LINUX GOLD CORP. (OTCBB:LNXGF)
FOLLOW-UP N° 4
EXPLORING FOR GOLD IN ALASKA AND BRITISH COLUMBIA
Business Summary
In the early part of 2004, Linux Gold Corp. ventured into China. The company has an option to earn up to 95% in mineral production from a sizable piece of property, that is, 161 square kilometers (100 miles). It is located 4 hours north of Beijing and has good accessibility. The property hosts 10 zones (3 main mines) with a proven history of producing small amounts of gold by bucket and hand for many years. The property is also believed to host silver and platinum. There is a mill that can be put into operation with minimal improvements or upgraded for increased output with about 8 months' construction.
Subject to further exploration and successful test results, the property has favorable potential to become a year round producer.
The mission is to test and analyze the property (mines & tunnels) and put the mill into production, then to search for a bulk tonnage reserve. The entire operation can be modernized for a reasonable cost.
Linux can also earn a 50% interest (Teryl Resources Corp. 50%) in 30 mining claims known as Fish Creek. Located in the Fairbanks Mining Division in Alaska, Kinross Gold's Fort Knox mill is within 6 miles of Fish Creek. Fort Knox has been in operation for several years, producing over 400,000 ounces of gold annually at a cash cost of approximately USD 207 per ounce. The Fish Creek Property is an excellent gold prospect that will be drilled in 2004 to test its potential to host lode and alluvial gold deposits. There is a possibility for a low-cost placer mining operation.
In the second quarter 2003, the company acquired 100% interests in two gold prospects located in the Lillooet Mining Division, British Columbia. The adjacent TY and ORO properties are located within 6 miles of the Bralorne Pioneer Gold Mine, among one of the richest gold mines in Western Canada, which since its discovery has produced some 4.1 million ounces of gold.
Recent News: Hebei Province, People's Republic of China, Gold & Silver Prospect Progress Report
Linux Gold Corp. has announced assay results indicating high grade gold and silver on the Tuo Dao Gou gold zone of the company's Bo Luo Nuo property in China. On April 1, 2004 the Tuo Dao Gou gold zone reported 5.5 ounces of gold per ton with 9 ounces of silver, according to analysis by Acme Analytical Laboratories.
The visit to the Hebei Province was supervised by Geologist Jim Yin, Ph.D., on behalf of the company. Dr. Yin directed the sampling of the major known gold zones and platinum, palladium properties. A total of 118 samples was collected from 12 different known gold zones for gold and silver and 32 samples were collected from the platinum, palladium deposit.
Assays are currently being completed by the Beijing General Research Institute of Mining and Metallurgy. The next exploration stage recommended by Dr. Yin is that of the higher grade gold zones, after receipt of the assays, in order to provide sufficient ore to feed the existing mill on the property.
Fundamental Considerations
Linux is moving forward on several fronts.
While the right of Linux to earn a 50% interest (Teryl Resources Corp. 50%) in 30 mining claims known as Fish Creek, located in the Fairbanks Mining Division in Alaska, Kinross Gold's Fort Knox mill, is valid on its own merits, the move into China adds a further dimension.
There are ten gold zones on the Linux property with a proven history of producing gold, and Linux believes that it could include a mega high-grade gold vein stretching 3 miles in length. For detailed information, please go to http://www.linuxgoldcorp.com/Linux_china_property2.pdf.
Linux is an early stage speculation, for which reason the shares should only be bought by those who are keen on such high risk investments.
Technical Considerations
The gold price remains in a solid up-trend and is pushing through the resistance zone at $ 400. A price target of $ 420 to $ 450 over the next six months seems to be attainable. Strong resistance exists around $ 400 - $ 425, but will eventually be overcome.
The surge of the share price from 5 cents to 45 cents (800%) has given way to a consolidation.
The support around 25 cents appears to be a good entry point and the share price could quickly snap back to 35 cents or higher on positive news.
Our recommendation: BUY AS A HIGH RISK, HIGH REWARD SPECULATION!
Peter Zihlmann
www.pzim.com
investment@pzim.com
forex@pzim.com
April 23, 2004
Disclosure: The author has not been paid to write this article, nor has he
received any other inducement to do so. The author is a shareholder in the
company and will benefit from any increase in the company's share price.
Disclaimer: The author's objective in writing this article is to invoke an
interest on the part of potential investors in this stock to the point where
they are encouraged to conduct their own further diligent research. Neither
the information, nor the opinions expressed should be construed as a
solicitation to buy or sell this stock. Investors are recommended to obtain
the advice of a qualified investment advisor before entering into any transactions
in the stock.
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