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In the Shadow of a Headframe

Bob Moriarty
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Nov 6, 2012

I’ve heard it said that the best place to discover minerals is in the shadow of a headframe of an old mine. That’s rubbish, of course. The best place to find minerals is in that old mine.

I spent a week in Eastern Europe visiting Serbia, Bosnia and Albania recently and that’s after a visit to Turkey about 6 weeks ago. After reading about all the financial chaos in Western Europe, I was prepared to be seeing 3rd world countries with a lot of poverty stricken people. That’s the impression you get from the media. Well, I was pretty surprised. The economic center of gravity is moving to the east and in ten years time, I think Istanbul will be to finance what New York and London are now. While we are in a steady state decline, Eastern Europe is booming.

Albania was your garden-variety economic disaster run by Communists from the end of WW II to about 1997. They had a Communist dictator named Enver Hoxha until his death in 1985 and the country declined with the death of Communism throughout Eastern Europe and the Soviet Union. Critics of the government were promptly executed and family members sent to work as slaves in the copper mines.

Copper mining in the Mirdita VMS district was a mainstay of government economics and was a great place to send people to shut them up. Along with the rest of the economy, mining collapsed with the demise of the authoritarian government.

1997 brought an internal revolution and change in government with more or less free elections. In 2009 Albania actually joined NATO.

A pair of local businessmen formed a company they named Tirex Albania and laid claim to a 40 km long belt of some dozen or so former copper/gold/silver mines. The Mirdita VMS Copper-Gold district was consolidated under Tirex Albania which was then bought out by a Canadian Junior now named Tirex Resources. The JV calls for a 10% carried interest to the original owners that can be converted to a NSR of 2.5% that can be bought for $2 million by Tirex prior to production.

Tirex has built a 40-man camp and conducted scout drilling and mapping since 2007. They put the project on hold pending government approval of six mining exploitation licenses over parts of the project. That approval was just granted a week ago.

Tirex is doing something quite brilliant. Rather than raising $50 million to construct a mill, they are entering into a JV with a private Turkish company named Ekin Maden with annual revenues of over $1 billion. The 50/50 JV will call for Tirex to put in their mines and Ekin Maden to do the processing. They have a nearby mill with a capacity of production of 1200 Tpd. Tirex plans on fast tracking one of their mines and being in production in about 6-8 months.

The deposit is a VMS with grades running between 1.12% to as high as 5% copper and various grades of gold from 1.2 up to 4.6 g/t. Before Tirex, there has been no professional exploration done while it was a government-mining district. Tirex plans on conducting ground geophysics and an extensive drill program to define a larger resource.

Other than getting their hands on more ore, the Turkish mining company is also going to get their hands on Canadian expertise. Ekin Maden is believed to be recovering about 84% of the copper and 28% of the gold. For a flotation plant processing VMS material, those recoveries are poor and better metallurgy should increase recovery especially for gold.

Regular readers of 321gold know that I have been warning of an impending financial superstorm for years. A dozen years ago, my message was fringe, now it’s mainstream and anyone with any sense can see it coming down the pike like a runaway freight train. The only safe haven is going to be precious metals and resource production stories. You can watch the disaster in the Northeast after hurricane Sandy. No matter how much warning some people have, they simply will not prepare for the disaster they know is coming. Don’t be one of them.

Tirex is executing a brilliant plan and will be in production next year without major dilution. That’s remarkable. It’s a big district and once supported thousands of workers. Tirex has a known resource and the potential for adding a lot more. Deposits in VMS districts tend to cluster and there will be more hidden from the surface only to be discovered with modern exploration techniques.

With a stock price of $.70 and 68 million shares outstanding, Tirex has a market cap of about $50 million. Management has done a good job of maintaining the share value but we are entering the range just before a company goes into production where the largest gains are possible.

Tirex is not an advertiser and we do not own any shares. In the end it’s your money so please do your own due diligence.

Tirex Resources Ltd
TXX-V $.70 (Nov 05, 2012)
TIRXF-PK 68.1 million shares
Tirex Resources website

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Bob Moriarty
President: 321gold
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321gold Ltd

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