67 WALL STREET, New York - April 17, 2012 - The Wall Street Transcript has just published its Building Materials, Construction and Housing Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Construction Equipment Replacement Trends - North American Electrical Transmission - Improving Domestic Building Metrics - Stock Rally in Homebuilding and Home Improvement
Companies include: D.R. Horton (DHI); AAON (AAON); Armstrong World Industries, Inc. (AWI); Axion International, Inc. (AXIH); and many more.
In the following brief excerpt from the METALS AND MINING Special Report, expert analysts discuss the outlook for the sector and for investors.
John Burges is President, Chief Executive Officer and Director at Northern Freegold Resources Ltd. He joined Northern Freegold from Knight Capital Group, a New Jersey-based global financial services firm. As a Managing Director for Knight, Mr. Burges was responsible for resources capital markets activities focused on North American small-cap public companies. Before working with Knight, he was employed as a Director for Deutsche Bank and Merrill Lynch, where he oversaw investment banking practices, advising and financing corporations in the resource and power sectors between the two companies for a total of 13 years. He was subsequently appointed as Chairman and an Officer of Newmarket Power, a private equity-backed independent power generation company. Mr. Burges also has worked with a private equity investment group in the Middle East, which invested in the energy and resource sectors. With more than 20 years involvement in the resources and capital markets sectors, he brings substantial corporate finance, investment and management experience. Mr. Burges graduated with an Executive MBA from Columbia Business School and a B.A. (Hons) from Bristol University, England.
TWST: Would you begin with a brief overview of the history and evolution of Northern Freegold?
Mr. Burges: Northern Freegold (NFR.V) is a company listed on the Toronto Venture Exchange, NFR, and on the OTCQX in the U.S., NFRGF. We're a junior gold mining exploration company. We had our IPO in mid-2007. The company was founded by Bill Harris, a Canadian Prospector of the Year, who was raised in the Yukon. He walked the hills of the Yukon, tracking the placer mining activity in streams around our Freegold project until he was able, in 2001, to start to amalgamate a land package that now is about 200 square km, or three times the size of Manhattan. The property has gold copper, silver and other valuable metals. We now have 43-101-compliant resources on two adjacent deposits with 2.8 million ounces of gold, so we are now one of the largest gold exploration companies in the Yukon, and yet with a $27 million market capitalization trade at $9 a resource ounce, which is at a significant discount to comparable companies. We are growing rapidly - in mid-January, we announced a new deposit called Revenue that doubled our tonnage and increased our gold ounces by 40%. The Yukon is synonymous with the Klondike, the world's most famous gold rush, which started in 1896. So it's an area where historically lots of gold has been found. The present Yukon Gold Rush started a few years ago as the government reformed their mining rules making the Yukon now a top 10 jurisdiction to explore and mine. The low political risk is making it attractive for major producers, who have recently made acquisitions there.
TWST: Northern Freegold's operations include the Freegold Porphyry project in the Yukon, and then there's also the Burro Creek property in Arizona. How do you assess the potential of these two projects?
Mr. Burges: Our Freegold project in the Yukon appears to be a district-scale, gold-dominant porphyry system, which is rare. Porphyries are attractive for majors as they typically are bulk tonnage open pittable with low cash costs of operations as they can be easier to mine than underground projects. We have conducted a geophysical survey using a deep penetrating induced polarization Titan 24 system. The results show we have an 8-kilometer geophysical anomaly toward the center of our Freegold property. We also have undertaken geochemical soil samples and have 5-plus kilometer gold and copper anomalies coincidental to this geophysical anomaly. We have already drilled two gold-dominant deposits from this at Nucleus and Revenue, and the data suggests there remains lots of blue sky potential as we have only explored about 5% of the project. In 2011, we drilled 27 new holes at Revenue and 12,375 meters, and added 1.1 million gold ounces, as well as copper, silver and molybdenum, for 3.7 million gold equivalent ounces. Our exploration costs were $4 million, so effectively, we had finding costs of almost $1 an ounce, which is very good. That really bodes well for the future exploration potential at Freegold. In Arizona, we have a smaller property called Burro Creek, northwest of Phoenix. It's a polymetallic vein system. It has about 5 million tons of mineralization with a gold and silver resource. It's on private land, and there's been a feasibility done on it and it was previously permitted for production. Right now, we have it for sale as the cost of putting this into production will be a distraction from our much larger Freegold project.
TWST: Who are Northern Freegold's neighbors in the Yukon? Are there similar-sized firms in the area?
Mr. Burges: There is a mix of much larger gold/copper producers as well as junior exploration companies. The Freegold project is part of the Tintina Fault running through the Yukon on into Alaska. Our project is on the Big Creek fault. There is the Minto copper mine in production 30 kilometers north of us owned by the midtier copper producer, Capstone. The largest development project in our neighborhood is the Casino copper porphyry project owned by Western Copper 90 kilometers northwest from us. It's almost a 1 billion ton reserve, which is big, but it is lowish-grade copper and gold. In between there are properties owned by Teck, one of the world's largest copper producers. You also saw another producer, Kinross, acquire Underworld. Kaminak, Ethos and Golden Predator also have properties near Northern Freegold.A key advantage Northern Freegold has is the infrastructure surrounding our project. The Yukon is relatively remote in the north of Canada, so roads can be few and far between. We are fortunate in that we lie off the main North-South Klondike Highway and have a government-maintained road run right through to the end of our property. Consequently, we can truck in all our rigs and equipment, which is a huge cost saving over helicoptering them in. We are also close to the high-voltage transmission line serving the Minto mine - so having a nearby source of commercial power will also be a massive cost advantage once this project becomes an operating mine.
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