Eskay Creek Mine, ran by Barrick Gold Corp, was until its closure in 2008 Canada’s highest-grade gold mine and the world’s fifth largest silver producer.
Now North Bay Resources, Inc (OTC: NBRI) acquires a parcel of land adjacent to it. Why would NBRI buy land along the entire northern boundary of the closed mine? This is literally a billion-dollar question. (And yes, it’s not a typo, since we’re talking about billions of dollars).
It is very possible that, based on British Columbia government records documented in BC MINFILE 104B 008, the land adjacent to and north-northeast of the now-exhausted Eskay Creek Mine contains high-grade layers of gold and silver in the amounts sufficient for commercial production.
How profitable can such production become? In a nut-shell – highly profitable. The average grade of the Eskay Creek Mine resource was 48.4 grams per tonne gold and 2221 grams per tonne silver. To put these numbers in perspective, a mine can be profitable with grades ten times lower than those of the Eskay Creek Mine.
Of course, grade alone does not give an entire picture. A more significant piece is cost per ounce, which is a combination of grade (grams/tonne) and operating costs (USD/tonne). In 2005, the Eskay Creek Mine’s cost per ounce was USD 350 while the average cost worldwide was USD 428 and rising.
We believe that NBRI will be able to maintain below-average cost per ounce by mining high-grade deposits as well as by using Eskay Creek Mine excellent infrastructure that’s already in place.
Considering all this, it looks like NBRI has successfully secured another strategically important property.
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International Monetary maintains a position in NBRI and is being compensated by NBRI via a combination of cash and restricted stock for its investor relations and market awareness services. Read full position disclosure and safe harbor statement.