Prolific Gold Property Still Producing, But Are Large Nuggets Still To Be Found?

Includes: GG, LEXVF, LSG, MUX
by: Biz Bluetree

"The Best Place To Find Gold Is Next To A Gold Mine."

-Rob McEwen

Scores of documented fortunes have been made here, while untold fortunes - as well as lives - have been lost. Still new treasures await those driven pragmatists, while other ambitious dreamers may lose everything again, trying.

They've come for more than 100 years with picks and shovels in hand and hearts full of lust for wealth, where at times the ultimate prize nuzzled in the ground for millennia went unnoticed below their boot heals only to be discovered a year later by others with an ounce more determination.

Starting with the Porcupine Gold Rush of 1909 this place is known over time to have produced 70 million ounces of gold (70M oz Au), as well vast amounts of zinc, copper and silver.

Crystallized gold nugget from Porcupine's yesteryear.

The city of Timmins, Ontario, Canada, founded January 1, 1912, is this place, centrally located in the Abitibi Greenstone Belt - a nearly 400 mile stretch of mineral rich, largely volcanic earth - that cuts west to east across middle Ontario into Quebec, Canada.

For more than a century the historic Timmins Gold Camp (within the city limits of Timmins, ON) has played host to upwards of 100 mining companies as well countless thousands of individuals seeking their own fortunes.

Today Timmins remains a hot bed of mining activity.

And today under this big blue sky, Goldcorp Inc (NYSE:GG) is the main player with its Porcupine operation consisting of the "Hoyle Pond" and "Dome" underground gold mines, several large tonnage stockpiles and a central milling facility capable of processing 11,000 tons of ore per day according to the company's web site.

Continuing to make progress with a new deep shaft that will provide increased access to recently discovered zones in the underground of Hoyle Pond, Goldcorp sees longer life for that mine's significant production.

"There is no end in sight," says Timmins Mayor Tom Laughren.

"Since the Dome Gold Mine went into production in 1910, the mayor said, there have been several gold mines turning out gold bars every single year in Timmins. It is a historical record for North America that is added to daily."

The mayor of the city of 43,100 people notes the Dome mine, by virtue of its continued production after 100 years sets a new record for individual mine longevity.

A precious commodity.

"We have the gold, we have the people and we have the knowledge. The mayor says, Timmins welcomes mining."

Photo courtesy Lexam VG Gold

Goldcorp Inc, one of the world's largest gold mining companies, with more than 20 active projects on three continents, is not the only aggressive miner in town. Other Timmins' gold companies trading on the New York Stock Exchange include Lake Shore Gold (NYSEMKT:LSG), a small cap miner involved in active gold production and exploration, and the micro cap exploration company Lexam VG Gold (LEXFG.PK).

Lexam VG Gold's Rob McEwen is the well known head of McEwen Mining Inc (NYSE:MUX) (five active projects; US, Central and South America) but is perhaps better known as the founder and former CEO of Goldcorp. McEwen is famous, indeed, for his ability to find gold, build mines and bring them to production, owning substantial stakes in the companies he manages with a 27% share holding of Lexam VG stock.

According to the company's web site, the allure of Timmins can be found in the phrase "Locate the next mine in the shadow of a head frame." Thus, each of Lexam VG Gold's properties is adjacent to either a previous mining operation or an existing one. This strategy allows the company, using the latest technology, to focus and aggressively drill known structures with high potential to host economic gold mineralization.

Lexam VG Gold has $4.4 million in cash, cash equivalents and short-term investments as of March 31, 2013, with no bank debt and is fully funded for exploration through this year.

With exceptional properties (surrounded by Goldcorp's) and a strong treasury, (market cap just above $22 M) Lexam VG Gold's management is confident the company has an excellent opportunity to make the next significant gold discovery in Timmins.

According to Mayor Laughren, "...many old camps are seeing new life these days as modern search techniques and new equipment lead to new finds almost monthly. The plain truth is that experts believe there is as much or more gold in the ground yet as has been recovered to date."

More of what I discovered

Goldcorp's Porcupine operation boasts a proven 1.40 million ounces of gold (1.40 M oz Au) at a grade of 1.57 grams gold per ton (1.57 g Au/t) with a combined total of 4.35 million ounces of gold proven and probable. Goldcorp, as has already been reported, posses one of the strongest balance sheets in the industry, has an exceptional assets portfolio and a dedicated management team overall.

Lake Shore Gold's Timmins operations consist of three wholly owned, multi-million ounce gold complexes and two currently operating mines. The company is on track to reach full production at its Timmins West Mine by the end of 2013. At full production by 2014 annual output at Timmins West is expected to reach 140,000 to 160,000 ounces of gold that year (140K to 160K oz Au) at cash costs of or below US$700 per ounce. The company looks good with a large base of resources (3.5 million ounces measured and indicated) at its combined Timmins assets, supporting growth today and into the future.

Photo courtesy Lake Shore Gold (Timmins West Mine)

With a solid year in 2012 having met guidance and set a base for future growth with increased production capacity up 25%, Lake Shore Gold expects a breakout year in 2013 and to achieve free, positive cash flow by Q3 2013. Starting off this year with $61 million in cash and bullion (and a $35M stand-by line of credit), no external capital will be needed going forward into 2014. Lake Shore's management displays strong capital deployment discipline. I am long LSG.


In this writer's opinion, the only money that will grow in value with inflation is not made of paper. As I stated previously it is gold and silver.

At the rate in which central banks are creating unprecedented amounts of fiat currencies, and the obvious certainty of declining economies, the world is going to be more reliant upon gold. Timmins seems a good place to have a tow hold. As a metals bull, and with the recent crunching of spot prices, I find investing in general equities a bit nightmarish - like yelling at the pretty girl in a horror movie, "don't open that door! Run!"

I am not an analyst so much as I am a writer with a concerned interest in preserving my financials. I'll attempt to do so with physical holdings of silver and judicial investments in gold and other resource commodities.

In a very recent interview from, Rob McEwen had this to say, "The case for owning gold hasn't changed. Governments around the world are still printing lots of money, still borrowing a lot, and the reasons gold ran up before (in price) are still there and greater today…Interest rates are so low the only place you can go is in the market right now. It's (all) very illusionary, and we'll find people returning to gold… (So) now is a great time to be buying it. When gold reaches $5,000 an oz., I would expect to see silver at $200 an ounce."

Do your own due diligence before making any investments or purchases of hard assets on my advice. I've researched the companies I maintain positions in, and the vendors from whom I make metals purchases. For me the numbers and the fit are comfortable.

There are smarter investors and mining people than I, and brilliant economists with far more insight - so I don't propose to give hot investment advice to anyone - except to say, be careful going forward and invest in what feels most comfortable for you. I only write about what excites me and makes sense to me, and about what I might be doing to prepare for my future.

I'll leave you with a little food for thought in a recent quote by another man I respect as a realistic thinker, who has made more than a few dollars with mining stocks; Doug Casey:

"I like junior mining stocks, Casey says. It seems to me that everything is lining up right now for a perfect bear-market-bottom in these stocks."

Disclosure: I am long LSG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.