The Office Bitch
I've worked in a lot of offices. It seems to me that in every one of them, there was an office bitch; someone pissing and moaning constantly about how life was mistreating her. [Editor's note: "Hmmmm..."]
Over the past few years, I've visited a lot of projects and talked to lots of management. On every one of them, I've been the Office Bitch. I've spent so much time whining and groaning about getting into production, I'm sure more than a few people don't want me around any more so they don't have to listen. A few listened and learned.
I just came back from seeing three great companies located in Mexico. They were great projects and I'm going to be writing about them over the next week or so. They are all production stories so I don't have to bitch any more.
There is a wide range of opinions regarding political stability in Mexico. There have been thousands of drug related murders near the border with the US. There is an unofficial war going on between the dopers and the government.
In addition, the worldwide depression has seriously impacted Mexico with inflation and increasing unemployment and underemployment. Kidnappings have become common even for what we would consider a trivial amount. As the depression deepens, I expect crime and unrest to increase everywhere, including the US. That said, Mexico has a long tradition of mining and in my opinion is one of the most favorable mining climates in the world today.
My first visit of the week took me to La Paz in Baja Sur to the San Antonio project of Pediment Gold. In the last year, Pediment, under the supervision of Mel Herdrick, VP of Exploration, has completed an incredible 31,400 meters of drilling at San Antonio. The project shows a total inferred 43-101 resource of 1.45 million ounces of gold at an average grade of about 1.3 g/t. The project has over 400,000 ounces of gold near surface in oxide ore. I've been whining for two years about getting it into production.
Gary Freeman, President and CEO of Pediment listened. In April of 2008, Chester Millar was appointed to the board and he assumed a position of Chairman of the Board in June of 2008. Chester Millar is a production guy who has been around the industry since Christ was a Corporal. He will focus on nothing but production.
And in December of 2008, Chris Babcock was hired as the person in charge of Mine Development at San Antonio. As it turns out, he was the former president of Castle Gold. I visited the project later in the week and I'll be writing about them in a few days. But Chris Babcock is another pure production guy with many years of experience putting mines into production and working in Mexico.
I like Baja Sur and really like the San Antonio project. It's near enough to civilization to have access to a supply chain and far enough out of town to not have citizens harping about being woken by blasting. San Antonio is about 45 km south of La Paz and 160 km north of Cabo San Lucas. There is power crossing the site, it's a nice warm climate and the property has lots of flat land for a mill and heap leach pad.
Gold and silver were discovered near San Antonio around 1748 and mining continued until about 1915. At the peak, around 1862, there were as many as 25 producing mines in the area.
Pediment owns 100% of the project with no underlying royalties. Currently they plan on conducting a bulk sample heap leach test beginning this year with up to 100,000 tons of ore. Bottle roll tests show recoveries of up to 88%.
Pediment has a giant land position near San Antonio and I expect them to continue to expand resources. The near term production from San Antonio will pay for it. Pediment still has a very tight share structure and I expect a lot of progress from them on the production side without very much more dilution.
In October of 2007 Pediment purchased the former producing La Colorada gold/silver mine near Hermosillo in Sonora. The total cost was about $3 million to various vendors for a past producing mine and mill. It came with a historic resource indicating about 600,000 ounces of gold. This was our second stop on this visit after La Paz.
The La Colorada mining district shows mining taking place as early as 1740 when Jesuit missionaries worked near-surface high-grade gold veins down to the water table in between attacks by hostile Indians. During the 1860s a 48 stamp mill was installed and one of the earliest cyanide plants in the world was started at La Colorada in 1888. Mining in the district was most active from about 1876 until 1914. Mexican government reports suggest that something over 3 million ounces of gold were produced from the area's mines making it one of the larger gold districts in Mexico.
Modern mining began under Chester Millar of Eldorado Gold in 1993. Chris Babcock also participated in the early design and construction of the heap leach facilities at La Colorada. Eldorado produced about 30,000 ounces of gold a year prior to selling the facility to a local mining contractor in 1992.
When the mining contractor shut the mine and mill down in 1992 he did a hard shutdown. Literally he just came in and turned off the power. I have always believed there is upwards of $10 million in gold and silver on the pad. I wanted them to spend the $1 million or so to get the processing side back into operation, they could fund it from the cash flow from the material sitting on the pad.
In any case, Pediment is moving forward at a rapid pace, doing some exploration at the same time as they advance the mill back into production.
It's obvious just from looking at La Colorada that there is a lot of expansion potential for resources. This project didn't even come close to being mined out. They can find ounces cheap and they can pay for them with what they have on the pad right now.
I've participated in a number of placements in Pediment. I like the management and I hope the commitment to production is followed through with aggressive action. It's time to produce. The world's financial system is in a state of collapse and we need to go back to an honest monetary system. For that, we need gold and silver . Pediment is sitting on a lot of it.
Pediment is an advertiser and we are biased. You make the profit so do your own due diligence but the stock is cheap in historical terms.
Pediment Gold Corp