I don’t know which football ground was described by just-retired John Motson as ‘a football stadium in the truest sense of the word’, but John Teeling might very well be described as an Irishman ‘in the truest sense of the word.’
This twinkling, sixty-two year old serial backer of bold mining ventures stepped off an overnight flight to tell me about one of his mining ventures which has not done too well of late – but only in share price terms.
This is Persian Gold, which has built a portfolio of mining projects in Iran on the sound principle that ‘while rocks do not change, politics do.’ Teeling is hoping that the west’s political relationship with Iran might change for the better next year when new leaders will be installed both in Iran and the USA. That might persuade to investors to look at the opportunity offered by the geology of Iran rather than take fright at the failed relationship between this major Middle Eastern state and the west. A more-than-usually-interested observer, too, will be Mike Thomsen, Persian Gold’s geologist who believes that Iran could be host to some of the largest undiscovered gold and copper deposits anywhere in the world.
Formerly the international exploration chief of Newmont Mining, his job then was simply to find gold, and what he noticed was a particular pattern of volcanic rock that hosted major copper and gold deposits in places such as South America, Indonesia and the Philippines. Without going into the exact geological details this pattern is also found in Eastern Europe and runs down from Turkey to western Pakistan – right through the centre of Iran.
So in 2003 Persian Gold was set up to explore for large gold and copper deposits in this territorial swathe known as the Tethyan belt. As usual the course of exploration has not been entirely smooth and Persian Gold’s first project in the north of the country has been delayed by the presence in the vicinity of a protected species - tortoises.
Thomsen, who told me that he ‘has previous experience of dealing with tortoises’ (in the USA) is confident that this obstacle can be overcome but in any case since that first project Persian Gold has signed three others, two of which have progressed with real promise.
Resource estimated good
The most advanced of these is the Char-e-zard gold project, which is right in the middle of the country. Here two phases of drilling and trenching have been sufficient for Persian Gold to estimate a resource of 160,000 ounces of gold and 1,000,000 ounces of silver. A pre-feasibility study will begin soon and if all goes well – and this is a straightforward open pit mining operation – production should commence in 2010.
This will be a small operation, with capital costs of no more than $20m, but according to Thomsen it could ‘clear a profit of three times Persian Gold’s current stock market value’ of just £5m. But it will also provide a valuable lesson in dealing with the local bureaucracy, a lesson that could prove valuable for a second and potentially much larger project at Dalli, which is about 200kms south of Tehran. Here Thomsen has spotted a promising volcanic rock formation, and four drill holes have all encountered copper and gold. Two of these holes were drilled in an area to the north and two to the south, and the latter encountered copper grades of around 0.5%, equivalent to the best grades found at major copper mines in the region – but also the presence of gold.
So this early results indicate sufficient mineralisation to support a mine, and the question now is whether it is sufficiently extensive. Three more holes are now being drilled with results expected before September, but several more will be necessary before Persian Gold can confirm the presence of the sort of world-class deposit that it is looking for.
Last year there was sufficient excitement about Persian Gold’s projects to see the share price bid up to 40p. Today, following months of sabre-rattling between Iran and the USA the price is back down to 7.5p. For those who are prepared to live with the political risks this looks as good a time as any to get into a company that has made some discoveries, and has first mover advantage in a country of undoubted mineral potential.
Regards,
Tom Bulford
for The Penny Sleuth
