It has been a fast paced and exciting month at Murgor Resources. This newsletter will provide you with an update of the key exploration activities and management decisions that have taken place at Murgor during September, 2007.
EXPLORATION ACTIVITIES:
Murgor continues to focus its exploration activities in the Flin Flon belt of northern Manitoba and Saskatchewan. Work continues on the six properties that Murgor Resources optioned from HudBay Minerals Inc. in the fall of 2006.
WIM PROPERTY:
In early September, Murgor started a preliminary drilling program at the Wim property. This preliminary program includes 5,500 metres of drilling in approximately 10 drill holes. This initial drill program consists dominantly of exploration drill holes aimed at testing the extensions of the Wim Deposit. A number of drill holes will also be located within the ore lens itself as infill holes or twin holes to verify the historical data. This preliminary drill program will guide the secondary drill program that is scheduled to begin in January, 2008. The secondary drill program will include approximately 13,000 metres of drilling and is designed to upgrade the resource to an Indicated and Measured category, as well as to test property-scale exploration targets (I invite you to visit our website in the "Projects Section" to view these new and exciting targets at Wim).
The preliminary drill program at Wim was initiated at the beginning of September and to date approximately 2,500 metres of the targeted 5,500 metres have been completed. Five drill holes have been completed (including one hole that had to be abandoned due to excessive deviation). All geochemical results are pending and will be distributed as they become available (after passing Murgor's QA/QC procedure).
Murgor is on track to complete a feasibility study at Wim for mid-2009.
HUDVAM PROPERTY:
At Hudvam, work is underway to prepare for a very busy drilling season starting in January of 2008 when Vamp lake will be sufficiently frozen to support the weight of the drills. Camp construction is underway to house a minimum of 20 workers. Crews are also ready to start making ice in late November and December on Vamp Lake (to accommodate the weight of at least two drills). In the office, Murgor is refining its 3D model of the orebody to carry-out the definition drilling this coming winter. Geophysical and geological models are being developed to define a number of high potential new targets to be tested once the definition drilling is completed. Murgor is planning 10,000 metres of drilling at Hudvam starting in January 2008.
In preparation for the feasibility study of the Hudvam deposit, to be completed by the end of 2008, geotechnical drilling will be completed in January and February of 2008. Metallurgical testing of the ore will be carried-out at the same time.
FON PROPERTY:
At the Fon Property, in Saskatchewan, Murgor is currently integrating geophysical data with the geology of the deposit and the area to define new exploration targets at the property-scale (I invite you to visit our website in the "Projects Section" to view these new targets at Fon). A detailed compilation of geological, geochemical and geophysical data is also underway at the Fon deposit to guide future drilling.
Drilling is scheduled to start in March 2008, at Fon with a helicopter supported drill rig. March is the ideal time for this type of program when good winter drilling conditions are combined with longer hours of daylight. At present, a minimum drilling program of 1,500 metres is planned.
TYR DEPOSIT, FLIN-D and SNOW-H PROJECTS:
A total of nearly 3,500 metres of drilling is planned at the Tyr, Flin-D and Snow-H Projects starting in March of 2008 with a helicopter supported drill rig. Again, the work is planned to start in March when good winter drilling conditions are combined with longer hours of daylight. Murgor is also planning a basal till survey to cover the eastern part of the Snow-H Project area and roughly 6,000 kilometres of VTEM at Snow-H and Flin-D.
RECENT TRANSACTIONS:
In late 2006 and early 2007, Murgor entered into two strategic partnerships on its most advanced exploration projects in Quebec: the Barry and Windfall properties. Parts of both properties were optioned respectively to Metanor Resources Inc. and Noront Resources Ltd.
On August 29th, 2007, Murgor took its partnership with Metanor Resources Inc. one step further. Murgor signed an agreement with Metanor wherein:
- Murgor sold to Metanor 7% of its NSR royalty on the Barry Gold Deposit (Murgor still retains a 1% NSR).
- Murgor sold to Metanor its 100% interest in 8 claims of the Barry I property (keeping a 1% NSR royalty).
- Murgor sold to Metanor its 50% interest in the Barry United property (keeping a 0.5% NSR royalty).
- Murgor optioned to Metanor a 70% interest in its wholly owned Nelligan Property.
The total transaction is valued at more than $2.0 million dollars when assuming a price of $0.80 for Metanor shares. Metanor will pay an aggregate of $1,106,250 dollars in cash and will issues 1,126,375 shares of Metanor to Murgor. You will recall that Murgor has already received payments, from Metanor, of $200,000 in cash and $250,000 in Metanor shares at a price of $0.60 per share.
The transaction is very positive for Murgor since the Corporation is getting much of its royalty payment up front while continuing to participate in the project as a large shareholder of Metanor (Murgor now owns more than 1.5 million shares of Metanor) and by retaining a 1% NSR royalty.
THE ROLLBACK:
Nobody likes a rollback! The management at Murgor knows that. However, there are times when in the long-term interest of every shareholder, unpopular decisions have to be made to move forward. It is after weighing all available options that management unanimously voted to move forward with a reverse split and first rights offering.
It is a case of: "short term pain for long term gain." Murgor is at a turning point in its history, growing from an exploration company to a producer. Murgor is committed to complete feasibilities studies at two of its deposits in Manitoba by the end of 2008 and by mid-2009 (respectively the Hudvam and the Wim deposits). Murgor is also committed to continue its exploration and development work at the Fon and Tyr properties, and at the Snow-H, and Flin-D Grassroots Projects in 2008 and 2009. Over the next two years, this work will require a total exploration and development expenditure of $15 million dollar. Unfortunately, this financing need comes at a time when Murgor's share price is grossly undervalued with more than 113,000,000 shares outstanding.
Although, Murgor Resources is currently in a very healthy financial position with over $5M in cash and securities, the corporation will have to raise capital in the near future to complete this work.
Could Murgor raise flow-through money? Of course! But at what cost? Looking back over the past five years, Murgor has had to cope with a highly fluctuating share price reacting to the cycle of flow-through financing at year end and profit-taking in April (once the four month hold period is passed on these new shares). These annual waves of profit taking have caused Murgor's share price to drop and have inhibited the Corporation's growth. This cycle has occurred year after year despite great progress by the Corporation, and to the detriment of long-term shareholders.
The rollback is aimed at stopping this cycle and the resulting fluctuations in the share price by reducing the number of shares outstanding and financing at the same time. Murgor's goal is to have a steadily rising share price that will benefit all shareholders. Murgor will find itself with a much lighter, versatile and nimble share structure that will react much better and quicker to the upcoming news flow. Instead of continuing with sluggish, excessively diluted share base.
Finally, to make the decision more attractive and fair to all Murgor shareholders, management is proposing to give each shareholder the chance to participate in the Corporation's future success with a shareholder rights offering as soon as the consolidation is completed. This shareholder rights offering will allow each Murgor shareholder to participate in a financing by purchasing shares of the Corporation at the maximum discount allowable by the policies of the TSX Venture Exchange.
IN CLOSING:
Murgor is a company that has everything to succeed. Excellent properties with two on the verge of production. Murgor has a well established and thought out Mission, Vision and Strategy. Murgor has a proven technical management and a terrific, dedicated and talented workforce.
You are invited to browse through this website and see all of what Murgor has to offer. You will also see a glimpse of Murgor's bright future. Now a future that Murgor will tackle with a responsive share structure that will allow for increased long term shareholder value.
Respectfully submitted,
André C. Tessier, P.Eng, P.Geo
President, CEO
October 01, 2007.
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.
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