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MINING Puma Exploration drill-testing Nicholas-Denys property Top 10 business risks facing miners Puma Exploration Inc. [PUM-TSXV; PUXPF-OTCBB] is currently conducting a diamond drilling program on its 100%-owned Nicholas-Denys silver prospect located 20 km north of Bathurst, New Brunswick, a mature and prolific mining camp. The 7,738-hectare Nicholas-Deny property is actually a polymetallic, multi-deposit property with a number of known mineralized zones, including eight lenses hosting silver-gold-lead-zinc values, three copper skarns, two zinc skarns, a gold skarn, an iron skarn deposit and a molybdenum porphyry. Based on 90 drill holes totaling 21,000 metres, the Haché deposit, in the south-central part of the property, contains NI 43-101 compliant indicated resources of 1.1 million oz silver, 11 million lbs zinc, 5 million lbs lead and 6,200 oz gold. In March, Puma reported the results of drill hole FM12-01 from the Millstream iron skarn deposit that returned 0.41% copper over 60.5 metres. The hole was collared to test the depth extension of the surface outcrop. Hole FM12-01 intersected 94.8 metres of skarn horizon characterized by distinct zones that contains values of copper, gold, silver, bismuth, molybdenum and tungsten. In 2007, Puma had drilled three holes in this area where similar copper grades and thicknesses were encountered. This drilling has prompted company geologists to speculate that there may be a large mineralized porphyry system hosted on the property. A drill rig is currently targeting a major magnetic anomaly that starts on surface and goes to a depth of 1,000 metres that has a typical porphyry deposit geological model. In late May, Puma reported drill results from hole FM12-02 that intersected continuous copper and molybdenum mineralization over its entire length, including a higher grade zone of 0.01% molybdenum and 0.015% copper over 193.9 metres. This correlates well with a 275,000 square metre molybdenum soil geochemical anomaly. The Nichols-Denys property is road-accessible year round and has electric power available. Drilling continues. Puma has another mineral prospect in the Bathurst mining camp – the 5,355-hectare Turgeon copper-zinc prospect located 5 km south of the deep water port of Belledune and 30 km north of Bathurst. Drilling highlights at the Turgeon property included hole FT1002 that intersected 0.5% copper over 325 metres as well as 0.54% copper and 0.31% zinc over 300.9 metres in hole FT11-04. Puma management has a target of 10-15 million tonnes grading 1.0-1.5% copper in the Main deposit. The road-accessible property is near a railway, a smelter and has electric power. Puma, the operator, also has a 71.6% interest in the Little Stull Lake gold prospect in northeast Manitoba about 600 km northeast of Winnipeg. Tanqueray Resources Ltd. [TQY-TSXV] has the remaining 28.4% interest. The property hosts a historical (non-NI 43-101 compliant) resource of 257,500 oz gold. n Ernst & Young recently released its annual report entitled Business Risks Facing Mining and Metal 2013-2014. The report details the various risks, from 1 to 10, that miners and explorers face in a time of lower commodity prices, increasing costs and limited access to capital. Number one on the list is broken down into two parts – how larger mining companies should allocate its capital for a variety of purposes and the difficulty that junior explorers have in obtaining financing in order to remain solvent. Number two is margin protection and productivity improvement in an environment where high costs continue to squeeze profit margins. There has been a shift in attitude from growth for growth's sake to one of long-term opitimization of operating costs and capital allocation. Number three is the growing threat of nationalization. This can come in several different ways, such as increased taxes or royalties as well as higher direct ownership of a company's mineral project. Number four is the social license to operate. Local community concerns, NGOs such as environmental activists as well as politicians wishing to cater to their constituents can impact the plans of a mining company. Miners need to demonstrate the benefits that their project can bring. Number five is a skills shortage that is expected to increase as existing skilled workers retire. Number six is the unprecedented price and currency volatility. Feasibility studies that demonstrate the economic viability of a mining project can be thrown out of whack due to unexpected volatility of metal and supply prices coupled with currency fluctuations. Number seven is capital project execution. Rising costs can turn a viable project into an uneconomic one and project decisions involving the spending of large amounts of capital can have serious repercussions if a wrong decision is made. This would come under the heading of strategic risk management. Number eight is the sharing of financial benefits. Despite the squeeze on margins, various stakeholders, including governments, local communities and shareholders all want an increasing share of a shrinking pie. Number nine is infrastructure access. With more miners looking a projects in frontier regions, sometimes both the company and the government just don't have the funds to build infrastructure to access the mine site. New funding ideas must be found. Number ten is the threat of metal or mineral substitution. Manufacturers are also seeking to lower costs and are looking to substitute aluminum for steel, palladium for platinum, as well as aluminum, plastics fiber optics or steel for and graphene for copper and pig iron for nickel. n The Ernst & Young report can be viewed at www.ey.com/ca JULY 2013 www.resourceworld.com 39