Tamerlane gets partial aboriginal nod, but falls on market

Tamerlane Ventures (TAM-V) has secured an agreement with one of the three first nations groups it is dealing with at its Pine Point zinc-lead project in the Northwest Territories.

And while the news is a positive indication that negotiations between the company and aboriginals groups are going well and consequently that it is progressing towards the land and water use permit that it needs to begin construction of the project the Blaine, Washington-based company saw its shares fall on the announcement.

In Toronto on April 16 Tamerlane shares were off over 20% or 35 to $1.35 on 2.6 million shares.

But a spokesman for Tamerlane says the sell-off has more to do with profit taking than any negative read on the news.

Our shares have come up so fast in such a short time, says the companys manager of investor relations Brent Jones, investors are just taking money off the table.

Tamerlane shares had been on a tear through the end of March and into April. After announcing the acquisition of the Los Pinos copper porphyry system in Peru on March 28 the company shot up to a high of $1.70 on April. 13 from just 55 on March 28 a 214% gain in just 12 trading days.

But Jones says the heavy investor interest wasnt all to do with Los Pinos. He says the flurry of buying largely came as a consequence of the company keeping so quiet for so long. Excluding a financial report, Tamerlane hadnt issued news since Aug. 11 of last year, and even that was only a progress report on its feasibility study at Pine Point.

News of the Los Pinos acquisition showed the market that the company was still alive and well and had the funds US$1 million — to make an acquisition, Jones says.

In terms of aggressive investor relations activities, management wants to be conservative, Jones says of the companys approach. We want to wait until all agreements are in place (at Pine Point).

Chief among those agreements is the land and water use permit, which the company hopes it can get by the summer. If the permit is secured, Tamerlane will begin to embark on a staged development of what could amount to be a massive lead and zinc project with the potential to take some 20 years to mine.

While the companys in-house feasibility study is currently being reviewed by a third party Jones expects the review process to be completed within a month the first deposit to be mined will be the R-190. The deposit has a non-compliant resource of 1 million tonnes of ore grading 12.1% zinc and 6.3% lead.

The plan is to encircle the deposit with a 4.5 metre frozen brine ring that will measure roughly 153 metres long and 122 metres across so that water does not get into the underground mine.

Lead and zinc would then be extracted via a Dense Media Separation circuit (DMS). The project is slated to cost roughly US$85 million and will have a mine life of roughly 12 to 15 months.

But it is after that 12 to 15 month period that the real heavy lifting begins. Cash flows from R-190 are slated to be used to develop some of the 34 other deposits on the site. While those deposits will also be underground mines and would use the freeze ring technology, they do not have the high grades that make DMS suitable for R-190, and would require the construction of a mill.

Those possible future deposits dont have a National Instrument 43-101 compliant resource estimate yet, but Jones says there is likely 70 to 74 million tonnes of ore, with many of the deposits coming in at a grade range between 7 and 10% lead and zinc combined.

In a best case scenario mining at the other deposits would begin round and about 2010, but clearly a lot of chips have to fall in place before then.

Investors, however, can glean some confidence from the fact that Tamerlane is being run by a man with a long history and a deep knowledge of Pine Point.

Chief executive Ross Burns worked at Pine Point while it was one of Comincos — now Teck Cominco (TEK.A-T, TEK.B-T) — operating mine. Operations stopped in the mid-1980s when it became uneconomical to de-water the open pit mine.

Despite the mine closure Burns was well aware of the mineral potential, and when Cominco let its permits lapse some 8 years ago, he snapped them up the next day and waited for zinc prices to rise.

Were going back underground, Jones says. Now were at a point where the price of zinc is very attractive.

Tamerlane has roughly 34 million shares outstanding.