Abcourt mines


I am satisfied to present you a new mine: Abcourt mines is in the province of Quebec in Canada what allows it to have a very weak geographic risk, contrary to the silvermines of South America which although having ratios reserves interesting are punished because of an important geographic risk. The exploitation of the mine can restart in one year with some new investments.


I. Mines.


Barvenab project (deposit Abcourt-Barvue and Vendôme Barraute).
Abcourt-Barvue is situated to Barraute in 60km in the North of Val-d’or.
The discovery of the zinc dates 1950. An mine was exploited from 1952 untill 1957 in sky opened with a production of 3200 tons of ores a day. The mine achieved a 76 metre depth and the works of preparation for a souteraine exploitation between--76 and 152m were made, the mine closed with the decline of the price of the zinc.
Bitter of the 20 million Canadian dollar spendings, the mine Abcourt was put back in exploitation in 1985. The ore is transported by lorry to Matagomi in 250Km from there. In 1990, the mine closes, again, because of the too low prices of the silver and some zinc. All the material and the infrastructures stayed place there to be used in the reopening.
The mine was investigated only in a depth of 300m, but in Abitibi the similar deposits reached a depth from 1000 to 2000 metres.

Property of Vendôme: discovered in 1951, the puit is dug in 1954 in 160m of depth and are dug 2030 metres of galleries.

The development of Barvenab:
It would be made in two phases
1st phase construction of the concentrating mill.
- Exploitation by pit Abcourt-Barvue.
- Underground exploitation of the deposit Vendôme.
The cost of this phase is 28 millions Canadian dollars (the time of recovery of this capital is of two years).

2nd phase
- Underground exploitation of the deposit Abcourt-Barvue.


II. Réserves.

Bilan 2003 (p.12)
- 15.4 million ounces of silver.
- 303 800 tons of zinc.
- 120 000 ounces of gold.
- 2308 tons of copper.

15.4m oz / Ag = 120 millions $ $( 7.85 / oz )
303 800 t / Zn = $330 millions $( 1086 / t )
120 000 oz / in = 50 millions $ $( 423 / oz )
2 308 t / Cu = 7 millions $ $( 3088 / t )
Total = 509 millions us.

Market capitalization:
$0.21X25.6 m = $5.3mca = 4.1millions $ us.

The ratio (value of the reserves diviéer by the value in stock exchange) is 123, that is that for a dollar of actions you have 123 spare dollars in raw material in under ground.
The ratio of silver is 29, it is one of the best ratios of silver, that of the gold is 12.3 and that of Zn and Cu is 81.
These calculations are made in the actual rate on March 30th, 2004.

Small calculation (very approximate), let us imagine a production over ten years $500m / 10 = $50m (value of the production annual).
With a 10 % net profit, it looks $5m of annual profit.
PER of 9 = $9*5m = $45 millions, we divide then by the number of actions 45m / 25m = $1.8us = $2.3 ca.
Let us be more optimistic:
With a 20 % net profit, it looks $10m of annual profit.
PER of 14 = $14*10m = $140 millions, we divide then by the number of actions 140m / 25m = $5.8us = $7.6 ca.
You should not lose sight of two points a positive and a negative:
- Increase in capital to finance the production, thus more actions (negative).
- Even more important increase of the materials 1ères, thus more profits (positive).
The increase of the price of the Ag, Zn, In, Cu should widely compensate for the increase in capital. Moreover this type of company is interesting only if we are very optimistic on the increase future of the silver or the zinc. If you think that the silver is for its maximum in $7, forget this analysis and all the companies of silver and look for another sector of investment.

 

III. Graphs.

It is impossible to make a technical analysis long term ( indistinct graph) and runs term (lack of volume). But it is nevertheless possible to make certain number of remarks.

- The mine opened in 1985 while the rate of the silver is in decline for several years and it closes in 1990 in a context of persepective on the market of the silver which is very unfavourable. She is in hibernation since, what is I find a very good attitude on behalf of the management. It is wiser to put the company in sleep rather than to dispose of the reserves in classes( floors. It seems to me that we are going to have the inverse scenario of that of the 80s, that is an opening in full phase of growth of the price of the silver (and some zinc). The price of the action should too follow the inverted road and go out of this zone of sleep to return towards its former(ancient) summits between $2 and $5 in the years to come.

 

 

It is a pity it is not possible to make a technical analysis more detailed by this new silver mine which seems to have numerous qualities. She has silver in reserve which are very weak with regard to the other companies (the smallest reserve of my table). But, she also has a quite small capitalization, what allows her to have one of the best ratio of silver of the same table. The management proved in the past that it was not ready to dispose of these reserves what is a very good thing because in absolute value it are not the most important. There is also a potential of good possible surprises with the gold mine of Elder and the golden property of Tagami. The part silver and zinc can have also its lot of positive news because the drillings were made only until a depth of 300m and this type of deposits can reach in certain cases a depth of 1000 in 2000m in this region of Abitibi. It is, certainly, an mine which contains risks by her small size but which can offer earnings as high as these same risks. The objectives, the long term, are in $2 and $4-5. I disadvise completely Abcourt for an investment short term, so much to stay on the market of the technological if we want to make of the day trading the volumes the objectives are much more interesting, are, at least, in 36 months.

This is only a personal opinion from the balance 2003 of the company Abcourt and I can make a mistake in the interprétaion of this information and my forecasts can be false, my analyses thus are to be consumed in moderation :-)

Thomas Chaize

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