Right On, charles!What are you doing up so late? I posted this on one of the SI boards, after reading several of them.
"This is a long post about the merits of UNB which has signed a letter of intent to acquire a large moly property. Moly has risen more than any other metal. I have attempted to stay out of the “debate” that has been raging about UNB on several boards as I have a large stock position, I personally know one of the vendors of the property, (and hold him in high esteem) and therefore I feel I have a vested interest in the success of this project. However, the innuendo, errors in fact and general confusion about the situation has prompted me to speak up, and with the above disclosure, I comment as follows:
There has been discussion that UNB only has a letter of intent. In Montana, a man’s word is his bond. The property option agreement will be signed as soon as the lawyers finalize it. I am not privy to the financial details of the agreement. However, the $10 million upset price (that some are worried as being burdensome)will not be achieved thru property payments. In the words of the vendor, “95% of the 10 mil will be from the NSR”. Some have confused the right of UNB to buy out 1% of the NSR as a raising of the NSR to 3%. In fact, it is a reduction to 1%.
Some have commented on the negative effect of the royalty on profitability. 2% NSR on a 0.060 Mo property effectively results in a lowering of the grade by 0.0012% Mo. Not very significant IMO.
The Cannivan Gulch moly porphyry was discovered by Cyprus in the late 1960’s. Extensive work was done on the property as announced in the NR.
“Cyprus conducted an extensive exploration program (+$5 million) between 1969 and 1982. The program included geological, geophysical and geochemical surveys; 88,450 feet (26,960 metres) of core drilling in 56 holes, underground development, bulk sampling, metallurgical testing and the computation of tonnages and grades of mineralized material. Underground access was gained via an adit near the bottom of a hillside. Work included 2371 feet (723m) of 9’ x 9’lateral development, and two raises of 76 feet (23m) and 67 feet (20m) driven on two drill holes to correlate raise bulk samples with drill results. Computation of tonnages and grades included the use of Kriging and floating cone methods, with the notation that the deposit was still open in a N-S direction. An estimate of 300.5 million tons of mineralized material grading 0.100% MoS2 (0.060% Molybdenum) with a 0.05% MoS2 cut-off and a stripping ratio of 0.9:1 was calculated in 1982”
It has been suggested by some that Cyprus were neophytes in the moly business, and not as competent as other companies, nor as thorough in their program. In fact, Cyprus-Amax were the world’s leading producer of molybdenum. About 5 years ago, they merged with, and became part of Phelps Dodge the world’s leading, publicly traded copper producer. I have no doubt, (and with the benefit of having seen many of the reports on the property) that the work by Cyprus was top grade and professional, (and included feasibility studies). Many of these reports are available in the public domain e.g. Schmidt, E.A. and Worthington, J.E. presented the paper “Geology and Mineralization of the Cannivan Gulch Molybdenum Deposit, Beaverhead County, Montana at the joint Geol. Assoc. of Canada/Society of Economic Geologists Meeting in Vancouver, B.C. on April 25, 1977.
It has been suggested by some that other properties have higher grade than Cannivan, therefore Cannivan is of less merit or no merit. From a table in the report, the use of higher cut-off grades and higher strip ratios will result in higher deposit grades at lower tonnages. Cut-off grade is a function of product prices and production costs.
Montana has been attacked as a place where one cannot mine. The reality is that Montanans passed a citizens’ initiative that banned the use of cyanide in new open pit mines and banned the expansion of existing open-pit cyanide operations 6 years ago. In Nov. 2004, a new initiative aimed at overturning the 6 yr old one failed. The five counties in south western Montana voted 2:1 in favor of rescinding the ban. (heck, when everyone around you is in favor of the initiative I thought it would pass!) There is nothing in the law that prevents the heap leaching of ore from underground production. There is nothing in the law that prevents the open pit mining of gold or any other material as long as cyanide is not used. The recovery of moly does not require cyanide. I know of no one in the world who uses cyanide in a moly concentrator.
In terms of permitting, the State of Montana is not anti mining or unreasonably tough. There are many radical enviros financed by Ted Turner and Theresa Heinz Kerry and many others who do not want mining (or logging or ranching or industry) in Montana, and who may protest anything UNB does). However in this part of Montana there are many who are pro-mining. Montana has sunk to #50 out of 50 states in terms of average wage, from the top 10, since the war on the west was launched. 4 of the 5 counties have an average wage 25% less than the Montana average.(Jefferson county is the fifth and Placer Dome’s Golden Sunlight, and Appollo’s Montana Tunnels mines are located there, so wages are high) Montana’s only member of the House of Rep. is pro-mining. Both of Montana's U.S. senators are pro mining. The new governor (a Dem) says he is pro-mining. I know of no county commissioner in the 5 counties who is anti-mining.
The Cannivan Gulch property is located in the Beaverhead National Forest. It is managed by the Forest Service of the US Dept of Agriculture. Someone has posted the entire FEIS for the Beaverhead Forest with the implication that this reflects Montana’s anti-mining bias. It has nothing to do with Montana, it is a federal document.
Especially noteworthy in the FEIS, however are the following excerpts:
Under Goals “ Maintain the existing opportunities for utilization of the variety of resources found within this Management Area. Generally, allow resource use with minimal restrictions, designed only to protect the existing status of other resource values." Sounds pro-resource development to me.
"Standard #5 - No known threatened or endangered plants are known to occur on the Beaverhead National Forest"
“ Watershed Description: Quartz Hill Gulch, the major drainage in the analysis area, is approximately 7700 acres in size. Seventy two percent of the drainage is carbonate/limestone geology, which likely accounts for the ephemeral nature of the streams The stream channels within the analysis area do not have designated beneficial uses. Their ephemeral nature prevents any surface water from being present in enough quantity or for a long enough period of time, to sustain a beneficial use. There are no fisheries in the analysis area." (carbonate/limestone geology will buffer any acid mine rock discharge.)
“Water Quality: Water quality is not an issue in the project area due to the ephemeral nature of the hydrologic regime The Quartz Hill Wagon Road built in 1872 has been mostly obliterated due to construction of the current high-standard Quartz Hill road. This road was improved and gravelled, partially with tailings from Cannivan Gulch, to the mines at Quartz Hill. “
It is noteworthy, that those tailings were from the 2500 foot long tunnel driven by Cyprus. If Cyprus got permission to use the crushed rock tails from their sampling operation as road building material, the ore does not sound very deleterious to me.
The FEIS stresses a concern for maintaining a high elk population. This year, they extended the elk season in that area by 2 weeks as they were concerned that there were too many elk.
From the Cannivan Gulch property, it is an 11 mile primarily downhill or flat, drive on “the current high-standard Quartz Hill road” to paved Highway 41, 5 more miles to Interstate 15 and the railroad, and 23 miles on Interstate to Butte. Butte is the site of the recently re-opened Montana Resources Inc. moly copper mine. MRI grade is 0.023% Mo and 0.24% copper (0.035% Mo equiv.) Concentrator capacity is +27,000 tons per day. Trucking costs from Cannivan gulch to Butte are less than $5 per ton.
Many posts have denigrated W.S. Morton the president of UNB because he is a rich business man from Missoula, Montana, and is not a mining man. I have met Mr. Morton but do not know him well. He seems OK to me. I know of another rich business man from Missoula who also is not a mining man. His name is Denny Washington, he owns Montana Rail, and a number of construction companies including the former Morrison Knudson. One of their Canadian subs is Northern Const. I remember them building the Edmonton airport, completing numerous Arctic projects, and I would guess they have done a number of Vancouver projects as well. Mr. Washington also owns a majority interest in MRI. His minority partner is Asarco (now part of Groupo Mexico). As I said, he is not a mining man, but was a smart enuf business man to hire the right people to open and operate a huge moly/copper mine in Montana of about ½ the grade of Cannivan Gulch!. I hope Mr. Morton is of the same mould!