There Be Gold In Them Thar Hills - Why People Invest In Juniors

In this article, we’re taking a look into why so many people invest in juniors, and more specifically, junior gold companies. What mainly attracts Joe Investor to a small-cap exploration company as opposed to one of these gazillion dollar blue chips?  What’s the big fuss about with these junior miners, anyway? Before we dive in, let’s first recap the question, Why Gold?

Gold is more than just another commodity, it’s a global currency. For thousands of years, gold has been valued as a global currency, a commodity, an investment and simply an object of beauty. Gold and silver are the only currencies not created and controlled by governments. All of today’s other currencies (Dollars, Euros, Yen, Pounds, etc) are ‘fiat’ currencies, which means they do not represent anything tangible but are only worth something due to government decree (namely legal tender laws). As evidenced by the current economic situation, governments end up creating too much fiat currency out of thin air. Inevitably, the fiat currencies become worthless over time, collapsing into hyperinflation.

Money can be “created” (printed) at any time. There is no ceiling or limit to the amount of money that can be in circulation at any given time. Harkin back to the image of the wheelbarrow load of Deutsche Marcs that equated to the value of a single loaf of bread; hyperinflation.

Gold cannot be created. The limited supply of gold (due to its scarcity as a natural resource) as opposed to the endless supply of paper money is one of the main reasons savvy investors keep a large portion of their portfolio in this rare commodity. This security can add some much needed stability in turbulent times. Recent years have seen a striking increase in investor interest in gold. While a sustained price rally, underpinned by the fact that demand consistently outstrips supply, is clearly a positive factor in this resurgence, there are many reasons why people and institutions around the world are once again investing in gold.

Ok, I get it… Gold is good… but why “juniors?”

Because we all like a good treasure hunt. Adding a junior mining stock to your portfolio is a slightly saner way of getting in on the action than taking a year long sabbatical from work to go find your own buried treasure.

You'll often read that junior gold miners are “where it's at.” The theory is simple: So-called "juniors " – mostly younger companies still in the exploration and discovery phase of developing gold mines – have a shot to either strike it rich on their own or become an attractive acquisition target for the majors.

Who You Callin' Junior?

What exactly qualifies a company as a junior ? There really isn’t an exact definition or set of criteria but you can get pretty close by calculating the resources a company holds, how far it is from actual metal production, or how much it has produced in the last few years. Many start out as junior exploration companies and become miners while others focus solely on exploration and development.

Many times juniors are cheap, especially now after the market has taken such large hits. Ask a penny stock investor – they can be highly rewarding and your portfolio can net handsome gains when one of the majors comes looking for gold resources. Mergers and acquisitions may be a more attractive way for big gold companies to add reserves than investing the time and resources to develop new projects themselves. Junior mining buyouts can and do happen.

“I’m not addicted to blackjack, I’m addicted to sitting in a semi-circle – Anonymous” Many stock speculators are not interested in being another “investor” with a 5, 10 and 25-year plan, they want to be in the ring. Do your research, don your seatbelt, and jump on board with a junior.

There is no arguing that the gold-stock sector has been one of the hottest in the financial markets since the turn of the century. Within the gold-stock world though lies a sub-sector that is not represented by an index and really has no boundary on its potential. Like an underground blood-sport event or a big-city basement casino, junior gold stocks fly under the radar and only those investors who actively seek this realm may successfully enter it. Little known to the average investor, this gold-stock sub-sector supports capital markets that don't show up on most radars. These stocks are so petite that you'll never see mainstream media coverage on them nor will you likely get recommendations from your broker.

But even with a limited pool of investors going after the junior gold stocks, their popularity has risen considerably in recent years. In and even out of the typical gold circles there has been significant chatter surrounding the up and coming junior gold stocks that are expected to shoot to the moon.

TESORO GOLD PROJECT, PERU - The "Plan"

NEWS RELEASE

TESORO GOLD PROJECT, PERU – The “Plan”

Lori McClenahan, President of St. Elias Mines Ltd. (“St. Elias” or the “Company”), is pleased to provide the following update with respect to the Tesoro Gold Project (the “Property”) located in southwestern Peru.

THE “PLAN”

The Company has developed the following plan for the continued exploration and advancement of the Tesoro:

Existing Mineral Resource

The most recent 43-101 report indicates an inferred mineral resource at the C1 Vein of 4,290 tonnes grading 1.04 oz./t gold with a total gold content of 4,460 ounces (based on a conservative figure of 100 meters for the length and 100 meters for depth.)  The Company intends to extract this block of material and ship to the nearby milling facility of Dynacor Gold Mines Inc. for processing.

The Big Picture

The unique nature of the Tesoro Property allows St. Elias to explore and develop the Property at relatively low exploration costs. Based on results to date, the Company is in a position to continue with this exploration method indefinitely (exploring while concurrently proving up reserves), however, the Tesoro Property has never been evaluated to depth or to its full strike potential.  This leaves a large potential for the discovery of additional mineralization.  Gold has been extracted from this area for not only years, decades and centuries, but millenia.  The source of the gold has never been located. 

The Company plans to conduct a detailed geophysical survey to identify drill targets and  commence a follow up drilling program.

TITAN 24 Geophysical Survey

The Company will retain the services of Quantec Geoscience to conduct a Titan 24 geophysical survey.  Titan 24 is the leading deep earth imaging technology for delineating orebodies to depth.  While deep drilling can be expensive, Titan 24 focuses drilling and achieves success by clearly prioritizing targets.

Measuring the parameters of DC (resistivity), IP (chargeability) and MT (magnetotelluric resistivity), Titan 24 measures to depths of 750 meters with IP and can explore beyond 1.5 kilometers with MT data.  These depths and multi-parameter data make the system the best option available for obtaining subsurface pre-drilling information related to geologic structure and for the direct detection of mineral deposits anywhere in the world.

Drillling

Guided by the results of the Titan 24 geophysical survey, the Company intends to carry out a deep drilling program to evaluate the Property to depth.

Ongoing Underground Exploration and Development Program

The Company will continue with its ongoing underground exploration and development program to block out mineral resources.  The program includes bulk sampling of material obtained from the development material.

THE TESORO GOLD PROPERTY

Exploration To Date

To date, the Company has identified five main mineralized zones with more than 50 quartz veins (having a total combined length of 9km) and has carried out underground exploration and development work on two of these veins (C1 and A4 Veins.)  While the veins tend to be narrow, the grade is significant and the veins are mesothermal, indicating that the vein structures extend to considerable depths.

The Company has adopted a systematic exploratory underground development program (access adits, cross cuts, drifts and raises) to block out mineral resources.  To date, over 1,700 meters of underground development has been completed on the C1 and A4 Veins with an inferred mineral resource of 4,290 tonnes grading 1.04 oz./t gold with a total gold content of 4,460 ounces being calculated for the C1 Vein alone. 

A portion of the Company’s exploration expenditures has been recouped by selling gold recovered from bulk samples processed at the Dynacor mill.  To date, a total of 950 tonnes of bulk sample material has been processed and has returned an average grade of 0.86 oz/t gold.  A total of 813.56 ounces of gold has been recovered. 

The Property

The Tesoro Gold Project is 100% owned by the Company with no underlying royalties. The Property covers approximately 1,800 hectares and is part of the well-known gold-bearing Nazca-Ocoña belt that is located in southern Peru.  The Nazca-Ocona gold belt has a long mining history dating back to pre-Incan time.  Gold is associated with disseminated sulfides that seeped into quartz veins or rock fractures within the intrusive body.  The continuity of the quartz veins and fractures is very impressive in the Nazca-Ocoña belt.  Although the veins are narrow, the mineralized structures tend to extend along strike for kilometres and to depths of 1,000 metres.

Qualified Person

All technical work is being supervised by, and the contents of this news release have been verified by, Duncan Bain, P.Geo., a Canadian geologist with gold experience in North and South America, who is a “qualified person” as defined in National Instrument 43-101, Standards of Disclosure for Mineral Projects.

For additional information on St. Elias and its projects, please visit us at www.steliasmines.com or call 1-888-895-5522 (toll free US and Canada).

ST. ELIAS MINES LTD.

(signed “Lori McClenahan”)

 

Lori McClenahan,

President

 

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or the accuracy of the contents of this document.

 

This News Release may contain forward-looking statements including, but not limited to, comments regarding the timing and content of upcoming work programs, geological interpretations, potential mineral recovery processes, etc. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statement.

St. Elias/Kernow Agreement - Jales/Grahleira

St. Elias/Kernow Agreement – Jales/Grahleira

St. Elias Mines Ltd. (the “Company” or “St. Elias”) is pleased to have announced its intention to sell their 51% interest in the Jales/Grahleira Gold Property (the “Property”) to Kernow Resources & Developments Ltd. (“Kernow”).

Overview:

St. Elias owns a 51% interest in the Property with a 49% interest owned by Kernow.  Kernow is a gold explorer based in Porto, Portugal.  As per the joint news release dated Friday, April 17, 2009, Kernow has agreed to purchase the remaining 51% of the Property from St. Elias.  Title to the Property is held by way of an Experimental Mining Licence granted to Kernow and St. Elias in May of 2007.  The Licence is valid for three years from the date of grant.

The Property covers approximately 1,250 acres (5.2 sq kilometers) and is located in northern Portugal, approximately 125km northeast of the city of Porto. The Property includes the Jales Mine, which produced about 830,000 ounces of gold in ore grading up to 12.9 g/t gold between 1933 to 1992. It also covers the Gralheira Gold and Silver deposit, which has been explored by drilling, 126 drill holes (completed to a maximum depth of 511 meters) over a strike length of 2,700 m, underground sampling from a 350 m long adit and 200 m of crosscuts, and a TITAN24 IP/Resistivity geophysical survey.

The following terms are contingent on Kernow receiving a Full Mining License from the Portuguese government, permission from the Portuguese Mining Authorities to award St. Elias a 0.4% NSR on the Property, and Exchange approval. Upon successful fulfillment of all terms, Kernow will own 100% of the Property and St. Elias will receive the following as per the agreement:

1. Cash equivalent of CDN $150,000
2. Forgiveness of all outstanding payments due to Kernow by St. Elias (approx. $61,200)
3. 3,000,000 (3 million) shares in Kernow’s stock (V.KRD)
4. 0.4% Net Smelter Return Royalty (NSR)
   
   

At present, St. Elias/Kernow currently hold an Experimental Mining License on the Property. In order to maintain this license, the Companies must carry out development/experimental mining work at a cost of approximately CDN $600,000. Following this time (after May 2010), under Portuguese mining regulations, the holder of the license must upgrade to a “Full Mining License” imposing further monetary obligations in order to take the Property into production (I.e. Feasibility study, building a mill, etc…, all at a substantial cost).

Terry Nixon, VP, Corporate Communications says, “This is a very strategic move for St. Elias as it eliminates the company’s financial responsibility on the property while still providing for great potential profits through ownership in KRD and a potential 0.4% NSR; a win-win for both parties. St. Elias is free of any future obligations on The Property while still retaining a vicarious interest, with no dilution to the shareholders.”

“This is another great step towards the immediate goal of channeling our efforts and resources on our Peruvian assets. More specifically, the Tesoro Project will be our first and primary target as we intend to carry out an ambitious program to prove up reserves and locate the source of the gold that is producing the high grade veins we are encountering”, says Lori McClenahan, President & CEO, St. Elias Mines Ltd.

For more information, contact Terry Nixon by phone at 778.238.6160 or by email at TNixon@StEliasMines.com.