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CANADIAN STOCK EXHANGE-DO YOU JUMP SHIP OR STAY ON BOARD?

E. A. SCHILLER OCTOBER 2008

The Stone Age did not come to an end because the earth ran out of stones, and the oil age, when we run out of oil, will not see the energy age terminated because we will find alternate sources of energy to replace oil and gas. The current financial crisis facing the US and affecting our nation and others will not see the downfall of stock markets because a solution will be found, although not overly apparent at the moment. Markets always recover, over time and like the farmer who was walking his sick pig to the vet looking for a cure, when told it was going to take a long time to get there walking, the farmer replied “What is time to a pig”. Back to reality in the mineral resource world, nothing is happening to excite investors to jump in and rally the troops. Metal prices vary almost daily and the leader, gold is doing its hardest to keep its head above $900.00. I am going to look at copper and report on a couple of companies with good projects in Canada with lots of potential but not exciting public interest.

I worked for Hudson Bay Mining and Smelting (HBM&S) in my previous life in the Flin Flon region of northern Manitoba (1957-58). Originally discovered around 1915 and put into production around 1925, more than 30 volcanogenic massive sulphide deposits (VMS) have been discovered from which 24 mines have produced more than $29 billion of copper/zinc and precious metals. (Back then millions were big, then we heard about billions and now trillions are quoted with regularity). The descendants of HBM&S, HudBAy Minerals Inc currently operates mines and a copper smelter in this famous prolific Proterozoic greenstone belt in and around Flin Flon. In the past year a new VMS deposit has been discovered at Reed Lake, near Flin Flon by VMS Ventures Inc (VMS-TSX-V) that has all the symptoms of a typical Flin Flon type ore body. The Reed Lake project consists of claims optioned from one of Manitoba’s most famous prospectors, Bruce W. Dunlop and a personal friend of mine. The claims are situated near the northern boundary of Paleozoic flat-lying limestones that cover Proterozoic volcanic rocks similar to the nearby Spruce Point mine of Hudbay Minerals. In 2007 a electromagnetic survey (EM) delineated a number of conductive units that were drill tested and found to contain VMS mineralization at three sites. Due to the Paleozoic limestones, that extend southerly and beneath much of Manitoba and Saskatchewan this area was neglected by previous explorers. The first EM site became a new VMS discovery containing high copper and zinc and the other two sites were considered anomalous to be followed up a latter time. The new discovery became the Reed Lake project and drilling to date has identified a series of parallel, steeply dipping mineralized lenses over a strike length of 225 meters to a depth of 425 meters.

The overall structure has an ellipsoidal configuration open to depth. Drill results to date have been very impressive with the latest results such as in hole RD-08-55 intersecting 61.96 meters (203.28 feet) of 5.96% copper and 0.12% zinc and in hole RD-08-56 intersecting 19.87 meters (65.09 feet) of 3.25% copper and 0.25% of zinc. Gold and silver assays are pending but in previous holes with similar massive and semi-massive sulphides gold assays are up to 5 grams/tonne and silver is up to 60 grams/tonne. Without a doubt this is an exciting looking discovery and compares in every way to the many mined out and currently mines in operation. The nearby HudBay copper smelter is operating on 75% capacity and in need of additional copper feed since their current mines and imported concentrates are insufficient for full capacity. VMS stock over the past year has come off from $1.75 to its current 50 cent level. The stock should be higher but so should many others.

From VMS deposits we move to British Columbia and take a look at a typical Cordilleran copper porphyry deposits. Immediately south of Princeton, BC copper was discovered in 1884 and from 1923 to 1957 Granby Consolidated Mining, Smelting and Power Company mined 31.5 million tonnes grading 1.08% copper. Newmont Mining Corporation of Canada purchased the property from Granby, mining first the Ingerbellle deposit in 1972 followed by the Copper Mountain deposit in 1979. Mining operations ceased in 1985. In 1988, Cassiar Mining Corporation (later to become Princeton Mining Corp) operated the mine until closure in 1993. The mine was reopened from 1994 and closed in 1996. When Copper Mountain Mining Corporation (CUM-TSX-V) acquired the property they took the bull by the horns and conducted one of the most extensive drill programs in the history of BC exploration. In 2007 they drilled 44,000 meters with the goal of combining pits one, two and three to create a super pit followed in 2008 with a schedule drilling program totaling 50,000 meters.

An independent final feasibility study released this summer estimated measured and indicated resources at 186 million tonnes grading 0.411% Cu and inferred resources of 92 million tonnes grading 0.344% Cu. Based on a mine life of 15 years through put is placed at 35,000 tonnes per day to produce 100 million pounds of copper with gold and silver credits. In addition a bit of blue sky surrounds this impressive project by way of some interesting electromagnetic anomalies that adjoin the super pit location.

The company is well managed and directed by highly qualified geoscientists and has all their ducks in order re environmental and aboriginal issues. Princeton is an user friendly local community and provides access to all amenities to support a major mining venture. Price wise, reviews by several Canadian brokers advocate CUM stock at speculative buys of $3.00 plus, however the stock in late September traded in the $1.25-1.30 range. So here is a company with a great project, in one of the safest countries/provinces on the planet with a world class project and fighting for recognition. As mentioned above re the HudBay smelter at Flin Flon lacking copper concentrates, Copper Mountain could provide the current shortfall. For more information on CUM it has an informative website and worth a read for those interested in copper and how mines are developed.