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Market:	TSX
Sector:	General Mining
Epic:	TSX-CYU
News:	Latest news
Web Site:	Columbia Yukon Explorations
Other Articles:	19-11-200828-10-200810-10-2008

Columbia Yukon is one to watch

by Paul Ljucovic

There is no question that the liquidity crunch in North America has hit Juniors hard.

Many exploration companies have had to go on a spending diet to conserve cash until more certain times. Ronald Coombes, President of Columbia Yukon Exploration [TSX.V-CYU], is using these tumultuous times to build his company’s credibility with a consistent philosophy of under-promise over-deliver. He knows that when the current financial crisis resolves itself, investors will look to companies with developed assets and sound fundamentals.

While Columbia Yukon has several properties in British Columbia and Labrador, their most developed deposit is in BC and contains Molybdenum (commonly referred to as Moly). Moly is a transition metal that does not react with oxygen or water at room temperature.  With a melting point of 2,623 degrees Celsius, it has the sixth highest melting point of all elements.  As such, moly is used in applications that involve intense heat (such as the manufacture of airline parts and electrical contacts) or require high corrosion resistance and weld-ability (bridge structures, pipelines, oil-rigs, etc). It is a major component in the manufacture of high-strength steel.

In the early part of this decade Moly sold for about US$3 to US$4 per pound. With production growing at just 3% per year and demand from China growing by 10%, the price has spiked to more than US$30 per pound today.  While current prices have been driven largely by demand in China and India as their economies have grown exponentially and some constrictions on supply, there is the potential for a “second wave” of demand growth (and therefore price growth) on the horizon. If the Green Energy sector were to achieve its potential and experience a major expansion, it would provide a new vein of demand for Moly as its characteristics make it indispensable to windmills (high-tensile steel to combat severe wind shear), geothermal heating systems (drilling equipment), and solar power equipment (high strength electrical connections). Add to this the fact that the discovery of significant Moly deposits have been few and far between you have the recipe for sustained long-term pricing that is favourable to producers.

Columbia Yukon’s most developed asset is the Storie Deposit in Northwestern British Columbia, located just South of the former Cassiar Mining Camp. They began actively drilling the property in 2006. Their work in 2006 and 2007 (96 drill holes for a total of 28,026 metres) was done largely to verify and upgrade earlier work on the property. The resulting updated NI43-101compliant Mineral Resource estimate (published in July 2008) put the size of the deposit at 98.3 million indicated tonnes (grading of 0.064% with a cutoff of 0.030% MO) with an additional 31 million inferred tonnes (grading of 0.059% with a cutoff of 0.030% MO). Looking at other BC-based Moly deposits, these results put the Storie deposit in the same league Kitsault and Schaft Creek.

In 2008 the company embarked on an aggressive drill program (30,000+ metres of drilling) aimed at expanding the limits of the known resource. The resource remains open to the East, West, North, and at depth. They plan to update their NI43-101 estimate following the completion of their 2008 drill program, complete a scoping study, and submit required permit applications.

Throughout 2008 they have released numerous favourable drill results in step-out holes. On September 17th, 2008, Columbia Yukon released the results of 5 holes, all of which were outside the limits of the known resource, and all of them intersected Moly with grades in excess of 0.060%! So the potential for a significant expansion of the known resource in a new NI43-101 seems more likely.

A recent announcement of preliminary results from their metallurgical study indicates that the ore in the ground should be extractable using simple traditional processes with proven methods. Minor amounts of pyrite are present but there is a lack of clay-like mineralization, which should reduce processing problems and therefore costs. The final concentrate graded at 53% MO with a 69% molybdenum recovery and preliminary “locked cycle testing” resulted in MO recoveries of 70% to 87%.

The Storie property is accessible via a five kilometer loose-surface road from the Cassiar mining camp and is connected to the regular highway system from there. As the property is elevated (1,400 metres to 1,750 metres), the deposit lies above the tree line and is snow-free from late June till mid-September (although the exploration season is longer). The Cassiar site features two ponds and electricity is supplied via two diesel generators as the nearest power lines are 350 kms away.

A second property of Columbia Yukon’s is their Barnes Creek Gold property in the Whatshan Range of the Monashee Mountains of Southern British Columbia. While largely under-explored to date, the company recently signed an option agreement with White Tiger Mining where White Tiger can earn a 60% interest in the project by spending Cdn$500k over two years. This agreement allows them to push ahead development of Barnes Creek without interrupting their focus on Storie.

The team at Columbia Yukon offers a strong mix of entrepreneurial, management, and geological experience. Douglas Mason, the current Chairman, has significant experience running public and private companies. He was the founder of the Clearly Canadian Beverage Corp and served as its President and CEO for twenty years, building a successful brand.

Since then he has served as the President and CEO of Waterfront Capital Corporation and the President, Director, and sole shareholder of Criterion Capital Corporation. President Ron Coombes founded International Bethlehem Mining Corp and also serves as president of Black Panther mining. Having run three mining companies he has a proven track record of being able to raise capital when required. John Kowalchuk, the VP of Exploration has over 34 years of geological experience. He has managed exploration projects and has been involved in the discovery and staking of several significant projects over his career, including:  the Kerr porphyry copper-gold deposit, the Howard’s Pass  stratiform zinc-lead deposit, the barium-lead-zinc and silver deposit in Driftpile Creek and the Cleo Tungsten property in Northern Canada. The team is rounded out with experienced legal (Bruce Morley) and Financial (Sead Hamzagic) professionals.

Their current stock price, which is in the $0.30 cent range, appears to be significantly undervalued when you consider the resource that they have in the ground. In a report by Objective Capital Limited, they put the company’s valuation at $0.92 per share with significant upside once a feasibility study and permitting are completed (with a target price of around $2). With further exploration and an expansion of the resource, that target price could double. So as the North American economies wind their way through the current financial crisis, Columbia Yukon is pushing ahead with their exploration plans.

If there is a stock to watch over the next six months, this is it.

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