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Big Problems, Big Potential

Bob Moriarty
Feb 11, 2011

In late October I flew out to Colorado to visit a historic district west of Boulder that I had never heard of before. I went to see the Cross/Caribou Mines located in Nederland, about 30 minutes west of Boulder.

Mining began in the district back in 1869. Based on the prices at the time, it would have been considered a silver mine. Over 20 million ounces of silver and 500,000 ounces of gold came out of the district. The entire place is now owned by Calais Resources. (CAAUF-Pink Sheets) The old timers left a heck of a lot more gold and silver than they took out but Calais has to clean up a mess before they can get into production.

Evaluating mining projects is hard but evaluating people is easy. One-man bands never work. Team efforts might work. Old time miner Tom Hendricks spent 30 years tying up the district and trying to get one of the mines into production. He did it as a one-man band and no one would come through with money when gold was rising. They never do, no one trusts one-man bands. By 2004 his company was in such chaos that they stopped reporting financials and things went off a cliff.

David Russell and Davie Young, formerly of Apollo Gold and Brigus Gold invested a hunk of their own money and took control of the company last year. They have spent most of the last year cleaning up the mess and just announced a major accomplishment today.

When the company ran out of money, employees and a future all at the same time in 2004, the British Columbia Securities Commission (BCSC) issued a Cease Trade Order mlevy@glenuna.com (CTO) for BC investors and they were relegated to the Pink Sheets which made it even harder to raise money.

Plans are in the works to settle some $11 million in debt and to relist the company in Canada and on the OTCBB. A new 43-101 is in the process of being completed by SRK and should be announced shortly. (Filed on SEDAR-Feb 11, 2011) It will not include an updated resource. Historic resources show 423,000 ounces of gold and over 12.4 million ounces of silver.

But the work begun by Tom Hendricks will provide the foundation for a real mining company. In Colorado the company owns 500 acres of patented ground and has claims on an additional 1800 acres. The mine is fully permitted for 200 TPD production. Initially the company plans on trucking the ore 90 miles to a mill in Leadville but to put in a flotation plant when finances permit.

It's a rich deposit with over 100 identified veins with true widths between 1 and 6 meters. It's also high grade ranging from 9.9 g/t to 19.5 g/t gold with 257 g/t silver to 627 g/t. There have been over 53,000 meters of drilling completed and the core is still around.

Calais has more than one donkey in the stable. They also own the White Caps mine located just five miles south of the Round Mountain Gold mine in Nevada. The district historically produced over 800,000 ounces of gold. The White Caps mine produced about 150,000 ounces of gold. Calais owns some 3800 acres patented and unpatented. The White Caps was mined to a depth of 1300 feet and began production as early as 1862.

White Caps is far more conventional and investors will have an easy time of understanding it. The project needs serious drilling. Calais has plans for almost 20,000 meters of drilling as part of a $3.5 million exploration program. Echo Bay completed some 70 RC holes and the data is still available.

This is going to be a really interesting company to follow. Up until now it has been an absolute basket case. But there is a lot of gold and a lot of silver still in the ground.

David Russell, Chairman and CEO, comes from a mining family, he got Apollo cranking. He and his family own almost 30% of the stock. He has a lot of skin in the game. David Young, President and COO was his right hand man at Apollo. They have the background to get the Cross Mine into production; the main question is if they can convince institutional investors to make the investment necessary to give them the opportunity.

It will either succeed wildly or fail totally. I don't have any question; there is a couple of million ounces of gold that can be located. Permitting is a bit of an issue, after all it is Colorado but they are permitted for both production and a small mill now. By the time they line up financing, I think the good folks of Colorado will yearn for a return to their roots. It was this district that created the need for a town in Boulder to supply them with food and a supply chain through Denver for mining equipment. Mining built Colorado 150 years ago and may well do it again.

I have enough faith in the company that I participated in a private placement. Calais is a new advertiser and we are biased. Please take responsibility for your own investments.



Calais Resources
CAAUF-OTCBB $0.27 (Feb 10, 2011)
142 million shares
Calais website


Bob Moriarty
President: 321gold

321gold Ltd