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Patience & Perseverance

2nd Apr 2012, 12:29 pm

"Patience & Perseverance Have a Magical Effect by Which Difficulties Disappear & Obstacles Vanish"--- John Quincy Adams

Dr. Michael Berry
March 27th 2012 Morning Notes

"Yesterday Terraco reported the results of a 19 hole, 4000 meter drill program on its wholly owned Moonlight Basin property in Pershing County, Nevada. The company intersected significant gold of 1.964 grams per tonne gold over 1.5 meters in an interval of 1.386 gpt gold over 3.0 meters from 42.7m - 45.7 meters depth in hole TML-37. In hole TML -36 the company reported .34 grams per ton over 1.5 meters.
 
The good news is that there is gold mineralization at Moonlight. You may remember that drilling in 2008 by Terraco discovered silver. I remember meeting with John Livermore (the discoverer of the Carlin Trend) and Andy Wallace in Reno at the time (former owners of Moonlight). Livermore was a principal of Cordex and identified the Moonlight as a significant target. They both suggested that there would be a great deal of silver on the property...
 
...There are two historic mines on the property, the Moonlight silver mine (formerly called the General Grant renamed in 1864), at one time the most prolific silver mine in the country, and the Pflueger mine to the north near the Moonlight Basin northern property line. 

Remember Ralph Rooney’s admonition, “You find a mine where there’s been a mine.”
 
Subsequent 2008 drilling near historic Phlueger Mine in 2008 discovered 24.4 meters of silver grading 35.31 gpt silver (1.03 ounces), including 10.67 meters of 73.03 gpt silver ( 2.13 opt silver)...

...  Putting these results in perspective requires that Terraco’s investors realize that sometimes drill results come slowly but as they improve they tend to accelerate because of the knowledge gained from the drill. This was the experience of Western Silver in 6 years of drilling at Penasquito in Mexico.

We must also realize that the company has recently added a significant land package that now totals 35 square kilometers. The land will undoubtedly be very attractive, perhaps necessary, for any company that wants to develop Spring Valley or consolidate the district further.

But there is more - Terraco management has acquired royalty positions and options on Royalties (see previous Morning Notes) on the Spring Valley land immediately to the south. We estimate using Black Scholes that these are worth, conservatively, $60 to $70 million in present value to Terraco shareholders. We will know more when we see the Barrick estimates of gold at Spring Valley...


... It was certainly not a home run announcement. Nevertheless it is clear that the much larger Moonlight property is in line (South to North) with:

 
  • Pershing’ Relief Canyon Mine (100,000 plus ounces of gold production), 
  • Coeur’s Nevada Packard Mine, Coeur’s Rochester Mine - (The Rochester mine is one of the great silver mines of the world, having produced more than 125 million ounces since production began in 1986, along with 1.2 million ounces of gold.)
  • Rye Patch’s Lincoln Hill (and Rochester?),
  • Midway / Barrick’s Spring Valley (perhaps ~4 million ounces Au) 
  • Terraco’s Moonlight Property and north to the historic gold mining district of Unionville.
Terraco also has the ~1 million ounce gold resource at its Almaden project north of Boise, Idaho that should see the drill sometime this year. Given the aggressive drilling at Almaden and Moonlight as well as the land acquisitions and royalty deals we think the market may be missing the boat on Terraco Gold.

I own shares in Terraco Gold and I am an Advisor to the company."

--- Dr. Michael Berry
March 27th 2012 Morning Notes

 

Terraco Closes Seymork Land Acquisition at its Moonlight Project (Nevada) 

Terraco Now Controls Over 35 Sq Km of Land at Moonlight Project 

March 21, 2012 Terraco Gold Corp. announced that "further to its news releases dated June 13, 2011 and February 3, 2012, the Company and its wholly owned Nevada subsidiary, TGC Holdings Ltd. ("TGC", and collectively with the Company, "Terraco"), have received TSX Venture Exchange approval of the purchase by TGC from Seymork Investments Ltd. ("Seymork") of certain private fee lands and mineral rights (the "Seymork Properties") in Pershing County, Nevada (the "Transaction"). The Transaction has now closed.
Moonlight Project
The Transaction significantly enhances Terraco's land position to over 35 square kilometres (13 square miles), at its "Moonlight Project" located in Pershing County, Nevada. The Moonlight Project now encompasses over 8,830 gross acres of land and 7,980 acres of net mineral rights, providing Terraco with a larger strategic land package and a better exploration opportunity for its early stage Moonlight Project. Terraco's 100% owned, now consolidated, Moonlight Project is located along trend to the north of and adjoins the "Spring Valley Project". The Spring Valley Project is a joint venture between Barrick Gold Corp. and Midway Gold Corp...  
--- March 21st, 2012 Terraco Gold Press Release

Terraco Identifies Gold Mineralization at its Moonlight Project   

"March 26, 2012 Terraco Gold Corp.  announced "initial drill results from its 2011 drill campaign at the Moonlight Gold Project ("Moonlight"), located in Pershing County, Nevada, and adjoining the northern boundary of the Spring Valley Gold Project....

Drill Results 

... The fall 2011 drill campaign at Moonlight included approximately 4,000 meters ("m") (13,050 feet ("ft")) of reverse circulation ("RC") drilling in 19 holes, completed by AK Drilling of Butte, Montana, between 24 October and 21 December 2011. Drilling focused on targets related to the northerly extension of the Black Ridge Fault zone and further defined by anomalies from aeromagnetic and ground geophysical surveys (CSAMT/CSIP)...
Assay highlights for the drill program include gold grades of up to 1.964 grams per tonne ("gpt") gold (0.057 troy ounces per ton ("opt")) over 1.5m within an interval of 1.386 gpt gold over 3.0m from 42.7m - 45.7m depth (10ft of 0.040 opt from 140ft - 150ft) in hole TML-37. The best gold mineralization was related to quartz veining encountered within sheared, altered volcanics of the Limerick Formation."
--- March 26th, 2012 Terraco Gold Press Release

A very favorable Margin of Safety Pattern?
 
Johnston-Sequoia Commentary: 

"Two men looked out from prison bars, one saw the mud, the other saw the stars."
--- Frederick Langbridge

They say beauty is in the eye of the beholder.  This statement hold's a particular amount of weight for Terraco Gold Corp. since January 26th, 2011 (stock closed at $0.47 that day) when Terraco finalized the agreement to merge/acquire Western Standard Metals in a $64,000,000 merger.  The key component of the acquisition was (& is) the 100% owned Almaden (Nutmeg Mountain) Gold Project in Idaho which contains a NI 43-101 MI&I resource of 948,000 ounces of gold within 91 m of surface.  Terraco issued 45 million shares to complete the transaction which equated to $19.67 per ounce of gold in the ground.  Since that time Terraco has traded over 38,634,000 shares at an average price of $0.2963 per share or ~$11,447,000.00 (42% of current market cap) in buying over the past 14 months.
  

Since January 2011 Terraco has amassed the following value creation components: 

 

The net effect of all this value creation by the TEN.V team led by President & CEO Todd Hilditch has resulted in a 57.46% decline in share price since January 26th, 2011.   As many of our readers know - this is exactly the type of pattern we search for in value investing.

Finally, I have spent thousands of hours (literally) studying the market, how it lives & breaths, what cyclical market characteristics may apply to current conditions & where can I find true value. So, in the humble opinion of this writer - Terraco Gold is the right company, in the sector, in the right cycle that we believe may create tremendous value to those who believed in it when no one else did.

I own shares in Terraco Gold & am advisor of the company.  As always - please do your own due diligence.

Your editor at The Moonlight Project - standing along the Blackridge Fault in Pershing County, Nevada.

 

 

 

***The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy or sell securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act). In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to future events and financial performance of the company which are inherently uncertain and actual events and / or results may differ materially. Mr. Johnston owns shares in Terraco Gold Corp., Senesco Technologies Inc. & Sama Resources Inc. Johnston-Sequoia Capital Corporation ("Johnston-Sequoia") owns shares in Terraco Gold Corp. & Sama Resources Inc. Johnston-Sequoia is a paid advisor of Terraco Gold Corp., Sama Resources Inc., Northern Vertex Mining Inc. & Touchstone Capital Inc. Johnston-Sequoia was formerly a paid advisor ofTalison Lithium Ltd., Salares Lithium Inc. & Kootenay Silver Inc. We cannot attest to nor certify the correctness of any information in this research page. Please consult your financial advisor and perform your own due diligence before considering any companies mentioned in this informational webpage.



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***The material herein is for informational purposes only and is not intended to and does not constitute the rendering of investment advice or the solicitation of an offer to buy or sell securities. The foregoing discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (The Act). In particular when used in the preceding discussion the words “plan,” confident that, believe, scheduled, expect, or intend to, and similar conditional expressions are intended to identify forward-looking statements subject to the safe harbor created by the ACT. Such statements are subject to certain risks and uncertainties and actual results could differ materially from those expressed in any of the forward looking statements. Such risks and uncertainties include, but are not limited to future events and financial performance of the company which are inherently uncertain and actual events and / or results may differ materially. Mr. Johnston owns shares in Terraco Gold Corp., Senesco Technologies Inc. & Sama Resources Inc. Johnston-Sequoia Capital Corporation ("Johnston-Sequoia") owns shares in Terraco Gold Corp. & Sama Resources Inc. Johnston-Sequoia is a paid advisor of Terraco Gold Corp., Sama Resources Inc., Northern Vertex Mining Inc. & Touchstone Capital Inc. Johnston-Sequoia was formerly a paid advisor ofTalison Lithium Ltd., Salares Lithium Inc. & Kootenay Silver Inc. We cannot attest to nor certify the correctness of any information in this research page. Please consult your financial advisor and perform your own due diligence before considering any companies mentioned in this informational webpage.