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CMX Gold & Silver (C.CXC) aims to unlock value in shuttered Idaho mine

Stockhouse Editorial
0 Comments| January 28, 2015

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The following is a Stockhouse Q&A interview with Jan Alston, President and CEO of CMX Gold & Silver Corp. (CNQ: C.CXC, Stock Forum).

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Why should people be interested in investing in CMX Gold and Silver at this time?

This is a relatively low risk opportunity for people who want to gain exposure to silver, lead and other key metals. The company’s flagship asset is the 100%-owned former Clayton silver-lead-zinc mine in central Idaho that was an early source of lead for Ford Motor Co. (NYSE: F, Stock Forum) batteries.

After 50 years in operation, it was closed down when commodity prices fell in the mid-1980s. We think the potential exists to add a lot of shareholder value by doing the work that is needed to establish that there is a lot more ore still to be mined. Our hope is to get this mine operating again.

What do you think sets you apart from the competition in your space?

We are an exploration stage company that doesn’t need to go out and make a discovery. Our key asset has a long history of production and we think that with sufficient capital and the use of modern exploration and mining techniques, we can put it back into production fairly quickly.

Historical production records show that the mine produced 6.7 million ounces of silver, 83.5 million pounds of lead, 28.9 million pounds of zinc, 1.4 million pounds of copper and small amounts of gold.

Early indications point to the potential to generate early cash flow by processing material that remains in waste dumps located at the mine site.

That cash flow could be used to fund underground exploration and development at the site, as well as the refurbishment of the mill.

Who are the key players on your management team?

President and CEO Jan Alston is a University of Alberta graduate who has been involved in the junior resource sector for over 30 years. Prior to CMX, he was CEO of Purcell Energy Ltd., which was involved in the Fort Liard natural gas discovery in the southern Northwest Territories.

Director Bruce Murray is a University of Calgary Bachelor of Commerce graduate with decades of experience in the oil and gas sector. He was also involved with Purcell Energy as a co-founder and chief operating officer.

What attracted you to this opportunity?

About 15 years ago, I was involved in a gas discovery in the southern Northwest Territories that turned out to be a company-maker for Purcell Energy Ltd after it was farmed out to Chevron (NYSE: CVX, Stock Forum). At the time, we didn’t know how big it would be. I liken that to this situation. We know the ore is there. It’s just a question of how much more is there.

We would probably want to set up a much larger milling operation than what they had before.

What are the challenges associated with securing financing for project development at Clayton?

I am particularly well trained through my history in that regard. Given the current climate for the junior miners, which has been brutal, you do it in steps, keep overheads low, don’t waste money, do the waste dump analysis, which has worked quite well at relatively low capital cost, be patient and wait for the cycle to turn.

What were the company’s key accomplishments in 2014?

Aside from getting listed on the Canadian Securities Exchange, the company collected over 3,000 kilograms of sample material from waste dumps located next to the old mine workings on the Clayton property. The aim is to investigate the economic potential of the mine dump material.

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What are the company’s key goals for 2015?

We plan to do some scoping work on the mill and underground workings. We want to get a good handle on the potential that we think is in the dump, so that we can build an economic business case for refurbishing the mill and starting to process some of that material. That will include confirmation of variable costs to process it and also confirmation of the percentage recovery factor for the metals.

That could be a good first step in getting the mine reactivated and working again.

Where do you see this company in a couple of years?

There are a lot of good people out there because the state of the industry. We are putting together an organization with management and operations people who can run a mine like this. We are not afraid of taking that on. We will do that if we have to in order to realize the value of this property.

Our main focus would be to move this far enough along to attract a bigger player and maybe a larger or smaller junior who would find this attractive as an operation. We could do a joint venture. We could sell it. Or we could be taken over.

Who are the biggest shareholders in the company?

There is no single controlling shareholder. Management has about 26%. Taking into account the shares held by family, friends and associates, more than 60% of the shares are in relatively close and supportive hands.

Will silver be the major source of revenue?

The main value creators will be silver and lead. Historically, silver has been 60% of the value. Lead also generated a large chunk of the value, followed by zinc.

Zinc is looking quite interesting going out a few years because of the supply questions around a lot of the zinc mines getting depleted and shutting down over the next few years. There is nothing really new to replace that material coming down the pike.

We think a lot of gold went to the smelter and they never got credit for it because they really weren’t set up to capture the gold.

Do you have a view on the commodities that you intend to produce?

I do believe that hard assets will have their day again. A lot of people talk about the commodities cycle being over. But I don’t think it’s all done. Silver tends to be volatile because it’s a thin market. I think that as we move forward in 2015, gold and silver are commodities that are going to surprise people to the upside.

Lead is a steady commodity that people need for so many things, including batteries.

Henry Ford owned the Clayton claims in the 1920s because Ford needed the lead for use in its car batteries. In the old Clayton Museum, there are all kinds of paraphernalia dating back to when Ford held the claims.

How much money do you think you will need to raise in 2015?

In early December, 2014 the company’s shares began trading on the Canadian Securities Exchange. At the same time, it raised $210,000 from a non-brokered private placement of units priced at 10 cents a shares. We would certainly like to raise at least $500,000 in 2015.

FULL DISCLOSURE: CMX Gold & Silver is a client of Stockhouse Publishing.

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