Cabral Sitting on a Plateau of Gold
I fully approve of garimpeiro miners. Rarely can they read and write. They can live under conditions that the majority of us could never handle. They mine in a totally different way than do the junior resource companies in the space. They all make money. That’s right, 100% of garimpeiro miners make money regardless of what the price of the commodity is. They have to, because if they don’t, they don’t eat or provide food for their family.
Junior mining companies believe that spending money for twenty years and never making a dime in profit makes perfect sense. In fact, most geologists believe that geology is all about spending money. And they will spend money until frustrated investors finally give them the boot.
Garimpeiro miners think that spending money and not producing profit is daft. Because it is daft. When they can’t make money on a project, they stop spending money and time in fruitless activity. The “professionals” in the junior mining space don’t think much of the artisan miners but they could learn a lot from them.
One thing they could learn is where the gold is. If you go back to what I had to say about TriStar Gold in January, our newest sponsor, Cabral Gold (CBR-V) is in the same boat. They both followed the garimpeiro miners to the mother lode.
Cabral Gold has doubled since the crash lows in mid-March and is still cheap. The company has a 100% interest in the 36,000 square km Cuiu Cuiu project with a million ounces of gold in 43-101 resources. The region was the world’s largest gold rush in the last 100 years with the artisan miners taking out somewhere between 20 and 30 million ounces of gold from near surface and surface mining. Their Cuiu Cuiu deposit produced 2 million of those ounces already. No doubt the locals left a few ounces, artisan mining leaves a lot of gold behind.
As a matter of general interest, Eldorado Gold is going into production at their 2.1 million ounce gold deposit only 20 km away. For many years infrastructure has been one of the biggest hurdles junior mining companies face in Brazil but the government put in a new road within the last five years that Eldorado linked into. Cabral has built a spur road from that. Brazil plans new hydroelectric plants in the area so power costs will drop and there will be more interest in the area.
The president, one of the largest shareholders of Cabral, Alan Carter, contacted me a year ago and pitched me on the project. My response to him was that all he needed to do was increase his visibility and the market would bid up the shares. He ignored me. The stock went down in spite of having compelling economics.
He called back this year. I told him the same thing. He’s on board now. The company just completed a major private placement and is sitting on $3 million cash reserved for drilling and exploration. Recent results that are now incorporated in the 43-101 show wonderful numbers including 3.4 meters of 36.9 g/t gold and 2.8 meters of 19.5 g/t Au. Surface samples from a newly discovered region called Alonso show grades of 11.6 to 200.3 g/t Au.
I highly suggest potential investors download the corporate presentation and go to page 11. I totally disagree with how Micon calculated the resource. When you are dealing with this form of gold, it has large nuggety gold in the saprolite layer at the surface decreasing to a tiny size in the laterite lower down: you get a really wide variation in size. Most investors, indeed most geologists don’t understand this but gold is highly mobile. In a very wet area such as Brazil half the year, the gold actually grows at surface in chemical remobilization. So using a top cut where you just ignore the very high grade simply is not accurate.
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So I don’t buy the current 1 million ounce 43-101. It’s really 1.5 million ounces using the existing numbers but not being so anal about being conservative. Perfection is being accurate, not being perfect.
So their market cap is about $10 million USD and they have for all real purposes, 1.5 million ounces. That makes gold under $7 an ounce. If you must be anal retentive, it’s still gold for under $11 an ounce USD.
Given that the FED has guaranteed hyperinflation and the banks are going to close one day soon, owning a real resource run by real management where their interests are aligned with that of shareholders is probably a very good idea.
Cabral has major drill programs scheduled for the next six months so expect a lot of news. And this year the company is going to keep telling people what they have and that’s a really good thing.
Cabral is an advertiser. I missed the pp but I have bought shares in the open market. Do your own due diligence.