Cash Minerals and The Long Emergency
I spend most of my traveling time visiting and reporting on silver and gold mines with the occasional iron or moly property thrown into the mix. So, by necessity, most of my writing takes place on our sister site, 321gold. While I would love to report more on the energy companies, once you have seen one drill rig, you have seen them all. But a phone call a month ago from Basil Botha, President and CEO of Cash Minerals changed my view about visiting energy properties. I made a flying visit to one of his several uranium properties and came back with some interesting insight.
Meanwhile back at the ranch...
If you have an uneasy feeling about the future, you sense big problems ahead or you simply need a good read for someone close who shares your sense of unease, you owe it to yourself to consider a new book by James Howard Kuntsler called The Long Emergency. When you read it, make sure you have your seat belt fastened, the book will scare the hell out of you. The subtitle will give you a good clue as to where Kuntsler is coming from, "Surviving the End of the Oil Age, Climate Change, and Other Converging Catastrophes of the Twenty-first Century."
He goes on at some length covering Peak Oil, the rise and fall of the American Empire, famine, disease and rising Chinese and Indian demand for resources. Basically he lays out a dim view of the next 20 years. The book is both depressing and stimulating. If, like most Americans, you would prefer to watch your favorite sitcom or sports team on the telly, you can safely ignore the book, you will get what you have coming and get it good and hard. If, however, you fear what might be around the corner, it's a good read and will stimulate you to consider changes in your lifestyle before it's too late.
Many readers know that Barbara and I live in Miami. Well, we were hit by Katrina before it hit New Orleans but it didn't do much. We lost power for a few days but that was about it. Wilma was another story. Wilma tore up power lines from Key West to Stuart and lay a path of destruction 100 miles wide across the entire state of Florida. Right after the storm 98% of those in Broward and Dade county lost all power and phones. A lot of people lost water or had to boil it, continuing on until now, three weeks after the storm hit.
We were prepared. I have a generator, we had gas, batteries, flashlights, water filters, water, food and about everything else you would need to survive for a month or more. And we still suffered. The power came on after a few days, and then went off again. For two weeks, internet access or the phone were issues. But we were in far better shape than our neighbors. We live in a condo with 170 units.
I'm glad I'm old and gray. Our children face an uncertain world with a variety of problems we never faced. But you can go back to your couch and ignore the future or you can prepare yourself and your family. Read The Long Emergency, it will scare you into taking necessary action.
There is no energy shortage ahead. While Peak Oil is real, it isn't about a lack of energy, it's about a lack of cheap energy. And while the Western World would like to believe our cornucopia of wealth comes from our brilliance, it's really more of a function of cheap energy. And the cheap stuff is pretty much all gone. Like the Spanish who defaulted on their debt five times between 1492 and 1810, the vast wealth created by a seemingly endless supply of cheap energy has bankrupted us in every way.
There are very real sources of energy, albeit at a higher cost, which provide alternatives. Coal is one, we have a 500 year supply and coal to liquid or coal to gas processes have been around since WW II. The other very real alternative is nuclear.
Cash Minerals (you gotta just love that name) covers both bases. They have a 51 million ton 43-101 coal resource; Division Mountain in the Yukon. Cash completed a scoping study last March and is in the midst of a Bankable Feasibility Study due for release later this winter. The Scoping Study showed a robust 51.5 million tons of coal and would require a Capital Cost of $31.9 million for a $104 million dollar per year mine and mill. The Scoping Study indicated a great IRR of 59.6%. But on our quick visit to the Yukon, all we had time to do was fly over the Division Mountain Coal property.
Basil Botha, Doug Eaton and I flew up to Whitehorse from Vancouver. We picked up a charter Navajo at Whitehorse and continued on to Keno Hill. Winter was just setting in and on a cold crisp late Fall night, we could see traces of the Aurora Borealis forming high overhead.
Early the next morning we set out in our helicopter after we grabbed our scintillation counters. Cash is running a winter drill program as long as they can, until the creeks totally freeze over and they can't get running water. The men were in the process of setting up a camp and a second chopper was in the process of taking in diesel fuel to the camp as we explored.
Before I continue, I want to say something about Doug Eaton. I had heard the name many times before but had never met the man. He is called Mr Yukon by his peers for his depth of knowledge about mineral deposits in the Yukon, of all sorts. His company had vended in many of the projects to Cash Minerals and was acting as operator on much of the exploration and drilling. It was a real pleasure to meet him and while we were only together a short two days, I can verify, he does know the Yukon.
In any case the three of us set out in the chopper to see what we could see of the drill project from the air. The area had already had a serious hit of snow and there was no way of seeing anything on the ground. We flew over to the Lumina Property of Cash. It's a 150 meter wide and 1200 meter long float train of highly radioactive boulders that overlie an alpine glacier. Samples tested between 1.36% and 7.67% so any hard rock find would be especially attractive.
We flew close to the outcrop which actually showed a narrow yellow vein of uranium. The scintillation counter works better as you get closer to the source and as we flew by, I pointed mine out the window and on the highest setting, it pegged the counter. The vein is a little hard to see in the picture due to the lack of contrast but I know their drill results will show high grade uranium (blowup of vein here click).
Between the weather and our schedule back to Vancouver we didn't have time for more than just a casual flyby of the Lumina property. A back of the envelope calculation shows the potential of that particular deposit of about 5 million tons of uranium but drilling will show grade and volume much better.
Cash has three other uranium properties and an aggressive drill program scheduled for next year. I anticipate an easy decision on the coal property, people are beginning to understand Peak Oil is here. While it's obvious that the capital costs will certainly increase, so will the revenue and the IRR. The coal property alone gives Cash Minerals a Net Present Value of about $2 a share.
Basil Botha is one nice guy. He's a true gentleman, a transplanted Rhodesian who smokes a cigarette or two a day when traveling and that puts him very high in Barbara's book, and she's just crazy about what she calls the 'Seth Efrecen Eccent,' and what's good for her is fine by me.
I think the coal property will go into production and since only about 5% of Division Mt has been drilled, I think the resource will increase. If you are looking for a double play with interests in both coal and uranium, Cash is an easy bet.
By the time you read this I will be in Bolivia, back next Mon Nov 14th and then off the next day to freeze (again) for 3 days in Thunder Bay, Ontario. I'll be back on Sat Nov 19th.
Cash Minerals, Ltd
written November 9, 2005
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