Diversified Journey Resources Seeks Near Term Production
By Doug Hadfield
When the ancient Roman scholar Publilius Syrus said, “No pleasure endures unseasoned by variety,” he could well have been referring to mining companies. One trick ponies, as recent events are sure to prove again, live and die the by price of a single commodity, and as such, are more vulnerable to sudden or unexpected market movements than are polymetallic companies.
Just a year ago, you could have been in copper, precious metals, zinc, uranium or nickel, and you would have represented a safe exploration investment – all were quite bullish and each looked solid for the near future. Now base metals are under pressure with the threat of sluggish US economic growth, the price of uranium has taken a reality check, and gold, well, gold is better than ever.
Journey Resources (TSX.V: JNY) is one of those juniors that has an insurance policy against such unpredictability: The company is diversified in both commodity and locale.
At the top of Journey’s project list is a JV operation with Grenville Gold (TSX.V: GVG) known as the Silveria Mine, a past producer located in Peru.
I spoke with Journey’s President and CEO, Jack Bal, who described the project with superlatives, “Silveria, I believe, is one of the biggest silver deposits in Peru,” he said. “It’s the closest to production. It’s permitted. And we have a stockpile of ore. We’ve also secured a mill, which should be ready by October of 2008.”
To Bal, being near term on all his projects is a priority.
“We have three near term production stories, and we believe that to be successful in this market you have to go into production quickly. If you do too much exploration when the market’s not doing well, you’re going to dilute yourself in the long run.”
The Silveria JV deal stipulates that Journey can earn a 50% interest by spending no less than $6 million before December 1, 2008.
“All the money will go into the ground and take the project within the next 12 to 15 months into production at 500 tonnes per day,” Bal said. “We think it should generate significant cash flow – which we’ll get half of. We also have the opportunity to earn up to 75% by spending another 6 million on the project if Grenville Gold decides not to match funding with us.”
The joint venture indicates that Silveria will enjoy an injection of new cash, an increased pace of exploration, and a hastened move to production. A drill program is slated to begin by mid-February to see what mineralization remains within, around and under the old mine workings at the four existing past producing mines on the 10,000 acre property.
According to reports, past production from just two of the four mines totals some 50 million ounces of silver, plus lead, zinc and copper. There are an additional 2 million tonnes of tailings containing silver, lead, zinc and gold, which the partners are presently assessing for economic viability.
Next on the road to production for Journey is Vianey, a 50% owned, rehabilitated silver-lead-zinc mine located 250 km south of Mexico City in the state of Geurrero. The Vianey property is comprised of two blocks totalling 12,400 acres. Less than 2 kilometres away is the town of Atzcala, with water, telephone and medical facilities. The mine is already tied into the local power grid.
“We’ve spent the last two years rehabilitating the underground workings,” Bal explained. “It’s a relatively small mine and will most likely operate at 300 to 400 tonnes per day, but even with prices the way they are today, that will generate quite a bit of cash flow – for instance the rock at current metal prices is worth in excess of $300 per tonne rock, and at 300 tonnes per day, so if you add that up the numbers look good.”
Journey will begin an underground drilling program at Vianey this spring, with the goal of confirming high grade historical intercepts and expanding recent drilling.
A review of past calculations of potentially mineable tonnages of mineralization, including the most recent exploration activities completed in 1997 provides a total in all categories of 345,020 metric tonnes grading 2.13% lead, 3.66% zinc and 269 grams of silver per tonne.
“This is a high-grade deposit,” Bal said. “Between 8 and 10 ounces per tonne silver and also high in lead and zinc, so the grade is very good for the price of metals today. The previous owners couldn’t manage with prices at 1997 levels, so we picked it up for pennies. But at that time we’re talking about $5 silver and lead and zinc had collapsed – you know 30 to 40 cents per pound. They’re all three or four times that now.”
