Friday, March 4, 2011

Jayden Resources Announces New Resource Estimate

Jayden Resources is one of those companies that captured the imagination last fall, but it subsequently fell back to a more reasonable level as other targets were chased. Its flagship project is the Silver Coin in British Columbia, 25 km north of Stewart. Silver Coin is a near-surface deposit, and it's the subject of an updated resource estimate released today. Since the deposit can be strip-mined, the cut-off grade is low.

According to the report, Silver Coin's measured and indicated part comprises 24.131 million tonnes of ore. Therein is contained an estimated 842,000 oz of gold, 4.456 million ounces of silver and 91.174 million tonnes of zinc. The measured and indicated part has close to 1 million ounces of gold equivalent, once the silver and zinc portions have been converted to gold value.

The inferred part of the resource, less delineated, contains 32.443 million tonnes of ore. It's estimated that this part of the ore contains 813,000 oz of gold, 6.691 million ounces of silver and 128 million pounds of zinc.

So, if the inferreds are completely promoted to measured or indicated, the Silver Coin deposit would have about 1.65 million ounces of gold and more than 11 million ounces of silver. That's a pretty big deposit, although only the measured and indicated are used for prudence's sake.

Jayden's next stage is to follow a recommended work plan to convert the inferred resources to the measured or indicated category, and to do the preparatory drilling for a prefeasibility study that would convert the above resources into reserves. They're already working on environmental studies to see how to build a mine with mininal enviromental impact, and they've already conducted gold recovery tests on the ore.

Their aiming at a pre-feasibility study says they're serious about trying to put a mine down on the property. At this stage in the process, there's no indication of what the net present value of the deposit is; nor are there any estimates of the initial capital costs, which may be daunting. At its current stock price, Jayden isn't cheap. There are more than 183 million shares outstanding, and the market cap at its current price of 26 cents per share is about $46.704 million. In order to be a good speculation, the net present value (NPV) must be several times that figure. As I already noted, the NPV hasn't been calculated yet. Also, the Silver Coin seems to be its only property.

Still, it's got a big deposit - one that the company intends to put financial teeth to.

Here's its one-year chart, from

The Moral Of The Story: Companies with good resource bases provide encouragment, but they're stuck in the middle of the process. A deposit with a good resource base isn't going to be a mine unless it can pay, and a resource estimate doesn't cover that part. Still, a company with a sizeable deposit is well worth a watch and a wait for the economic assessment. A prefeasibiliy study includes that assessment as part of the package, as this Wikipedia article outlines. Jayden is expecting to complete the Silver Coin prefeasibility in about a year. Given the market performances I've seen, it may be worth the wait for the prefeasibility study itself. Whatever the NPV, unless it's fantastic, the speculator's going to have a long wait anyway.

Disclosure: None.

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