A growing Storie for Columbia Yukon (August 08, 2008)

Vancouver – A new resource estimate upgrading most of the Storie molybdenum deposit to indicated is just what Columbia Yukon Explorations (CYU-V) was aiming for with its aggressive drill campaign in 2007.

The 76-hole, 40,000-metre campaign focused on infill drilling and fulfilled its goal. The project in northwest British Columbia now hosts 98.3 million indicated tonnes grading 0.064% molybdenum and 30.9 million inferred tonnes at an average grace of 0.059% moly.

“We’re very happy with the new numbers,” says Ron Coombes, president and CEO. “We did what we said we were going to do, and now we have to just keep moving forward.”

The drill program not only increased confidence in the resource but also uncovered a higher-grade zone in the west-central section of the deposit. The zone produced several significant results, such as 105 metres of 0.147% molybdenum in hole 51, 78 metres of 0.162% molybdenum in hole 75, and 33 metres grading 0.141% molybdenum in hole 89. However, capping of outlier high-grade intervals meant several of these key intercepts were left out of the resource calculation.

To rectify the situation the company included in its 2008 program a series of infill holes in the high-grade zone that will reduce the drill spacing to 25 metres. Hopefully the additional intercepts will increase confidence in the outlier results sufficiently that they can be included in the next resource estimate, which the company hopes to have out by November.

The rest of this year’s 30,000-metre program is focused on expanding the deposit, which remains open to the north, west, and east. Importantly, the high-grade zone is open to the west. Plans call for large step-outs to the west; when drills stop hitting mineralization they will step back to fill in the gaps.

The company also recently completed a metallurgical scoping study, results from which should be available shortly. Coombes says the preliminary results are very positive: the host rock is a soft granite, making crushing easy, and the molybdenite within the granite is coarse-grained, which eases recovery.

And while the management at Columbia Yukon want to see the project put into production, they don’t think their company is the right one to do so.

“We’re doing everything necessary to put this into production but we don’t think that, as a small company, we are suited for that,” says Ted Ohashi, head of corporate communications. “We expect to turn the property over to a major within the next 24 months.”

Some of those efforts include a phase 3 environmental baseline study, currently underway, as well as the signing late last year of a memorandum of understanding with the local Dease River Indian Band covering the entire exploration phase of the project.

The Storie deposit is just a few kilometres west of Cassiar, an old mining town with a small permanent population. Cassiar was home to an asbestos mine for 40 years and as such is served by a paved connection to the nearby Highway 37. The closest connections to telephone and electricity are 320 km distant; Columbia Yukon is an active member of the coalition urging the provincial government to build the high-voltage transmission line up Highway 37 that was promised but then cancelled with the cancellation of Galore Creek.

In the late 1970s Shell identified a resource of over 100 million tonnes grading 0.077% molybdenum. The major got as far as a pit design, then dropped the project due to depressed moly prices.

Columbia Yukon came on site in 2006 and has been drilling vigorously since. The 20 holes drilled in 2006, all twins of historical holes, resulted in the company’s first resource estimate for the property: 101.6 million inferred tonnes grading 0.067% molybdenum.

In 2007 the junior ramped up its efforts, completing the 76 further infill holes that informed the latest resource count. Columbia Yukon also fulfilled its option agreement that year, giving it 100% ownership of Storie (subject to a 2.5% net smelter return that the company can purchase for $4 million).

The company has some $9 million cash on hand, more than enough to fund the $6-million summer exploration program. Management came up with another use for some of its excess cash:

“We’re actively buying back and retiring shares because we feel the stock is so undervalued,” says Ohashi. Regulations limit a Venture board company to buying up to 2% of its outstanding common shares in a 30-day period, up to a maximum of 5% of its issued and outstanding shares in 12 months. Ohashi says they will come close to that this year, which would mean purchasing just over 2 million shares. The purchased share would be cancelled, giving Columbia Yukon the ability to raise capital next year without further diluting its shares.

Columbia Yukon currently trades around the 50-mark. The company has a 52-week trading range of 42 to $1.55 and has 40.8 million shares issued.