Basic HTML Version
Annual Report Edition, May 2012
5
ME n a
In Conversation with…
CBay Minerals CEO
Roland Horst
Roland Horst joined CBay Minerals in February
2012 to lead the restructuring of the Chibougamau
assets on behalf of Nuinsco and Ocean Partners.
Mr. Horst has over 35 years of mining industry
experience as a chief executive officer, investment
banker, corporate banker and geologist, including
close to 15 years as a CEO of both public and
private companies involved in mining, development
and exploration in North and South America,
Indonesia and Europe. He holds a Masters in
Business Administration from the Richard lvey
School of Business Administration, University
of Western Ontario; a Bachelor of Law from the
University of Western Ontario; a M.Sc. in Geology
from Laurentian University; and a B.Sc. in Geology
from McGill University.
What attracted you to CBay?
I was primarily attracted to CBay for the following
reasons. First, the people - Nuinsco has an
excellent team and CBay will be able to draw
upon this talent to increase the value of CBay and
therefore the value for Nuinsco shareholders. In
addition, Ocean Partners has as excellent team and
can successfully market the copper concentrate
and gold. CBay also has an experienced General
Manager, Jean Tanguay, who is based in
Chibougamau.
The second reason was the assets. CBay has
an excellent suite of past producing copper/gold
mines. The Chibougamau camp historically has
produced over 47 million tons of 1.7% copper and
over 2 grams per ton gold or 1.6 billion pounds of
copper and 3.2 million ounces of gold. Almost 80%
of this past production was from mines now owned
by CBay. Substantial resources remain to be mined
at these past producers.
CBay also has the high-grade Corner Bay
copper project. Over $20 million was spent on
developing this mine prior to 2008. Corner Bay
is permitted for a bulk sample right now and
given the existing development can be put into
production in a short time. We think a mining rate
of up to 650 tons per day is achievable.
The fact that CBay has the only permitted mill
and tailings impoundment in the Chibougamau
region is also a huge benefit. Replacement cost
of the mill alone could well be over $75 million,
so right there we have tremendous value.
The third reason was the jurisdiction and
community support. Quebec is one of the best
jurisdictions for mining. In addition, Chibougamau
is part of Plan Nord, a Quebec mining initiative.
Chibougamau, with a population of 7,500, has
had mining in its blood for over 60 years and is
a very supportive community. The Cree Nation
also recognizes that, managed properly, the
revitalization of the Chibougamau mining camp can
mesh with the objectives of their community.
What is the plan to realize value
for Nuinsco shareholders?
It’s quite clear that the CBay value is not being
reflected in the Nuinsco share price currently. As
I mentioned a 3,000 ton per day mill alone would
cost over $75 million to replace and this does not
include any value for the resources that are in the
Chibougamau mining camp in CBay. So how do we
unlock this value?
Well, the plans are first to raise $3 million from
the public and our existing shareholders - Nuinsco
and Ocean Partners - for exploration. This should
result in the release of drilling results to enhance
value.
Secondly, we have undertaken an updated
NI-43-101-compliant resource at Corner Bay,
which we expect will be the first mine to be put
into production. Current resources were estimated
in 2006 based on a copper price of $1.25. Once
this report is completed and exploration drilling
results are released, our plan is then to complete
an Initial Public Offering (IPO) or Reverse Takeover
(RTO) and take CBay public in the fall of 2012.
We expect to raise $10 million to $15 million
dollars once CBay is public to put Corner Bay into
production and to refurbish the mill. Once Corner
Bay and the mill are producing, we must then
decide which subsequent mines to develop to fill
the mill at 3,000 tons per day. The idea is to have
three producing mines by 2016.
So in summary, CBay has the potential to
become a solid intermediate copper and gold
producer and as the CBay value increases this
value should be reflected in the Nuinsco share
price.
Over and above the production
potential, what are your thoughts
about the exploration upside?
CBay has a land position of over 96,000 acres
covering the core of the Lac Doré Complex, much
of which is highly prospective exploration ground
that has not been systematically explored. Clearly
there is exploration upside adjacent to and on
strike with the past producing mines, however
there is much more than that. Corner Bay has had
most of its work done on the Main Zone which
hosts all the resources, but there are at least
four other parallel zones to test right there.
Drill-ready targets also exist elsewhere on
the land package, including Portage Island where
excellent grades over mineable widths were
returned when it was last drilled in 1956-1957 -
a time at which the gold price was $35 per ounce.
There was also a MegaTEM survey flown over the
entire land package in 2002 which correlates well
with known mineralization, identifies many new
showings and has never been fully interpreted.
This is representative of the lack of systematic
exploration done in the camp over the past
several decades.
Nuinsco to Maintain
Presence in Mena
Region Through
Subsidiary Z-Gold
Cairo, Egypt
- Exceptional geology and a will on
the part of governments to create a modern mining
industry are two of the factors that led Nuinsco to
evaluate gold projects in Egypt and Sudan, and these
advantages of the Middle East North Africa (“MENA”)
region have not changed. What has changed in recent
times is the political climate, and it is for this reason
that Nuinsco opted earlier this year to put its plans to
spin off NuMENA Minerals Corp. (“NuMENA”) on hold.
“In 2009 Z-Gold, our jointly-owned Egyptian
subsidiary, successfully bid on two gold concessions,
Bukari and Umm Samra, and since that time has
done field exploration and advanced the process
toward receiving full tenure on these concessions.
While the exploration results were positive and
well-received by the market prior to Egypt’s political
revolution in early 2011, it has become apparent that
recent political events have changed the market’s
perception and valuation of exploration properties
in Egypt and other MENA region countries,” said
René Galipeau, Vice-Chairman and CEO. “As a result,
Nuinsco decided not to continue to participate in
the process to obtain full tenure on the concessions,
and to deploy its resources elsewhere.”
The Company continues to believe in the potential
of Egypt’s mineral resources and will consider
participating in future bidding for concessions
in Egypt, assuming that stability returns to the
area. Management was very impressed with the
professionalism exhibited by the leadership of the
Egyptian Mineral Resources Authority and their
willingness to provide assistance and guidance.
Given the political issues impacting the region,
Nuinsco’s previously announced plan to spin off
NuMENA as a public vehicle focused on projects
in the MENA region has been delayed pending a
return of investor confidence to the MENA region.
“Through its involvement in Egypt Nuinsco
has established strong personal and business
relationships with government and local officials
and has obtained valuable experience and
knowledge of the MENA region. It is hoped that
the next round of bidding for Egyptian gold
concessions will reflect revised expectations and
valuations and that the business environment
in the MENA region will have stabilized by that
time,” added Mr. Galipeau. “Until the international
political and social environment sorts itself out,
Nuinsco will refocus its activities. Management will
maintain a watch in Canada and internationally
for exceptional projects where the financing
environment for exploration is strongly supported
by the government and investment community.”
With regard to the Company’s election not to
exercise its option to acquire an 85% interest in
the J. Tobrar gold project in Sudan, this again is
not a reflection on the prospectivity of the geology
of the country in general, but of the realities of a
change in market sentiment at the present time.
“Although our evaluation of the property
returned positive results and demonstrated the
presence of gold mineralization, the scale of
mineralization identified didn’t justify the option
price of US$4 million in Nuinsco shares and
ongoing exploration and development expenditures
under current market conditions,” said Paul
Jones, President. “Our relationship with the
property owner remains strong, and may result in
other opportunities in the MENA region. Nuinsco
will continue to evaluate opportunities in this
underexplored region of high exploration potential.”
New CBay CEO Takes the Reins
CBay has the potential to
become a solid intermediate
copper and gold producer
Roland Horst, CEO CBay Minerals
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Gold
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