CHARTS: The coming critical minerals trade war is BRICS short of a load
"While a large number of countries around the world continue to talk about securing raw material supply, China is actually doing something about it."
On May 10th 2010, United Mining Group (CNSX:UMG), formerly Scarlet Resources Ltd., began trading on the CNSX under the stock symbol UMG. UMG is an exploration group with a difference; not only does the company own and operate a lucrative mine services company, they’ve also entered into an earn-in agreement to earn an 80% interest in the Crescent Mine – a past producing silver mine in North Idaho’s “Silver Valley”. Perched loftily in a position of financial stability that most juniors can only dream of, UMG is aiming for phase one production with Crescent in Q4 2010 – Q1 2011. All permits and financing are already in place.
Located in Northern Idaho’s historic Coeur d’Alene district – famously referred to as “The Silver Valley” – the Crescent Mine and its neighbors live up to their provincial name. The Silver Valley is the world’s 2nd largest silver district, having produced over one billion ounces of silver.
Crescent Mine Located Between Sunshine and Bunker Hill Along Strike
Located immediately adjacent, and along strike, of the Crescent Mine are the Sunshine and Bunker Hill Mines, properties that have produced nearly half of the area’s historical one billion ounces.
Although Bunker Hill has produced over 168 million ounces of silver, it is the Sunshine Silver Mine that is widely regarded as one of the world’s richest past producing silver properties. The property has produced over 328 million ounces of silver grading 23 ounces per tonne. To date, the Sunshine Mine is believed to still boast resources of over 260 million ounces still to be mined.
Evidence of the promise, potential and inherent allure of the Sunshine Mine is in the all out battle for ownership that was won only a month ago by Silver Opportunity Partners, a company backed by multi-billionaire Thomas Kaplan. Kaplan’s presence on the Silver Valley scene is generally regarded as a positive development, with belief that his finances and ambition will inject some life into the Sunshine Mine, and its neighbors.
The Crescent Mine
Getting back to the UMG property, it’s obvious that the Crescent Mine is keeping good company. However, consisting of 25 patented claims totaling about 350 acres plus surface rights to an additional 40 acres, UMG’s property actually has the same size/grade potential as the Bunker and Sunshine, with the most favorable geological conditions to yield ore discoveries in the Coeur d’Alene district.
Mining at Crescent is characterized by steep, persistent 3 – 10 foot veins. These silver bearing veins strike predominantly east – west and dip steeply to the south. “Silver Belt” veins are composed of siderite, quartz and various sulfides including pyrite, tetrahedrite, chalcopyrite and galena. Although substantial amounts of silver are recovered from galena, most of the silver is found within the tetrahedrite, which generally contains between 2% and 6% silver by weight.
Resources and Potential
Regarding resources and resource potential, UMG is already in possession of an NI 43-101 report, conducted by SRK Consulting in March 2009. The results read as follows:
With over 5000 vertical feet of historic stoping and more than 6000′ of prospective strike length along 12 separate veins between two world class mines, the Crescent has excellent potential to produce many times the 5-10 year mine life based on the existing resource
What’s more, the company believes that less than 5% of target zones has been significantly explored or mined, providing considerable potential for UMG to add to that resource with continued exploration.
More than $12 million has been spent on the Crescent Mine in the last two years on surface/underground drilling and mine rehabilitation providing UMG with a deep understanding of the Crescent Mine property.
Mining and Environmental Services
Despite the obvious potential of the Crescent Mine, none of this would have been possible for UMG without the services aspect of their very unique business model. United Mining Group CEO Greg
Stewart explains what these services entail:
“Mining Services is the backbone of our company. We have years and years of experience with underground contract mining which will give us a huge edge when we start mining the Crescent Mine. We fabricate, repair, and rebuild mining equipment, so we can service our own equipment and be independent of outside suppliers. Our environmental contracting division remediates mine sites and works closely with state and federal regulators. The bottom line – a totally integrated mining company.”
Indeed, UMG certainly has a strong revenue platform to grow from. Mining Services generated $15.7 million in revenue in 2009 alone, with an operating income of $3.0 million. Their compound annual growth in revenue was 77% from 2007 to the end of 2009. Furthermore, their projected revenue for 2011 is expected to grow to $30M, as the Crescent Mine is brought into production.
The planning for this production is based on recently completed drill results, underground work, ongoing mine planning and historical mine workings in the immediate area of the proposed production. The company wishes to emphasize that it has not yet completed a preliminary assessment as defined by NI 43-101 or a pre-feasibility study with respect to the Crescent Silver Mine.
Reactivating the Crescent Mine
Within 12 months, UMG will be reactivating the Crescent Mine with production scheduled for Q4 2010 – Q1 2011. UMG plans to produce 0.8 million ounces of silver in their first year, growing to over 3 million ounces annually within 3 years, with an ultimate goal of becoming an intermediate primary silver producer.
With a market cap of only $27 million, $6.6 million cash from a financing in May 2010, a stable and profitable mine service division, 80% interest in an extremely promising property, an experienced management team and an admirably unique business model, United Mining Group is charging, practically hurdle-free, towards their dream of silver production.
Follow their progress at www.unitedmininggroup.com
By Claire O’Connor James West
MidasLetter.com
Friday, July 23, 2010
