U.S. Stock Market – Yesterday’s late day sell-off was the first of its kind in quite awhile. The market has not had a 10%+ correction since the March lows. We’ll need to watch the next couple of days to see if one has finally arrived. Whether it does or not the market continues to “melt-up” and my target of DJIA 10,500-11,000 remains intact.

U.S. Dollar – In 25 years+ in this business, I can’t recall any single market having such an overwhelming number of bears (95% bears in U.S. Dollar Futures) and not see a reversal of some magnitude. There are just so many legitimate bearish factors continuing to pile up against the U.S. Dollar. The only hope for some counter-trend rally to begin would come IMHO if the U.S. Dollar Index could close above 78. Until such time, the path of least resistance remains down.

Gold – Sorry for the bad language but if you’re a bear you have to be poo-pooing in your pants right about now. Despite widespread bearishness not only from the usual wrong suspects, many former bulls became weak kneed or outright bearish and continue to see the market move away from them. Gold has shown tremendous internal strength by actually self-correcting intra-day by selling off only to come roaring back. Today so far has been no exception. We’re in a secular bull market that has been “stealth-like” and despite being a few dollars from it’s all-time nominal high, gold remains hated and/or ignored by most. I LOVE IT!!!!

Oil - Oil indeed broke out above $76 and has $85+ written all over it. If it can get there with the DJIA also hitting my target, both could become shorts so stay tuned.

U.S. Interest Rates – Going much higher over time!

I’ve met with a few companies so far on my trip and here’s a summary of those meetings as of now:

Effective immediately, I’ve resigned my position with ATW Gold. I’ve said over and over again that management is the key for a junior’s ability to be the one in ten that makes it. While I have considerable personal respect for Graham Harris of ATW Gold, I believe his management team has not done the job. While I believe Graham will try hard to right the ship, the bottom line is they lost the confidence of shareholders, myself and the market in general. I think there are too many others who offer better opportunity at this time and one should recognize this and move on.

I had a terrific meeting with the management of Evolving Gold. Yesterday’s drill results IMHO strongly suggest that they have true home-run potential. I no longer think the question is DO they have something but HOW BIG will it end up? Management agreed with me that they have room for improvement on the corporate communication side of things but don’t let that be a knock against them. Remember, they’re the very same management team which has discovered and is developing what 99% of all other management teams can only dream about. I CONTINUE TO BELIEVE ANYTHING UNDER A BUCK IS AN AGGRESSIVE SPECULATIVE BUY.

Met with Hunter-Dickinson management and had great updates on Farallon, Taseko, Northern Dynasty and Continental Minerals. With great bias I must tell you in all my years associated with HD, I never found them as confident in one of their deals as they are with KMK.

I had an in-depth update on Sunridge Gold. They have all the makings of becoming the next Nevsun. Company is on European road show. I’m told to look forward to lots of news flow.

Must Watch! For all those who make fun of people like me and others that speak openly about the U.S. government’s “Working Group”, I strongly suggest you watch this video.

God Bless!

In this industry you see a lot of stories about mining projects and upside potential that may or may not deliver the goods. Well Farallon is a story that has not only delivered but they have delivered virtually on-time and on-budget. Farallon’s President & CEO Dick Whittington is starting to make a name for himself as one of the CEO’s that actually sets target and delivers results despite all the market turmoil over the past two years.

Mr. Whittington has successfully positioned Farallon as an emerging, low-cost, mid-tier mining company. To kick-start construction, Farallon undertook a heavily oversubscribed equity offering in the fall of 2006. Subsequently, in the spring of 2007, Mr. Whittington brought in Rothschilds and Societe General for a $30 million bank loan to finance equipment. Then, in the spring of 2008, when silver prices climbed significantly, Mr. Whittington signed a deal with Silver Wheaton worth $80 million for less than 10% of the G-9 mine’s revenue. Mr. Whittington used these funds to pay off the bank loan and complete construction of the G-9 Mine.  More recently a $30 million term loan with Credit Suisse was signed in the summer of 2009. This deal is a 4-year term loan at a 6.9% fixed interest rate that I believe, is lower than Teck’s recent loan rates.  Through these various transactions, Mr. Whittington has adeptly maneuvered Farallon through the financial machinations of taking an exploration play into an operating mine. For a relatively unknown junior mining company to pull all this off through the worst credit markets since the Depression, IMHO gives a huge vote of confidence in the G-9 mine and the Farallon management team.

All things being considered, Farallon’s management and specifically Mr. Whittington has been instrumental in bringing the G-9 Mine forward through a very difficult timing in the past two years.  There are a few exceptional CEO’s that come to mind in this industry and I believe that very soon the market can fully understand the many accomplishments of Mr. Whittington and start to “back the jockey”, as I did in New Orleans back in 2005, when Mr. Whittington coined the phrase “Mine by ‘09”. It is now 2009 and Farallon has a mine!

Farallon released its 2^nd Quarter Financial Results on August 12, 2009. This was a particularly significant event as it was the first quarter of full commercial production at the G-9 Mine in Guerrero State, Mexico. The results speak for themselves. In their very first quarter Farallon was able to generate positive cash flow from operations of US$5.7 million dollars. For a new mine to generate cash flow in the first quarter of production is a remarkable achievement. As well, the cash costs of US$0.39 per lb of zinc are in the lowest 40% of zinc producers worldwide and show that the G-9 Mine is a high-quality asset.

Further development is in the works at Farallon including ramping the mill up to 2,000 tpd by July 2010, which can increase the production of zinc on an annualized basis to approximately 160 million lbs of zinc. And with improving cash costs, the G-9 Mine can become one of the most competitive zinc mines worldwide. In tandem, Farallon is resuming exploration work on the property. As Mr. Whittington says Farallon did not stop exploration on the property because they exhausted all of the exploration opportunity – quite the opposite. The company simply drilled off sufficient resources to have a critical mass of resources sufficient to build a mine. Over the last year, the focus was to get job #1 done – that of building the G-9 Mine, then turn the exploration taps back on.

As a result, exploration is expected to start again in earnest in October. The target is to increase the tonnage of high-grade resource at the G-9 Mine by 2 million tonnes over the next 12 months and provide for a re-rating on the stock valuation going forward.   A review of Farallon’s exploration news releases prior to shutting down exploration last year is most interesting. Six news releases in six months, each with excellent results – results that many company’s dream of – including the highest grade intersections on the property to date, 5 metres of 31% Zinc and 4% Copper.

The G-9 Mine seems destined to become a significant cash flow producer. As well, with the very real potential for resource expansion and mine-life increases, the Campo Morado property is shaping up to be a world-class mining district. Farallon owns 100% of the Campo Morado property and management has taken an excellent approach to exploring, financing, and developing the G-9 Mine. With this solid record of management this property is well on its way to become one of the leading mining camps globally and with it, Farallon can achieve its goal of being a low-cost, mid-tier mining company.

Since our last update, Farallon Mining Ltd. continues to advance on many fronts as it ramps up production at the G-9 Mine in Guerrero State, Mexico.

Back on May 7, 2009, Farallon announced a $30 million four-year term loan with Credit Suisse out of Switzerland, that significantly reduced the interest rate from approximately 15% to 6.9%. As well, the term allows the company to restructure the balance sheet by reducing current liabilities and replacing them with longer term debt that significantly improves the working capital position of the company. This loan, which was completed on June 8, 2009, is a testament to Farallon’s asset they have in the G-9 Mine and in the overall Campo Morado property. More importantly, posting a four year, term loan, together at a fixed interest rate of 6.9% in today’s credit and debt market environment is another milestone for Farallon’s management to crow over. While other small – and some much larger – companies are struggling to secure debt, Farallon has put an exceptional deal together that once again vindicates my confidence in this team. And all this, without a feasibility study is truly impressive.

Another milestone of note was reached on May 25, 2009 when the company announced a corporate name change from Farallon Resources Ltd. to Farallon Mining Ltd. The new name is more reflective of the current status of the company as a full commercially producing mining company. The Company management mantra was “A Mine by ‘09” and they have done that! The ultimate intention of the management of Farallon is to create a mid-tier, low-cost, multi-mine producer. Management has been very diligent in bringing into production the G-9 Mine, under 4 years from the timing of the first blind discovery hole back in June 2005 up until the announcement of commercial production on April 1, 2009. This is a management team that has performed!

The management team has recently been strengthened. On June 10, 2009, Kevin Weston joined the company as the Chief Operating Officer. Mr. Weston comes over to Farallon from Capstone Mining, where he was in charge of the Minto operations in the Yukon. When Mr. Weston started with Capstone Mining (formerly Sherwood Copper) his mandate was to bring the Minto mine up to the full design efficiency and he was successful on that front. Mr. Weston’s mandate with Farallon is to improve the efficiencies of the operation to maximize the value gained through the G-9 mine plan. Mr. Weston is a specialist in getting operations up to the full design capacity in the shortest time-frame. Farallon is very pleased to have secured his services and look forward to an even more efficient operation at G-9.

As well, Farallon has been shipping concentrates to several Asian smelter destinations over the past several months. However in late June Farallon’s zinc concentrates were shipped to Teck’s smelter in Trail, B.C. for the first time. This marks the first North American delivery of Farallon G-9 concentrates to a North American based smelter, which proves that Farallon’s concentrates are being very well-received in the marketplace. This further enhances Farallon’s reputation as world-class producer of mineral concentrates.

Going forward, with the asset at G-9 projecting to produce positive cash flow in the second half of the year, and also making continuous improvements to the efficiency of the operation, the time is ripe to re-establish exploration on the Campo Morado project in order to unlock further value from the property. Farallon’s intention is to start exploration drilling again in October 2009 and to add further resources to the current mine-life at G-9. The team is very optimistic that further areas of 10% + zinc are likely on the property particularly adjacent to the current G-9 mine workings. The exploration potential at a stratigraphic horizon that is 200 metres lower than the existing deposits Reforma, Naranjo, El Largo, and El Rey shows signs of great promise. As well, with the restructured balance sheet, the company can now focus on looking at potential accretive acquisitions that meet the overall corporate objective of building a mid-tier, low-cost, multi-mine producer.

All in all, the future at Farallon is looking very bright indeed and it is shaping up to be the next major player in the mid-tier mining space.

I want to say it was an absolute pleasure meeting so many blog followers at the Vancouver show. Your words of encouragement were very special to me. I always felt a sense of responsibility to my readers but after you meet so many personally, you come away with even more a desire not to screw up. Thanks again for all the kind words there and here on the blog.

There’s not much to update as yours truly has curled up into a fetal position-lol. I’m very content holding all metals related positions as I think we’re not even close to the explosive stage for precious metals and feel we’ve seen the lows for base metals.

I explained in Vancouver that after 25 years in this business and losing more money than I ever thought I would make as a youngster, I’ve learned to take profits, especially when they come much faster than expected. That’s why I advised taking profits in oil-related recommendations.

Since I’m basically a speculator/gambler, I’ve learned when you swing for the fences its best to have plenty of swings. Profits allow more swings.

I also feel quite comfortable holding my short treasuries and U.S. Dollar positions for the long term.

I’m extremely bearish on the belief that the U.S. economy can return to any real economic growth for years to come. Yes, a recovery is likely but what good will flat growth be anyway? It’s my belief that a multi-year trading range can develop between the lows around DJIA 6500 and 10,500 on the upside. I think the play is to await some a run to the top of the range before going short. If we simply go back towards the lows again I will once again consider the long side depending on the then current fundamental and technical outlooks.

In regards to the few open buy positions and Grandich Clients, here are my latest views:

Taseko Mines – Please see most recent comments

Continental Minerals – Buy up to $1.20. Stock appears to be consolidating recent gains.

Nevsun Resources – Would be a break out on a close above $1.60

All remaining positions in model portfolio are holds.

ATW Gold – The market seems to be realizing that they’re on the threshold of becoming a significant producer and still have excellent exploration potential.

Apella Resources – Still waiting on new developments.

Bravo Venture Group – Soon to be drilling again and the Homestake project is the homerun swing.

Crosshair Exploration – Has lifted off lows thanks to renewed interest in Uranium.

Donner Metals – The Rodney Dangerfield of juniors has finally received a little respect. Here’s to it continuing.

Farallon Mining – The name change says it all. It’s now a producer.

Hawthorne Gold – It too is set to drill and we wait in anticipation of good news.

Knight Resources – Another kick at the can this summer. Here’s to a big kick!

Northern Dynasty Minerals – Is consolidating recent run and is a buy if it gets below $7 again.

Oromin Explorations – Management continues to drill for gold and not investors. This may hurt now but pay off in the future.

Silvermex Resources – Is under review and I hope to have an update out soon.

Sunridge Gold- Just had an update today.

Timmins Gold – Onward and upward towards production now with financings all in place.

This commentary is highly biased and potential conflicts of interest.
I bet you don’t see many first sentences like this one in stock market commentaries. But it’s true. I’m absolutely fond of the Hunter-Dickinson group since the days of my position as a mutual fund and hedgefund manager (way back in the 90s – man am I old). I know of no other management group of this size and a history of developing so many companies in the resource sector. My conflicts included the fact that I own from time to time shares in one or more of their companies and I’m engaged as a compensated consultant to several.

Having said that, I would like to bring to your several of their companies, all of which I believe have a special story underway that can greatly impact corporate developments. I will of course note which ones I’m currently engaged by and if I own any shares at the moment (full disclosure is here).

Anooraq Resources (ARQ-TSX-V, ANO-NYSE/Alnet) – This is a special turnaround situation that in a few weeks can be elevated to a higher level. After a much too long dragged out major transaction that was greatly hindered by the financial crisis, the ability to become one of the world’s top platinum producers is now Anooraq’s for the taking. In addition, platinum prices have appeared to have bottomed and have move up nicely to a point where it’s profitable again to mine. I believe once the transaction is finalized, we could see a significant increase in shareholder value (I’m engaged by the company).

Continental Minerals (KMK-TSX-V) – While I’m not currently engaged by the company, I was last year. I also have bought a boatload of shares recently, including today. Two big copper-gold-silver porphyry deposits being developed that I believe are of extreme interest to one or more major base metals companies. Management recently proposed a poison pill and I knowing them I don’t think this was merely a simple corporate exercise. A dramatic increase in buying and a technical chart that indicates strong accumulation is a big plus. Even if there’s no near term interest from a major, the current two deposits are more than worth the current share price. Don’t chase the share price!!!!!!!

Farallon Mining (FAN-TSE) – A slogan just a few years ago at FAN was “Mine in 09”. Like much of what company CEO Dick Whittington does was smack on target despite horrific market conditions in 2008. Here too I think FAN is attractive to a significant player in Mexico and can also more than stand on its own if no such interest is forthcoming (I’m engaged by the company).

Northern Dynasty Minerals (NDM-TSE, NAK-NYSE/Alnet) – The cream of the crop at HD, it’s finally getting some of the recognition it has deserved. There’s just no way IMHO that it can remain independent for too much longer. Management has openly stated on more than one occasion it anticipated a major financial transaction in 2009. HD management word is 100x times more likely then Vancouver Canuck fans predictions of a Stanley Cup (but really, isn’t everything?). I’m engaged by the company and own shares.

Taseko Mines (TKO-TSE, TGB-NYSE/Alnet) – Here’s a perfect example of the skills of HD. They stuck through thick and thin with TKO, giving shareholders their best shots and it paid off. Now the company can see an increase in production and  another project they are awaiting permits for. If and when NDM goes, I think TKO becomes the flagship company (Not presently engaged but own options from previous engagement).

Since our last company update on Farallon, the company has had several significant milestone achievements at their G-9 Mine in Guerrero State, Mexico. On March 5, 2009 the mine achieved the full design capacity of 1,500 tonnes per day on a sustained basis. Subsequently Farallon announced that Commercial Production has been declared as of April 1, 2009. Farallon has managed to build a mine that has been pretty much on time and also on budget in a very turbulent timing in the marketplace. The final capital cost for the mine was $149.7 million which is only 20% above the Preliminary Economic Assessment from December 2007 – this during a time of massive capital cost escalation and project overruns.

Farallon also announced their First Quarter production results in April and the numbers were very encouraging. In the quarter, the G-9 Mine produced 14,829 tonnes of zinc concentrate, 3,015 tonnes of copper concentrate, and 650 tonnes of lead concentrate. The company is still on track to achieve its key production targets and goals for the year. The company continued with concentrates shipments and also regular shipments are scheduled to occur throughout the year.

For the first time, Farallon held a Conference Call for analyst’s and investor’s to review the First Quarter production results. This was a timely milestone since it is less than 4 years since the original discovery hole for G-9! The company is now an operating mining company – all in less than 4 years. As well, the company completed two equity placements in the First Quarter that were used to re-pay the $7.75 million promissory notes from October 2008 and also for working capital.

The G-9 Mine is now in full commercial production starting in the Second Quarter of 2009, the ability of the company to bring the mine into production at such a difficult timing in world markets has been quite an achievement. Going forward the Company’s intention is to produce positive cash flow from the G-9 mine and then grow the company even further. When the company meets operating targets they should be in the lowest cost quartile of zinc producers globally. As well, Farallon would consider increasing the capacity to 2,000 tpd which would help to alleviate costs even further. Also, the Campo Morado property has numerous exploration targets that remain untested. Going forward Farallon intends to reinitiate exploration with the expectation that further areas of 10% zinc are available to add to the mine-life at G-9. There are very few operating mining companies with this kind of exploration potential!

With base metal prices making a move into positive territory again and Farallon making significant strides from an operational perspective, the timing is lining up quite nicely for Farallon. The ultimate goal for Farallon is to become a multi-mine, low-cost, mid-tier mining company. With the track record that management has already achieved, the opportunity for success here is well within Farallon’s grasp. Dick Whittington said “mine in 09″ in 05 to me and he was spot on despite an onslaught of outside issues from credit crunch to falling metals prices. I never seen a btter job done in 25 years.

This is strictly my opinion and I have no special insight but I can’t imagine FAN staying independent too much longer. There’s too much upside to the exploration potential here and the hardest part of building the mine is over. I’m of course bias due to my working relationship with FAN but this IMHO.

I hope to do an update on DON-TSX-V in the coming days.

Farallon Resources FAN-TSX also updates G-9

Read

Anooraq Resources (ANO-AMEX) – The completion of the acquisition is expected shortly. I believe this should bring a big bump up in the share price. The rise in platinum prices won’t hurt either. Stay tuned.

ATW Gold (ATW-TSX-V) – Like many of the emerging gold producers, ATW is beginning to generate a lot of attention as they move towards production in March.  I have high expectation for 2009.

I’ve put together a quick summary of the company’s progress in Australia to date.  A full corporate update, which will include the updated mine plan and production schedule for Burnakura, is scheduled to be released by the end of the month.   Brent Butler and his team have made considerable progress at both the Burnakura and Gullewa mine sites:

On the exploration side, ATW has had continued success with the drill bit: consistently hitting high-grade intercepts during their fall program:

-      16.0-metre intercept, grading 9.79 grams per tonne gold.

-      23.7-metre intercept, grading 16.0 grams per tonne gold

-      15.6-metre intercept, grading 13.7 grams per tonne gold

Refurbishing of the plant at Burnakura is nearing completion, with the elution circuit for gold recovery and the gold room being the only items remaining to be completed. Recently, the crushing circuit and mill were commissioned with great success.  A video of the crusher has been posted on the company’s website www.atwgold.comm

A new zone within mining distance of the underground workings has been discovered; drilling has yet to fully define this new zone but the results to date will be included in ATW’s new mine plan.

The underground mining contractor has been selected and management tells me they are pleased with the proposed cost for delivery of ore to the plant.

An IP survey and gravity survey were completed on the Gullewa Project.  Interpretation of these surveys show that the current 750,000 oz Deflector Deposit could continue for an additional 1500 meters.  Gullewa should add another dimension to ATW’s story when it is drilled this spring.

Moving ahead in 2009, I believe that ATW can benefit from the easing of fuel prices and labor costs in Western Australia, giving the company some breathing room in their projected cash operating costs of $700 AUD per gold ounce.  The economics at Burnakura continue to be robust, with the price of gold in Australian dollars recently hitting $1200.  The transition from explorer to emerging gold producer can create significant value for shareholders in 2009.

Bravo Ventures Group (BVG-TSX-V) A brand new client. I hope to have a full report out shortly.

Continental Minerals (KMK-TSX-V) – There hasn’t been much news on KMK in the last few months so I’ll provide the latest fact sheet

Crosshair Exploration and Target Exploration See commentary

Donner Metals (DON-TSX-V) – 2008 was a banner year for Donner and its Matagami Project. The Mining Journal awarded the Donner / Xstrata Zinc Canada exploration team with an Outstanding Achievement Exploration Award for their zinc – copper discoveries in Matagami, Québec. A scoping study is in progress, and enough drilling was done that we can expect a 43-101 calculated resource estimate in the near future.

The Matagami Project is Donner Metals’ zinc – copper project with joint venture partner Xstrata Zinc Canada, one of the world’s largest mining companies. There have been decades of profitable, low-cost production from the Matagami Mining Camp with 10 former producers as well as the Perseverance Mine that was put into production early last year. Perseverance has an estimated 5-6 year mine life, at which point Xstrata should need more mill feed for its 2,600 tonne/day Matagami mill. Donner’s award-winning Bracemac/McLeod discoveries are about 5 kilometres from this mill, and the area has the necessary road, rail, airport, and other infrastructure in place and ready to go. With a positive feasibility study, the Bracemac/McLeod discoveries could be fast-tracked into near-term production.

In 2009 I see Donner continuing the advancement of the Bracemac / McLeod discoveries, while moving ahead with drilling exploration in other areas of the Matagami Camp on highly prospective targets. The exploration team is well-equipped with both historical drilling results as well as a continually evolving exploration approach built upon their success at Bracemac/McLeod. I am very interested to see how many other areas can yield results like Bracemac’s 23.70 metres of 11.46% zinc and 5.63% copper. There is plenty of blue sky potential in the Matagami Camp to go along with the many historical high grade intersections that never had the chance for sufficient follow up exploration. I understand that the Donner / Xstrata team have a very high level of confidence for 2009 with respect to maintaining their strong rate of success.

Eastmain Resources (ER-TSX) – In contrast to the TSX composite index, in 2008 Eastmain’s share price performance bucked the trend of the horrible market meltdown, ending the year on a positive note. Eastmain is very well financed with $20Million in working capital, no debt and an annual exploration budget of $4M in mining-friendly Québec. With two 100%-owned gold deposits, a new discovery at its Goldcorp joint venture and a strong treasury, Eastmain is well positioned to grow in 2009. The Corporation plans to drill a number of gold projects this year.

Drilling over the past 12 months on its 100% owned Eau Claire gold deposit confirmed higher gold grades. The Company reported 300 intersections that averaged 14.65 g/t gold over 1.28 metres including lots of visible gold, with 100 veins averaging 35.87 g/t gold or 1.05 ounces per ton. The Corporation is delineating a high-grade, near-surface gold resource strategically located in an emerging gold district of James Bay Quebec, within trucking distance to Goldcorp’s Éléonore mine development project. Eau Claire is close to existing infrastructure including roads, power, fuel and telecommunications.

Recent drilling has helped determine some of the principal controlling factors to the deposit and has led to a new discovery (”T-Veins”) north of the gold resource. Over 60 drill intersections, extending north into the footwall of the deposit hit high-grade gold-bearing T-Veins, containing up to 17.99 g/t gold over 4.8 metres, and with numerous veins grading over one ounce per ton. The next drill phase at Eau Claire, scheduled for February 2009, will continue to delineate the main gold trend at depth.

Eastmain Resources is a textbook case on how a junior resource company can be successful.

Farallon Resources (FAN-TSX) – Farallon is quickly advancing the G-9 mine through the first months of the commissioning phase in order to get to the target of full commercial production design capacity of 1,500 tpd in January 2009. Once the G-9 mine is at the 1,500 tpd on a sustained basis the mining costs should show G-9 to be a low cost producer on a global scale. The G-9 mine is projected to be in the lowest quartile of zinc producers world-wide. The production targets for the calendar year January – December 2009 are as follows:

January 2009 — December 2009 Targeted Production

Under very difficult circumstances in the metals markets, the management of Farallon has been carefully managing the costs associated with bringing the G-9 mine into production. For almost any mining project the tendency during the commissioning stage is to have a higher start-up cost when bringing a mine into production. However once the G-9 mine is at the full production level, the robust mine plan and the high grades associated with the G-9 deposit should allow Farallon to weather the current downturn in prices far better than others in the peer group. Ultimately, this should allow Farallon to consolidate its position as a low cost producer and benefit from the potential uptick that should occur in metal markets when stability returns to the market.

In this current environment the companies that show they can produce cash flow even at these current low metal prices should be the prime beneficiaries in a return to a bull market in metals. The management of Farallon has utilized a “Parallel-Track” approach in bringing the G-9 into production in a very quick time frame. Management has been flexible in managing revisions to mine plans and, at the same time, expediting the mill commissioning has given Farallon the opportunity to reach commercial production much earlier than most other poly-metallic mines. This is a testament to the strength of the management team and the ability to adapt to changing external circumstances. This approach has allowed Farallon to be more in control of their own destiny when others in the peer group may simply be at the mercy of metal prices due to their higher cost structure. While they’re still working towards their goals on an operational level, I believe their chances for success are still very much in their grasp. In this type of market it is not easy to have that type of confidence, but the quality of the G-9 mine allows them to be confident.

Geologix Exploration (GIX-TSX-V) Quality and expertise of the GIX team.

Randy Smallwood – Wheaton River, Goldcorp, Silver Wheaton

Eduardo Luna – Luismin, Goldcorp, Siver Wheaton

Dunham Craig, Wheaton River, Cominco

etc etc…

These guys know how significant the San Agustin is (they have looked at hundreds of projects during their careers), they know how to build companies, they know how put value back into the shares and increase market caps. The board feels strongly that doing what’s necessary to acquire this project gives GIX a “company maker” asset.

Value of the San Agustin

- San Agustin deposit is 215 million tonnes or conservatively 8.7 m ounces gold Equiv

- value of deposit is $1.0 billion (again this is very conservative because that takes the current value of $1.8 billion and discounts it significantly)

- cap cost is estimated to be $500 million

-leaving $500 million value

Even with 200 million shares that is a per share value of $2.50

100% ownership vs. JV

- Majors don’t always recognize upside (as an example under the stewardship of Silver Standard, the San Agustin was simply a 400K ounce equiv project that they had given up on)

- and that is what can happen when you enter into a JV with a bigger company. They tend to have less urgency so once you enter the JV, you are at the mercy of the major in terms of timimg.

- the Geologix team saw what others didn’t and turned San Agustin into a multi-million dollar ounce deposit.

- SO … having GIX 100% in the driver’s seat gives shareholders the benefit of having the GIX team in control of the project’s growth (the same team who have grown this project 2,000% in 2 years)

Upside

- Project remains open for immediate expansion potential

- high potential to add another 100 million tonnes ( a 40% increase in deposit and value) without going back to market

- medium potential to add another 200 million (85% increase) possibly without going back to market

- potentially explosive gold and silver price rally

- potential to identify additional targets on project

- potential to acquire additional prospective projects as secondary assets

Knight Resources (KNP-TSX-V) – In terms of grade and thickness, Knight uncovered the best intersections to date at the West Raglan Project in northern Québec during this past year. For Knight and joint venture partner Anglo American, the 2008 results show a significant breakthrough on the road to discovering economic deposits. Highlights from the expanded 2008 drilling program include 8.80 metres of 4.73% nickel and 1.16% copper, as well as 36.43 metres of 2.66% nickel and 1.10% copper.

Located just 90 kilometres from Xstrata’s prolific Raglan Mine, the experienced nickel team working in West Raglan has identified Raglan-style mineralization in multiple locations on the project area. Over the past 5 years Knight has continued building upon the geological understanding of the West Raglan Project area and has generated ever-encouraging drill results. The partners are currently working on a 2009 program, and if the past is any indication of their future, 2009 could be another year of significant advancement for the West Raglan Project.

Oromin Explorations (OLE-TSX-V) Oromin Explorations Ltd. is a growth-oriented resource company focused on exploring the Sabodala gold concession in Senegal, West Africa and the Santa Rosa Dome oil prospect in Argentina. The company is well financed and managed by experienced industry professionals with a track record of discovery. The company continues to find significant new deposits and building past discoveries into potential mines. In addition, their oil play is about to kick the can and here’s hoping it goes through the uprights.

Rockwell Diamonds (RDI-TSX) – “RDI has cash and has a new very efficient, low-cost plant ready to go. Although rough diamond prices are off, RDI’s continues to monitor the market and state that unique, very rare diamonds are still achieving premium prices.

Rockwell is actively implementing a range of operations measures to reduce costs and conserve the cash position (approximately C$8m as at Nov 30/08) beginning with an extended 5 week shutdown period over Christmas-New Year’s holiday.

The new processing and recovery plant at the Saxendrift property was completed on-time and on-budget at the end of November 08. Depending on how the diamond market turns in 2009, this new low-cost, high-volume plant is set to go and able to produce with an initial capacity of 200,000 tpm and ramping up to 380,00 tpm

The diamond market has been strongly impacted by the credit crisis and prices of rough diamonds have softened appreciably since the beginning of October 2008 due to decreased trading in the rough diamond market.

Very large, high-quality, rare polished diamonds have continued to achieve premium prices in the market. With Rockwell’s unique manufacturing and marketing agreement with Steinmetz Diamond Group, the company achieves additional revenues – going directly to Rockwell’s bottom-line without any additional risk from the sale of these selected cut and polished diamonds

2008 Accomplishments:

Completed TSX main board listing and assumed ownership of 74% of assets (from previous hold of 51%)

Completed acquisition of TransHex Middle Orange River Ops – doubling Resources – increased production profile

Maintained ops during labor strike and successfully concluded labour negotiations with National Union of Mineworkers

Fended off hostile takeover bid from PALA Investments and revamped BOD to include PALA representation

Saxe drift: commissioned new state of the art diamond recovery plant and new high-volume, low-cost, wet plant (4×18foot rotary pan plant) completed on-time, on-budget (capacity of 380,000 tpm longer term)

Beneficiation agreement with Steinmetz -sale of 102 ct and 2 matching 10ct stones – $$s being added directly to the bottom-line.

In 2008, Rockwell was cash flow positive at operations ($48million) and producing 24,000 carats valued at US$2466/carat.

Santa Fe Minerals (SFM-TSX-V) – Cuatro Ciénegas Project

Cuatro Ciénegas is a high-grade copper oxide project with recorded grades as high as 6% OxCufrom outcrop channel samples. The project area covers 3,408 hecatres in six concessions composed of three separate claim blocks: the El Granizo, Adriana and Don Indio. The deposit is classified as a sediment-hosted stratiform copper-silver-lead-zinc deposit of the Kuperschiefer-type of which there are numerous world-wide examples including: Zambia-Congocopperbelt); Michigan, USA (Spar Lake and White Pine); and Germany and Poland (theupferschiefer district). Tabular deposits of this type may extend laterally for tens of kilometer sand varies in thickness from tens of centimeters to several meters. Within the Cuatro Ciénegasproject area, this lateral potential is indicated on the Don Indio concession from mapping and sampling in mines and prospects over 5km (the total strike length potential in Don Indio is 17km where 70% of the outcrop has been obscured by scree and has yet to be mapped and sampled).

Mineralization on the El Granizo concessions, in the same formation but on the opposite side (south) of the Valle de Jabali, occurs over a strike length of 2.5km. In the NW section of the property, in the Don Indio claim, silver, lead and zinc sulphide predominate. There are several historical small scale workings that have exploited the high grade mineralization.

In the San Marcos West Mine, the weighted average of 36 samples recorded 75g/t silver and 9.5%combined lead and zinc. In La Encalmada Mine, 27 samples averaged 49g/t silver and 9%combined lead and zinc.

The Company intends to commence the copper production from this project by late 2009. Copper oxide mineralization from underground exploration drifts, to be developed as part of an exploration program on the property, will be processed on site in a standard acid heap leach operation to produce cement copper, a product highly coveted by smelters because of its high copper content. This type of process has existed for centuries and is a reliable, cost-effective way of producing copper (although any silver contained in the copper oxides will not be recovered by this process.) Proceeds from the sale of cement copper will be used to fund exploration activities on this and other Company properties.

Professional Research Associates Ltd. (PRA) laboratories in Richmond, BC has been performing metallurgical test work since October 2008 on a 250kg sample of copper oxide material gathered during two campaigns from the outcrop on the El Granizo claim block. A total of 16 channel samples were taken over approximately 100 meters of exposed face. The weighted average head grade as determined by PRA is 1.90% total copper (TCu), 90% of which, or 1.72%, is leachable copper oxide (OxCu). Sampled grades ranged from 3.7% TCu (3.6% OxCu) to 0.6% TCu0.54% OxCu) and bed thicknesses from 2.7m to 9.6m.Initial results from a series of bottle roll tests indicate that target copper recovery should be 85%on a crush size of 10mm. Final process parameters for leach pad design will be confirmed by column leach test work expected to commence mid-January. Final results from the column tests are expected by the end of February 2009. This test work is being supervised by John Fox, B.Sc

(Met), P.Eng of Laurion Consulting Inc. Mr. Fox, a competent person under NI 43-101, is also a director of the Company.

The Company is completing a preliminary economic assessment and is currently evaluating detailed proposals from three mining contractors. The process facility contemplated is very simple, consisting of leach pads, launders containing scrap iron to precipitate the copper, and pumps and piping to circulate the acid and pregnant solution. The Company expects that the capital cost to build the plant, including working capital, to be in the range of $US2-$3 million and produce approximately 10 million pounds per year of copper in precipitate (70% to 80%Cu).

Lobos Project

The Company’s 2008 drilling program tested five northwest-trending epithermal brecciastructures and four potential Carbonate Replacement Deposits (CRD) within an area of 4.5km by4.0km to depths of up to 200m.Drilling in the Cerro Media Luna area returned significant mineralization which, together with the presence of multiphase intrusive events, exhibit good potential for CRD’s at depth. At Charcos, significant mineralization was intersected over four meter and eight meter intervals with values as high as 0.7% zinc and 0.29% lead. Silver and gold mineralization was also anomalous with values over one meter of 0.32gpt gold and 36.5gpt, 47.5gpt, and 34.0gpt silver.

This zone has characteristics of a typical episodial epithermal vein system and has been mappedover a strike length of 1.5km. Complete drill results are posted on the Company’s website.

During the last quarter of 2008, the Company focused its activities on the northern area of Lobosproperty, where mapping and sampling has identified significant silver and lead/zinc values (>300g/t Ag and 10% combined lead/zinc in surface samples) in an area (called Mayra) where there has been small scale antimony mining over a strike length of over 6km. The Company will continue mapping and sampling this structure prior to initiating a geophysical program with follow-up diamond drilling.

About Santa Fe Metals Corp.

The Company’s mission is to utilize the extensive experience and expertise of its management team and board to identify and develop precious and base metal properties of economic and strategic importance in economically and politically stable jurisdictions. The Company has assembled a very experienced management and board with more than 200years of combined industry experience in senior corporate positions encompassing exploration, mining and metallurgical engineering, operations, project management, finance and accounting and mining, corporate and securities law.

The Company’s initial focus for project acquisitions is the prolific Mexican precious metal (gold and silver) and Carbonate Replacement Deposit (zinc, lead and copper) belts of north/central Mexico. Management and Board have extensive Mexican experience, a country that has low political and permitting risk. Further information, including

Detailed drill and metallurgical test work results and Technical Reports, is available on the

Company’s website: www.santafemetals.com

Sunridge Gold (SGC-TSX-V) – Through the latter part of 2008, Sunridge Gold has been one of the most severally oversold junior mining companies out there. This has set up an opportunity to speculate in Sunridge as they remain well funded and are currently sitting on a tremendous amount of contained metals on their Projects in Eritrea that they continue to push towards production.

Sunridge currently has roughly $7 million in its treasury. Given the global financial challenges, the company is conserving capital by limiting the amount of exploration drilling and focusing efforts on advancing their 4 known deposits towards production.

In 2009, Sunridge is expected to continue developmental programs on several deposits. A scoping study at the Emba Derho gold-copper-zinc deposit is continuing and should be complete early in the year.

Metallurgical test work is being conducted at the Debarwa copper-gold deposit and the Gupo Gold deposit in anticipation of scoping studies beginning on these.

Emba Derho: Sunridge recently issued a resource update on the large Emba Deho Copper-Zinc-Gold deposit which now hosts an indicated resource of 62.5 million tonns containing 996 million lbs of copper, 1.9 billion lbs of zinc, 575 thousand ounces of gold, and 20 million ounces of silver. The scoping study is being expanded with a specific focus on utilizing the very good infrastructure that exists in and around the Asmara Project such as local power. The expanded scoping study should be completed by the end of the first quarter of 2009.

Debarwa: Metallurgical work is underway for Debarwa with an emphasis on the high grade copper supergene zone containing 43-101 indicated resources of 1.336 million tones averaging 5.36% copper and 1.54 grams per tonne gold. The objective is to examine the fast track to production possibilities of a smaller high grade operation given the more attractive financing options for a smaller operation in the current market.

Gupo Gold Deposit: The Gupo Gold deposit hosts an inferred gold resource containing 189,000 ounces of gold, with an average grade of 3 grams per tonne. The mineralization is at surface and open for expansion. Sunridge is expected to be conducting meturlugical test to see if the gold can be mined in conjunction with the gold oxide zone at the nearby Emba Derho deposit.

Of interest to Sunridge and their shareholders is the activities of Nevsun Resources, which is currently building the Bisha Gold-Copper-Zinc mine, the first modern mine in Eritrea. Nevsun announced late in 2008 that it had secured $89 million in debt financing and is expected to complete the debt financing of over $200 million of the mine by the end of the first quarter of 2009. This will demonstrate to the market the mining potential in Eritrea and Bisha is expected to be in production in 2010.

2009 is expected to be a good year for Sunridge. With the scoping study at Emba Derho expected to be completed soon and further studies at Emba Derho and other deposits planned, there will be a steady news flow for the company. With Nevsun completing their debt financing, we can expect investor sentiment to improve for companies with projects in Eritrea.

Timmins Gold – (TMM-TSX-V) The Company is preparing an extensive new update and I’ll bring it to you ASAP. Meanwhile, this company remains on track to be a producer in 2009 and emerging producers are likely to develop more interest as they come closer to production.

With a recently announced (Nov.10^th) new 20-month mine plan that incorporates several ways to optimize efficiency at G9 including the use of open stoping mining methods. Farallon is well-positioned from a cash and operational perspective to not only weather the recent down-turns in metal prices, but to benefit from any upside in the metals markets. They intend to mine high grade portions of the Southeast zone at the G9 deposit, which the average zinc grade in that zone is 16.2% Zinc. Like any mining company in these turbulent times, it is imperative to maximize cash flow and minimize costs and Farallon’s management is doing everything they can to maximize the benefit to shareholders over the longer term. If you are a believer in a longer term bull market for metals, then companies like Farallon that can survive through these rough times, should potentially see the most benefit when things eventually turn-around.

Farallon’s advantage over its peers is that with both high grades in zinc and by-product credits in copper, gold, silver and lead, this should allow the G9 deposit to be a low cost producer of zinc. With a mine-plan that optimizes the high grade in the near future, it should allow Farallon to operate through 2009 and into 2010 with any improvements in the metals markets to contribute to the cash flows at the operation. From that point, assuming metals markets improve through 2009/2010, then Farallon can get back on track to enhance further exploration on the property to set up for the next stage of growth at the property.

Farallon is a client of Grandich Publications Disclosure

Farallon Resources (FAN-TSE $.43) – Is cashed up, continues to have great drill results and is getting closer to production. If there’s such a thing as a safe stock under $.50, FAN appears to be it.