Richard (Rick) Mills
Ahead of the Herd
As a general rule, the most successful man in life is the man who has the best information
Emgold Mining Corp.’s (TSX.V – EMR) Idaho-Maryland Project (IMP) lies at the foothills of the Sierra Nevada Mountains - a region that produced over 17 million ounces of gold and is the original Mother Lode Country that spawned the California Gold Rush.
The Idaho-Maryland Mine was the second largest underground gold mine in California producing 2.4 million ounces of gold with an average recovered grade of 0.43 ounce per short ton (“opt”) or 14.7 grams per metric tonne (“gpt”).
The IM project is a structurally controlled mesothermal mineral deposit with numerous high grade vein structures showing both horizontal and vertical continuity - The Idaho No. 1 Stope was one of the richest bonanza grade ore shoots in the world, producing one million ounces of gold from one million tons of ore.
Current resources are:
Measured and Indicated (M&I) - 472,000 ounces of gold (1.7 million tons at 0.30 opt or 1.5 million tonnes at 10.3 gpt)
Inferred (I) - 1.0 million ounces of gold (2.6 million tons at 0.30 opt or 2.3 million tonnes at 13.4 gpt)
Emgold’s management believes that the many exploration targets at the mine have the potential to up the combined resources to between 3 and 5 million ounces of gold (the exploration target of 3-5 million ounces of gold is based on projecting ounces per vertical foot to depth). To date, 216 gold resource blocks have been defined to delineate measured, indicated, and inferred resources with a total of 512 exploration targets identified for further exploration. In addition, 26 conceptual gold exploration targets have been defined.
Emgold is completing an Environmental Impact Report (“EIR”) to reopen the mine and ultimately plans to construct a 2,400 ton per day (2,200 tonne per day) operation with the potential to produce over 200,000 ounces of gold per year. Existing Idaho-Maryland Mine workings consist of 72 miles (116 kilometers) of tunnels with the lowest level developed to a depth of 3,280 feet (1,000 meters) below surface. Conventional underground mining and gold processing methods will be applied.
Patented mineral rights consist of 2,800 acres (1,100 hectares), typically 200 feet (60 meters) or more below surface. Mineral rights are patented mining claims and are owned or controlled under a Lease and Option to Purchase Agreement. Surface property rights consist of three properties, totalling 146 acres (69 hectares), which act as portals to the subsurface rights. Surface rights are owned or controlled under a Lease and Option to Purchase Agreement.
The mine operated on and off for almost 100 years. The original stake was made in 1851, with mining beginning in 1862 and continuing on and off until 1954 when it became uneconomical in the post war boom with gold trading at just US$35 an ounce.
Emgold acquired the property in 2002 and immediately commenced permitting activities to reopen the mine. The permitting process is straightforward and well defined, with substantial work having been completed to date. The City of Grass Valley was selected as the “Lead Agency” in 2005.
A key to moving this project forward is the completion of an Environment Impact Report (EIR) - given the state of California’s economy now might be the perfect time to get it done.
Emgold completed the Master Environmental Assessment in 2006, with the initial study completed in 2007. Emgold’s management completed its draft EIR in October 2008, with public comments received in January 2009.
Modifications and clarifications to its Project Applications were completed in 2009 and 2010, which led to revised project applications being completed in May 2011. Selection of a consultant to finish EIR process was completed in November 2011. The last phase of the EIR is expected to take approximately 12 months, subject to financing.
There is excellent infrastructure, with direct road access to each of the three surface properties, along with power lines, natural gas lines, drinking water lines and sewer lines.
California slipped from 8th place to the world’s 9th largest economy in 2011 (California's gross domestic product totaled $1.96 trillion last year, behind Italy but ahead of Russia and India). California’s fiscal situation is a mess, its chronic budget issues and boom-and-bust economy have left it with one of the lowest credit ratings of any state in America.
Municipal budgets are feeling strained as growing pension requirements and declining real-estate revenues are burdening cities. In a move to shore up the state’s budget municipal budgets were stripped of more than $1 billion in local redevelopment funds and vehicle-license fees. California State Controller John Chiang highlighted in an interview how cities are being affected saying; “They’re having huge financial issues. The question is when you take one of their principal revenue sources, if not their principal revenue source, how are they going to sustain themselves?”
Three cities recently declared bankruptcy, and Moody’s Ratings has warned that they are not likely to be the last, with more than 10 percent of California cities having declared fiscal crises.
California, the Golden State, is the home of the original Gold Rush and Californians still have mining in their bones. Two former gold mines have reopened in the last four years:
- Newgold’s Mesquite Mine reopened in 2008 employing over 255 people and using 25 contractors
- In May 2009, Atna announced the restart of gold production at the wholly owned Briggs Mine in Inyo County, California. Atna employs 135 people at Briggs and is the second highest tax payer in the county
Emgold’s Idaho-Maryland Mine will include unique additions such as an Education Center and an Outdoor Mining Display Park to enhance tourist opportunities for the City of Grass Valley. Environmental protection measures for the mining project include a cyanide destruction plant and a water treatment plant.
It’s no wonder there appears to be strong support for the Idaho-Maryland in this old mining town.
In a 2006 public opinion poll, commissioned by the local City of Grass Valley, out of 388 randomly selected residents, 72 percent respondents stated that they were in favour of reopening the historic Idaho-Maryland Mine if appropriate environmental safeguards are in place, while just 12 percent indicated they may not support the mine’s reopening. And this poll was taken was two years prior to the financial crisis at a time when the unemployment rate in the local county ranged between 3.8-4.9 percent.
The most recent state unemployment data showed that California’s unemployment rate was running at 10.2 percent, compared to the 7.8 percent from the United States as a whole. In this county of 98,764 people, a fully operating mine would be one of the largest employers, and tax payers, in the county.
Here’s the opportunity for investors - just recently, Prodigy Gold (PDG) announced a business combination with Argonaut Gold, valuing Prodigy at $341 million, or over $50 per ounce of gold resource (inferred and indicated).
Emgold is trading at less than $4 per ounce of gold resource.
Is it plausible, is it realistic to think that upon completion of its EIR the remaining elements to bring the Idaho-Maryland project into production will fall into place and Emgold will make the substantial paradigm shift from ‘want to be developer’ to developer to miner?
Realistic money making opportunities should be on all our radar screens. Is Emgold on yours?
If not, maybe it should be.
Richard (Rick) Mills
Richard is the owner of Aheadoftheherd.com and invests in the junior resource/bio-tech sectors. His articles have been published on over 400 websites, including:
WallStreetJournal, SafeHaven, MarketOracle, USAToday, NationalPost, Stockhouse, Lewrockwell, Pinnacledigest, UraniumMiner, Beforeitsnews, SeekingAlpha, MontrealGazette, CaseyResearch, 24hgold, VancouverSun, CBSnews, SilverBearCafe, Infomine, HuffingtonPost, Mineweb, 321Gold, Kitco, Gold-Eagle, The Gold/Energy Reports, Wealthwire, CalgaryHerald, ResourceInvestor, Mining.com, Forbes, FNArena, Uraniumseek, FinancialSense, Goldseek, Dallasnews, SGTReport, Vantagewire, Resourceclips, Indiatimes, ninemsn, ibtimes and the Association of Mining Analysts.
If you're interested in learning more about the junior resource and bio-med sectors, and quality individual companies within these sectors, please come and visit us at www.aheadoftheherd.com
Legal Notice / Disclaimer
This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.
Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified; Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission.
Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.
Richard Mills does not own shares of Emgold Mining Corp. TSX.V – EMR