Valuation of Shoreham ResourcesMolybdenum
In my opinion, Setting Net Lake the molybdenum “moly” property, is Shoreham’s most valuable asset. It is located in the Red Lake Mining District of Ontario. Drilling was conducted during the periods of 1968 and 1969 and 1977 to 1978 resulting in an historic resource of 100,000,000 tonnes grading approximately .07% Mo. This deposit is exposed at the surface and runs parallel to the surface at depth making it particularly attractive as an open pit mine. Holes drilled to 175 meters stopped in ore and are likely to continue at depth. To date, only a portion of the anomaly has been drilled. Management believes the deposit can be expanded to 3 or 4 hundred million tonnes. This substantial size could be attractive to a large international mining company.
Since the original deposit was drilled, the value of moly has increased significantly and now trades at approximately $30 / lb. Given the present ore grade, 1.5 lbs per tonne could be recovered. Using a longer term price of $12 / lb suggests each tonne has a value of $18.52 or $1.8 billion in-situ for a deposit of 100 million tonnes. Given the lower grade, one might use a factor of 8% of the in-situ value as a sales price for the deposit. This would yield a sales price of $148 million or $2.74 / fully diluted share. Of course, this will require additional drilling, engineering and time to establish a resource estimate that is 43-101 compliant. Drilling is currently underway. Assay results may be released as early as the end of October.
Uranium
In addition to its moly claims, Shoreham owns Bear Head Lake, an uranium property, located in the Red Lake Mining District. Drilling in 1977 formed the basis for a historic, pre-NI 43-101 'indicated reserve' estimate of 978,810 tons averaging 0.06% U3O8 to a depth of 500 feet (152.4 meters). Drilling covered a length of 433 meters while favourable geology extends up to 4 kilometers. Historical values in the range of traces to 0.98% U3O8, and widths ranging from 1 meter to 50 meters were reported. An air-born survey was completed this fall. Based on the results, Shoreham has staked additional ground covering a total length of 15 km in line with the geological structure. In addition, trench samples have been taken recently. Assay results from these samples may be released as early as the third week of October. No value for this property has yet been assigned. Drilling is planned for the winter of 2008.
Silver
The claims cover the historic Borland Lake Silver Target in the Red Lake Mining District. Historic ‘probable reserve’ estimated by Noranda Exploration and Massive Energy in 1985 was 502,412 tons (456,738 tonnes) with 8.09 ounces Silver per ton (277 grams Ag per tonne) and 0.02 ounces gold per ton (0.69 grams Au per tonne. Silver is presenting trading in the $13 / oz range.
Grab samples gathered in 2005 ranged from 3,396 to 6,802 grams of silver per tonne, 18.57 to 44.74% lead, 0.96 to over 1% zinc, and 0.50 to over 1% copper. The samples were collected in isolated outcrops along a 1.2 km strike length. There is excellent potential for developing new targets along this trend. Exploration will be carried in the winter of 2008.
Gold
An updated gold resource is currently being calculated on Shoreham’s gold claims in Guyana. This resource estimate will also be completed this fall, at which time more details of the deposit will be available.
With a steady stream of news coming from the field and the annual General meeting to be held the third week of October this under valued stock is likely to get attention from the market and could double by Christmas.