Saturday, January 8, 2011

Fire River Gold in a Nutshell

It has been more than a few moons tracking the ultra amazing Mr. Harry Barr and Fire River Gold and it's past time for a reader's digest overview of that growing mountain of pooh in the obligatory nutshell.

To those just tuning in, the story is all about construction of a brand spanking new $ 7m CIL circuit that is charging forward despite the growing tardiness of an "in house" PEA on the resumption of underground mining supervised by Snowden that presumably will justify it all.

That makes great PR for career promoters but the simple fact is the majority of the ore at Nixon Fork, and all the proven ore, is below the natural water table. A fact that is likely already proven conclusively to this management through the non-public Golder Associates Study on grouting and pumping. This ore simply cannot be mined because Nixon Fork is a zero discharge facility and there is no way to either grout the workings or pump the water into wells through the permafrost. Pumping to lower the water table is not feasible, and even if it was an EPA permit to discharge the waste water would take at least 2 years to obtain.

St Andrews studied the matter in great detail, blew tens of millions, and could not touch a single gram of that ore while enjoying a truly horrid 68% recovery rate from the remaining sulfide ore scratched from elsewhere.

Remove the C3000 and C3100 zones from any mine plan and the economics at Nixon Fork make no sense whatever. Tailings are finite, can only be processed when not frozen, and will offer a very modest return in the final year, if stakeholders are very lucky.

It absolutely appears that a massive investment exceeding $ 7m will barely offer any return at all in a best case world, and in a ordinary world will end up in the bottom of the mine shaft in a few years without returning anything except losses for the holders of this equity.