Additional Value Added Through Their New Silveria Project in Peru
January 23, 2008
The primary reason I am revisiting Journey Resources at this point in time is to apprise you of a new project in which they will be involved. The project is called Silveria and it is located in Peru. In the interest of brevity, I will direct you to their website at www.journeyrecources.com for all the latest information regarding their participation in this acquisition. I do believe all the particulars can be found on their web site, in their latest Press Releases, and I would recommend making a visit in order to get up to speed.However, just for the record a quick word, as Silveria is no small potatoes. It encompasses approximately 50 square kilometers and it is a past producer of copious amounts of silver—somewhere in the range of 40 million ounces. It was shut down in 1990 because of political reasons; not for any reason having to do with the mine or its resource– in other words, not for any economic ones.
Most importantly, Silveria has the permits and the local /regional licenses to fire it up again as soon as the infrastructure is in place. However, most of the mining occurred at shallow depths so this will not be a huge challenge.Left, is a photo of the Silvera Lagoon–please take special note of the old mill and corresponding facilities in the lower left portion of the picture. Captions: Middle Photo: Silveria Valley and the bottom photo shows excellent mineralization to scale. Please see www.grenvillegold.com for addtional information and photos.
I’ve spoken with Jack Bal about this and he is quite excited, believing that this project could indeed be a “company maker”. Jack believes that they have “lucked” into the right project at the right time and after reviewing the project and its corresponding material, I would have to agree with him. Journey has been one of those twixt and between companies and I suppose the best way to describe them is that they could break out at any time. They certainly have the projects which would allow them to enjoy that kind of success.
They now have a 100% lease interest in the Musgrove project in Idaho which is primarily a gold deposit; they have another project in Guerrero, Mexico called the Vianey Mine in which they have a 50% equity interest with lead and zinc mineralization; and they still have the Empire project which is a former copper/gold/silver producer near Mackey, Idaho. Now they have the Silveria property located near Lima in the Huarochiri province of Peru—perhaps the most promising of them all.
My sensing is that they will be diligently working on Silveria in order to advance the development of that property as quickly as possible.This is the project that could take them to positive cash flow within 12-14 months.. Currently, a refurbished 500 ton per day mill is being relocated from Nevada to Peru. It should arrive at some point in the fall of 2008. Again, and this is most important, once this mill is set up and running, it will turn journey into a positive cash flow producer which is something they been trying to accomplish for several years now. There is over 100,000 tons of material already waiting to be mined as soon as the mill is operational.There is one final point I’d like to make and this too is of utmost importance. There has been very limited exploration occurring at Silveria; even though there as been significant amounts of actual mining. Beginning in February of 2008, there will be exploration programs commencing on the property. These will run the gamut from mapping to drilling and should open up an already past-proven and prolific mine to further development. En toto, we are looking at some excellent potential.
Background Information-Several Past Write-ups
I have written up Journey Resources (JNYRF.OTC or JNY.CA) at least three times over the past several years. For background information, might I suggest that you post a search on our site for those articles. I believe that this story regarding Journey has only gotten better even though the share price might be down a bit. On balance however, I don’t believe investors have lost significant portions of their positions and that is a good thing. Journey has been “sparring” with the markets and JNY.CA has held its own.
I think we all have to marvel at the stealth bull market in the precious metals that has witnessed $900.00 Gold, a devaluation of the US dollar, an appreciation of the Canadian Dollar, significant elevations in inflation and a junior mining sector that for the most part, has gone nowhere. But, lest we forget, most of the companies that we have represented have held their own and our investors have not lost sizeable amounts of their capital. I would consider this to be quite amazing especially considering that we are investing in the speculative end of the markets.
So often with these juniors, the share price is not the end all be all (although we certainly want to see the share price appreciating over time). This is because it is difficult to gauge the value of the projects at any given time and there are confluences of influences that need to be added into the equation to acquire a real sense of the value of any particular company at any particular time. Drill projects, financing, promotion, and how the major markets are acting all play into this equation. Patience is one of the perquisites for investing in this sector but then again patience is required for most investments. We always have to ask ourselves if we’re in the “right” sector at the right time. In the case of the precious metals the answer is yes and yes. But we also have to remember that so many other elements affect the behavior of these junior mining companies and frequently they do not receive the credit they deserve in spite of all the work that has been put into the company. I think Journey is a prime candidate for this kind of scenario.
Reasons for the Recent Market Conditions
We certainly have to look across the landscape of the junior mining companies specializing in gold and silver over the past 12 months to understand how volatile and unpredictable the sector has become. I believe there are three main reasons for this:
One is that investors are not really certain about the nature of gold and silver and the commodity bull market in general. Investors are constantly as to whether or not these juniors are worthy of investment. Wall Street is constantly “dissing” gold and all things tangible. This is because they live for “paper” and one is always going to protect their own areas of investment.
Secondly, the major indices play a role in the evolvement of these mining companies (junior and senior) as does the vitality of the overall economy. If the Dow is rolling over and the S & P is close behind, it will take a while for separation to occur. Separation is the ability of the precious metals and their corresponding stocks to stand on their own regardless of how the major markets are behaving. Separation entails the idea that gold and silver are insurance and hedges against the unrelenting pressures that most financial institutions and governments constantly put forth; frequently against any tangible item that might compete with their fiat currencies.
Essentially, this has been GATA’s argument for the last eight years (www.gata.org or www.lemetropolecafe.com) Essentially, GATA has been correct in their arguments. We also must consider that Gold is once again at $900 and ounce US and has rebounded from below $875 US in a matter of days and against general markets that have been anything but robust. Fear is ruling the Street and yet now for the first time we are witnessing the separation to which we refer.
Smart money is moving into gold and the precious metals. There is a second chance; actually this is probably to the fourth or fifth chance to get aboard this train. There are still a good many junior mining companies that are finessing their way into better and higher quality projects. This simply means that it is still possible to purchase quality junior mining company for $.30 and ride it to three dollars.
Finally, I would have to say that many smaller investors are being whipsawed by the gyrations they are witnessing in the global economies and the financial markets at large. It is difficult to get a handle on anything in which the powers that be either ignore, disparage, or both.
Journey has simply been caught in the ebb and flow of this volatility. Nevertheless this company, headed by Jack Bal, has been adding value through project acquisitions, development of existing projects, and seeking the addition of exceptionally talented and qualified board members.
Refreshing Memories vis a vis the Projects and Philosophy
One of the first things we have to remember about Journey is that they are a group interested in discovering and then acquiring late stage mineral projects. They will then either put them into production or sell them to another company that might do the same thing. Again, I would reiterate the idea of reviewing their website, www.journeyrecources.com. because it is one of the better junior mining company websites on line.It is thorough, detailed, informative, and very understandable. I always request that people perform their own due diligence and this is an excellent place to start.
“Leveraging the hidden value in advanced stage projects”
Journey currently has in its portfolio, four major projects the last of which is a relatively new deal to the company—Silveria, which is the one that we’ve been talking about. I would put Musgrove which is located in Idaho at the top of the list. Musgrove is primarily a gold deposit, with some 313,000 ounces of gold listed as a resource. I must admit that this is one of my favorite projects in the portfolio. The Musgrove Creek Gold Project is located 40 km which is about 25 miles, southwest of Salmon, Idaho and covers approximately 1500 acres. A 43 — 101 inferred mineral resource estimate at the Musgrove deposit delineated 8,000,000 tons at 1.22 g/ton of gold. This is equivalent to about 313,000 ounces of gold at zero dilution. The company is awaiting further news from their recent drilling program which occurred at the end of the past summer of 2007. They should be posting those results in the near future on the website so keep an eye out.
The next project that we should consider is their Vianey project in Mexico. It is primarily a silver play and has been a past producer. Work is currently under way to bring this project back into production.I think that the Vianey project has a great deal more potential than people are attributing it. Primarily it’s because they don’t understand it’s history. And I’m not going to go into it at this point but I would suggest that you take a good look at the website and how they are proposing to reopen this mine.I will take the time to briefly mention the Macky project in Idaho which is which is called Empire.
In my estimation Empire has been a disappointment but I can’t fault Jack Bal or his team for what’s been going on there. I think there were forces beyond his control from the very beginning. I know from first-hand experience that they gave this project the old college try. I can’t fault anyone for doing their best and I think that considering their point of involvement at that time, they made the best of a bad situation. If anything, I would suggest to you that Journey did as much as they possibly could on that project with minimal support from the other players. This is strictly my opinion based upon what I was able to glean from the situation. I don’t consider that Mackey is totally out of the picture, but I think that this is a game of odds as in you win some and you lose some. We shall see how this one involves.It would appear to me that Jack Bal and his group have assiduously moved ahead with the development of their programs on all of their projects to the best of her ability. I think the Silveria project which there are now actively pursuing is one that holds enormous promise. As good as the other projects appear to be and I am specifically relating to Musgrove in Idaho, this latest project, this latest acquisition could be a company maker.My opinion is that Journey might very well surprise all of us and I’ll be buying it for my portfolio up to $.50. And just for the record, I own a great deal of Journey Resources and I have confidence that Jack Bal will see this through and be successful with at least several of these projects.Please keep abreast of their press releases via our website and via journey’s website.We’d also like to have you on our Email list and you’ll be among the first to receive write-ups such as this one.
Until next time,
D. Stewart Armstrong
Consultant to the Junior Mining Communityconsulting@seacoastpub.comwww.seacoast-consulting.com
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