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XMFSinchiruna (27.97)

CAPS Exclusive: Online Forum With Alexandria Minerals CEO Dr. Eric Owens

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July 22, 2011 – Comments (40)

Hi all,

Many of you will recall that Dr. Owens -- co-founder and CEO of Alexandria Minerals (ALXDF on the pink sheets; AZX on the Toronto Venture Exchange) -- was kind enough to join us right here on the CAPS blogs last April to engage in direct dialogue with Motley Fool members and answer questions about his company. Anyone who may have missed that live forum may wish to review the post at the above link, and anyone not familiar with the company may wish to carefully review the summary presentation I offered here. I believe the stock traded for $0.21 at the time, while presently, with gold prices higher still, and following additional positive developments like these encouraging drill results last month, the shares are now more than 20% cheaper to acquire. Having acquired additional shares myself during the dip, I wanted to remind Fools that I consider Alexandria Minerals poised for meaningful appreciation as the market comes to account for the high prospectivity of Akasaba in addition to the properties presently hosting the company's estimated global resource of nearly 900,000 ounces of gold at the Orenada and Sleepy projects.

Alongside my summary presentation linked above, this corporate presentation will help get you up to speed.

Dr. Owens has graciously agreed to participate in a follow-up forum with CAPS members today, and he will be available for the next couple of hours. If you have more questions for him than he is able to answer within his available time, I will coordinate with him to address them in turn.

Please join me in welcoming Dr. Owens back to our Foolish fold, and please be sure to take full advantage of this uncommon opportunity to engage in direct dialogue with the CEO of a prospective investment. My regular readers know I have selected Alexandria Minerals as my largest personal position among exploration resource companies, and I have viewed the recent retracement of the shares as a welcome opportunity to increase that stake. But everything I have to say about this company and the opportunity I believe it represents, I have said before. Today is about giving you all an opportunity to explore the company on your own terms, ask your questions as they occur to you, and make your own investment decisions accordingly. I hope you enjoy the process, and appreciate the opportunity.

Welcome back, Dr. Owens! And thank you in advance for joining us here.

40 Comments – Post Your Own

#1) On July 22, 2011 at 10:08 AM, XMFSinchiruna (27.97) wrote:

This is the press release I meant to link to above with Alexandria's drilling results released in June:

http://www.azx.ca/news/2011/news20110615.html

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#2) On July 22, 2011 at 10:11 AM, XMFSinchiruna (27.97) wrote:

I'll get things rolling if nobody minds. :)

Eric, could you start us out with a quick summary of exploration activity at Akasaba, and perhaps a general timeline for anticipated developments ahead for the property?

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#3) On July 22, 2011 at 10:19 AM, XMFSinchiruna (27.97) wrote:

Hints for Fools for topics to be focusing on:

Have a look at my discussion of "real estate" for resource companies here

http://www.fool.com/investing/general/2011/07/11/7-secrets-to-profitable-gold-investing-part-1.aspx

To understand Alexandria Minerals, it is necessary to understand the Cadillac Break from a geological perspective. Take advantage of your access to a professional mineral geologist, and gain a fuller grasp of Cadillac Break and the broader significance of Val d'Or trend, and on a broader level still ... the Abitibi greenstone belt.

I have made this area the primary geographical focus of my gold investment portfolio, and I encourage Fools to consider why I have done so.

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#4) On July 22, 2011 at 10:27 AM, EvilEmpire (29.25) wrote:

Thank you for joining us today. As a prospective shareholder the one thing that worries me is the current low cash on hand and share dilution in the past. Over the last year and a half the fully diluted share count has risen from 99.8 million shares to 171 million shares. At a cash burn rate of 750k/month the company will be out of cash within the next 5-6 months. 
How do you plan to raise cash to continue operations in the next few months and at what point in the future will the company be able to operate on its own merits without the need to raise cash via share dilution?

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#5) On July 22, 2011 at 10:31 AM, TMFRosetint (99.27) wrote:

I want to thank Eric Owens for sharing his time with us today, before anything.

Eric, I notice in your most recent presentation that you Alexandria has access to $4.5 million in cash and short term assets. Since you have four drill rigs running currently and they cost $250k per month each to run, that would indicate that you have about four-and-a-half months worth of cash and short term assets.

If you begin running low on cash, will you consider dilution to continue operations? You mentioned in the previous blog that you're currently looking for a JV partner for Orenada that could bring in some cash. Will there be any updates about your progress on that soon?

Thanks,

Scott 

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#6) On July 22, 2011 at 10:32 AM, TMFRosetint (99.27) wrote:

Looks like EvilEmpire beat me to the first part of my question. Sorry for that - he posted his while I was writing mine.

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#7) On July 22, 2011 at 10:33 AM, alex2011 (< 20) wrote:

Hi All, glad to be back. I should be able to be here for the next 2 or 2.5 hours. In repsonse to #2, our exploration activity at Akasaba is focused on one goal, to build the biggest gold deposit we can in as timely a manner as possible. Recent drilling has been aimed toward two outcomes - 1) in-fill drilling at shallow depths to enable us to put together enough data points for a formal resource estimate of shallow, potentially open-pittable gold resources, and 2) deeper level step-out drilling, designed to enlarge the gold deposit at depth (these would be underground-type resources).

We have also recently begun step-out drilling at shallow depths, testing further to the west along strike with the mine area, in oreder to better determine whether the shallow gold zone can get bigger. To refresh memories, we have, since we started drilling in earnest 18 months ago, expanded the potentially economic gold mineralization from a zone that was 200 m long by 200 m deep, to 1,000 m long by 500 m deep, and still growing, with much room to grow further.

Our immediate goals, apart from growing this deposit, is to aim for our first 43-101 compliant resource estimate (the study is starting now) by mid Fall, 2011. Beyond that, we aim to move this deposit to a point where it become economically desirable to produce gold. 

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#8) On July 22, 2011 at 10:58 AM, XMFSinchiruna (27.97) wrote:

Any pause like this one might be a great opportunity to submit additional questions!  :)

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#9) On July 22, 2011 at 11:06 AM, Frankydontfailme (27.20) wrote:

Would you consider equitable buy-out offers or are you in this for the long hall?

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#10) On July 22, 2011 at 11:10 AM, alex2011 (< 20) wrote:

Answer to #4

Obviously, dilution is an issue of concern for junior resource companies, something I have to consider carefully. I have to balance the value needs of the shareholders (of which I am one) with the operational needs of the Company (which is also of shareholder interest).

I will start by saying that we are conducting our activities in a manner to 1) allow us to hopefully outlast this recent market turmoil that has buggered us juniors, and 2) create further value for the Company and its shareholders. These value-added activities, of course, focus on drillling (because that's what we do), but also include business combinations: we are currently in negotiations, for example, to move our most advanced property, Orenada, into the hands of a miner (we will maintain an interest) who we believe can start producing gold from this deposit. We beleive that by outsourcing gold milling to one of the four nearby mills in the region, gold can be produced in a relatively short time frame; namely along a 2 year time frame rather than a 5-6 time frame if we were to construct a mill on site. We believe such a transaction will inspire investment interest as well as lead to income down the road for Alexandria.

We have recently reduced our # of drill rigs back to two from 3, therefore our exploration expenditures drop to between $400-$500K per month, to buy us a little time while markets settle down. We have about $4.5M available to us over the coming months - between cash, salable Aurizon shares and Quebec Mining refunds. This actually gives us a number of months to accomplish the tasks we're aiming to do; hopefully the markets will not only settle down but recognize what a value we are.

As added ammunition for the argument that I expect the share price to increase, we currently have global combined resources at Orenada and Sleepy of 900,000 ounces (not all currently minable -- this is a global resource of M&I and Inferred ounces) which, if discounted by 90% of the gold price is worth something like $135,000,000. Our market value is on the order of $20,000,000. And we are not inlcuding

It is pretty clear from the reception of our three most recent drilling press releases (last month) that the markets weren't terribly interested in good drill results, as these were some of the best results we have had in a long time, and included a new discovery at Sleepy near the growing Sleepy deposit, yet our share price remained flat (and has declined since). However, by building the deposits as we are, through steady drilling, we not only continue to build our assets at Akasaba and Sleepy, but we also daily increase our chances of hitting "the mother lode" that we believe is there.

The goal then with these acitvities is to get our share price up to a level such that when we do have to raise money, we can do it with less dilution.

 

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#11) On July 22, 2011 at 11:13 AM, TMFRosetint (99.27) wrote:

Eric: I know Alexandria is excited about Akasaba, but just how excited are you? According to your website, there are numerous multi-million ounce deposits in the region, including Agnico Eagle's La Ronde and Century Mines' Lamaque.

Is Akasaba geologically similar to any of these mines? Do you think it has the potential to become a multi-million ounce deposit itself? 

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#12) On July 22, 2011 at 11:16 AM, alex2011 (< 20) wrote:

Answer to #5

I partially answered this question in previous answer. However, please note that one of the drill rigs running on our properties was being operated by, and paid for by, Niogold Mining, who is earning a 50% interest in our Siscoe East Property, located on the NW side of the city of Val d'Or (a separate property from our Cadillac Break group of properties.

As mentioned in the previous answer, we have also cut back to 2 rigs from 3, again lowering our immediate costs, and extending the time frame in which to let the markets recognize what Alexandria has.

I anticipate having an update on Orenada by summer's end. 

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#13) On July 22, 2011 at 11:16 AM, XMFSinchiruna (27.97) wrote:

Wow ... that's some great stuff in #10!  :)

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#14) On July 22, 2011 at 11:24 AM, alex2011 (< 20) wrote:

Answer to #9, Frankydontfailme:

We are interested in an equitable buyout - but this much is clear, it has to be fairly valued, and as noted above I believe we are considerably  undervalued. That was one of the reasons I brought Agnico in a year and a half ago: as protection against unwanted suitors with an undervalued offer. Risk management, if you will.

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#15) On July 22, 2011 at 11:30 AM, alex2011 (< 20) wrote:

Add-on to #10

I had a phone call and got sidetracked and forgot to end a sentence: the last sentence in paragraph four, talking about our resources I meant to add that the global resources were all calculated in 2009; therefore no work since then is included in these numbers. This means all of Akasaba and this year's drilling at Sleepy are not included in these numbers. 

 

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#16) On July 22, 2011 at 11:33 AM, Sedridor (< 20) wrote:

Do you forsee possible additional projects on your Val d'Or land, or just the existing three?

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#17) On July 22, 2011 at 11:36 AM, cizastro (< 20) wrote:

I apologize if these are dumb questions, but I am still trying to learn about the business.  In #9 you state that you're currently in negotiations to move your most advanced property to a miner to expedite the process while you maintain an interest.  By  "most advanced" are you inferring to the most difficult to generate positive results on your own given the current state of the markets and cash situation?  How do these arrangements typically work? 

Also, this is more of just a fun question but let's say your properties were children.  Do you, personally, have a favorite property (child) so far based on the drilling results or do you love them all equally?

Thanks so much for taking time out of your day to do this.  I love having the opportunity to learn from the experts who do this for a living.

 

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#18) On July 22, 2011 at 11:38 AM, XMFSinchiruna (27.97) wrote:

Eric, as long as I have you here, a reader of mine e-mailed me recently asking about inside ownership at Alexandria. Would you happen to know offhand your % stake in the company, and/or that of other senior management?

On a related note, I had been aware of the Agnico stake (I think that's what alerted me to the your company in the first place), but I was unaware of a 7% stake by TCK and IAG until recently. Is that a new development? Could you offer context for that holding ... is it through a jv?

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#19) On July 22, 2011 at 11:53 AM, alex2011 (< 20) wrote:

Answer to #11, HallShadow:

Yes we are very excited about Akasaba. The geological signatures we see at Akasaba are similar to Agnico's La Ronde Mine, which as you know is a 3 km deep, 10 million ounce gold deposit (about half of that mined to-date). We have mostly drilled down to 300 m deep, with a few holes (not many, just 2 or 3) down to below 450-500 m. We therefore have much to do.

The similarities are these: 1) gold occurs in sulfide-rich volcanic layers 2) there are multiple gold-bearing veins (called "lenses" by the oldtimers because of the high sulfide content), not only within our principal target, the main Mine Horizon, but also elsewhere on the property, 3) anomalous to ore-grade copper and zinc sulfides, with total sulfide content routinely 5-15%, but often up to 30% or more, 4) spatial relationship of the mineralization to granitic rocks and their volcanic equivalent, dacite/rhyolite.

All of these characteristics are found at La Ronde, and if one recalls, La Ronde was a zinc discovery before it became a gold deposit and mine. Agnico mines zinc and copper there, from orebodies that are separate from the gold orebodies. At Akasaba, our levels of base metals are genreally not high (copper generally in the range of 0.2-0.4%, locally up to 1-2%; although we have hit up to 6.35% zinc in a drill hole).

Such deposits are known as gold-rich volcanogenic massive sulfide deposits (VMS). VMS deposits form an important class of deposits for copper, lead, zinc and silver worldwide, and some are rich in gold. Another example of a gold rich one include the Horne Mine in Noranda, Quebec,  a copper mine which produced about 10 million ounces of gold as byproduct.

The characteristics listed above are also, however, consistent with a skarn-model, another important type of metal deposit worldwide, some of which can be large as well (Fortitude Nevada is one). The jury is still out however, but we learn more with each new drill hole. 

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#20) On July 22, 2011 at 12:01 PM, alex2011 (< 20) wrote:

Answer to #16, Sedridor

The simple answer is yes there is more potential than our current focus on Sleepy, Akasaba and Orenada. If you overlay the 35 km long outline of our property package anyhere else along the Cadillac Break (on a map that shows all the past and present mines, like the one on our website), I think you'll see that potential. We have a 35 km long by 4-5 km wide, underexplored property on our Cadillac Break property group, with many untested or under-tested targets. Our current and near-term focus has to be the projects that can see nearest term production/money-making, but in a dream world with enough money, I could see several drill rigs turning on our properties to speed up discovery and delineation. 

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#21) On July 22, 2011 at 12:11 PM, alex2011 (< 20) wrote:

Answer to #17, Cizastro

We have all heard this from at least some of our elders: no question is dumb. It depends, I suppose on who's asking....

Orenada is our most advanced project because we have conducted a certain amount of work on it that the others still lack, such as metallurgical testing (how to get the gold out of the rock), and economic/engineering studies. Now, the economic studies, although favorable and conducted by an independent engineering firm, are not 43-101 compliant -- we are in the process of having an independent firm make them 43-101 compliant so we can talk to the general public about the results. But this is why this is our most advanced project. It also has the most gold (officially, that is 43-101 comliant), although ahs much room to grow.

Akasaba would be my favorite child, because of its perceived potential, but as we learn more about Sleepy with each new drill hole, we get more surprises from this earlier stage project.

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#22) On July 22, 2011 at 12:15 PM, alex2011 (< 20) wrote:

Answer to #18

Collectively, insiders own about 10-13%, including my family members, board members, etc. I don't have exact nubers off the top of my head. Me and my immediate family, wife, duaghter, sons, etc., hold about 4 million shares. 

The Teck and Iamgold holdings are from property acquisitions - specifically we acquired the Cadillac Break group of properties from these two in two separate deals. 

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#23) On July 22, 2011 at 12:28 PM, EvilEmpire (29.25) wrote:

Do you have a timeline for delivering a 43-101 for Akasaba?

 

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#24) On July 22, 2011 at 12:47 PM, alex2011 (< 20) wrote:

Answer to #23 EvilEmpire

We are looking at late October/November for public release.

This puts us in a bit of a quandary, however, because we're getting good enough drill results that I do not want to stop drilling there. However, in order to complete the 43-101 study we mostly have to stop drilling for awhile in the area that is included in the study, otherwise the independent geologist has to keep adding new holes to his study, thereby leading to a never ending study and payment. We are looking at other areas for drilling while this is underway. 

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#25) On July 22, 2011 at 12:51 PM, alex2011 (< 20) wrote:

All

I have to leave now, but can check later if there are any other comments.

Thank you

Eric 

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#26) On July 22, 2011 at 12:53 PM, XMFSinchiruna (27.97) wrote:

Great stuff! Thanks Eric. That's interesting, I must have overlooked the TCK and IAG stakes in my initial DD... just shows you never stop learning about a stock, even the stocks we think we may know inside and out. The reason I keep increasing my stake in Alexandria, specifically, is that everything I uncover in sequence is accretive to the investment thesis!  :)

I think a family stake on that order certainly qualified as an unquestionably vested interest ... bravo!

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#27) On July 22, 2011 at 12:57 PM, XMFSinchiruna (27.97) wrote:

Eric ... thank you so much!! This has been absolutely terrific!

Fools ... please feel free to continue posting comments, questions, etc. There is a chance Eric may be able toi swing by at a later time to address additional questions, and even if not I can compile them and follow-up personally myself to get replies.

I personally found this exchange extremely informative thus far, and yet again I emerge with even greater confidence in my top pick among gold explorers.

How about you??

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#28) On July 22, 2011 at 1:08 PM, Frankydontfailme (27.20) wrote:

I've had my eye on this one thanks to Sinch. Decided to pick up some shares today. Even though I think a minor pull back in gold is likely if the US comes to a BS debt deal, the stock price isn't yet tracing gold prices... suppose the market is more interested in status reports (even then not very rational).

 How do taxes work for a company like this (physical mines in Canada?) Does SLW and Sandstorm have tax breaks because their properties are international?

 

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#29) On July 22, 2011 at 1:24 PM, XMFSinchiruna (27.97) wrote:

franky,

I don't have time to get into the case of SLW's taxes, but let me just state Quebec has the most favorable tax regime for resource explorers in the world.

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#30) On July 22, 2011 at 2:45 PM, SN3165 (< 20) wrote:

Sinch, great post. Much appreciated.

Where would you rank the following micro-caps on yourcountdown?  Alexandria, Caza, Tyhee.

 

 

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#31) On July 22, 2011 at 3:34 PM, XMFSinchiruna (27.97) wrote:

Alexandria is definitely tops by a wide margin in my book. Caza is early-stage, so there are limits to how much I am willing to wager until we get confirmation of an initial positive discovery. Tyhee is my second-largest exploration holding, but I sometimes wonder what it will take to get the stock moving. In Alexandria's case, I just think the market hasn't become sufficiently aware of the company, its properties, and the prospectivity thereof.

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#32) On July 22, 2011 at 3:44 PM, SN3165 (< 20) wrote:

Cool, thanks! I'm surprised it's by a wide-margin, given the positive notes on the Tyhee write-up. Can't wait to see what other stocks are on the list. Out of curiousity, are Atna Resources and Aurcana? (not sure if they qualify).

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#33) On July 22, 2011 at 3:48 PM, Gonzhouse (66.64) wrote:

This is just Way Cool stuff;  there isn't another way to buy the access to a CEO and ask questions like this.  On behalf of The Followers of your blog, Thank You.

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#34) On July 22, 2011 at 4:01 PM, Jbay76 (< 20) wrote:

I concur, this has been spot on and helps me deal with the friggin heat. And my portfolio as well. :)

Thanks Eric and Sinch!

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#35) On July 22, 2011 at 8:33 PM, rfaramir (29.57) wrote:

I'll second Gonzhouse. Just because I can't think of a good question to ask, doesn't mean I don't really appreciate you doing this.

Thanks to both Chris and Eric! 

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#36) On July 22, 2011 at 8:56 PM, 100ozRound (29.70) wrote:

And here I am showing up super late as usual! Thanks again Chris and Eric - I am way behind and have some major catching up to do but information like this makes it that much easier.

Thanks again!

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#37) On July 22, 2011 at 11:22 PM, tdonb (44.15) wrote:

Thanks again for all of the great work and great information. I'm increasing my stake in Alexandria on monday.

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#38) On July 23, 2011 at 6:49 PM, silvermind (< 20) wrote:

Thanks Sinch!

Added 33% more AZX today.  This is way cool due diligence. 

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#39) On July 23, 2011 at 6:57 PM, silvermind (< 20) wrote:

Eric,

Question on Post #12  ---  You said you had three drill rigs but cut it down to 2 currently.  Is the drill rig that you dropped the drill rig that was paid for by Niogold?  In other words you had 2 rigs and Niogold had 1?  Or did you had 3 rigs and Niogold 1 and then Niogold finished drilling for now and you dropped one of your rigs therefore AZX actually had 4 rigs on their properties for the last few months?  Thanks for the time and effort Eric!  Added another 33% to my AZX position yesterday.    

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#40) On July 23, 2011 at 7:10 PM, silvermind (< 20) wrote:

AZX had an increased volume of shares traded yesterday.  

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