Research Analyst Opinion on Abcourt Mines Inc. [PDF]

Abcourt Mines Inc. (TSX Venture: ABI)

(Frankfurt & Berlin ISIN: CA00288E3005), (U.S. Pink sheets otc: ABMBF)
 

Opportunity Presents Itself in Abcourt Mines

"With close to a billion dollars in zinc resources, a 13 year mine life, less than 50M shares outstanding and trading well under US$0.50/share - Abcourt offers an exceptional risk-reward scenario for investors. A recent qualified Analyst initiated coverage on Abcourt Mines Inc. with a Buy Recommendation and forecasts a 50% to 100% near term upside target investment opinion (copy of analysts report is available here [PDF])" Article by James O'Rourke

       Abcourt Mines Inc. is a TSX Venture Exchange listed advanced stage development and exploration mining company (ticker symbol ABI.V, also listed in Frankfurt). Abcourt is extremely undervalued at its current market cap as they have the resources to put into production and are currently forging ahead with progress towards open-pitting the once producing Abcourt-Barvue Silver-Zinc Project back into production. Production was put on hold in 1990 when silver prices were falling and there was an anticipated drop in the price of zinc. The equipment was mothballed for a timely reemergence and it appears the necessary right determining steps and requirements are now in place for a highly profitable operation. The company is debt free and has managed to maintain and upgrade their properties, equipment, and resources during the hiatus all without diluting the share structure.

       A recent analyst report (copy available here [PDF]) has identified Abcourt Mines Inc as significantly undervalued with five projects of significance in Northwestern Quebec and is heavily discounted at its current share price. The Abcourt-Barveau silver-zinc deposit alone has significant resources which the Company's independent feasibility report indicates as economically mineable. This one project alone is significantly discounted with the market capitalization of Abcourt Mines Inc. under CDN$20M; Abcourt has well in excess of a billion US dollars of zinc resources at current market prices. Abcourt Mines also has 19,644,354 ounces of silvers at the Abcourt-Barvue project and 198,744 ounces of gold at it's Elder Gold Project. The Analyst report is recommended reading for astute investors as various methods of valuation are employed by the Analyst using different scenarios/catalysts and provides a compelling risk-reward picture for inventors. Abcourt Mines Inc. (ABI.V) appears grossly undervalued with current disproportionate multiples as inherit resource and infrastructure value per share is well in excess of the current trading price. ABI presents tremendous upside potential. The Analyst report provides insight about how ABI.V presents tremendous opportunity of doubling their current large resource base. Area miners such as Agnico Eagle, IAMGold, Richmont, Breakwater and Xstrata share the same geological model and are currently mining at much greater depths than what Abcourt currently is at.

       The Company has optimized their feasibility report, improving upon their previous numbers, and managed to lower capitalization costs to reopen mine by significantly, they managed to buy some key items; ABI.V's latest purchase of equipment once owned and used by Barrick Gold Corp. eliminates a 24 month wait for new equipment and is a major savings. The latest equipment purchase is only 10-12 yrs old and includes flotation and grinding mill equipment plus all accessories including bins, conveyors, cyclones, pumps, tanks, overhead cranes, lime and reagents circuits, electrical circuits, a gravity circuit with two 30" Knelson separators, spare parts. This with the two ball mills, crusher and lime plant already purchased and the existing facilities on the mine site covers close to 90% of all the material needed for the construction of an 1800-tonne per day mill at their silver-zinc Abcourt-Barvue project.

      Abcourt's other prize asset is their 100% interest in the past producing (1947 - 1966) Elder gold mine located 60 miles from their silver zinc project in Northwestern Quebec. Abcourt recently completed a 7000 meter, 40 hole drill program on this Elder gold property that will increase existing resources. Initial results are extremely encouraging. Similarly to the Abcourt-Barvue mine, Elder gold mine has a substantial amount of well maintained and upgraded infrastructure in place. The geological model the Company believes in for the Elder gold property, holds the potential for 1.5M tones of ore grading approx. 0.2 oz of gold per ton. The initial proceeds from the Abcourt-Barvue Zinc-Silver mine operation will finance the reopening of the Elder gold mine. Additionally Abcourt has exercised an Option to acquire 100% of the Aldermac deposit near Rouyn-Noranda, Quebec. The Aldermac is a past producing mine (1936-1943) and offers great potential for future exploration.

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Comments on Oct 23/07 Analysts Report: Approaching one billion US dollars zinc resource and a 13 year mine life Abcourt is identified in newly issued analysts report with 100%+ near term upside valuation from numerous potential project scenarios/catalysts.

The qualified Analyst has identified Abcourt Mines Inc as significantly undervalued with its five projects being heavily discounted at current share price valuation of under CDN$0.50. The Abcourt-Barveau silver-zinc deposit alone has significant resources which the Company's independent feasibility report indicates as economically mineable with a 13 year mine life and this one project alone is significantly discounted with the market capitalization of Abcourt Mines Inc. under CDN$20M; Abcourt has well in excess of a billion US dollars of zinc resources at current market prices. Abcourt Mines also has 19,644,354 ounces of silver at the Abcourt-Barvue project and 198,744 ounces of gold at it's Elder Gold Project.

The Analyst provides a compelling risk-reward picture for inventors as Abcourt is currently undervalued at between a mere $0.01 - $0.02 per Zn-equivalent lb found at the Abcourt-Barvue project alone, a level at the low end generally attributed to earlier stage exploration companies with resources. The currently share price is only attributing value to the in-ground zinc resources at the Abcourt-Barvue project - ignoring its large silver resources, other properties and the significant infrastructure the Company possesses from when it was a past producer at the silver-zinc operation and the Elder Gold mine sites.

Abcourt now has active programs at several base metal properties and a gold property (4 of 5 are 100% owned), all located in Quebec’s prolific Abitibi Greenstone Belt:

 
1. The Abcourt-Barvue Zinc-Silver property unifies two past producers with significant exploration/development work. It has been the subject of a recent optimized feasibility study on a 500 million lb. Zn, 13+ million ounce Ag orebody over a 13 year minelife. Additional inferred resources and clear exploration potential could result in a long life asset. Abcourt is continuing with a development program at Abcourt-Barvue (permitting, raising financing, etc.).

 
2. Elder Gold Property. Plans are to re-open the 43-101 compliant 200,000 ounce gold resource following a successful drill program in2005/06.

 
3. The Jonpol Copper-Zinc-Silver property has historic resources and short term exploration potential to add more. Jonpol also represents a historic target for a large massive sulphide deposit. A $300,000, 2500 meter drill program has been performed.... SEE NOV 15, 2007 RELEASE of DRILL RESULTS/SILVER VALUES.

  
4. The Aldermac Zinc-Copper property, with historic resources at the previous mine and undeveloped high grade discovery/resource in 1987/88. There is considerable valuable underground development. Abcourt is now preparing for a $300,000 drilling program there.

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Abcourt Mines Inc.'s Mineral Resources as of March 29, 2007: (This was taken from corporate website, it is a little dated and resources have since increased, for example Elder now has gold ounces closer to 200,000K)

Abcourt's Prolific Region and Neighbours:  Abcourt's key properties are located along Quebec's Cadillac Fault in the prolific Val D'Or (Valley of Gold) District of Quebec. Val D'Or is in the hub of mining in Eastern Canada. The Val D'Or district, with the exception of Nevada, is considered by many industry professionals as the most mining-friendly district in North America. The Province of Quebec is judicially expedient in facilitating mining permits and provides colossal tax incentives for exploration and tax concessions for off-periods. Abcourt is the beneficiary of such exploration tax credits and concessions; having taken advantage of exploration incentives (35 cents credit for every $1 spent) and been allowed a tax-loss carry-forward (from when they mothballed operations in 1990 until present) that may be credited towards profits when they reopen - several millions will be added to the bottom line in Abcourt's case.

Several large mining players are in the vicinity of Abcourt. Either producing or developing miners in this mineral rich area include the likes of Agnico Eagle, IAMGold, Richmont, Breakwater and Xstrata. The presence of these majors in the near vicinity to Abcourt, with it's ever increasing NI-43-101 resources of significance, leads us to speculate on the appeal ABI.V makes as a buy-out candidate. Regardless, there is ample milling and smelting capacity in the region that will make transportation costs minimal, whether by Abcourt or other.

RadioFN Michael Blackstone: And in width from what I understand there is a mile and a half open-pitable surface, is that correct?
 
Yves Gagnon, P. Eng.: Yes, well if you call it the width, it's the length - the area laterally where the zone extends, okay, more or less east-west. Okay, that's over 1.6 miles, that's right, and it's still open on both sides. Okay, and there's a faulting on one side that we are looking for the zone on the other side and we think that we discovered it recently, and same thing at depth - it's all open. And the total resources of that big package is around 7 million tonnes of measured and indicated resources. Those are the 43-101 rules now and to that you have an additional 1.5 million tonnes of inferred resources.
 
RadioFN Michael Blackstone: So essentially going down to that depth there's tremendous possibility, or outstanding, or enormous potential for adding to known resources.
 
Yves Gagnon, P. Eng.: You're right, you're right, it's a possibility to double or triple or whatever, if you compared ourselves to the depth that other mines went down to and the other thing that I must maybe put some light on is the fact that we are working with sulfide associated mineralization, okay, so it is usually much more extensive than veins. Veins or veinlets are in time and places and volumes - you can not extend those things on very very long distances.
 
RadioFN Michael Blackstone: It appears to me that with a ten year mine life based on 300 meters and an open pit of a mile and a half that once you chew through that depth you can just simply continue digging deeper for more product. There's an old saying in the mining industry that you've probably heard, that "if you want to find mine, you simply look beneath the one that exists".
 
Yves Gagnon, P. Eng.: Yes well in fact if you look at the recent history in the Val d'Or camp, the Louie Court mine was found found just underneath the former little deposit that was exploited in the years 35 to 45 I think, so that new deposit was just standing there hidden a little deeper.
 
RadioFN Michael Blackstone: Now, in addition Abcourt has another key property, the once past producing Elder gold mine. Can you please tell us a little bit about the Elder project?
 
Yves Gagnon, P. Eng.: Well that deposit is located just west of Rouyn-Noranda, okay, it's another site where great potential exists to add to the gold resources we already have. Those resources were recently evaluated and a 43-101 report just came out for those.
 
RadioFN Michael Blackstone: And what are those number?

Yves Gagnon, P. Eng.: Measured and indicated resources were about half a million tonnes of 0.224 ounces of gold per tonne and there's an additional inferred resources of 185,000 tonnes also of 0.234 ounces of gold per tonne. So that's again very interesting.
 
RadioFN Michael Blackstone: Very impressive actually.
 
Yves Gagnon, P. Eng.: Yep, impressive, interesting also by the grades, okay, because those grades are a little over the average that you find usually, which is in between 0.15 and 0.2.
 
RadioFN Michael Blackstone: That's interesting.
 
Yves Gagnon, P. Eng.: On Elder we do have a 2,500 foot shaft which is in there, okay, with 14 levels, because there was production on Elder before. Okay. Gold was produced in there, the gold ore was sent to the Noranda smelter as flux for their milling process, so they recovered the gold at the same time then they were helping their copper recovering process. And that shaft is there, still existing, it's developed on 14 levels but the shaft is going down to below the 16th level. Oaky. The 15th and 16th level are not developed, but those are part of the exploration we are planning to do, okay, developing those two levels and adding some between 500 and 1000 feet below what we already know to the 14th level.
 
RadioFN Michael Blackstone: And currently the 14th level is down to what depth?
 
Yves Gagnon, P. Eng.: It's about 2,100 more or less.
 
RadioFN Michael Blackstone: So being a past producer one would expect the infrastructure at Elder to be fairly well developed, can you talk a little about that please.
 
Yves Gagnon, P. Eng.: Infrastructure we have at the Elder project, because the shaft is there, the headframe is there, offices, the hoist is there, so we do have about $12 million in value only in equipment on top of that deposit.
 
RadioFN Michael Blackstone: Just an observation here is that the equipment you just spoke of is just at Elder alone and there's other equipment as well. Now the replacement value of this equipment is close to the current market cap of Abcourt thus offering an attractive entry for investors now, you know especially with known economic silver & zinc deposit plus the gold mine as well and also room to grow on these numbers. Now can you tell us about this other equipment and where about is it?

Yves Gagnon, P. Eng.: In the Barvue area if you look at the equipment that we have, because we do have the former scoops that were used underground, we do have jumbos, we do have some equipment also in there. Again there's between $10M and $12 million value of a in quotes "new stock", but equipment that we have which is in there, so only those two things are essentially making the value that market is giving us today.
 
RadioFN Michael Blackstone: And adjacent to the Elder gold mine is your Tagami property, tell us about that Yves.
 
Yves Gagnon, P. Eng.: Essentially the Tagami is the extension of a number of structures that we have on the Elder project. Okay, those structures are - and the property is adjacent, so if ever we want - if the grade is good enough or the depth or the slope of those zones are good enough, it could be developed underground from our existing property or if there is something from surface then we can develop it straight from open pitting. The point interesting in there is that we do have a number of structures with grades up to 0.34 ounces of gold per tonne over 4.5 foot intervals, so that's something very interesting, high grade stuff.
 

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