Big Problems, Big Potential
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
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 email@example.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.
CAAUF-OTCBB $0.27 (Feb 10, 2011)
142 million shares