In recent months, the small-cap mining sector has been hit particularly hard by increasingly tight credit conditions, and the cooling of commodity prices. The credit crunch has made it a real challenge to secure financing, and many small players in the resource sector have been forced to cancel or delay building mines. Some exploration companies have been forced to completely halt all activities, in an effort to conserve cash.
The junior mining sector has experienced its most drastic 12-month decline since 1987, falling about 50%. Similarly, the TSX Venture Exchange composite index, which tracks companies on Canada's junior stock market and is largely made up of mineral exploration companies, is down more than 51% since mid-June. The S&P/TSX materials subgroup, which tracks Canadian mid-to-large cap mining stocks, is down 44% over the same period.
Although the recent stock sell-off has come as metals prices have retreated, it is not at nearly the same rate. Gold is down about 10% since June, while copper is down 29% and zinc is down 18%.
Despite the recent market volatility, Murgor has remained focused on our long-term objective of achieving sustainability through production; either independently or through a joint partnership. We made significant progress in moving forward our properties in the Flin Flon Belt of Manitoba and Saskatchewan.
Highlights from our activities during September 2008 include:
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New NI 43-101 on the Wim deposit
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Updated NI 43-101 on the Hudvam deposit, announced in late August
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Metallurgical study results on Hudvam and Wim
An updated NI 43-101 compliant resource estimate at Wim was announced on September 9, 2008 with encouraging results. Highlights include a 130% increase in tonnage over historical estimates, including a 60% increase in the contained copper and a 170% increase in the contained ounces of gold (based on a 2.0% copper equivalent cut-off grade). In addition, the growth of the deposit to date has been focused on extending the deposit to surface, significantly improving the economics of the project. We have achieved this, and the current deposit outline extends for over 400 metres on surface, as shown in the figure below.
The new resource estimate includes 18,266 metres in 61 drill holes completed on the property by Murgor in 2007-2008, in addition to the 68 historical drill holes validated by Murgor.
Since Murgor optioned the property two years ago, we have successfully doubled the size of the Wim resource, a significant achievement proving the ongoing success of the aggressive drilling program.
A longitudinal section of the Wim deposit is shown in the figure below, highlighting the new outline of the Wim deposit.
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.
The newly estimated mineral resource is as follows:
INDICATED CATEGORY
CUT-OFF TONNAGE GRADE CONTAINED METAL**
GRADE* ( Metric Tonnes) Cu Zn Au Ag Cu (lb) Zn (lb) Au (oz) Ag (oz)
2.0% Cu Equiv 2,776,787 1.94% 0.30% 1.88 g/t 7.53 g/t 118,763,000 18,365,000 168,000 672,000
2.5% Cu Equiv. 1,805,382 2.20% 0.35% 2.30 g/t 8.56 g/t 87,564,000 13,931,000 134,000 497,000
* Copper equivalent grade based on US$1.75 per lb. Copper, US$0.80 per lb. 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 (lb) Zn (lb) Au (oz) Ag (oz)
2.0% Cu Equiv 445,999 1.12% 0.43% 2.11 g/t 5.06 g/t 11,013,000 4,228,000 30,000 73,000
2.5% Cu Equiv. 219,310 1.22% 0.47% 2.57 g/t 5.55 g/t 5,899,000 2,272,000 18,000 39,000
* Copper equivalent grade based on US$1.75 per lb. Copper, US$0.80 per lb. Zn, US$700 per oz Au and US$10 per oz Ag.
** Figures rounded to nearest 1,000.
HUDVAM PROPERTY:
As we discussed in our last newsletter, the results of a new NI 43-101 compliant resource at Hudvam were released on August 28, 2008. Highlights from this new resource estimate include a 40% increase in the gold resource and a conversion of more than 70% of the resource into the indicated category, relative to Murgor’s February 2007 NI 43-101 resource estimate.
This new 43-101 resource estimate took into account 13,553 metres in 51 drill holes completed by Murgor in 2007-08, in addition to 115 historical drill holes validated by Murgor. This 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 drill 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.
METALLURGICAL STUDY RESULTS:
The results of the metallurgical study completed on the Hudvam and Wim properties were announced on September 18, and further demonstrate the size and quality and the projects.
Highlights include the following:
Hudvam:
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Excellent copper recoveries averaging 89%.
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Very good gold recoveries averaging 67.1% with a combination of flotation and gravity.
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Producing a high grade copper concentrate averaging 30% copper and 51 g/t gold.
Wim:
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Excellent copper recoveries averaging 92%
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Producing a high grade copper concentrate averaging 32.6% copper
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Gold recoveries still being evaluated.
The results show that the recoveries at Hudvam and Wim will be comparable to those achieved by HudBay Minerals at the Flin Flon mill, while producing a higher grade copper concentrate with a very high gold content.
IN CLOSING:
Despite the recent market events, we are committed to deliver on our long-term vision of becoming a sustainable producer either independently or through a joint partnership. We believe that Murgor provides excellent value to our shareholders through our portfolio of quality assets with expanding resources and our strong management and technical team.
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
October, 2008.
