Egg In Your Beer?

We are starting this blog out of a sense of frustration. For a number of years we have had inter-linked sites online dealing with prospecting (www.TheProspector.com even dates to before the web through a fido network) and presenting mineral properties for sale, lease, joint venture — or anything that made sense moving the project forward.

Coming from the (what-is-left-of-the-frontier) industry side of things we understand (but do not endorse) the arm-waving crackpot who claims he has a whole mountain of gold. We know God put him on earth to balance out his financial counterpart, the “high yield” promoter, dealing in dreams of riches from spreadsheet values, for “humanitarian” reasons. The only negative to this interaction is that the so-called prospectors friends and relatives are the ones burned fronting for “their representatives” trips to London. The fun part is listening to all the creative excuses why a “tranche,” or some other inside jargon event has not happened. “London,” as in “bankers,” and “Lloyds of,” is a destination used so often used in these scams that some are wondering where London, Nigeria is located.

We also have learned the hard way that any sort of Las Vegas connection with “pink sheets,” or “over the counter” listings have been contaminated to the point that the prospector is risking a “free trip to the desert,” by not going along with his scheme of running up values with platinum group minerals that “require a propitiatory” process to extract.

And “honest” prospectors in general have had a hard time getting a fair deal from the majors. It’s difficult to answer the question — “If your find is so good, how come you haven’t gone to Anaconda, or some big company as that?” Answer: been there, done that, and survived being over-run. Point is, the mining majors have the attitude that the whole system should be put out to lease, as is done with oil — which was how the risk-everything-wildcatter has disappeared from the scene. Worse, the fact that the claims covering what was the largest gold operation in Carlin, Nevada (see the National Geographic issue, “Gold”) were purchased for $2,000 started other want-to-be millionaires in thinking that they too could buy a mineral prospect with “no money down”. You see us Mountain People aren’t as dumb as the “commentators” people listen to at the Wall Street Journal expect us to be. Thanks to blogs, they no longer have sway where the exclamation mark is placed.

The majors at this time are still trying to overcome the Briex stench of a company geologist trying to set the stage in the financial press for an Arthur Anderson/Enron insider information type exploitation. The little people of the “industry” are still wondering how it is that Wall Street big guys (as Anderson, Merrill Lynch, the Dotcom millionaires, etc.) have been able to control the SEC to the point (other than a playful slap on the wrist when caught) that when widow and orphan protection is discussed, everyone points to small start-up mineral exploration companies as the “bad guy.” We say anything in defense —as, “Hey, silk stocking, blue blood, newspaper owner, I had seven great-something-grandfathers that fought in the Revolutionary war, and have a Mensa rated mind — and somehow I end up a cranky ass leading a donkey around, or is it the other way around?

Ever hear that 93 percent of all major mining properties in the US were discovered by the old-fashioned prospector? Did you know that where Nevada used to be the top of the list in funds spent on exploration, all that money has been, “sucked south of the border,” all the way to Peru? Did you know that it takes $3 billion a day in foreign money transferred to America to keep us financially afloat, with much of that coming from China, who supposedly know nothing about good old fashioned, red blooded American capitalism? Hadn’t heard that? Guess you don’t know that while we have been playing a Ponzi game of flipping Las Vegas real estate to the point that no craps dealer can actually afford the gamble of “investing” in a house to live in, the Chinese have been buying up Nevada iron ore properties, to go along with their acquisition of one of the “big 6” iron ore properties of Michigan.

I personally like the Chinese “commies.” I like their food. I was not worried about defending Viet Nam from the so-called domino theory. I am, however, a little concerned about foreign recourse companies taking advantage of our governments mistakes, supported by a subversive organizations as the self serving Sierra Club Sissies, in destroying the mineral exploration business — a part of Americana.

I am wondering, given the freedom of expression of the “crackpot fringe,” the blog. Now, my fellow Americans, that we clearly are in the third cyclical up-turn in my lifetime (as 1935, 1954, 1980, and now 2006 for those that like charts that show a historic curve up every 20 plus years or so) for the mineral industry, with silver solidly leading the way over the metal of choice of the speculators, gold. Silver, reaching today $10.82, is where we need to put our money where our mouth is!

Here is the question I haven’t been able to ask as an editor of www.MiningInvestment.com — what is it you investors are looking for?

As editor of that online publication I receive at least five paid-for-to-distribute press releases from penny-stock promoters (thinking we could print them for free?) per day. Do you, as a “mineral investor” actually believe what they claim? Or is it that the higher the cranked-up spreadsheet values (undocumented) values happen to be, the better the property?

What I really want to know is after my beating the Win silver, Alaska, claimholder into making the most honest, bare bones, share the risk, proposal of his life (so “here it is,” that his wife complained about giving away the farm) that nobody has jumped on the opportunity showcased, appropriately enough on www.Property-Prospect-Showcase.com, with any other question than, “Do you have a recent assays other than when the price of silver was $1.62?”

I don’t consider that “doing your homework.” The first assays done on this property by the U.S. Geological Survey was for a stringer that ran 300 ounces silver to the ton. It doesn’t matter that this high grade sample of material a couple of million years old was worth $486 a ton in 1967, or $3,246, today in 2006 — the content of assays do not change over time. Especially those documented by the conservative USGS, as backed up by the State of Alaska.

What is critical for the investor to know is there enough ore to be mineable at a profit? Yes, the Win Claims have geologist documented spreadsheets that assert that there is measured ore, in place, valued at today’s spot metal prices $28,249,954 —not counting the gold and platinum values the owner refuses to discuss as not being documented.

Ironically, shortly after this query, the USGS did release new assays that showed what was documented was valid, and that the extent of the mineralization was wider than known before. Add to that AU returns, supporting other AU returns the owner still will not validate, and a real possibility that the State of Alaska roads to Resources will turn this prospect into an economically feasible open pit mine.

Here is what I told the owner of the claims. “Even though you have spent half your life developing the Win claims to the point that it is absolutely obvious (the USGS geologist on the property most recently asked why this hasn’t been accomplished) that the property be proven economically ready for development, or dis-prove, which would free you to recover what you could from the $2.5 million (documented) that has been spent on this property (including Homestake of Canada for right of first refusal, whose offer was then turned down by the pervious claim holders).

Using that $2.5 million spent (adjusted for inflation) as a value, and as the property was in need of a geologist recommended drill and exploration program, I suggested that the claim holder put his claims (that have cost $2.5 million) into an escrow, to be matched by funding the $2.5 drill program, for 50% interest, to prove up the indicated values of, at least, $283.5 million. That is, in our jargon, put the money in the ground.

To alleviate fears that somehow this was a one-sided manipulation I suggested joint control in selecting and paying a third party drill and exploration company. I suggested that if this investment did not work, that the 50-50% company formed after the results of the program came in go ahead and “high grade” what was already stockpiled, so to recover costs.

To keep either side from using the “insider” news of the results to their individual advantage (Oh? You say this doesn’t happen?) that the end resulting 50-50 split be open to transfer of a controlling 1% by both sides being offered the right of first refusal.

So there it is. From the developer side of the equation, the perfect proposal; with the advantage being on the money side. Yes, it is a gamble. All mineral exploration is a gamble. That is the excitement of the game. But, the above is a bet on nature being bountiful. Not, a way to show the world you are a master of negotiation; a force to contend with in the battle of the Industrial Age “I win, You Loose,” philosophy.

I am betting that someone out their will step up to the plate as a mineral investor wanting to control his own destiny (ever read Rich Dad, Poor Dad?) by forming a small group of friends, doing a patriotic duty, in making American mineral exploration work once again in this country.
If you accept the challenge of not following the sheep watching an investment house commercial where Sam Waterston won’t even look you in the eye, then let me know here—besides “egg in your beer,” or delegating prospectors into a life of poverty— what is it exactly do you want? Please. Tell me! If you are inclined at all to invest in anything, why not mining prospects?

Investing In Mining 101

Investing in mining from both the investors side and the prospectors. Created by the editors of WesternMiner.com, MiningInvestment.com, GoldMining.net and many other online mining magazines.