RENO, NEVADA -- Everything old is new again, in bankruptcy court anyway. This is what CEO Brad Cooke is hoping for his long-in-the-tooth Canarc Resources Corp. (TSX: T.CCM, Stock Forum).
Mr. Cooke started Canarc in 1988 to prospect for gold at Eskay Creek and elsewhere in Canada and points north. Alas, he is winning accolades not with Canarc but with another company, Endeavour Silver Corp. (TSX: T.EDR, Stock Forum) and (AMEX: EXK, Stock Forum), the potent Mexico producer that was wrangling to purchase small but high-grade Mexico silver miner Cream Minerals Ltd. (TSX: V.CMA, Stock Forum).
Mr. Cooke, a professorial and understated Canadian businessman, tells me he scooped up Relief Canyon gold mine in Nevada. It’s an open pit, heap leach gold mine and laboratory that he snared, pending a review of the asset, via bankruptcy court auction in Reno. Price tag: $11 million USA.
Brad Cooke’s challenges for Canarc at Relief Canyon are enormous. Most every company associated with the project either did not achieve the recoveries needed to turn a profit for the mine or they did a piss-poor job at crushing the ore before milling the rock. The situation sent current operator Firstgold Corp. into bankruptcy court protection.
Oh, and there is the matter of neighboring Newmont Mining Corp. (NYSE: NEM, Stock Forum) and Victoria Gold Corp. (TSX: V.VIT, Stock Forum), both of which own properties or mining rights/claims across the Relief Canyon deposit.
“What attracted us to the asset is that it is largely built and permitted, just like Endeavour's mines in Mexico,” says Mr. Cooke from Vancouver. J. Bradford Cooke’s Endeavour team (Godfrey Walton, Barry Devlin, et al) at Guanajuato and elsewhere in Mexico has improved the milling process for their silver-laden ore. The team turbo-charged its methods in the metals lab.
On the exploration side, Endeavour has extended silver and gold veins across Guanajuato and achieved nearly 100 percent recovery rates. The result has been record-high cash flow, actual net income and a 20 percent year-to-year gain in quarterly silver output to almost 800,000 ounces. Quarterly gold output is rising even more in year-to-year comparisons. (See Endeavour Silvercoverage via Stockhouse articles.)
Mr. Cooke is dogged in delivering cheap yet finely honed mines into his fold. He had the right idea with Cream and its Nuevo Milenio property in Mexico. When Brad started his run at Cream Minerals this past summer and autumn, Cream’s Canada-traded shares were about 8 cents or so. Endeavour was offering 14 cents a share in cash, stock or both. All bets are off now; the stock is 25 cents.
Here is my take. On site visits in Mexico, Mr. Cooke often laments how much time he and his team have spent these past four years searching for a worthy North American (and Mexican) fit for Endeavour Silver, which aspires to mine 5 million ounces of silver a year. “I’m picky, and cheap I guess you’d say,” he says.
Mr. Cooke calls Nevada the best address in the world when it comes to gold. (Its state name, by the way, is The Silver State.) Just looking at the stuff that comes with the mine (and not the exploration properties), I have to believe Mr. Cooke is looking to repeat the Endeavour fast-track route in the True Grit desert some 100 miles from Reno.
The four-pad heap leach covers 70 acres. They’re all new and the first pad facility is primed and ready … with a two-stage crushing circuit, a radial stacker, 3,000 gallon-per-minute ADR plant, mine offices, a warehouse, a maintenance shop, that assay lab at a separate site, other offices in Lovelock, lots of mobile equipment, two drill rigs, 12 operating permits, a $2.8 million reclamation bond for waste … and a partridge in a golden pear tree.
“The resource is small but there are other gold resources available for purchase in the district,” he tells me.
The transaction has some intrigue. “We chased this acquisition for almost 18 months and a year ago lost out to a Chinese company that offered to pay and invest $28 million for control of the company,” he says. “But the mine is less than 50 kilometers from Fallon Naval Air Station (west-central Nevada) Force Base so USA Homeland Security stepped in and killed the deal.”
Nevada Runners
As our Ticker Trax crowd knows, I like Nevada these days and have been spending most of the autumn poking around companies such as Golden Phoenix Minerals (OTC:BB: GPXM, Stock Forum) at Mineral Ridge, La Quinta Resources at its early stage Easter Project and others. The Carlin Trend, Rain District, Comstock Trend and other mineralized regions in the state account for about 80 percent of all USA gold. Lots of silver, too.
I know 15 geologists with offices or homes or both in Nevada. All of them are busy working existing properties in their portfolios, syndicating legacy acreage or working their bums off for gold and silver (and lithium) prospectors and miners.
Raul Madrid, one of those PhD geologists, tells me, “Victoria Gold had very good results in those portions of the property south and southwest of the mine area. As far as I know, Newmont still has a back in for much of the property except the small mine area proper.”
Dr. Madrid is former vice president of exploration for Nevada’s Victoria Gold. He and another colleague, Ralph Roberts, have long considered the region an untested gold belt. “It is wider than the Carlin Gold belt and just as long potentially. We called the gold belt at 8.4 km wide and extending to the southeast for a minimum of about 80 miles -- the ‘West Gold Belt.’ The Carlin is 6.8 km wide in the area of the Betze mine and has a strike length of more than 300 miles (into Utah).”
Canarc, its shares at 22 cents Canadian, appears to have a chance to follow in Endeavour’s footsteps. Brad Cooke hopes to use a $22 million gold-convertible loan, with Relief Canyon gold one year from now he says, to repay a $12 million bridge loan for this bankrupt asset. He also must negotiate with surface rights owners in the Newmont and Victoria areas that border the asset for what he calls “pit layback” land.
“It looks like a great fit with our 1.1 million ounce underground New Polaris gold mine project in northwestern British Columbia,” Mr. Cooke tells me today (Wednesday). Relief Canyon will take about a year to bring back into production, and New Polaris needs about three years to develop to production.”
(Thom owns shares of Endeavour Silver but none of Canarc or the other companies in this report.)
NEVADA COVERAGE: For the December round-up on these on-site visits – La Quinta Resources Corp. (TSX: V.LAQ, Stock Forum) and its Easter and Blackjack gold properties, Gold Standard Ventures Corp. (TSX: V.GV, Stock Forum) and its Railroad Project in the Rain District and … of interest to those seeking multi-jurisdictional gambits, Golden Phoenix Minerals at Nevada’s Mineral Ridge, in the Shining Tree District of Ontario, Canada, and in Peru, please see www.tickertrax.com and for non-subscribers, free coverage via Stockhouse.
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THOM CALANDRA of Ticker Trax helps his audience find value in a quagmire of investment choices. Thom was founding editor of MarketWatch, CBS MarketWatch and FT MarketWatch. He was the voice of Thom Calandra's StockWatch and The Calandra Report. Thom has been covering life-sciences and natural resources since 1988.
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