Many are the companies gone quiet in the economic winter that is the first quarter of 2009. Barrack Obama’s inauguration yesterday had the hope-hype dial set at maximum, while sober economists measured the impact of the anticipated Obama Spend-o-rama about to hit. The dilution of value to the U.D. Dollar and associated Treasury Bills will be truly spectacular. Imagine trying to get from New York to San Francisco on a gallon of gas by diluting it with 10 parts water. Futile and hopeless.
But for gold, the future is brightening faster than you can say “Krugerrand”.
Even mainstream economists are bashfully extolling the wisdom of owning gold for the next few years.
And although there will be little else more reliable than gold to hold its value through the end of this decade, emerging gold producers will be where investors can leverage the sudden popularity of gold as an asset class into a premium performing investment.
One of our top picks for 2009 is Hawthorne Gold Corp. (TSX Venture: HGC), and the reasons for that are legion.
First and foremost is the management team.
Headed by veterans of successful mining corporations Bema Gold and Eldorado Mining, Hawthorne’s management team has participated in the acquisition of assets they discovered and put into production by major mining companies. Michael Beley and Richard Barclay are probably a couple of the most well respected and connected top level mining managers in the world today.
This model is a replica of that used to develop Eldorado Gold Corp from 1994 to 1997, which saw the start of production in 94 of 20,000 ounces with resources of 1.1 million ounces to 1997 when that company produced 189,000 ounces were produced and resources were developed to 6.7 million ounces of gold. CEO Richard Barclay and Chairman Michael Beley occupied senior positions during that period of Eldorado’s development.(Barclay was the founding CEO of that company).
Prior to the founding of Eldorado both Beley and Barclay were founding directors and senior managers of Bema Gold Corp, which was purchased by Kinross in February of 2007 for $3.1 billion. Clearly the management team has the track record to execute a repeat scenario of either outcome, which is a primary motivation for recommending Hawthorne Gold Corp.
"During 2008,Hawthorne advanced each of its gold projects in British Columbia, Canada, and is preparing for another busy year in 2009. The company successfully completed the acquisition of Cusac Gold Mines Ltd., completed two exploration drilling programs at two different gold camps, consolidated the Cassiar Gold Camp, and completed rehabilitation work of the Table Mountain mine site on surface and underground. Our experienced operational, geological, and technical teams are planning for the new season, and with the forthcoming completion of the comprehensive digital geological model of Table Mountain mine, we anticipate an exciting exploration and development season. Our team has taken significant steps to ensure that the company is prepared to become a junior gold producer in the latter part of 2009," commented Richard Barclay, President and CEO of Hawthorne.
Hawthorne’s project portfolio is another reason we think the company is likely to perform well in 2009.
Table Mountain – Cassiar, BC
The first project that will see production is this fully permitted operation in northern British Columbia, that has a 300 ton per day gravity flotation mill ready to start processing ore, likely before the end of 2009.
Historical gold production from the camp amounted to just under 500,000 ounces at grade of approximately 15 g/t Au. Gold mineralization at Table Mountain is primarily hosted in extensive quartz-carbonate-gold vein systems strongly associated with thrust faulting within altered greenstone and/or altered carbonatized ultramafic volcanic assemblages that are typical of some of Canada's largest gold camps, including Timmins, Kirkland Lake and Val d'Or.
"Hawthorne is excited to have identified priority areas of exploration interest throughout the Cassiar Gold Camp, which is planned to be fully evaluated in 2009. The company has now completed consolidation of the property through an increased land package and has gained extensive knowledge and valuable information of the property through the recent completion of the geophysical survey and geological reconnaissance program. Our experienced geological and technical teams are nearing completion of a comprehensive digital geological model and significant progress has been made to enhance Hawthorne's ability to fully evaluate the numerous opportunities presented in the historic Cassiar Gold Camp," said Richard Barclay.
During a site visit in September, 2008, we saw first hand the extensive infrastructure that appeared to be in perfect working order, and we were impressed with the incessant communication coming over the radio from what was obviously an army of geologists, geo-techs and mining equipment, mechanics and operators.
From the air, the shear size and scope of Table Mountain is awesome. The nearby Taurus deposit, that comprises bulk-tonnage, low-grade gold deposits located on strike and approximately five kilometres north of the Table Mountain mine.
Taurus Project – Cassiar, BC
Hawthorne advanced its strategy of consolidating the Cassiar Gold Camp by acquiring the remaining 70% interest of the Taurus deposit. The purchase was strategic to the company as it will save up to $6 million in future cash payments and deliver 100% control of the deposit. It will also increase Hawthorne's gold resource portfolio at a low acquisition cost (estimated at less than $2.75 per ounce).
The Taurus Deposit hosts an NI 43-101 compliant inferred gold resource estimate of 1.04 million ounces consisting of 32.4 million tonnes at a gold grade of 1.0 gram per tonne (please refer to Technical Report Prepared by Wardrop Engineering that is titled, "Report on the Taurus Deposit -- Liard Mining District, B.C." and dated June 2007, which is available at www.sedar.com). In addition, there is significant upside potential for future resource development. Company research indicates there may be strategic higher grade zones that can be stockpiled as supplemental mill feed as Table Mountain Mine prepares to go into production in the latter part of 2009.
Hawthorne completed a 58-hole diamond drill program totaling approximately 10,400 metres at the Frasergold property in central British Columbia, which is optioned from Eureka Resources Inc (TSX-V: EUK). Initial results, reported late November 2008, continue to indicate positive assay results both in low grade and high grade intervals. Of note, 54% of all holes encountered visible gold in the core and 83% of the holes within the northwest zone encountered visible gold .The remainder of the assays are expected to be released soon and will provide source data for a NI 43-101 technical report on a potential resource estimate in the area of 2008 drilling.
2009 could be the year of transformation for Hawthorne – especially if gold starts to reflect the dilution inherent in the U.S. dollar. Investors who leverage the rising price of gold by investing in emerging gold producers might be laughing all the way to the bank.
Visit Hawthorne Gold online at http://www.hawthornegold.com.