Vena Discovers 115 Metre Extension at Azulcocha Polymetallic Mine in Peru Including an 11.65 Metre Drill Intersect Containing 25.2% Zinc and 3% Lead
That's decent rock by anyone's standards (I make it U$640/tonne at today's spot), the other holes offer good numbers too (see the release) and I'm pretty sure there's more to come from the current drill program....spideysenses and all that. So you can like VEM for its U if you like, I'll stick with Azulcocha as the main reason to be long here, as always. The chart looks like a breakout to me, too:
So c'mon, swing out dudette and join in the chorus:
DYODD, cos I'm long this one (and winning already).
First, let's take this morning's news release about the major new gold discovery made by Gold Fields (GFI) and Buenaventura. Here's how the NR kicks off:
JOHANNESBURG, May 11, 2010 /PRNewswire-FirstCall/ -- Chucapaca's joint venture partners, Gold Fields Limited (51%) (Gold Fields) (JSE, NYSE, NASDAQ Dubai: GFI) and Compania de Minas Buenaventura S.A.A. (49%) (Buenaventura, BVN), are pleased to announce the discovery of a major gold-copper-silver deposit in their Chucapaca project area (CPA) in southern Peru.
Called the Canahuire deposit, it has a Mineral Resource estimate of 5.6 million gold equivalent ounces[1] (Table 1), with mineralisation potential beyond the extent of current drilling. The Inferred Mineral Resource for Canahuire is approximately 83.7 Mt at 1.9 g/t gold, 0.09% copper and 8.2 g/t silver for a total of 5.6 million gold equivalent (AuEq1) ounces. CONTINUES HERE
And if you do the math, 5.1m oz of that total is pure gold.
Second, let's remember what the GFI Head of Exploration said about the area in and around Chucapaca. In his opinion, what we have here is a "new district".
Third, let's check a map:
click to enlarge (gets big)
And here's a nice close-up. Oh look! Esquilache is just 25km away from a major new gold discovery made by GFI....hoodathunkit, eh?
TORONTO, ONTARIO--(Marketwire - May 4, 2010) - Vena Resources Inc. (TSX:VEM - News;VEM - News; FRANKFURT:V1R - News; OTCBB:VNARF - News), a Company with strong partnerships with four of the world's largest mining companies, is pleased to announce that after field reviews conducted by its partner Gold Fields Limited ("Gold Fields") (NYSE:GFINews; JSE:GFI)(NASDAQ Dubai:GFI) in the Amantina region (18,900 hectares) in southern Peru, a technical committee comprised of geologists from both Vena and Gold Fields has agreed to advance the exploration to focus on a significant diatreme breccia target that had been previously identified by Vena in 2007. LIMA: -
The explosive breccia target known as the Amantina prospect is located approximately nine kilometres east of the historic Esquilache silver mine where Vena is actively exploring and approximately 27 kilometres east of the Gold Fields / Buenaventura Chucapaca JV project. The Amantina prospect consists of a polymictic breccia with a strongly silicified chalcedonic matrix surrounded by a zone of hydrothermal heterolithic breccias developed in Tertiary aged andesitic volcanics. The core breccia measures approximately 400 x 200 metres and trends N 20 degrees E. Additional lenticular outcrops of breccia poke through the extensive soil cover approximately 250 metres to the southeast and indicate that the overall size of the diatreme pipe may be much larger than the observed outcrop. The breccia body responded as a chargeability / resistivity high (disseminated pyrite in the siliceous matrix) during the 2007 induced polarization survey conducted by Vena and two other similar targets were identified to the southwest and northeast.
Strongly anomalous mercury, arsenic, lead and antimony geochemistry combined with the chalcedonic content of the breccia matrix suggest that CONTINUES HERE
Hey, there are never any guarantees when you're out exploring for gold, but GFI didn't just pick the VEM Esquilache/Amantina concession to JV because it had some leftover geologists that wanted a new spot in the mountains to go hiking. DYODD, dude.
Vena Resources German ticker (V1R.f): A YTD high set today, with the company now making good on its promises and plans
Here below is the very solid news release sent out by Vena Resources (VEM.to) this morning. The terms of the deal look good at first sight and it means the major part of a soon-to-be working asset stays inside the company (this time it's easy and fun to say "Azulcocha is going to be a mine"). It also explains why VEM recently hired a very experienced minebuilder/mine operator. The news has gone down well in Germany trading, with the stock up 3.4% and now, notably, all those people that recently entered the stock on a German newsletter recommendation are now in the money (by at least 10%, and many much more than that). Satisfied investors = holders.
But the main thing here is that VEM really has done a significant, solid, positive deal and it's about to leave the realm of near-producer and will become a producer. No small achievement, folks...take that to the bank. Flash update coming for subscribers later (once i've played with numbers).
TORONTO, ONTARIO--(Marketwire - 05/03/10) - Vena Resources Inc. (TSX:VEM - News)(Lima:VEM - News)(Frankfurt:V1R - News)(OTC.BB:VNARF - News), a Company with strong partnerships with four of the world's largest mining companies, is pleased to announce that it has entered into an agreement with Trafigura Beheer B.V. ("Trafigura"), a privately-held international commodity trader, to negotiate a transaction in which Trafigura will invest US$5 million to acquire a 30% minority interest given a pre-production valuation of US$17 million in a Peruvian subsidiary of Vena to be formed which will hold the Azulcocha project (mine, tailings and Azulcocha West) and would support Vena's efforts to fully finance an initial 1,000 tpd mining operation. As part of the transaction, Vena and Trafigura will negotiate a life of mine offtake agreement for the full concentrate production at international market terms agreed annually.
Given the current development stage of Azulcocha with its known NI 43-101 compliant indicated resources and the NI 43-101 compliant reserves from the tailings deposit (both reports filed on SEDAR) as well as exceptional exploration upside underground and at Azulcocha West, Vena and Trafigura have agreed to work together towards achieving full financing of the project to put this project in production.
Juan Vegarra, Chairman and CEO of Vena commented:
"We believe that together with Trafigura we can substantially increase the amount of known resources/reserves in a short term. It is important to emphasize that less than 1.0 million tons out of the 3.2 million tons of historical resources have been confirmed at the Azulcocha Mine to date. Given the enhanced joint venture with Glencore only 6 kilometres to the west of the Azulcocha mine, the potential to find incremental resources is likely and if confirmed, should enable us to double the initial 1,000 tpd mill capacity quickly."
Whatever's going on in Germany around Vena Resources (VEM.to) (V1R.f) this morning, it's sure making the stock move:
That's over 900k shares traded and a 15% upmove in the first couple of hours. Very nice to see some good volume and price movement in the stock. Right now it's trading at €0.25, which is U$0.337 and CAD$0.343 at today's forex.
VEM.to closed in Canada yesterday at CAD$0.285, so there's a bit of upside in the offing here. DYODD.
UPDATE: make that 1.1m shares traded, because Vena stock is trading chunks in other city bourses, such as 130k in Stuttgart. Here's a link to an overview.
Thought for the day:When a small junior mining company specializing in Peru attracts a decent, world class joint venture partner, then you can virtually guarantee that the bigboy miner in question can spot a bargain or a good, solid team with which it can work.
So what can you deduce from a small mining company like Vena Resources (VEM.to) that has attracted not one but three world class companies to JV with it?
In Base Metals, Vena Resources JVs with Glencore, as big as it gets in the sector.
In Uranium, Vena Resources JVs with Cameco, world leader in the metal.
And now in Precious Metals, Vena Resources has attracted Gold Fields (GFI) as a JV partner to explore its highly prospective Esquilache project in southern Peru.
So ask yourself this: What do serious, world leading mining companies see in VEM.to that the retail market has up to now ignored? Your humble correspondent owns, so DYODD. Now check out today's press release pasted below:
TORONTO, ONTARIO--(Marketwire - Dec. 9, 2009) - Vena Resources Inc. ("Vena" or the "Company") (TSX:VEM - News; LIMA:VEM - News; FRANKFURT:V1R - News) is pleased to announce that it has signed a definitive Joint venture agreement with Gold Fields, the third largest gold producer in the world, to create a new Peruvian company "NewCo" to jointly explore the Esquilache regional project 100% owned by Vena in southern Peru. "NewCo" rights will not include the historical San Antonio de Esquilache gold/silver mine that is currently undergoing a 3,000 meter drill program.
Under the terms of the joint venture, Gold Fields can earn an initial 51% interest in "NewCo" by spending US$1.5 million on exploration and maintenance within three years of the effective date of the joint venture agreement. Gold Fields can earn an additional 19% interest in "NewCo" by spending an additional US$3 million on exploration and maintenance within the subsequent three year period to bring its total interest to 70%. If Gold Fields does not complete the additional investment of US$3 million, its interest in "NewCo" will remain at 51%.
Further development of the project would be subject to normal straight line dilution clauses. Should either party dilute to below 15%, then it would exit with a 1% NSR. The "NewCo" owner would have the right to purchase one-half (or 0.5%) of this NSR interest for US$2 million.
Gold Fields will be the initial operator and full pre-emptive rights will apply in the case that either party wishes to assign or sell its interest in the joint venture or its rights to the NSR royalty to an unrelated party. The parties have agreed that NewCo's Management Committee will be comprised of two representatives of Vena Resources and two representatives of Gold Fields with Gold Fields having the casting vote.
Gold Fields is one of the world's largest unhedged producers of gold with attributable production of 3.6 million ounces(1) per annum from nine operating mines in South Africa, Ghana, Australia and Peru. Gold Fields also has an extensive growth pipeline with both greenfields and near mine exploration projects at various stages of development. Gold Fields has total attributable mineral reserves of 81 million ounces and mineral resources of 271 million ounces.
(1) Based on the annualized run rate for the first quarter of fiscal 2010.
Juan Vegarra, Chairman and CEO of Vena Resources commented,
"We welcome Gold Fields to the Esquilache region. Vena is very focused on drilling the historical Esquilache gold/silver mine while working with Gold Fields to explore the early-stage areas surrounding the historical mine. Access to geological knowledge and global expertise is what Vena looks for in any partnership. Gold Fields is the third global mining company that Vena has entered into a joint venture agreement with - the others being Cameco in Uranium and Glencore in Zinc."
The transaction remains subject to regulatory approvals.
Statements in this press release regarding the Company's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties, such as estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements.
In November last year, this humble corner of cyberspace ran an interview with Juan Vegarra, CEO of Vena Resources (VEM.to) (find it on this link here). At the time the stock price was down at 19c but Vegarra was keen to point out tht VEM.to wasn't about to turn its back on plans and go into hibernation.
So last week I had the chance to catch up with Vegarra and get the lowdown on developments at VEM.to. This interview was first seen by subscribers to The IKN Weekly last Sunday and it's now availble on the internetwebpipes for all to see. Enjoy.
IKN: Hello Juan thanks for taking the time to talk again.
Juan Vegarra: Interesting times for sure. Looks like we survived the global financial meltdown, but I am still a little worried about the US dollar and the credit markets – should be promising for the metals, especially gold. I know you may not agree, but we can have the finance debate on a different occasion or platform.
IKN: So what has been happening since we last spoke, apart from the quiet doubling of your share price (which is good)?
JV: There is no way you are going to get me to gloat on the current stock price. Remember we were at $1.91 not too long ago (although it feels like forever ago). I know our value is closely tied to zinc and uranium as those are the metals the market recognizes us for, but for the last 12 months we have been enhancing our precious metals portfolio as part of our mandate to maintain a diversified portfolio. We have two exciting projects – Pucara and Esquilache which are both gold/silver plays as well as the investment in the coal business that has kept a much smaller and focused team very busy lately.
IKN: Let's take things piece by piece, as Vena has a lot of irons in the fire. Of course you have to find a balance between what you can say in public and what you can't, but we'd like to know as much as possible about the current state of play in the following:
1: The uranium projects and the JV with Cameco
JV: Cameco, like everyone else in this industry, also has to manage the bottom line, so we went back to investing $2.5 million this year as originally agreed when we created Minergia, our joint exploration company in Peru. They have abandoned some JVs around the world but have kept the Vena deal going. That alone is a clear signal without me having to continue to emphasize we have a strong relationship which is getting stronger every year. After drilling over 12,000 meters last year at Macusani we have been doing a lot of “what if and what’s next” in Macusani. We knew we needed a strong manager and well experienced uranium geologist that can “live” in Puno and not in Lima. We hired an outstanding professional in David Bent. He ran a JV with Cameco in Canada before and we think David can do very well for us in Macusani. While we prepare the next drilling phase for Macusani we wanted to drill test Lagunillas. We knew the surface info was not as exciting as Macusani, but regardless it was worth doing 2,000 to 2,500 meters to test those targets. So what should you expect? A targeted drill campaign for Macusani for the next 18 to 24 months so we can get a better picture of possible resources with the goal of meeting Cameco’s uranium pound threshold.
2: Azulcocha, and plans now that zinc has rebounded a bit(along with the latest gold discovery there)
JV: If you base Azulcocha solely on zinc, as long as Zinc stays below 75c/lb I am not too keen to invest the dollars that are needed to build the mill and begin operations. The risk/reward is just not there when there are better opportunities in other parts of the business. BUT, if you fully understand the latest press release regarding finding gold on the sandstones then the picture changes dramatically for us. We are going to do some metallurgical tests to see if the gold in the sandstones is recoverable. If we get positive metallurgical results then we have a great future ahead for Azulcocha. I will tell you what we will do but remember it is all speculation right now. The first step will be to drill from surface to expand the lateral extends of the mineralization. So far we know dissemination exists near surface for more than 250 meters along strike. The second step will be to drill from the working level -40. This operating level already extends one kilometer underground, so we can fan up and down to test mineralization at depth. The third step will be to test other nearby targets where we have seen sandstones. “El Mono” is a hill right across the Azulcocha mine that we now know reported several gold anomalies in sandstones in previous exploration programs years ago. And finally, we will review core from the Azulcocha West program and see if we see similar occurrences. In summary, if the metallurgical tests are positive then spending money to delineate a 43-101 gold resource as part of the operating mine would be a no brainer. So expect us to discuss metallurgical tests before discussing the sandstone potential again.
3. The coal business you're putting together. How will it work, on the supply side and the demand side?
JV: There are two sides to this business; bituminous coal from Oyón in the Andes of Lima and anthracite coal in northern Peru. The anthracite business is the most interesting to me. We have completed a review of several coal projects in the Alto Chicama area in northern Peru and now have a solid understanding of the market inefficiencies so we can maximize our earnings. We have a clear idea of market dynamics (supply/demand, key Peruvian and international buyers, key properties, competition, market inefficiencies especially on the logistics end). The next step is for us to set up a coal classification facility in northern Peru which should generate significant cash flow for Vena in the short term. Coal classification can lead to washing coal which will increase our margin even more. We will not be releasing more numbers especially of a financial nature until we begin operations. You know this is standard venture capital work managing a start-up business. It would be nice to have some barriers to entry so we avoid people cloning our strategy as they did when we announced the uranium finds several years ago. So you need to be patient for a few more months with me on this subject.
4. What’s the latest on the Pucara gold project? Does the JV have a timeline to production there as yet?
JV: We received a very detailed report from Consorcio Minero Horizonte. It suggested we should drill further down to increase tonnage. We have reviewed the entire report and there is a good working relationship with CMH but no final deal has been signed as we are still working on several other fronts that may lead to a stronger (or no) relationship.
5. And finally, what about my personal favourite asset of Vena's, Esquilache? It seems to have been put on the back burner so any reason for that?
JV: Esquilache is also my favorite exploration project in our portfolio. It is very strategic to the future of Vena so there is more being done on this project that there is space in this interview. This project requires 5,000 to 10,000 meters of drilling NOW which is estimated to cost between US$1.5m and US$2m to start with, so I am “monetizing” other assets to raise enough funds to drill Esquilache without dilution at these low share price levels.
IKN: Final question: In last week's IKN Weekly I mentioned VEM as an example of a company that might benefit from the loosening in credit markets and the subsequent hunt by larger miners for cheap assets. Has VEM seen any evidence to suggest that is true recently? Is being asset rich (and relatively cash poor) becoming a positive as I imagine?
JV: I can only state what we are seeing as I’m not sure what is happening to other explorers in Peru. The answer is Yes, you are correct. We are seeing strong interest in reviewing our assets. Vena is asset rich and cash poor in comparison to previous years. We have signed several confidentiality agreements with third parties that may lead to something or nothing. The advantage we have is that we have accumulated plenty of assets over the last seven years in Peru that could be classified as non-core for now, like recoverable VAT or equipment that we can sell today without affecting short term deliverables, plus funds from our partners, so I am not going to a negotiating table with weak hands.
IKN: Thanks for your time, Juan. Any last words?
JV: I find the time to read IKN every day. I know you are very supportive of the company and I thank you for it. Peru is booming in comparison to the rest of the world. I know your comments regarding the Peruvian economy, but in comparison to the US where I live Peru’s economy looks strong. I think it is the first time the country is facing a global economic crisis with sufficient financial resources that should provide a cushion for Peru that it never had before. I see the performance of the Lima Stock Exchange as very beneficial to Vena. We (and other BVL juniors) are trading at five to six times more volume than we do in Toronto. The political climate is changing as elections are nearing, so the next 12 months should be even more interesting for all of us doing business in Peru.
.....Vena Resources (VEM.to) price chart, October 2008 to date.
This basically because I like the company and I'm glad they've been catching a bid these last few days (and it's my blog, so there). It's also 71.8% since Yoda from Star Wars guest-blogged the Trading Post on February 26th and said;
"Vena Resources (VEM.to) UNCH at $0.16. My Jedi powers see a bright future and happy news. Stock to keep on your radar in the near future, this is. Hmmmmmm."
He may be small and wrinkly, but that Yoda is one smart dude. Disclosure: I own and I also know people that do. DYODD.
Lima (ANDINA).- In the next two years, Peru may export uranium and be one of the four Latin American countries to have a nuclear reactor generating electricity in several remote areas of the country, the president of the Peruvian Institute of Nuclear Energy (IPEN) Conrado Seminario said Thursday.
He noted that IPEN currently promotes a bill encouraging private investment in the electric core field with the purpose of having an alternative electricity generation source to fossil fuel, hydro-electric and wind power.
In the future, given the oil, gas and water shortage caused by global warming, the atomic reactors would be the substitutes to generate electricity and avoid stagnation of industrial and human activities.
Seminario said that in the world there is a resurgence of nuclear power, driven by the high cost and scarcity of traditional fuels and in the Peru the nuclear activity has also resumed in the context of technical cooperation in Latin America which had remained stagnant.
"In 2008, a provision enabling the IPEN be part of the Energy Guide Plan Commission was issued. This committee will seek to modify the energy matrix which has remained unchanged for years. Its amendment will provide access to other energy sources including nuclear," he said.
The scientist said that the work is going well and state that there are projects to export uranium by 2011 after checking the prospecting works which mining companies are currently conducting in the region of Puno.
Let's be straight here; I'm a fan of the company, ok? I like the company attitude, it looks after Peruvian locals, I've done an interview with CEO Juan Vegarra here on site (here's the link). I've visited their properties (unpaid, I hasten to add). There's even a non-revenue generating banner up there at the top as my little show of solidarity for the company.
I like VEM.to because the people there have always been straight as a die. I like it because it has some very good looking projects and prospects on its books. I like it because it hasn't tried to run and hide from this economic downturn and has got on with the job of exploring and trying to add value to its assets; exactly what a junior miner is supposed to do.
So with all that said you'll forgive me if I paste out the VEM.to press release from today. The company has got honest-to-goodness positive news to tell the world and i'm happy to help disseminate it just that little bit more. DYODD, and by way of disclosure I do not personally own at this time but I know people that do. Here's the PR:
TORONTO, ONTARIO--(Marketwire - March 2, 2009) - Vena Resources Inc. ("Vena" or the "Company") (TSX:VEM - News; LIMA:VEM - News; FRANKFURT:V1R - News) is pleased to announce that after an extensive 18 month effort the Government of Peru has approved an environmental impact assessment (EIA) for the Azulcocha polymetallic mine.
Juan Vegarra, Chairman and CEO of Vena Resources commented: "This is a tremendously important milestone for the Company. Vena has invested close to US$20 million in the development of the Azulcocha mine and has delineated a NI 43-101 compliant underground resource of close to 200 million pounds of Zinc thus far. The orebody is open in multiple directions and the infrastructure buildup, completed over the last 18 months, includes a modern three MvA electrical substation, onsite lab, mining infrastructure capable of supporting over 350 employees and a scalable floatation mill capable of processing up to 1,400 tpd.
A prefeasibility study was completed in June 2005 on the tailings with robust economics resulting in an NPV of US$37.2 million and an IRR of 157% using US$0.50 per pound Zn and US$0.60 per pound Mn and this NPV does not include possible gold credits. A scoping study completed by MineFill Services from Vancouver in January 2007 provided positive economics for the entire project and we're pleased that Glencore continues to invest in the exploration of Azulcocha West where 32 holes (7,056 metres) have been drilled thus far with expenditures of US$2.4 million to date."
With the approval of the EIA, Vena can now continue to explore from underground and surface locations for additional tonnage. The EIA is a requirement for proceeding to mill construction and mining operations. Perhaps the most important aspect of this milestone is the local community commitment the Company has received to develop this project as soon as possible.
Azulcocha Highlights - Current Mine Resources NI 43-101 Compliant
Underground Mine Resource Confirmed so far (NI 43-101, R. Henckle and Assoc., 2008) -------------------------------------------------------------- Indicated Resource Tonnes Zinc % -------------------------------------------------------------- 865,132 @ 5% cut-off 10.0 --------------------------------------------------------------
Tailings Reserves Pre-feasibility Study (NI 43-101, M. Lytle and R. May 2005) -------------------------------------------------------------- Probable Reserves Tonnes Zinc % Mn % Au gpt -------------------------------------------------------------- Calculated 908,400 3.27 10.04 1.13 --------------------------------------------------------------
General Overview of the Azulcocha Property
The Azulcocha Project is a polymetallic zinc deposit located on the Central Andes Peru where the major silver-lead-zinc-copper producer mines reside including: Raura, Uchucchacua, Izcaycruz, Atacocha, Milpo, Cerro de Pasco, Colquijirca-San Gregorio, Huaron, Casapalca, Morococha-Toromocho, San Cristobal-Carahuacra, Azulcocha and Yauricocha.
Azulcocha Mine
The Azulcocha deposit is set in Pucara Group (Condorsinga Formation limestone) of the upper Triassic to lower Jurassic age, marine and continental sediments of Mesozoic and Cenozoic age. The zinc ore deposit is controlled by the regional N45W trending Cochas - Gran Bretaa fault which builds an E - W sygmoidal overthrust structure. The Azulcocha deposit is not well defined yet and is still open for more exploration. The 2006 to 2008 exploration programs consisted of both surface and underground core drilling in addition cross cut workings in order to define the remaining resource for the Azulcocha mine.
Metallurgical Information
17,440 tonnes of ore from underground mine was processed in a pilot mill, which obtained concentrate of 54% of zinc with 89% recovery.
Infrastructure
- Electricity Supply - The property has a Sub Station of 3 MvA which is connected to the National interconnected System.
- Water supply - Abundant water resources are available from surface ponds and small lakes.
- Transportation facilities - The Azulcocha - Pachacayo 40 kms non asphalt road is connected to the central railroad and the central highway which is 225 kilometers to the port of Callao, and 45 kilometers to the Smelting and Refinery of La Oroya. The Azulcocha Project is also accessible by airplane from Lima to Jauja - 60 kilometers from the mine site.
Social Issues
Vena has a well defined social impact policy that is formalized through written agreements with the local communities of Tomas and Shicuy to undertake exploration and production programs. This collaboration is maintained through programs of social support related to medical services, electricity and agriculture improvements.
Exploration Potential
The Azulcocha deposit is not well defined yet, it is still open in multiple directions, for additional exploration to increase and define resources along the eastern and western extension of the Azulcocha mine as well as in the projection below the -40 underground level.
Azulcocha West is a Joint Venture with Glencore, which is undergoing an exploration and evaluation program with a total investment of US$2.75 million.
Azulcocha has historically been known as a zinc mine, however several drill holes discovered gold, lead and manganese zones. Vena plans to investigate these new targets as well as obtain final permits for full production at Azulcocha.
The exploration and development program is being supervised by Gervacio Rodriguez P.Geo., Vena's Qualified Person as defined by NI 43-101.
Vena Resources at the PDAC
Vena Resources is pleased to extend an invitation to all interested parties to visit Vena's management at booth #3023 at the 2009 PDAC International Investors Exchange. The PDAC is being held at the Metro Toronto Convention Centre, South Building - Level 800, from Sunday, March 1st to Wednesday, March 4th.
Vena Resources (VEM.to), beaten back to where it bounced the last time, has published on its coal start-up business in Peru. Read the PR yourself and pay special attention to the fact that the company doen't have a price fixed for its goods yet, but all the same this is an easy and technically simple way of adding alsmost immediate cashflow to the company.
You need to DYODD on the company (as always) because I have two vested interests:
1) Vena sponsors ths blog
2) I like the company and how it's going about its development program under tough market circumstances.
But there's no doubt it's cheap, and there are far, far worse pennyflip possibles out there. Have a look at the PR, and if you want to investigate further here's a link to the VEM.to website
TORONTO, ONTARIO--(Marketwire - Dec. 17, 2008) - Vena Resources Inc. ("Vena" or the "Company")(TSX:VEM - News; LIMA:VEM - News; FRANKFURT:V1R - News) is pleased to announce the acquisition of its first producing coal project with plans to increase tonnage deliveries to a large Peruvian cement manufacturer. The property is currently being mined at a very small scale; however the Company has received an order for a minimum of 2,000 MT of coal per month, with the option of increasing it up to 6,000 MT per month in the near term. The Company plans to confirm non-43-101 compliant resources and to continue to sell coal to local cement and steel manufactures.Vena is also pleased to announce the appointment of Ing. Luis Moran as General Manager of Peruvian operations. Mr. Moran is a chemical engineer with an exemplary track record in the Peruvian mining industry. He has been on the board of directors of Centromin Peru as well as Minero Peru SA and held the position of general manager for San Ignacio de Morococha Mining Company, Castrovirreyna Mining Company as well as general manager and president of Hierro Peru (ex - Marcona Mining Company). Mr. Moran also held the position of Vice President of the Special Privatization Committee for several large Peruvian mining companies (Tintaya, Centromin, Minero Peru and Hierro Peru).
The Company also would like to extend its gratitude to James Fairbairn who recently resigned from the board of directors as well as to Rod Ogilvie who recently resigned as Vice President, Engineering.
The Oyon Coal Property - The formation containing the coal seams corresponds to the Oyon formation of the lower Cretaceous age. The main structure controlling the location of the identified coal seams corresponds to an asymmetric syncline with a north-south bearing; the coal seams outcropping along its west and east flanks. A number of coal seams have been identified within the mining concession with thicknesses that vary between less than one metre and exceptionally reaching four metres, all of them hosted in dark gray slates and gray sandstones of the Oyon formation.
The Alexia and Micaela seams are the most outstanding due to their geological characteristics and their relative continuity outcropping for over 670 metres, their average thicknesses being 4.0 metres and 2.0 metres, respectively. The Alexia seam has been partially exploited but the old workings are currently collapsed due to the inadequate mining method previously used.
The results obtained from chemical analyses of channel samples taken show that ash content ranges from 6.0% to 31.5%, volatile matter content is moderate to low, ranging between 8.8% and 16.0% and fixed carbon ranges between 58.3% and 82.5%, whilst sulfur contents are all below 1%.
Historical Resource Potential - Non 43-101 Compliant
A preliminary field evaluation and review of historical production and exploration records, including mine development plans and an EIA application submitted to the Peruvian government by the previous operator performed by Vena's consulting coal geologist, Dr. Rolando Carrascal PhD, has so far identified estimated historical coal resources in the range of 620,000 TM to 700,000 TM and a prospective additional tonnage ranging between 130,000 MT and 150,000 MT. The Company plans to conduct an exploration program based on Dr. Carrascal's guidance leading to a NI 43-101 complaint report in 2009.
Dr. Carrascal, PhD Geo is acting as Vena's qualified person for all coal related projects. He has not completed sufficient work to classify the historical estimate as current mineral resources, and it should be noted that Vena is not treating the historical estimate as current mineral resources and that the historical estimate should not be relied upon. The Company would like to caution readers that the potential quantity and coal quality is conceptual in nature as there has not been sufficient exploration to define a mineral resource and it is uncertain if further exploration will result in discovery of a mineral resource.
I could have chosen the five day chart and we could have all gone "WOW, look at that for a win!" but to get a real idea of the stock we need to remember just how far it has fallen, so the 10 day variety is a more honest fit (pull up a 12 month chart and you'll see the almost constant selling and lower prices).
Yeah, it's one of my fave undervalued juniors. Yeah it's here again. Yeah I'm happy about the last few days' action because it has clearly broken a long-standing trend. Yeah I'm pleased that the stock seems to have reacted well to the interview with CEO Vegarra over the weekend (any other CEOs want to come and play?....free publicity, dudes and dudettes :-). And for sure you have your own fave smallcaps too, but hey.....this is my blog.
Final thought: I do like it when management puts their own personal money where its mouth is. Here's the latest insider trading report on Vena Resources:
Juan Vegarra is the CEO of Vena Resources (VEM.to). As well as being a site sponsor, regular readers know that VEM.to is a junior mining company I’ve liked for a long time (long before the company started advertising here, in fact). So when given the chance to get this exclusive interview with Juan Vegarra over the weekend I jumped at it; this fascinating look at the world from the eyes of a junior mining CEO in the midst of the sector downturn is the result. Enjoy.
Otto Rock: Hello, Mr. Vegarra, thanks for agreeing to do this interview with IncaKolaNews.
Juan Vegarra: My pleasure, you know I have been reading your comments for several months and find your site one of the most instructive out there – keep up the great work.I hope you and your readers realize that there may be some issues that I may not be able to expand completely due to the legal restrictions, but I will be as transparent as possible.
Otto:Straight down to business: It’s been a rough time for junior resource stocks recently. How is Vena coping with the circumstances?
JV: Recently we put out a press release explaining how we are allocating our resources with some detail.Bottom line the financial meltdown has created a huge financial problem for ALL companies not just the mining sector.I look at my personal retirement account and this quarter was just nasty even though it is pretty well diversified.In particular with regards to Vena, the current situation has forced me to reassess some investments, delay others and look at my core team and had to let go of some great people whose projects made no sense continuing to invest until the market recovers again.Specifically;
1) Any kind of exploration in all those early stage projects (24 of them) will be put off indefinitely.
2) We are focused on getting the Azulcocha mine fully permitted (EIA and construction permits) AND increasing its resources by drilling underground and along Azulcocha West.The question about when we build the mill is still being debated, but frankly as long as Zinc stays at historically low levels makes no sense to spend millions to barely break even by milling high-grade ore.Like any business person, I would prefer to invest those precious dollars in projects where we can still see a nice return.
3) One of such projects is what we are doing with Sudamericana de Carbon (SDC).We haven’t announced much recently as we have been reviewing several projects that we want to purchase.More than 12 projects have been reviewed and we know which ones we want to purchase, so now it is a matter of the team closing some of those deals under favorable terms.We will of course have to drill some of these projects to comply with the exchange to confirm resources.Some of these projects are owned by small producers so we should be able to mine some anthracite and sell it to the local market.In fact we already have a well known steel manufacturer in Peru as a key client; we plan to expand our sales to this customer.
4) The Uranium exploration projects are being funded by Cameco.We still have another $5 million dedicated to drilling in the short term to delineate a significant resource. Finally…
5) The projects in Puno – Pucara (gold/copper) and Esquilache (gold/copper/silver) will be explored and exploited with as few incremental funds as possible.
Otto: Vena has plenty of different projects in the pipeline, but significantly they are all in Peru. Can you tell us why VEM only operates in Peru and what advantages that gives you?
JV: I am Peruvian by birth.Yes – I left Peru at a very early age to study in America, but my love for the country is perhaps stronger now than when I was growing up.Sounds strange but as an adult I have come to realize how precious its people and natural resources are.America has been great to me, but there is something about the magnetism of Peru that makes me to want to come back frequently.
From the business perspective, Peru is a rich mining country and still heavily under-explored. I know enough business and political people as well as friends and family that support my efforts, so why would I venture to a different country with mining laws that are not as clear and lack the richness Peru has?.Besides there is no match for Peruvian food anywhere!The business model we use at Vena Resources is to have a highly diversified portfolio of assets across all regions of Peru.If I wanted to invest in another country I would most likely work with a local mining expert and create another junior company.The chances of finding a large deposit in Peru over other countries are simply better by focusing in Peru given the large number of world class deposits already there.
Given the strong focus on Peru and understanding the financial market there well made me work with the Lima exchange people to create a junior sector in the BVL.So after months of efforts, Vena become the first Junior company listed in Lima – perhaps the best corporate decision I have made as the dual-listing allows Peruvian investors to invest in an exploration company focus on running Peruvian mining projects for the benefit of Peruvians (via employment, social responsibility etc).Today more than 35% of all outstanding shares are owned by Peruvian investors and growing every day.
Otto: What about disadvantages of Peru exposure? What are the things that make life more difficult for companies operating there, be that on a macro or company scale?
JV: Like any other developing country you find the same issues – corruption, bureaucracy, lack of knowledge of what exploration is all about amongst the indigenous communities.But, the actual investment environment is pro-mining and there is plenty of intellectual capital at a much lower cost that is highly efficient and professional than most countries.So yes you can write pages about what is wrong with this country, but the risks are significantly offset by the potential rewards.So the “Peru” factor is just another element you must take into consideration when analyzing your investment risk/reward profile.
Your readers may not know this, but Vena was created by 7 experienced engineers with MBAs and we reviewed this industry as a business case before even investing a single dollar.Standard MBA work leads us to create a vision for Vena that is very different from 95% of all exploration companies and the “Peru” factor was actually a positive factor from our research.As an example -- It is much easier to explore for Uranium in Peru than it is in the US.
Otto: If I’m not mistaken, your main projects are the Azulcocha zinc/lead/silver mine that is close to commissioning, the uranium projects in the South of Peru, a recently acquired coal project based in the North of the country and two polymetallic projects in the Puno region. Four very different projects. Can you give us an update on all of those projects, starting with Azulcocha where I believe you’re waiting on a final government permit to get production started?
JV: Allow me to expand a bit on what I said above – Azulcocha already has a measured resource capable of feeding a 500 tpd mill for 5 years.The orebody is open along strike and at depth, and significant funds are being invested by Glencore on the exploration project we call Azulcocha West, just 6 kilometers west of the mine.The internal scoping study we completed over 2 years ago, gave us the green light to purchase a mill and put the project in production.Two issues have caused us to re-evaluate our thinking here.First the significant decline in the price of Zinc (from US$2/lb to under US$0.50/lb in 12 months) makes the project economic by only milling high-grade ore (>15%) so we have decided to expand the resource underground.We are currently reviewing historical data as well as what we know from our drill programs with the goal of defining a new drill program to expand the high grade resources – couple those resources to whatever we may find on Azulcocha West and we can see better economics for building the mill.All the equipment and infrastructure investments have been completed, so it is a matter of getting permits and completing another drill program to expand resources before proceeding to the final stage and “expecting” zinc metal prices to recover in the short term.
Otto: What about the coal project?
JV: Very soon I will be able to share more details what we have been working on, but I gave you the general idea just now.We are about to purchase a group of concessions that have enough anthracite to feed the local market for at least 7 years.These resources are of course non 43-101 compliant, so we will need to do some drill work to comply with the TSX requirements, but the coal seams are so obvious that are currently being mined by small coal miners and it is very possible for us to scale-up the operation thus creating a nice cash flow stream to allow SDC to grow organically.
Otto: The VEM uranium project?
JV: This is perhaps the most significant exploration project for us currently.Its development is fully funded by Cameco so we expect to delineate millions of pounds of U308 over the next two years.The current drill program has significantly exceeded our expectation.We originally thought we might get a resource somewhere around 0.2% and it is closer to 0.4% on average.So our goal is to delineate several high-tonnage, low-grade systems that will feed a central mill somewhere in Puno.I would suggest you read about Cameco’s Inkai deposit in Asia to understand the economics of low-grade/high tonnage systems.
Otto: The polymetals projects at Pucará and Esquilache?
JV: Think of Pucara as a high-grade/low tonnage gold/copper system.Cheap mining costs make this project relatively economic even with these metals prices. Our development approach resembles what we did at Azulcocha.We will drift along the major veins, transporting rock to a nearby mill and making enough money to help us subsidize and perhaps make some money while developing the project.We cannot afford, under current market conditions, to invest heavily on this project as we have larger targets (e.g. Esquilache) but if we can find a way for Pucara to grow organically – why not?Very simple management decision that most other juniors would never take given their business model.
Esquilache is perhaps the most exciting exploration project we have. It is so much easier to explore right next to an old mine.Decades ago – geologists had no clue about Stockworks – Esquilache appears to have several Stockworks and some very significant vein structures.We are awaiting permits to drill this project.There are seven significant mineralized zones, we will drill the Mamacocha zone first and grow from there.
Otto: Can you tell us a little bit more about yourself, Mr. Vegarra? I understand that your background isn’t in the mining sector as such.
JV: I am an Electrical Engineer with an MBA and tons of advance management courses.I worked for Microsoft Corporation in the 1990s leading several teams of engineers in some of the most competitive fights against larger companies at the time.Although I am not a geologist or mining engineer, I know what makes engineers tick and know how to grow operations from the idea stage to significant contribution to the corporate P&L. Ask yourself how many Fortune 500 companies in the US are run by “experts in their field”- very few.
The key for start-ups like Vena is to have strong entrepreneurial skills, surround yourself with people that know a lot more than you on their core competencies and ask for advice.The rest is standard corporate management of human and financial resources.I feel strongly that my blended technical/business skills are better suited in times of crisis to navigate thru these tricky times.
Otto: Would you say that Vena Resources is lacking in deep mining knowledge compared to other junior mining companies?
JV: I have heard that criticism before. I personally don’t have a mining related degree, but my management team and the corporate board is heavily loaded with technical talent, so the key question to ask – can the Vena team pull it off?We have already shown that we can finance the company in very difficult times, we have already shown that we can work with partners 100 times larger than us in a win-win structure that is very protective of our shareholders.Finally you can compare the Vena chart to any other Zinc/Uranium producer/explorer and will see that even under those scenarios the stock price has declined less than most percentage wise.I am not trying to excuse myself or the performance of the stock price, simply pointing out comparables so people reading your site can make a proper evaluation of my team’s (and obviously my) performance.
Otto: Times might be tough for the industry right now but if we look forward, how do you see things shaping up? Is mining going to suffer through 2009 or is there reason to be optimistic about the next 12 months or so?
JV: Let me put my MBA hat to answer this question as I believe global macro-economic events will have more of an influence than anything a miner can do.The US FED is printing/borrowing money like no other time in history as it intends to battle a global recession caused by the financially leveraged world we lived until recently.This deleveraging will continue to cause pain to all industries as hedge funds liquidate positions and pension funds are stuck with non-liquid investments in their portfolios, thus forcing them to liquidate equity positions pushing stock prices to incredible low levels to comply with redemptions or cash calls.So it may take all of 2009 to clean up the global mess.
But as we all learned in business school there is always a bull-market somewhere.The question is – how is this global recession going to play in the metals market? Frankly I see the surge in the US dollar against other currencies to be the result of a temporary “flight to safety” more than anything else. The huge infusion of US dollars has at some point to lead to a devaluation of the US currency to the benefit first of precious metals and then to base metals.China has not stopped growing; yes its growth is slowing but it is still quite significant, and as metal prices force operators to shut down or reduced exploration investment to preserve cash or to mill high-grade ore that can only lead to lower supply and higher prices eventually across all metals.We all know how these cycles work, the question is – how long is it going to last?
Given my believe that precious metals will recover first; we are focusing on Pucara and Esquilache (mainly gold/silver).As base metals recover we will be ready with a fully permitted Azulcocha.Finally – energy needs will not slow down and the “drill-baby-drill” mantra will take years to significantly upset the supply/demand curves on the energy side, so Coal and Uranium will go back up in time (I hope) as we complete our resource delineation programs in both metals over the next two years.
Otto: I noticed an intriguing appointment to your board of directors this year. Could you tell us more about the Romaña-Letts family and why investors that may not know so much about the local Peruvian mining scene should be interested the recent link-up between Vena and that family?
JV: By now it should be clear to your readers what I learned from Bill Gates at Microsoft – “surround yourself with people whose core competency adds value to the enterprise” Roberto and his family are part of the Volcan group, perhaps the largest zinc/silver producer in Peru, and their contacts and knowledge of the Peruvian industry is a great asset for me.Roberto is young and aggressive so I expect to pick his brain and use him as a sounding board as to how Vena’s corporate moves may be perceived by the very tight network of Peruvian miners.
Otto: Of all the assets and projects on board at Vena, which one are you most excited about personally?
JV: Esquilache is by far the most intriguing asset from the exploration perspective.Every junior looks for a world class deposit, and Esquilache appears to have that potential.From the cash flow perspective I think the work we are doing with SDC on the coal side has the most potential in the short term.At the end, the most significant assets are the 30+ geologists that continue to find and advance interesting projects for all of us.
Otto: Thanks again for doing this interview, Mr. Vegarra. Do you have any parting words for readers?
JV: I thank you for letting me share some thoughts. It is hard to put a simple corporate strategy press release, so this format is more conducive to interaction allowing me to emote on how I truly feel about the future of Vena.We are facing some very difficult times, but we are not going to hide in a corner watching the world implode around us.God gave us brains to think strategically, and if it means that we must defer our investments and grow at a slower pace – so be it, but we plan to be around to fight another day. Thank you.
