In a previous article, we discussed how Trade Winds Ventures has managed the Block A property. In this follow up article, Ian Lambert, CEO of Trade Winds offers an update on the progress of the gold find and their overall business objectives.
Ian Lambert, the CEO of Trade Winds Ventures, has reasons to be optimistic about the progress of his company and their goals for this year. He said, “On December 30th, we announced a new resource update.
This year, with the incremental 30 holes and the 12,000 meters of drilling, along with some other data we had put into the Block models, we updated the resource and the whole Block model. As well, we've announced a new constrained pit resource.”
The Block A resource is directly adjacent to Detour Gold, a Trade Winds partner. Trade Winds has been drilling on the Block A jurisdiction since 2004 with a break during 2008 and 2009 when they weren’t doing any drilling due to the downturn in the economy. During that time, they invested in some analysis and returned to drilling it in 2010. During 2010, Trade Winds moved forward on the Block A project by completing another thirty holes in and around the pit area.
With the change in the economy, Lambert believes this is the right time to move forward with the Block A project. He said, “There's been a significant increase in the price of gold. We've been using the three year moving average price for gold, and the foreign exchange rate between Canada and the US.
For our new resource and pit, we used $1000 gold, and that drove us to look at a .4 gram cutoff because the economics indicated that even as low as .3 could be economical. We came up with an indicated category of 1.9 million ounces and an inferred of 760,000 ounces. So, the total is 2.6 million ounces of gold in pit. Trade Winds owns 50% of those numbers. Our partner, Detour Gold, owns the other 50%.”
The numbers have increased dramatically. As a comparison, during early 2009, using a projected $700 per ounce gold price, Trade Winds advanced a first constrained pit using a cutoff of half a gram with a stripping ratio of 4.68:1. With those numbers, Lambert reports, “We came up with a pit, indicated of 1.2 million ounces, and inferred 277,000 ounces. The resource value was 1.9 million ounces in the indicated category and 1.8 million ounces in the inferred category using a ½ gram cutoff.”
This change has allowed Trade Winds to become more aggressive in their treatment of the Block A property. Comments Lambert, “What we saw was a combination of the price increase of gold, which allows us to capture more ounces that are within the pit shelf – fewer truckloads of material go to the waste dump – and more go to the mill in the theoretical operation. We've used a cut off that is marginally lower, from .5 to .4 grams per tonne, but that has given us more ounces overall. We feel that you get into those kinds of numbers and you can build a business case that will work for a production scenario, even at these grades.”
Responding to this change in the market and the increase in the indicated amount of gold in the find has allowed Trade Winds to confirm that new drilling is underway. Lambert says, “We started a 30,000 meter drill program in and around the pit and it is designed to do several things. It is to infill some data gaps within the pit area itself that will increase the confidence in the number of inferred ounces. We expect a lot of the inferred ounces will be changed into the indicated category as a result of this infill drilling. That's an important thing to do at this juncture, because once you get to your economic analysis and feasibility study, you cannot use inferred ounces in your calculations.”
Trade Winds’ other area of focus is to drill at the west end of the Block A pit and to look for an extension to the west. Lambert explains, “We'll be stepping out 320 meters, trying to extend the overall west end of the pit. That's probably the maximum we'll be able to move directly west because we run into a lake.”
Though the Block A property is limited at one end due to a lake, Trade Winds still has plans for growth in their drilling program. Lambert says, “The rest of the focus of our 30,000 meter drill program is to drill to the north and south sides of the structure. We know we have ounces below the bottom of the theoretical pit shell. Every time we widen the pit, we drive it deeper and we can get more of those ounces in addition to the newly discovered ounces on the sides. Part of that new exploration north and south of the pit area will be to look for mineralization in zones that we believe extend from the Detour Gold property. That drill program begins in January 2011.”
Other plans for the Block A property are already in the works. They include looking at a second phase of drilling on some of the area of ground to the north side of the pit and to the west extension of a satellite pit for additional areas of mineralization. Unlike the other areas of Block A, which are typically swampy and can only be drilled in the winter, that area is a higher ground and is accessible by the drills during the summer time when the ground is no longer frozen. Lambert comments, “We believe we can design a program that can include up to a further 30,000 meters. That could give us up to 60,000 meters of drilling in 2011.”
Financing In Line
For every company taking on an aggressive drilling program, financing is always a concern. According to Lambert, Trade Winds is in a good position. He said, “We're in great shape. We're sitting on in excess of $10 million dollars in the treasury. The approved program of the first 30,000 meters, and all other operating costs for the company, will run us in the $4 to $4.5 million dollar range expenditures for the year. If we do the second phase of the program it will run us another $3 million. So, in all cases, we have more than adequate cash to run us well into 2012.”
Depending on what the drilling results are, Trade Winds may look at some additional funding down the line. Lambert comments, “We may, if the market reacts well to the work we are doing, consider a financing in the second half of the year to provide working capital going forward. We will start to get into bigger drill programs on a regular basis and we'll also be getting into some more comprehensive studies such as a environmental studies, preliminary economic analysis and feasibility study.” These baseline studies will be focused on economic impact assessment and further metallurgical results for the Block A property.
One of the most positive results of the program so far is their projected recovery rate. Lambert explains, “Some of the gold just won't separate, so we've used 91% recovery, which is an achievable number for the Detour Lake deposits. No matter how you do it, there are going to be pieces that just don't make it through the system and go out as a waste rock at the end. Detour Gold has done a lot of work on this and they know how they want to grind the rock, what size to grind it at, how it's all going to work and what kind of recovery they can get, and we can benfit from that knowledge.” These metallurgical results were determined when Trade Winds drilled an oversized hole to provide extra core for testing. Currently, they plan to drill two more large sized holes this year in other areas of the pit to test the rock to confirm the consistency for grinding and processing recovery. Lambert says, “This is all part of the analysis one has to do to ensure that you can define a case for building this thing economically and successfully. Fortunately, we don't appear to have any issues. It has a high rate of recovery.”
Upcoming Challenges
Trade Winds has planned carefully to anticipate upcoming challenges. Lambert says, “Right now things are going fairly well, so I would say, honestly, probably the one factor that is going to have an impact on us will be how cold it gets this winter and our ability to access all the drill hole locations that we are targeting. That's sort of a short term problem.” Due to the swampy geography of the Block A property, drilling can be more difficult as some of those areas simply don't freeze. Trade Winds has been trying to help Mother Nature along, “We've been going in with excavators to take snow off the areas we want to bring the heavy drill rigs down to open them up to get them to freeze hard,” Lambert said. “Weather will be one of our biggest challenges over the next four months. We did have some trouble getting adequate people, but now we are set there and that is no longer an issue.”
With sound financials, Trade Winds focus is simply to manage the drilling, wait for results and update the resource.
Long Term Plans for Trade Winds
In looking down the road, Lambert can see several possibilities. He said, “One possibility would be that in three to four years from now, we've completed financing and feasibility of a stand-alone mill operation. This is a scenario. We'd probably be in production in year five or six from now at a production level of between two and four hundred thousand ounces a year.” However, there may be another alternative if Detour Gold adds on to their production facility. Lambert explains, “What we understand at this point in time is that they are building a mill that's going to have a mine with a sixteen year mine life and they are adding new ounces all the time as they hunt. Their mill is going to be at full capacity for ten to fifteen years for sure. They've talked about possibly increasing the size of their mill operation, a fifty percent increase, going from 60,000 tons per day to 90,000 tons per day after five years. That's a huge increase, and they'd have to have material to make sure they could feed it all. Perhaps our property would be a good source, but there's been no determination.” Since there's been no confirmation, Trade Winds is operating on the basis that Detour will not expand and are projecting that Block A will get big enough to be a stand-alone operation.
Another future option for Trade Winds is more industry related. Comments Lambert, “I think that in this industry there is some serious consolidation going on as majors and mid-tier producers who are trying to grow rapidly are acquiring deposits that are at an advanced stage or are near or at production. So I think there is a good likelihood that if we build this thing to the 4 million plus ounce size that someone might buy it. It could be Detour saying 'we want to buy this and wrap up this whole region' or it might be somebody who buys Detour. There are lots of possibilities and I certainly do not rule out being bought out by somebody else. That's probably what would happen rather than us getting the chance to take it to production.” No matter the future, Trade Winds has many positive opportunities.
Other Trade Winds Holdings
If the Block A property were to be purchased, Trade Winds does have another exciting property to concentrate on. Lambert says, “We do have a copper property in British Colombia that is still an unknown entity, but it has a very large mineralization potential.” This copper property is called Treasure Mountain. Though Trade Winds hasn't spent a lot of time on it in the last couple of years, there is mineralization of copper along a continuum of an area that covers over five kilometers. Explains Lambert, “We've seen some areas where it looks like we have a zone that is 145 meters thick that plunges into the ground, but we don't know how deep. It's a significant find that could provide large tonnage. We did do some drilling and sampling that recovered copper in the 2% range. It has potential, there's no doubt about it. Copper is now becoming a strong demand metal.” In 2008, the initial results of Treasure Mountain indicated 2.68% copper and 25 grams of silver over four meters. With several major zones on this property Trade Winds has the opportunity to branch out from the Block A project.
Investor Interest
With two major properties held by Trade Winds, Lambert knows there are investors who are interested in his company. He says, “There are two significant reasons to consider investing in Trade Winds: one is that we are still undervalued. There are probably lots of reasons why, but mostly because we didn't work for a couple of years during the financial downturn, but now we are back working since 2010. Our market cap per ounce in the ground, the total ounces we own, is something in the order of $26 per ounce. The average is $130 per ounce.” A comparable company, such as their neighbor and partner Detour Gold, who has similar mineralization but is more advanced, has a value of $100 per ounce. Lambert comments, “We have a wide range of companies that are similar to us that are worth more. As we demonstrate that our value is there, and that we've got great growth potential, I believe we'll see an increase of the market cap per ounce in the ground as our stock price moves up.” An undervalued resource is not the only reason investors should consider Trade Winds according to Lambert. He said, “The other reason to consider investing in Trade Winds is because we have the growth based on the new drilling we are doing. We have a significant drilling program underway. We're targeting over the next year to year and a half to have at least another million to a million and a half ounces in the pit and grow it to the size where it will stand alone. We have the land and the mineralized zone to make it work.”
With an aggressive drilling program rapidly turning inferred resources into indicated resources, Trade Winds is getting to work at developing the Block A property. Lambert says, “We're down to doing the job now. We're well funded to go forward – we've never been in better shape.” That said, Trade Winds has a lot to be optimistic about for 2011.
For more information:
http://www.tradewindsventures.com
Corporate Office:
Trade Winds
Ventures Inc.
1166 Alberni Street,
Suite 1006
Vancouver, BC, Canada
V6E 3Z3
Tel:
604-648 6228
Toll Free:
1-866-698-9187 ext 228
Fax:
604-288-2436