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Siga Resources Inc. (SGAE-OTC: BB) |
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May 13, 2011 Issue |
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The Most Powerful Name In Corporate News and Information |
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CURRENT ISSUE | COVER ARCHIVES | INDEX | CONTACT | FINANCIALS | SERVICES | HOME PAGE |
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Now Controlling 100% of Their Lucky Thirteen Gold Claim, Siga Resources Inc. is Preparing for a 90-Day Evaluation and Exploration Program that will Provide the Data Needed to Apply for Permanent Production Permits |
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Company Profile:
Siga Resources Inc, founded
in 2007, is based in South Lake Tahoe, California. Siga is a mineral
resource exploration and development company. Siga's strategy targets
properties that have the potential for near term production and early
positive cash flow. Siga's general geographical interest is North and South
America.
A registered Professional
Geologist, Mr. Morrow has served on the Boards of Directors of several
Associations and companies. Mr. Morrow has worked as an employee or consultant for over 35 years in exploration, development and production of natural resources in multiple commodities. He has held line and executive positions within the mining and minerals industry with Sonoma Quicksilver, Utah International Inc, InterPace Corporation, Federal Bentonite Corporation, Homestake Mining Company, and Zaruma Resources Inc. (Laminco Resources Inc.). He has been instrumental in the successful discovery and construction of several mining properties. His consulting practice includes many years of significant responsibilities in real estate management, planning, entitlement, permitting, engineering and construction management. |
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Interview conducted by: Lynn Fosse, Senior Editor, CEOCFOinterviews.com, Published - May 13, 2011
Mr. Morrow: When I came on board, Siga offered a good opportunity to put a small goldmine into production in a very short time. It is a Placer mine, which is a little bit of a rare bear in the mining industry and it was just a very interesting project.
CEOCFO: Where is the project located? Mr. Morrow: It is about five miles out of Hope, British Columbia, which is about 70 miles northeast of Vancouver, British Columbia. It is on the Fraser River.
CEOCFO: Would you tell us about the project? Mr. Morrow: The project is essentially a gravel bar. It has been known for 100 plus years as the Union Bar, and it is right on the banks of the Fraser River. It has been the subject of prior gold production starting back in the 1850’s as one of the Klondike era gold rushes. It is a large, generally flat area and one of the reasons that it is attractive today is because it really has not had a lot of modern technology, exploration or production applied to it. For one reason or another miners of the day were drawn to other places where the gold was hopefully easier to get, and it went for a long period of time without any production at all, except some minor testing. Looking at the data package in whole, it looked like a good opportunity. The current owner also had pursued the permitting of the property at least as far as advanced exploration and early production.
Siga has acquired 100% of the Lucky Thirteen, from the long time owner. It has been the subject of some study and reports that were done before Siga became involved, including one in 2007 that essentially reviewed the entire project and summarized all of the reports that were on file both with private and public sources. There is some data that went back into the mid1800’s. We now control 100% of the Lucky Thirteen and are in the midst of early preparations for about a 90-day evaluation and development program, which will involve test pitting in a grid pattern across the project beginning from the last production area, which was on the south portion of the project. We expect to spend about between $350 and $400,000 on this evaluation program. Based on that, we will have the data we need to apply for permanent production permits and we expect that with a little bit of good luck that the project could go into production within the year of 2011.
CEOCFO: That is pretty quick! Mr. Morrow: That is pretty quick because it is a placer deposit. You do not need a lot of expensive bricks and mortar buildings drilling equipment or anything like that. It is essentially a gravel project. Run the sand and gravel through a washing plant, which removes the gold and black sand concentrates from the gravel. In addition, most of the equipment that is used in that industry is portable. Essentially, it is on skids or on wheels, so it is movable both in and out of the project and around the project. Therefore, it is relatively low capital for a mining project with this potential.
CEOCFO: What is the financial picture for Siga Resources today and will you need to raise additional funds once the preliminary is done? Mr. Morrow: We do need to raise additional funds. When Siga came into the project there was some funding to evaluate the project, get the permits into effect by cooperation with the owner, and initiate the purchase contract with him. We are currently in the middle of a funding to raise around $500,000 to go immediately into the evaluation program.
CEOCFO: Do you find there is more interest these days and that it is becoming easier to raise funds, or is it still as difficult as it has been for the last few years? Mr. Morrow: There is a lot of money out there for production-ready properties or properties that are in production. There seems to be almost an unlimited number of dollars for that kind of activity. Placer mines are a little bit of a different animal and people tend to be wary of an investment in that. It has been difficult raising preliminary capital for both Placer and other operating activity because there is just a degree of skepticism in placers where it is more difficult to prove a reserve. Just to talk about that for a second, most placer mines are river based where the ore source, the gravels are in a fairly confined river bed. You are working in running water, or loose banks of a running river. Many of them are very small, very difficult to determine what your resource is and what the value of it is.
One of the attractive things for Siga on the Lucky Thirteen is the ease of access and sheer size. It is on the banks of a major river in British Columbia, but it is well over 100 acres of flat ground, so you can work without very many logistical problems. Our permits require us to leave a boundary on the outside of about 100 feet to protect the river from basically anything. It is a huge resource. It is more than 21 million cubic yards of sand gravel that is actually surveyed on the property limited more less by the water depth. It is a project that you actually can determine the resource relatively quickly and with our evaluation program, we expect to do that. Therefore, it is very different from most Placer properties. Water obviously is not a problem because it comes right out of the ground. You can pump it and you are not taking water off site, you are using it just for the washing point.
CEOCFO: Will Siga Resources continue to control 100%, or do you see the need to take in partners? Mr. Morrow: We can take in partners. The ability to control 100% actually came up opportunistically. The biggest initial option on the property was with a private company that struck a deal with the owner and at the end of the day the private company was not able to perform and when their option expired; Siga renegotiated it on slightly better terms and became the operator. We attempted to deal with the private company at first ourselves, in which case we were going to be able to acquire 80% of it. So you can see how this new agreement is a far better deal. We have more control over the property and a small net smelter royalty burden on the production.
CEOCFO: What is your two-minute take on the price of gold? Mr. Morrow: I was personally surprised when gold went into the $1400 range; I thought that based on history from 1981 and 1982 that with the gold market that $1,000 was going to be a really good number, because it went to around $800 during the 1980’s. I think it is a function of the average view of the world economy. People do tend to seek gold as a hedge against disaster, inflation, and practically anything that you could name. That buying pressure has pushed gold up to the levels it is right now. Do I think it is going to go into the $2000 range, which many people are projecting right now? I think it could if the governments around the world are unable to control inflation. I see personally kind of a long haul getting this global economy moving like it was five years ago and gold is a good place to be in uncertain times.
CEOCFO: In closing, there are many gold companies in your group to look at, why should investors pick Siga Resources out of the crowd? Mr. Morrow: At this point Siga is a small gold company with two projects in its portfolio. One of them was the project the company was based upon called the Valolo Gold Claim. It is a gold exploration play in the Republic of Fiji. It was originally acquired because of its location in a caldera environment in the Savura Volcanic rock group, which underlies the property. That project is a pure exploration play, it still remains a viable play and we own it 100%. It was picked up because it is in the area of a historic mine called the Nasoata Gold Mine, which produced about 1 million ounces of gold between 1956 and around 2002. We believe in the exploration play. However, our prime focus right now is on Lucky Thirteen, which can be brought into production far faster and with less risk.
It
is $400,000 in round numbers in the evaluation program, which is about the
lowest that I have ever seen to develop a project that a simple proforma can
show, based on some historic production data, that it can make between $10
and $20 million a year at a relatively modest production rate of 100 tonnes
an hour or so. Therefore, it is an opportunity to watch the stock build from
well below a dollar to a $1.50 or $2, if we can verify the values earlier
workers found. |
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Siga has acquired 100% of the Lucky Thirteen, from the long time owner. It has been the subject of some study and reports that were done before Siga became involved, including one in 2007 that essentially reviewed the entire project and summarized all of the reports that were on file both with private and public sources. There is some data that went back into the mid1800’s. We now control 100% of the Lucky Thirteen and are in the midst of early preparations for about a 90-day evaluation and development program, which will involve test pitting in a grid pattern across the project beginning from the last production area, which was on the south portion of the project. We expect to spend about between $350 and $400,000 on this evaluation program. Based on that, we will have the data we need to apply for permanent production permits and we expect that with a little bit of good luck that the project could go into production within the year of 2011. - Edwin G. Morrow |
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