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| Date: |
9/7/2010 |
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Welcome to the September 2008 edition of Murgor’s Monthly newsletter. This newsletter provides a summary of key exploration activities and management decisions that have taken place at Murgor during the summer months of 2008. An update on upcoming activities and thoughts about the industry at large are also provided.
A WORD OF INTRODUCTION:
Summer is an interesting and difficult time of year for mineral exploration companies that are active in Canada. Despite a flurry of exploration activities, it is only much later that results start trickling in and that conclusions can be drawn from field and compilation work. Consequently, summer news releases are typically rare. This lack of new results from the industry, combined with a general disinterest from investors and markets at large, traditionally result in a very quiet summer period.
The summer of 2008 was no different. In fact, the summer of 2008 was worse than usual. During the summer of 2008, the traditional slow-down of activity in the markets was compounded by a generalized instability in the world economy, fuelled in part by the raising price of oil, which translated in a lack of investor confidence and volatility in the market. Furthermore, a decrease in the consumption of metals and a slump in the price of commodities (from record highs) came as a result of the summer Olympic Games in China. All these factors adversely affected junior stocks and the resource sector in general.
Obviously, management teams of junior mining companies can’t control the markets or the world economy. Although we must keep an eye on these external factors, companies must focus on their long term objectives.
During the summer of 2008, Murgor did just that. Murgor has been advancing all of its exploration projects of the Flin Flon belt, with a particular emphasis on the Hudvam and Wim properties. Throughout the summer, Murgor has been working with Golder Associates to complete new 43-101 compliant resource estimates at the Hudvam and Wim deposits. Metallurgical study of the ore at both deposits is also underway and nearing completion.
On August 28th, Murgor released a new 43-101 compliant resource estimate at the Hudvam deposit where the increased size of the deposit and grade of the ore are very encouraging. At Wim, preliminary results were released on June 18th, 2008 and the results from a new 43-101 compliant resource estimate should be available within a week. Metallurgical results should also follow shortly thereafter.
Elsewhere in the Flin Flon belt, Murgor is currently working to evaluate and prioritize hundreds of new exploration targets, stemming from two helicopter-borne VTEM surveys in 2007 and 2008. More than 8,400 line kilometres were flown in total in Manitoba and Saskatchewan.
HUDVAM PROPERTY:
At Hudvam, the results of the new NI 43-101 compliant resource estimate were released on August 28, 2008. This new 43-101 resource estimate took into account the 51 new drill holes completed by Murgor in 2007-08 for a total of 13,553 metres. Results were highlighted by a 40% increase in the gold resource and the conversion of more than 70% of the resource to an Indicated category, relative to Murgor’s 2007 NI 43-101 resource estimate (February, 2007).
This NI 43-101 compliant resource estimate does not include Murgor’s new discovery of Hole 44 where 2.17 g/t Au, 1.11% Cu, 0.76% Zn and 13.30 g/t Ag over 5.82 metres were intersected between Zones 1 and 3 (see figure below). This new zone is situated 275 metres away from the known mineralization and demonstrates the potential for growth at Hudvam.
Murgor’s near-term follow-up work at Hudvam will include a drill program to better define the potential new lens intersected by hole 44, between Zones 1 and 3 and to further test a new mineralized horizon in the stratigraphic hangingwall of the current mineralization.
LONGITUDINAL SECTION OF THE HUDVAM DEPOSIT
Figure showing the longitudinal section of the Hudvam deposit and the new discovery (Zone 44) made by Murgor in 2008. The new discovery shows the potential for additional growth at the Hudvam deposit.
The new results of the 43-101 compliant resource estimate at Hudvam are as follows:
INDICATED CATEGORY
CUT-OFF TONNAGE GRADE CONTAINED METAL**
GRADE* ( Metric Tonnes) Cu Zn Au Ag Cu (lbs) Zn (lbs) Au (oz) Ag (oz)
2.0% Cu Equiv 854,076 1.22% 1.78% 3.82 g/t 13.84 g/t 23,008,000 33,541,000 105,000 380,000
2.5% Cu Equiv. 680,657 1.38% 1.98% 4.33 g/t 15.38 g/t 20,640,000 29,654,000 95,000 337,000
* Copper equivalent grade base on US$1.75 per lbs Copper, US$0.80 per lbs Zn, US$700 per oz Au and US$10 per oz Ag.
** Figures rounded to nearest 1,000.
INFERRED CATEGORY
CUT-OFF TONNAGE GRADE CONTAINED METAL**
GRADE* ( Metric Tonnes) Cu Zn Au Ag Cu (lbs) Zn (lbs) Au (oz) Ag (oz)
2.0% Cu Equiv 502,901 0.79% 1.33% 3.25 g/t 6.96 g/t 8,759,000 14,746,000 53,000 113,000
2.5% Cu Equiv. 338,557 0.85% 1.46% 3.96 g/t 7.36 g/t 6,345,000 10,898,000 43,000 80,000
* Copper equivalent grade base on US$1.75 per lbs Copper, US$0.80 per lbs Zn, US$700 per oz Au and US$10 per oz Ag.
** Figures rounded to nearest 1,000.
THE GROWTH OF THE HUDVAM DEPOSIT MINERAL RESOURCE
TOTAL MINERAL RESOURCE CONTAINED GOLD RESOURCE
Graphic representation of the growth of the resource at the Hudvam deposit since Murgor’s acquisition of the deposit. The graph on the left shows the growth of the total resource at the Hudvam deposit whereas the graph to the right shows the growth of the gold resource. Inferred and Indicated resources are 43-101 compliant and resources are divided by categories (Historical, Inferred and Indicated).
WIM PROPERTY:
At Wim, Murgor has been working with the consultants of Golder Associates to complete a new NI 43-101 compliant resource estimate. The results of this study are expected within a week. Metallurgical work is also underway and is scheduled for completion shortly.
In June, as a preamble to the new 43-101 compliant resource estimate, Murgor released its estimate of the additional new potential at the Wim deposit, taking into consideration the additional 61 drill holes completed by Murgor in 2007-08 for a total of 18,271 metres. Although the estimate calculated internally at Murgor is not 43-101 compliant, it is an indication of how the deposit has grown since Murgor’s acquisition. A minimum of 50% increase of the resource compared to Murgor’s 2007 43-101 resource estimate.
LONGITUDINAL SECTION OF THE WIM DEPOSIT
Figure showing the longitudinal section of the Wim deposit. Note the exceptional growth of the deposit that occurred as a result of Murgor’s aggressive drilling program in 2007-2008. A new 43-101 resource estimate at Wim is schedule for completion in September 2008.
Elsewhere at the Wim property, Murgor is currently evaluating drilling targets stemming from a helicopter borne VTEM survey. These targets are generally located on ground that is owned 100% by Murgor. Murgor is also planning to follow-up an drill intercept from its 2008 drilling located 1.5 kilometres away from the deposit, on the mineralized horizon that hosts the Wim deposit. Drill hole WZS08-044 intersected a 3.51 metre thick horizon of disseminated to semi-massive sulphide grading 3.11 g/t Au and 0.29% Cu.
IN CLOSING:
This last year, Murgor focussed much of its efforts in advancing and upgrading its copper-gold assets in Manitoba: the Wim and Hudvam properties. The price of copper and gold, and the high demand for quality copper concentrate have made these projects very attractive. So far, Murgor has reached its milestones on time, on these important projects, with results that are extremely rewarding. In August, Murgor released the new resource estimate at Hudvam and the new resource estimate at Wim should follow within a week.
About the market’s appetite for the junior mining sector… it looks like investors have a bit of indigestion! A compilation of the ten companies that are active in the exploration of massive sulphide deposits in the Flin Flon Belt, including a producing company such as HudBay Minerals, shows that the share price of all these companies is down by 63% to 86% from their 52 week highs. On average, these companies are down by 75%. The news is not all bad, however, since most financial and mining analysts predict a recovery in the fall of 2008 and a shortage of base metals starting as soon as 2010.
Management at Murgor believes there is always appetite for quality!
Continue to log on to www.murgor.com for more up to date details on the Corporation.
Thank you for your interest in Murgor Resources and for your continued support.
Respectfully submitted,
André C. Tessier, P.Eng, P.Geo
President, CEO
September 04, 2008.
P.S. This month, I have attached a very astute commentary by John Lee that I found particularly interesting… and encouraging.
This newsletter includes certain "forward-looking statements". All statements other than statements of historical fact, included in this newsletter, including, without limitation, statements regarding potential mineralization, resources and reserves, exploration results, and future plans and objectives of Murgor, are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Murgor's expectations are exploration risks detailed herein and from time to time in the filings made by Murgor with securities regulators.
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this press release.
Reproduced with permission from John Lee.
Bear Comparison: Today's Junior Resource Sector vs 2001's Nasdaq
"Another lesson I learned early is that there is nothing new in Wall Street. There can't be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again. I've never forgotten that. I suppose I really manage to remember when and how it happened. The fact that I remember that way is my way of capitalizing experience."
- Jesse Livermore, Reminiscences of a Stock Operator
In October 2002, few stock traders doubted that technology was creating value and changing the face of the Earth. Even so, the Nasdaq was priced at 1/4 of the value of its March 2000 peak amid the rubble of the tech crash. Six years later in 2008, the Nasdaq has gained 100% from its 2002 bottom. Such a swing speaks to the short-term irrationality of the market.
Today's resource junior sector offered the same types of glowing promises as the technology startups did in early 2000. With record commodity prices and mining producers looking to replenish depleting reserves through acquisition, the value proposition of junior companies is clear.
For the last few years, investors bought into junior mining companies for the elusive, 10-bagger discoveries. While there were some success stories, most junior mining investors have found disappointment so far.
A glance at the TSX Venture Composite Index (junior resource index), shows that the index is trading at a nearly 3-year low, which begs the question: "what is going on?"
Top: Nasdaq March 1999 � July 2003
Bottom: Toronto Venture Index (proxy to junior resource sector), Oct 2004 � July 2008
In the charts above, I have aligned the Nasdaq's peak in March 2000 with the peak of the Venture Index in May 2006. You can see striking similarities in those two charts after the peaks.
Technically, the Venture index just broke through the green consolidation range and is in its final bottoming phase. Fundamentally, junior companies without prospects are selling at or close to cash value. Those with real deposits are being acquired, as witnessed by recent $ billion+ takeover of Aurelian (by Kinross) and Gold Eagle (by Gold Corp). This picture reminds me exactly of where the Nasdaq was in late 2002, where companies were either trading at cash value or being bought out.
I can't say the bottom will be in August for sure, or that a surging rebound is around the corner. There are already casualties and many outfits won't make it through this correction above water. For me, this is housecleaning time, there is no exact formula in what to sell, switch, and keep, and I oftentimes consult experienced brokers for some emotionally unattached advice.
Wall Street can stay irrational longer than you can stay solvent. Regardless of when the rebound comes, I wouldn't mortgage the house to buy junior stocks now, or ever. However, with the all the reasons for investing in the junior mining sector still intact, for those with pennies to spare, now is the time to average in. As Warren Buffett puts it: "You should be happy; the hamburger you want to buy just got cheaper."
John Lee
August 12, 2008.
jlee@goldmau.com
1.800.965.6404
John Lee is the founder of Goldmau.com and editor of the John Lee's Stock Chart of the Week investment newsletter. Previously a student of James Turk, John is a regular speaker at resource investment conferences.
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