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Gold exploration companies are not in the business of gold production, but rather gold discovery

The Unique Sparkle of Gold Exploration



With the price of gold rising to variable but generally escalating levels, our global focus has turned golden. Speculation is running rampant on whether gold is merely an asset class appreciating due to fundamental forces or if there are graver implications for the future of the global economy. As the president of a gold exploration company, there is no doubt that the trajectory of my industry’s popularity is ever increasing as gold is the global topic du jour. This shimmering spotlight offers me the opportunity to set the record straight on the distinct differences between gold mining and mineral exploration companies.
With the euphoria surrounding gold, more people than ever are confusing gold mining with gold exploration. Step aside Fred C. Dobbs, the gold prospector in the movie classic, “The Treasure of the Sierra Madre,” portrayed by the iconic Humphrey Bogart, and understand what genuine 21st century gold exploration is about today. Analogous to software development or the research and development process behind new pharmaceutical drugs, gold mining exploration is essentially the R&D side of mining. Gold mining exploration entails the process of finding commercially viable concentrations of gold minerals to mine and is an intensive and organized form of mineral prospecting. Gold mining companies, on the other-hand, come aboard once a substantial quantity of mineral deposits have been identified and focus on the extraction or recovery of the mineral from its ores which often requires a combination of mineral processing, hydrometallurgical, comminution (the process where solid materials are reduced in size, by crushing and grinding) and extractive metallurgy processes to be performed.

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Gold exploration companies are not in the business of gold production, but rather gold discovery. The business model of most gold exploration companies is to partner or sell the company to a gold mining company. We engage in cost effective, cost-controlled exploration. While gold prices continue to reach record heights, many gold analysts predict prices will go even higher. They reason that investors will continue to turn to gold as a hedge against the falling euro and other global economic woes. At Westridge Resources, we will be able to be profitable with gold per ounce levels at far lower levels and as I’d like to see a healthier global economy, I am hoping for a more rational gold future. However, it would be hard for me to write a better script for a recommendation to buy gold as the supposed risk-free asset class of the US Government debt is now uncertain, we continue to grapple with an ongoing crisis in the eurozone, there’s political dysfunction in the US; and, our slowing/no growth economy which is bad for stocks. My company benefits in this type of gold environment as our primary project is a Charay gold silver property located in Western Mexico, approximately 40 minutes by car northeast of Los Mochis, an ocean-side city in the State of Sinaloa. The Charay project hosts a high-grade epithermal gold/silver vein system that has shown indications of bonanza grades. Our company management has deep bench strength with over forty years of extensive experience working with epithermal vein systems in Mexico. There are significant cost advantages associated with the Charay project due to mineralization at surface, ease of access and excellent infrastructure that currently exists. We have two paths that we can choose as far as our end game. We can go into production ourselves at a relatively low cost compared to many other exploration companies. If our discovery is a large, economic gold discovery, we will likely become an acquisition target for some of the world’s largest gold companies. Clearly, the large cap gold producers are making staggering amounts of money at today’s gold prices and all of them have a requirement of replacing their respective annual production. If we choose the direction of going into production, and an offer comes in that the shareholders approve of, then so be it. If politicians in Europe and the United States rush to a rescue plan that makes sense, the price of gold will moderate, even go down. However, at this time the market sees nothing but uncertainty. About the author: Peter Schulhof is Director & President of Westridge Resources, (TSX-V: WST) a Canadian-based mineral exploration and development company whose primary project is the Charay gold/silver property located in Western Mexico.


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