Some initial thoughts on CB GoldIn the event that Red Eagle is successful in their takeover bid of CB Gold, I wanted to begin to get a better understanding of the CB Gold assets.
So here is some information I have gathered. Please understand that you should independently verify anything contained here. I am not a registered investment advisor and I am long Red Eagle stock.
Red Eagles project is located in the Columbian Department (Province) of Antioquia. CB Golds Vetas Project in located in the Province of Santander which is adjacent and directly east to Antioquia. More specifically, the project is located east of Santanders provincial capital of Bucaramanga.
In comparing the site locations on Google Maps, it is estimated that the two projects are approximately a 9 hour drive from one another. I am not sure to what extent Google Maps is able to factor in information on road conditions in this part of the world. However, based on information on the CB Gold website, it appears that the road between the two sites is largely paved with only the final 36 km to the Vetas site by gravel road.
With regard to infrastructure in the area, here is a quote from the CB Gold website: Infrastructure in Vetas includes electrical power, cell phone network and road building equipment. Water, both industrial and potable, is drawn from nearby streams. Diamond drilling equipment is brought from Bogot.
From what I read, the Vetas Gold project includes an interest in 11 mining titles (9 of which are registered in the name of CB Gold). The project covers a total area of more than 1000 hectares (1 hectare = 2.47105 acres).
CB Gold appears to have released a compliant resource estimate for Vetas in April of 2014. In that estimate, they distinguish between near surface and narrow fault-fill veins. But in the aggregate, here is summary for the resource estimate:
Gold: Indicated: 123,000 ounces Inferred: 289,000 ounces
Silver: Indicated: 121,000 ounces Inferred: 969,000 ounces
Notes: (1) Remember that mineral resources are not mineral reserves and do not have economic viability. (2) The figures are based on a $1500 gold price and process recoveries of 95%. (3) Cut-off grades from .50 g/t au to 1.5 g/t au were used, depending upon whether looking at the near surface resources or the narrow fault-fill veins.
In addition to the Vetas project, CB Gold also has interests in other projects (El Dorado/San Bartolo and Real Minera).
My thoughts: Even at the current quote for physical gold and silver, you can begin to see the attraction here. The ROI for the acquisition could prove to be quite significant, especially to the extent that the resources expand at the various CB Gold projects over time. If the transaction is successfully completed, it will be interesting to learn what kind of cost savings will be possible and the timeline Red Eagle would adopt for further exploration and development of the assets.
From my viewpoint, the Red Eagle/CB Gold combo would be a win-win for the shareholders of each company. Red Eagle appears to pick up significant resources at a discounted price and the CB Gold shareholders find a way to unlock the value of Vetas in a more timely manner and share in the downstream benefits of the combined entity (with one of the very best management and development teams in junior mining).
Either way, this next year is going to be event-heavy and filled with news. I cant wait. Good luck, all.