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The Calandra Report: Going deep on Freegold Ventures (T.FVL)

Thom Calandra
1 Comment|February 19, 2014

SAN FRANCISCO -- I promised more from J. Kristina Walcott, the 44-year-old mine developer who has been running Alaska operator Freegold Ventures since September 2009. 
 
Freegold (TSX:T.FVL, Stock Forum) this week got a 4-cent nudge, mostly from a Germany mailer to individual investors in that country. Half the rise evaporated today | Wednesday. This happens with many direct-mail come-ons in any language. 
 
That is OK. "I actually got calls from folks who said, 'I didn't even know your company existed,' " she said from Vancouver, Canada.
 
Ms. Walcott has a reputation for getting all hands on the deck. She was general manager of Orex Laboratories, which processes prospector's diamond samples. She also navigated real estate for Pacific Northwest Capital (GREY:PWESF, Stock Forum) and CanAlaska Ventures Limited (TSX:T.CVV, Stock Forum), both of those mineral explorers with links to relentless promoter and property syndicator Harry Barr.
 
Mr. Barr incorporated Freegold in 2007. His legacy thus far seems to be starting exploration companies, promoting them heartily, watching the shares rise briefly, then resigning from the companies. Sounds like a business model for a third of the junior metals runners out there. Mr. Barr exited Freegold a few years after he acquired land up north.
 
"I know there is a propensity to say that the fact Harry is no longer involved is a good thing but the property was acquired by him. So credit where credit is due," she says.
 
Ms. Walcott's intentions, I trust, are intense and strike me as sound. For example: she knows that Freegold's Golden Summit benefits from being near a producing Kinross heap-leaching gold mine just south of her. Yet when asked, she declines to ponder publicly about battered Kinross Gold (TSX:T.K, Stock Forum) and its acquisition plans.  
 
"They have their own stuff to deal with. Kinross will try to starve us out first," she says.
 
Fort Knox runs low-grade ore, about 0.2 grams per metric ton, through a carbon-in-pulp mill for Kinross. "I believe $51 million of revenue come out of that mill," says Ms. Walcott. They're 5 miles away and a half-hour by freeway from Fairbanks." Golden Summit is 20 miles northeast of Fairbanks.
 
She adds, "Sure the cap-ex is done there, but Fort Knox is still producing -- maybe 400,000 open-pit ounces per year." Kristina thinks she can heap-leach low grade at Golden Summit -- perhaps using the Kinross mill.
 
Ms. Walcott is out there raising about $1 million to $1.5 million via a pre-PDAC private placement equity offering. Her pitch is that Golden Summit already has 700,000 ounces of easily harvested oxidized ore to mill. She says she will use about $500,000 to hire an engineering consultant for a preliminary economic report, known in the acronym-loving biz as a PEA with PODs.
  
"I come from a line of geophysicists, my husband, my father, my brother," Kristina says. 
 
She took the reins at Freegold after the company, like so many of its brethren, ran up its bills and ran down its prospects. Freegold had $11 million in debt, and by 2009 most everyone but Ms. Walcott had resigned.  
 
Freegold has run through many millions of dollars since 2007. She takes the position that four resource upgrades "gave people a measure of our accomplishment." Freegold has something on the order of 8.5 million ounces of gold in all Canada-compliant categories.
 
Average grade is about 0.65 grams per metric ton. Possible life of mine? Who knows? Maybe eight years, maybe 12. The PEA will show a number on that front.
 
Ms. Walcott is willing to stick her calculator out on a possible capital-expenditure figure for building the mine. "I think you have to be below a $200 million cap-ex to be an investable junior," she says. Now that's a quote I can print.
 
Her burn, with zero hesitation, she says, "1 point 5 million a year, and a lot of that is travel."
 
She gets $175,000 a year in salary; so does her chief of exploration, Alvin Jackson. Together, the two own about 1 percent of the shares (82 million all-in).
 
Ms. Walcott hopes to add ounces to the oxide portion in coming months via assays. "You can't press-release unless you drill," she says. My take is that is what moves the share price, not the PEA. 
 
Please see Jochen Staiger's German-Swiss interview with Kristina.   
http://www.commodity-tv.net/c/mid,22913,Swiss_Mining_Institute_October_2013/?v=250148

"Our PEA will be true to cost," she says.

About a fifth of Freegold's known shareholders hail from Europe. Ms. Walcott must continue to sway those stakeholders. She also must reach out to fresh investors who are comfortable with a 5-year timeline for clearing Alaska's mountains of minerals permitting.

I shall be purchasing shares at 21 cents Canadian if I can find any. They're at 24 cents right now. If I succeed, I'll be getting them a heck of a lot cheaper than two large Canada buyers did in a June 2007 financing: see terms.  

More: I purchased Tembo Gold shares (TSX:V.TEM, Stock Forum) today. Tembo, whose Tanzania project I flat-out loved when I saw it 11 months ago, is due to give us a money snapshot of cash in the bank and David Scott's drilling plans. ...

Still waiting on whether I will visit John Lee's two Prophecy Coal (TSX:V.PCY, Stock Forum) projects in Mongolia next week. Waiting on hip MRI results. ...

TCR 8 Movers (+) Wednesday: Colt Resources (TSX:V.GTP, Stock Forum) -- Colt's Middle East unit raised $3.1 million and paid no one to help in the financing; and Gran Colombia Gold (TSX:T.GCM, Stock Forum) -- also in the hunt for cash. ...

I purchased a small number of JNUG shares to keep their NUGT cousins company.  ...

Looking to sell one of the TCR 8 and shift into something? Not sure what to say, but if I need cash from my natural resources holdings, I likely will sell none of the TCR 8 at these levels and instead dispatch some of the mis-fires I have been holding for years: Klondike Gold (TSX:V.KG, Stock Forum), Bellhaven Copper & Gold among them.

On the Bellhaven front (TSX:V.BHV, Stock Forum), I am down to 1.7 million shares from 2.2 million and have 60-day orders to sell 100,000 shares at approximately 7 cents Canadian and 7.5 cents Canadian. ...

Thursday or Friday will be a breakout + day for shares of Ivanhoe Mines (TSX:T.IVN, Stock Forum). I own more than 100,000 shares of Ivanhoe Mines, a platinum and copper and zinc developer in Africa. Today's trading activity is the key for that remark. ...
 
Speaking of Africa, I just watched Fernando Meirelles' The Constant Gardner for a fourth time in nine years. One of the best, and the John le Carre novel, too.
 
Your friendly, Thom Calandra

THE CALANDRA REPORT: Subscribe*
 
Thom Calandra  
@thomcalandra for Twitter
 

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kingscorpion
interesting I read all the posts regarding company outlook and really nothing in terms of cheapness with the potential to make the most comes close to Apogee Silver APE-V. This company has 115 mil ounces of silver, average grade 153 gr/tonne 500 mil pounds of lead and about 1 bil pounds of zinc. It is in Bolivia and the main reason why it trades at around .03c/share. However Bolivia is about to come out with a mining law that would be one of the few main catalyst to move the share price up. T...
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February 20, 2014
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