Emgold: Small Market Cap Gold Mine Developer
(A Gold Stock Write-Up)
Silver Stock Report
by Jason Hommel, August 7th, 2012, 6pm
Emgold July 2012 Corporate Pesentation:
As of July 1, 2012
Market Cap: $5.3 million CDN equivalent to $5.3 million US.
Emgold's last feasibility study projected their Idaho Maryland mine being economically profitable with gold prices at $420/oz. At $1600/oz., this leaves $1200/oz. as pure profit.
They plan to be able to produce up to 200,000 oz./year, giving a profit of about $240 million/year.
For a $5.3 million market cap company, this is an incredible opportunity and value. They need to raise around $125 to $175 million to start mining, and payback would be in less than a full year of mining, but it might take up to year five to reach full production.
The company might be able to earn over $1/share, and this is a company that might rise in value 100 times from today's share prices. It may well rise to $1/share by financing, and up to $10/share at full mining production.
The reason this project is overlooked, I feel, is due to the fact that the gold market is just getting started, since less than $1 in $1000 in America is yet being spent on physical gold. Only about $1.6 billion is spent on Gold American Eagles, which represent about a third of the gold sold through our gold and silver bullion shop at www.jhmint.com. So, about $4-7 bilion is spent on gold in the USA, out of maybe $18,000 billion possible, which indicates that only about $1 in $3000 is being spent on gold annually. Gold is an overlooked, and undervalued market, and gold stocks are an even more overlooked market.
As gold prices have climbed, gold stocks that have lagged the gold price must certainly slingshot upwards in value to catch up to their true value, and Emgold is one of those stocks.
Emgold also was overvalued in 2006, when mining stocks in general hit their prior peak, and since then, Emgold stock has come down significantly in price.
Emgold owns a lease on the Historic Idaho-Maryland Mine.
Historically, the Idaho-Maryland Mine was the second largest gold mine in California, and produced 2.4 million ounces of gold at a recovered grade of 0.43 ounces per ton from 1862 to 1956.
The Idaho-Maryland deposit has current measured plus indicated resources of 472,000 ounces of gold, and inferred resources of 1,002,000 ounces.
The Idaho-Maryland deposit represents a world class gold property. The potential resource target is 3 to 5 million ounces of gold, subject to mine dewatering and additional exploration.
Emgold is completing an Environmental Impact Report to reopen the Idaho-Maryland Mine to ultimately construct a 2,400 ton per day underground gold mine with potential to produce over 200,000 ounces of gold per year.
The mine consisted of 72 miles of tunnels with workings to a depth of 3,280 feet below surface.
Underground mines within a three mile radius of Idaho-Maryland Mine produced 13 million ounces of gold from 1850 to the mid-1950’s.
Emgold originally acquired the Idaho-Maryland Mine in the 1993 and completed an Environmental Impact Report to dewater and explore the mine in 1996. The Company temporarily abandoned the Project in 1999 when the price of gold fell below $300 per ounce.
In 2002, with rising gold prices, Emgold re-acquired the property. By 2006, the Company completed exploration drilling, geological modeling, and other technical work, including an NI 43-101 Technical Report.
In 2005, Emgold commenced permitting activities to reopen the Mine, including dewatering, exploration, operation, and reclamation.
The City of Grass Valley was chosen to be the Lead Agency to permit the Project under the California Environmental Quality Act and Surface Mining and Reclamation Act.
I live in Grass Valley. This is a real historic gold mine in a real historic high grade gold district. The numbers are real. The town has on display many of the high pressure hose nozzels that were used to strip mine the hills in the area with hydrolic high water pressure, of the type that was outlawed in the late 1800's. The gold is so rich in this area, many people even today bring in placer gold on a nearly daily basis into our shop, and there are 5 other dealers in town buying placer gold found in local streams and rocks.
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