Petaquilla Minerals Ltd PTQMF

Lom Poy

[wwadehammer]

The history of Lom Poy is interesting Paul,  Cambridge Mineral Resources (CMR) accquired rights to mine Lom Poy in 1973.  The rights were good for 60 years providing CMR took steps to explore and start development.  CMR did drill Lom Poy and came out with NI 43-101 and mining plan in 2002.  The drilling inferred 1 million equivalent ounces of gold.   The mining plan was underground mining only for 250,000 ounces.  Even with the price of gold rising, CMR could not raise funds to fund Lom Poy development.  I guess the Spanish Government finally gave up on CMR after 38 years of waiting and revoked the permit.  Mr. Fifer and friends bought the concession for $1 million and sold it us within months for $33 million.  PTQ has released a PR stating that twin drilling to raise the work done by CMR from inferred to indicated had been completed.  Now you have to define completed.  Is it they completed the twin drilling or is it they didn't complete it but just stopped.  Why issue a PR saying you completed drilling without giving the results?

They've run out of money and can't develop Lom Poy.  If they did complete the twin drilling and it did comfirm CMRs numbers, it would make sense they would not release the results as it would only benefit whomever buys the concession.  They could probable sell the drilling results for several million dollars.  

As to why CMR could not raise funds, even with gold prices rising big time, is there's probably not enough proven gold to justify a mine.  CMRs underground mining plan was only for 250,000 ounces and the cost to mine it and ship it to someone else for processing didn't justify someone giving them a loan to start operations.  It would cost around $180 million to build a 1,000 tons per day processing plant.  That's $720 an ounce just to build the plant and then you have mining costs on top of that, probably $600 an ounce for a underground mine contain heavy sulfides that have to be properly disposed of.  So a total cost of $1,320 an ounce.  Not to good.  Assuming you just mined it and shipped it to someone else to process would probably cost $300 an ounce to total cost of $900 per ounce.  So at today's prices that's $300 dollars profit per ounce not counting taxes.  $300 times 250,000 ounces equals $75 million in profit before taxes.  I suppose someone might try it but looking at building an access ramp, dewatering the mine, conducting underground drilling, coming up with a mining plan, preparing an environmental impact statement, leasing equipment, and building infrastructure around the mine would be around $30 million.  I don't know that anyone would risk $30 million for pretax profit of $75 million.  Lom Poy will probably never be developed unless someone comes up with a plan to get all the 1 million ounces economically.  Maybe when gold goes to $2,000 an ounce.