grossly encumbering the operation and earnings potential by stockpiling 6X the processing rate for the first two years' time.

Gold Companies

Gold companies should have been high flyers during the internet boom, except that Bre-X and gold depreciation was in vogue during that time.

One example of how gold companies should have performed is Prize Mining. Look at the 20-year chart:

http://tmx.quotemedia.com/charting.php?qm_page=23819&qm_symbol=PRZ.H

This did not occur for gold companies, in fact, they consistently underperformed inflation and the gold price. Prize Mining basically gave its Yellow Jacket deposit to Eagle Plains resources due to the hugely pessimistic outcome of its share price. Eagle Plains then spun off the property into Yellow Jacket Resources:

http://www.yellowjacketresources.com

Eagle Plains has subsequently acquired under explored gold properties in Saskatchewan, outside of the La Ronge Gold Belt this year.

Prize Mining is the only example of how gold companies SHOULD have performed in the markets, the outcome would not have been any different. Bre-X greatly interfered for a short time, but everything turned out just about the same anyways.

Things are about to get hot for gold companies, since Teck Resources now recognizes the opportunity in acquiring gold properties. Cominco was once a player in the La Ronge Gold Belt years ago, as well as in Manitoba in the same area:

Financial Post

-F6