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Cash Flow is KingBob Moriarty Cash flow is king. If you don’t believe that you may want to look at a two-year chart of Rio Alto. (RIO-T) I wrote about them just over two years ago. The stock was $.44 and they were going to soon be going into production. Recently they announced quarterly production of 55,327 ounces of gold. The market likes production and cash flow. The shares are $4.37 today after hitting a recent record high of $4.76. They aren’t as cheap as they were when I wrote about them but with over 200,000 ounces of gold a year, they are still probably pretty cheap. I went to see a project in Mexico a week ago. It’s a production story similar to that of Rio Alto. Excalibur Resources (XBR-C) is putting up $2 million to fund a 250 TPD gold mill in the Pinos District of Zacetecas. The district was discovered by the Spanish in 1546 and mined up until the revolution in 1810. At its peak, the district was considered one of the three richest gold areas in Mexico. What I saw and the rocks I picked up confirmed that. A 76-year-old Phd Geologist named Don McLeroy heads Excalibur’s partner up. He has spent 30 years putting the district into one company and now he wants to get it into production. His company, Minera Apolo is the operator and 51% owner, Excalibur is funding the 1st $2 million for a mill and after that, the partners share according to their ownership. The mill is 90% complete. Don and Excalibur President Tim Gallagher watched with me as they put power to the crushers and ball mill. It may well take another 2-3 months to work out all the bugs in the system but Excalibur/Minera Apolo will be producing gold soon. Historic records show bonanza grade material, it’s all oxide and free milling gold perfectly suitable for a small mill. At this point, grade is unknown but we hand crushed a sample and it would have been multi-ounce material. If they can do 250 tons per day at 4 grams a ton, that works out to about 10,000 ounces. The program is unorthodox but it’s the way people mined and milled for centuries. The ore is there, it’s near surface, there are lots of shafts to work so capacity isn’t a problem. I would estimate their costs to be in the $100-$300 per ounce range, it will depend on grade. Right now Excalibur is a crapshoot until the mill is perfected and they learn what average grade material they can produce. But Excalibur has a tiny overhead and no costs associated with supervision. In six months, Excalibur should be milking a cash cow in the same way Rio Alto is doing. As of today, no one knows just how big or rich that cash cow will be. I bought some shares as soon as I saw the mill and I participated in a PP just being completed. I am biased. The company is an advertiser and you alone are responsible for your own due diligence. Excalibur Resources
### Bob Moriarty 321gold Ltd |
