first majestic silver

The Ormetal Report

March 21, 1997

If I could buy only one stock!

There is no doubt in my mind that I would chose Manhattan Minerals. I have been following Manhattan since I first met with CEO and Chaiman of the Board, Robert D. Willis, in May 1994. The stock was at $2.00 back then - which is the price I paid for my first shares of this great company. In those days, MAN (this is the trading symbol), had very little money and only two projects, the Morris deposit, on which a positive feasibility had been produced, and the Tambo Grande deposit, that was still at the negotiation stage.

The Morris deposit was a small gold resource of some 225,000 ounces of minable gold in Chihuahua State, Mexico. The reserves were 4.7 million tons with an average gold grade of 0.062 ounces per ton. MAN intended to bring the deposit to production by building a heap leaching operation capable of operating at approximately 30,000 ounces per year for 7 years.

The Tambo Grande project is located in Northern Peru and consisted of a massive sulphide deposit with drill-indicated reserves of 42.3 million tons grading 2.06% copper, 1.47% zinc, 30 grams per ton silver and some gold values. This is what attracted me to MAN. The only problem is that this very promising property was not yet a done deal, as MAN only had a letter of intent to acquire it from BGRM France. Nobody knew how long it would take to finalize the deal as some Peruvian government agencies had to agree to all details before anything could be signed.

An exercise in patience!!

I knew that patience would be needed if I wanted to make money with this deal. Indeed, it was only in March 1996 that the Morris mine construction was finally completed. The delays had been related mostly to financing problems until MAN struck a deal with NM Rothschild & Sons Limited in the fall of 1995. The mine began commercial production on May 1, 1996, and is now operating at 2,200 tons per day. Initial cash flow has allowed the company to resume exploration and expand the geological reserve which now stands at 8.6 million tons grading 0.054 ounces of gold per ton. Minable reserves are at approximetely 320,000 ounces.

That is the moment the stock price started to take off, trading in the $4.00-$5.00 level during the startup period. MAN was on its way to becoming a growth company. Concurrent to bringing operational life to the Morris Mine to life, Chairman Bob Willis, P. Eng. and President Peter Tegart, P. Geo. were both thinking about the company's future. They were continuing their negotiation on the Tambo Grande project, and at the same time acquiring new properties in Mexico and Peru. In Mexico, they acquired the Rome, Guazizaco, Chicaco and Candamena properties. In Peru they acquired the huge Lancones property located very near to the Tambo Grande deposit.

Then came the big news! In summer 1996 MAN announced that it had finally come to terms with BGRM France, and had finalized an agreement whereby MAN would get 50.25% of the Tambo Grande property. This started a price move in the stock that ended in near $8 at the end of the summer. Patience was starting to pay off. But the deal was not yet in the bag. The Peruvian authorities still had to go through a lenghty process of approvals that is about to be finalized as of we speak. But with this announcement, the future was getting more and more exciting.

Then later last fall, more big news caused the stock price to surge again when the company announced the discovery of a large anomaly in Mexico that had the potential to contain 2 million ounces of gold and 50-60 million ounces of silver. The price soared to $13 in a few weeks... After a normal correction the stock price is now stable and consolidating in the $11-$12 range.

And guess what? I am still holding most of my shares, even after a 500% move since my first purchase. And here is why...

A potential massive discovery!!!

Manhattan has a market capitalization of approximetely $275 million. The Moris mine alone cannot justify this market cap as it is worth no more than $50M. But the new Candamena discovery could be worth $200-$300 million by itself if they proved up these deposits of millions of ounces of gold and silver. And judging by the initial drill results, the chances are very good that they will.

But what will really enhance the possibility of making of Manhattan Minerals a $1 Billion+ company is the potentially large VMS (Volcanic Massive System) complex at Tambo Grande and Lancones. Lancones is already 100% owned by MAN. And last month we heard that the Minister of Mines had approved the BGRM France-Manhattan deal. Further to that announcement, MAN announced a new aggreement that would see it share of the Tambo Grande property being increased to 75% from 50.25%. Basically, there is only one thing missing for this project to fly, and it is the Supreme decree to be signed by Peruvian President, Mr. Fujimoro. And this is coming this spring.

Recent and past exploration programs have identified several geophysical anomalies on these two properties - more than a dozen. But so far, only one has been drilled and has indicated the 42 million tons mentioned above. This one anomaly has a metal content of more than $3.5 billion in copper, zinc, silver and gold - based on current metal prices. Alone, it could add a value of $300 million to MAN's bottom line, or more than $12 per share. With most other anomalies discovered so far carrying a similar geophysical signature, all hopes are allowed - and you can understand why I am thrilled by this project.

The possibility exists to clearly develop a new major mining camp with hundred of millions of tons containing high grade copper and zinc with meaningfull value of gold and silver. The first drilled anomaly contains by itself more than 45 million ounces of silver. What if all anomalies are of the same nature?

Of course, nobody can be assured that more metal will be found on the Lancones and Tambo Grande properties. That is the risk of the mining business. You may think that this is all, but wait! MAN has also the possibility of discovering additional gold deposits on any of its properties in Mexico. All are highly prospective, and at least one has shown a larger anomaly than what has been discovered at Candamena. In brief, Manhattan has the management and the properties. But what about the last ingredient to this good recipe... cash?

Peru and Mexico are the backbone of Manhattan's future growth.
MAN has the management, the properties and the cash !

They say that when you have good people and good properties, it is easy to get the money to explore and develop them. Well, Manhattan proved it again with new financing of $36 million to be closed by the end of March. This one follows an earlier financing done in 1996 at $7, which brought in $21 million. MAN has now more than $55 million to spend on these great projects. You can bet that these exploration efforts will translate into a much larger market capitalization in the next few years, and therefore much higher stock prices.

How high is high? Only time will tell. In the meantime, why don't you get in touch with them and ask f or your information package on MAN. They can be reached at 800-810-7111. Manhattan Minerals has also a website at

The total world's holdings of gold could be transported by a single solitary oil tanker.
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