More Panamanian Adventures
While I was in Panama recently, I was introduced to another mining company with a porphyry copper/gold project and some really nice gold projects. The company is Bellhaven Copper and Gold. (BHV-V)
In comparison to the giant world class copper project of Petaquilla, the Cerro Chorcha Copper project is tiny, only 1/10th of the size of the Petaquilla copper project. Yet the grade of copper and gold is similar. Bellhaven has entered into a JV with Dominion Minerals on the project whereby Dominion can earn up to a 65% interest for $6 million in cash and shares and $15 million in exploration expenses over a three-year period. Dominion has an option to acquire an additional 10% by spending $2 million per year until a positive feasibility study is complete.
Cerro Chorcha is but 1/10th of the resource of Petaquilla Copper but they have only spent 1/20th of what Petaquilla spent to get to the same place.
The Cerro Chorcha deposit has already had a 43-101 resource reported of 1.4 billion pounds of copper and 255,000 ounces of gold. Drill results released in August of 2007 but not yet included in the 43-101 resource reported intercepts of 241 meters of .81% copper and 125 meters of 1.32% copper. All of the holes drilled to date have ended in mineralization; the deposit begins at the surface and is open at depth, to the north and to the east. It has world class potential.
Bellhaven geologists are in the process of completing an 11-hole 3600-meter drill program that has already reported excellent results. The company is attempting to both increase the size of the resource and the quality of the resource. Holes 9 through 11 will be released shortly. The company has been very successful expanding the size of the project. The program expanded the high-grade near surface zone for 900 meters along strike and to a depth of 200 meters.
I like the copper porphyry copper/gold project. Bellhaven management has done an excellent JV where they retain a substantial portion of the project while their partner spends the money. But it's still a small project in relation to that of Petaquilla located nearby. It's going to take another $15 million dollars in the ground to have something worth panting over. The money is coming and so far, results are excellent. Bellhaven is spared the expense but shares in all the benefits of a giant project.
The gold projects really do interest me a lot more. In October of 2007 Bellhaven announced the purchase of a 100% interest in the Cerro Quema gold project. Cerro Quema is an advanced stage heap leach project with a 43-101 resource of about 495,000 ounces of gold. BHV is paying $10.5 million over a five-year period, equivalent to $23 US per ounce. Now that's a hell of a deal.
A feasibility study was completed on the project by a previous owner in 2002 calling for a heap leach operation processing some 1.5 million tons of ore per year and producing about 45,000 ounces of gold yearly. In 2006, the Capex was estimated at $14 million to commission the mine and mill, you can plan on that being 75% higher today. That doesn't sound like much but with $900 gold and probably a $250 cash cost, you could pay off the project with 8 months cash flow. That's nice.
But that's not the great gold project; all that is is a very sweet gold project. The really great gold project has just been announced and is located in Columbia. The Santa Maria gold project has a 50 TPD mill exploiting a high-grade gold vein that has been mined for over 200 years. The vein runs almost 2 ounces to the ton. 50 TPD doesn't sound like much production and part of the reason is that 50 TPD isn't much production. But when you are milling 2 ounce gold, a tiny by any measure mine producing 100 ounces per day does over 30,000 ounces a year. That's like owning a gold mine.
I like it because as President and CEO Julio Benedetti explained to me, the area has never had any serious exploration. He intends to drive a 1200-meter tunnel along the high-grade mesothermal gold vein to join it with a high-grade vein swarm of 5 veins. Once the tunnel is complete, Bellhaven will develop reserves and start a drill program to define the resource. Ore produced as a result of the tunnel program will be milled and the revenue divided 50-50 until Bellhaven has paid a total of $250,000. Once that is paid, Bellhaven will get 80% of the revenue.
Bellhaven does have an option to buy an additional 10% of the project for $1 million and has a $1 million dollar work commitment. Mesothermal gold veins are created from higher temperature fluid movement. They tend to be eight times as deep as they are long. Some professional exploration will go a long way. Bellhaven is exploring other opportunities in Columbia as well. This Columbian project is not complete; it is at the Letter of Intent stage, Bellhaven having already paid $25,000. They intend to complete the JV within 45 days.
The company has a $16 million dollar market cap. That's absurd. That's about what their JV partners have committed to spending by themselves. They could have a heap leach operation set up in less than a year and be in production. I assure you that is their intent. They would need to raise about $10 million in equity and the other $18 million or so could be debt financing. That kind of market cap for a potential of 60,000 to 70,000 ounces of gold a year from now is damned cheap.
The company is active on 7 different projects with drilling to commence on at least 4 of these projects this year. There will be a constant flow of information for investors and I like that a lot.
Bellhaven is a new advertiser. I've visited them; I like the people, the projects and the country. I don't own shares right now but by the time you read this, I will. I am biased so please do your own due diligence.
Bellhaven Copper and Gold