Cal Graphite withdraws reserve and cost estimates for gold bet

A statement of reserves and capital costs for Cal Graphite’s recently acquired gold property near Magdelana de Kino in the Sonora province of Mexico could not be substantiated by formal engineering reports and the company has withdrawn its initial estimates.

“The reason for this withdrawal is that these management estimates cannot at this time be supported by formal engineering reports as requested by the Vancouver Stock Exchange,” President John Stirling says.

The company announced on Feb 4 it had acquired a 70% interest in the property which had “a reserve potential of over five million tonnes of immediately mineable material across wide widths. The block of ore samples is estimated to contain 348,000 troy oz of gold recoverable by low cost open pit mining and heap leaching methods.”

Stirling estimated that capital costs would not exceed $2.5 million(US) to bring the mine into production.

Retracting these claims, Stirling nevertheless said the company is proceeding with underground drilling and he expects a feasibility report will be available within three months.

Cal Graphite is also working on placing a graphite property near Huntsville, Ont., into production.

Referring to previously announced cash flow estimates of $900 million in pre-tax profits over the life of the mine, Stirling said that “these are management estimates based upon most current graphite prices and enhanced recovery processes since preparation of the feasibility report.” The figures are approximately 2 1/2 times higher than those prepared by the company’s consulting geologist.

The company stated it is not aware of any reason to account for the recent decrease in the value of its shares, which resulted in a temporary trading halt Feb 9 pending clarification of the company’s affairs as required by the vse.