J-Pacific Gold Inc. (JPN-TSXV)
July 24, 2009 Issue
The Most Powerful Name In Corporate News and Information
Junior Exploration Company, J-Pacific Gold Is Focused On Moving Their Black Dome And Elizabeth Projects Towards Gold Production
J-Pacific Gold is a junior resource company
focused on gold exploration and mining in North America. Since our inception
in 1990, J-Pacific has been engaged in a variety of exploration activities
as well as small scale gold production. Currently, J-Pacific is focused on
exploration opportunities and aggressively adding to our portfolio of
projects. Our plan is to develop J-Pacific into a world class exploration
company. Our production properties are permitted and our exploration
properties are drill-ready.
With a strong background in
economics and finance at senior managerial levels, Mr. Ferris has valuable
corporate banking experience with Lloyds Bank Canada, and sales and
marketing experience with the Canadian Home Income Plan.
Interview conducted by: Lynn Fosse, Senior Editor, CEOCFOinterviews.com, Published – July 24, 2009
Mr. Ferris: “J-Pacific is a junior exploration company and we’re focused on gold. Our exploration activities are now focused primarily on moving our Blackdome and Elizabeth Projects towards gold production.”
CEOCFO: Where are you with these to projects and why do you like them?
Mr. Ferris: “Blackdome and Elizabeth are roughly 200 miles north of Vancouver, BC, Canada, so access is good. Blackdome itself is a past producer for over a 4 year period in the late 1980s with total output of roughly 250,000 ounces at a very high grade of about 20 grams of gold per tonne of rock. It currently has an inferred resource of about 50,000 ounces. The mine has been under care and maintenance for many years. We’ve done some exploration over the past few seasons to see if we can get a better handle on the structures and add to the resource there. Elizabeth is 20 miles to the south of Blackdome. We acquired the property in 2002 thinking it was perhaps a small feeder zone for the Blackdome mill, but it’s turning out to be something much bigger than that. We made an initial discovery there in 2004 of this new southwest vein that had never been indentified before. We had some nice numbers in that drill program and we expanded upon that with further drilling. We had some very nice numbers from our 2007 program and last week, we announced our first resource calculation for the Elizabeth project, which was a very pleasant surprise for us. Currently Elizabeth has 206,000 ounces of gold, grading 12.26 grams of gold per tonne of rock. The resource analysis was completed by the engineering firm of SRK Consulting. We now feel that we have an adequate resource to restart the mill if the economics are correct. We plan to hire a third party engineering group to do an economic study on the two projects and we have a large underground exploration program planned for Elizabeth to better understand the mineralization and hopefully get some ore from the program. We think that were just scratching the surface at Elizabeth. We’ve only been able to work in a small area because of the typography and the orientation of the mineralized zones, so we really need to go underground. If it all works out, we could be in a situation where we’re actually mining some gold in about two year’s time.”
CEOCFO: That’s pretty quick!
Mr. Ferris: “Yes, it is. We are in an advantage with Blackdome, because we have roughly $70 million in infrastructure and equipments costs up there with a fully permitted mill and a tailings facility. We have septic tanks, plumbing and everything else up there, so we do not have to incur massive capital costs for a start-up. We estimate very roughly that our capital cost will be in the $15 million range. As well, if the economics and grades are good, these costs could be recovered in a very short period of time. We think it’s pretty positive.”
CEOCFO: What is the philosophy for J-Pacific?
Mr. Ferris: “We try not to fall in love with our properties. This is a high-risk business, so the goal is to reduce the risks and improve your targets. What we’ve done is pick properties in mining friendly jurisdictions with existing infrastructure and a strong mining culture like Nevada, Quebec, British Columbia, and properties that have targets that can be developed quickly. We test them and if they work out great, if they don’t, we get rid of them and the associated carrying costs. We had a couple of properties in Nevada that did not work out, and we did drop a couple here in British Columbia as well. We take a pretty hard, cold approach. We’ve only spent $2.4 million Canadian on the Elizabeth property, and we have 206,000 ounces. It’s a great return on capital so far, at least in terms of the resource that we’ve been able to define. We generate targets to drill test that we believe have a good chance to succeed, test them thoroughly and quickly, and they don’t work out, we move on and run with the winners.”
CEOCFO: What is the financial picture like for J-Pacific?
Mr. Ferris: “We have working capital to get us through the fall. We’ll probably do a small fund raise, but we’re expecting about $1 million back from government refunds. The market conditions are horrible and have been for some time. However, our opportunity to finance will improve will be once we have the economic study done on the BC mines. My own feeling is that with the current market conditions, unless you have near term production opportunity, it is difficult to get anyone’s attention, although I remain very bullish on gold. I would expect, especially with all of the government guarantees and printing money, we’re going to see much higher prices for gold. I’m highly still bullish on the prospects for this sector.”
CEOCFO: Are you looking at additional properties?
Mr. Ferris: “We’re always looking at new projects, even in this environment, and there are a lot available right now. We’re looking at them if they make sense and if they can add to our activities at Blackdome and Elizabeth, we certainly would look at it.”
CEOCFO: Do you own your properties 100%?
Mr. Ferris: “It’s all 100%. Some of them have option agreements with underlining owners, but everything is 100%.”
CEOCFO: By design?
Mr. Ferris: “Yes.”
CEOCFO: At one point might you bring someone else in or would you expect to actually go into production yourself?
Mr. Ferris: “If an opportunity arrived with the right party that would be beneficial to our shareholders and could move the properties ahead quicker, we certainly would be open to that. Otherwise, we are just going to continue on our current path and continue to move the properties towards production.”
CEOCFO: Is it easier to get personnel or equipment in this economic environment?
Mr. Ferris: “We have a lot of equipment at site but equipment is not the issue, it’s more finding the qualified people for underground operations. That is the bigger challenge, although there are people available out there now with this downturn.”
CEOCFO: What are the challenges you see as you move forward and how do you meet them?
Mr. Ferris: “Finding qualified and experienced people who can match up with our culture. That’s the biggest challenge.”
CEOCFO: There are many resource companies for investors to look at; why does J-Pacific stand out?
Mr. Ferris: “J-Pacific stands out because we’re careful with our shareholder’s money, number one I would say. Secondly, we have a proven track record of discovery and have created a resource from discovery. I believe that the probabilities are very good that we will be able to create positive and sustaining cash flow in a meaningful way and move ourselves into the lower end of the active gold producers, which is a very small group.”
CEOCFO: What should people reading about J-Pacific remember most?
Ferris: “It’s a
company that the management of this company believes has great leverage to
the upside. With the bullish prospects for the price of gold, we feel we
have a positive future with the near term production opportunity at
Blackdome and Elizabeth.”
“J-Pacific stands out because we’re careful with our shareholder’s money, number one I would say. Secondly, we have a proven track record of discovery and have created a resource from discovery. I believe that the probabilities are very good that we will be able to create positive and sustaining cash flow in a meaningful way and move ourselves into the lower end of the active gold producers, which is a very small group.” - Nicholas T. Ferris
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