Resource World Magazine

www.resourceworld.com 15 F E B R U A R Y / M A R C H 2 0 1 4 Want to grow your business? Join over 200 companies who have accessed capital on the Canadian Securities Exchange. Save time, lower costs and build a great company by listing on the CSE - the Exchange for Entrepreneurs. www.thecse.com COMMODITIES Selecting a junior miner has to be done by first selecting commodities that present an upside potential. The investor should look for companies that have a flagship prop- erty containing that specific commodity of interest. Beware of promoters that peruse the periodic table trying to find less known commodities they claim as being in defi - cit and would then make them the main exploration target of their newly floated company. This type of 'high demand' commodity bubble usually fizzles in one to three years. Avoid companies that have nothing to show for money spent. They often change the mining district and commodity according to what it is hot at the moment (uranium, then lithium, gold, graphite, etc). Stability is an asset. ELDORADO Staking a piece of Eldorado is everybody's dream; however, timing, location and the size of the property are things that have to be considered before investing in a junior that claims to have staked a piece of heaven. In any gold rush it's the early birds that staked the best ground with very little left for late arrivals – exceptions would be the newcomers that had a better plan, geological model or used innovative ways to uncover hidden mineral deposits. Location is always important but in order to be considered as an appropri - ate investment candidate, the company's mineral property has to have the same geo- logical setting as the one that triggered the gold rush in the first place. The bigger the better is also the motto of the mineral exploration business. While that is true, opportunistic companies some- times stake too much ground that doesn't get properly explored and some two or three years later when the new mining district bubble fizzles, they relinquish it without having done a proper assessment. Hence, before investing, the question is: does the company have the funds and expertise to explore its prospect? Lessons can be learned from the recent Yukon gold rush which had been started by a self-taught prospector and a skilled group of promoters – billions of dollars were raised with little to show for it. The rule of thumb is that locations endowed with rich placer gold deposits often lack the hardrock source of the precious metals. Considering the particulars of the pres - ent day market, it would be safer to play juniors that explore well established min- ing districts (brownfield exploration) and use modern techniques that allow them to 'see' at depth through overburden. Sometimes juniors say they are explor- ing in 'elephant country' but the truth is that outcroppings or near surface mineral deposits which had a large footprint have already been discovered and the chances of discovering new ones at the same depth and size are slim at best. In most mining camps 20% of deposits provide 80% of ore; the corollary being that the larger ones having been already discovered means that the juniors end up finding smaller deposits. An investor may want to consider a com - pany exploring a territory or country that has only recently opened up to mineral exploration and has not been subjected to modern exploration. This type of environ- ment can result in important discoveries. GEOLOGICAL MODEL Mineral exploration is a complex process involving different scientific disciplines. It is cold detective work where specialists are trying to understand processes that took place tens to hundreds of millions of years ago, deep in the earth's crust, in regions that we cannot access and of which we have a limited understanding. Each mineral deposit is unique; however, the work of thousands of geologists and scientists across the world has resulted in the creation of generally accepted geologi - cal models. The junior has to present a clear case, solid geological models and a simple path forward to success. The model has to be continuously updated with new explora - tion data and context while the potential for new discoveries has to be explained. The type of mineral deposits expected to occur in certain geological settings dictate the size and grade of the exploration tar - get. For example, the big trends in Nevada host large, low-grade gold deposits. While a disseminated or stockwork type of mineral deposit (porphyry included) is easier to explore and understand, atten - tion should be paid to narrow, tabular and/or any kind of structurally-controlled mineralization because this is where trouble can occur. Are the narrow, but high-grade, fissures spaced close enough to make it economic to be mined through cheap bulk mining methods or not? What is their thickness? What kind of dilution would be expected if they would be selec - tively mined underground? It might not be wise to invest in a company that boasts high-grade but wide-spaced, thin, gold intersections.

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