gammon lake on the brink, page-2

Holy crap, hanrahan!

I remember all of that (I bought into BSG when it was just a tailings dump processor in Georgia). The present Gammon Lake tenements (Ocampo) were supposed to be the next, big thing for BSG.

I was so annoyed when Norm got out BSG's share of the Ocampo project (to concentrate of Palmerejo), that I almost sold.

The point of my post is to put some historical perspective on things. In 2002, the Georgia tailings project was not only coming to the end of its life, but there was political unrest and uncertainty in that country, so BSG was looking for alternatives. They had two: the Roseby copper project in NQld and an offer from a company called Gammon Lake in Mexico.

They had the opportunity to earn 60% interest in Ocampo by paying an initial sum, then funding the full feasibility and development costs of the project. However, they had deadlines to do all of these things (24 months to get to production, or forfeit the project to back to Gammon Lake).

They spent about 18 months doing all of the drilling and pre-feasibility studies. In Dec 02, they had announced 2.6g/t Au and 90g/t Ag, before announcing in mid-June 03 that a decision had been made to proceed (although they didn't actually release any numbers from the pre-feasibility study). The resource estimation was actually done by a mob called Hellman & Schofield Pty Ltd in Sydney and the reserve estimate by AMDAD mining consultants (Australia). That resulted in reduced grading to 1.79g/t Au and 81g/t Ag.


They were really doing this well, I thought. Everything looked above board, professional, well considered and externally checked. One thing I would note - because of the tight time frames, they were already doing a lot of construction and engineering work around the project before the full feasibility study had even been completed (sound familiar?). Separately, they had acquired Palmerejo around mid-03 and almost immediately started getting good sampling results.

Then, in November 03, BSG suddenly announced that they would be selling Ocampo to Gammon Lake for $5m, due (amongst other things) to the relatively modest investment return, anticipated because of the need to pay all development costs for only a 60% interest.

I was non-plussed, but Palmerejo was looking better than Ocampo ever did. It should be noted that the projects are not even close to each other geographically and cannot be directly compared. Also, after the Ocampo experience, you would expect that Norm and crew would be wiser the next time around. Ocampo was BSG's first foray into actual exploration, drilling, feasibility and construction.

Good luck to all who hold.