Dutch Gold Resources, Inc. (OTC: DGRI) is engaged in the mining and processing of proven gold reserves in North America. The company’s strategy is to focus on overlooked resources which can be quickly and cost-efficiently brought into production. The Company currently owns two mines in southwestern Oregon, consisting of the Benton and Gold Bug Mines. Production resumed in March 2007 and the Company has begun a drilling program to prove up additional reserves, and enhance future production. In January 2007, Dutch Gold Resources, Inc. acquired Dutch Mining LLC, which was founded in 1994.Dutch Gold Resources, Inc. owns the lease of The Benton Mine consisting of 24 gold mining claims on 480 acres; which are all in good standing including 8 patented claims and 16 claims located on US Forest Service Land. Dutch Gold also owns the adjacent Gold Bug Mine on 110 acres with 5.5 patented claims. Dutch Gold Resources, Inc. acquired these interests in a share exchange agreement with Dutch Mining, LLC. The mines are located near Grants Pass, OR.
Pouring of Doré Bars & Shipping to Refiners
Dutch Gold announced at the beginning of October that it had poured its first Doré bars using the company’s new laboratory equipment and has completed its first shipment of the Doré bars to its refiners. Doré bars are part of the precious metal production process. Metal that is as much as 90 percent pure is melted into the bars, and the bars are sent to smelters that further purify them to 999.9 parts per thousand.
Dan Hollis, Chief Executive Officer of Dutch Gold Resources, stated, “We have been adding to our inventory of product to be poured since the second quarter of this year. We are pleased to ship our first Doré that was produced in our own facilities. The timing of our first pour is excellent, given the recent increases in gold prices.”
Added Mr. Hollis, “We find this to be an exciting time to be producing both gold concentrates and Doré. With the major producers closing their hedge books, increasing global demand for gold and shrinking world wide production, Dutch Gold is well positioned to benefit from its increasing production in its Oregon operations.”
New Ore Bodies Discovered
The Company announced in early October that it has discovered new ore bodies in previously unexplored acreage in its Benton Mine. The Company reports that it has struck multiple vein structures to the South of existing production areas following the recent deployment of its new Hagby ONRAM 1000/3 Core Drill.
Dan Hollis stated, “Our geology staff and our drilling teams are doing an excellent job putting to use and leveraging the expanded capabilities of the Hagby equipment. We are now actively drilling previously unexplored acreage within our Benton Mine, both farther and faster than previously efforts. The first hole is on the D-S120E-0 azimuth and we have encountered several interesting mineralization zones for only being 190 feet horizontal. It appears that we have found multiple pay zones, right where the historical mining reports predicted, but the old timers were never able to reach.”
Hollis further stated, “Assay cuts have been taken at multiple distances for analysis at independent labs. We will report on the results as soon as they are made available. We are encouraged, believing that we have made a new, meaningful find in a completely untapped area of our mine. Considering that none of our existing 43101-compliant estimated 279,000 ounces of reserves are associated with this area and those reserves were calculated on roughly only 10% of our total acreage having been explored, these drilling results may clearly bode well for future gold production and reserve growth. Since this new area was never included in any third party report, we believe this to be the first clear tangible indication of additional ore bodies not previously documented.”
Outlook for Gold
The fundamentals for gold remain very strong, as geopolitical and military tensions run high and the dollar continues to lose its reserve status. The dollar replaced gold as the international reserve currency after World War II only because it had been convertible to gold, and we are in the midst of an experiment with the first fiat global reserve currency. It has held up remarkably well for 36 years, but cracks are deepening and there is a strong risk that it will be abandoned.
There is significant current risk of a U.S. recession and possibly elsewhere, but global economic activity is less dependent upon the U.S. compared to previous periods of U.S. recession. Current credit market challenges and ballooning U.S. trade and government deficits suggest that gold is likely to appreciate further against the USD, similar to many currencies and other commodity assets (like energy) which do not share USD’s government based fiscal and policy challenges.
Supply & Demand
Dollar demand for gold in the jewellery, retail investment and industrial sectors all reached new heights in the second quarter of 2007. Global demand for gold jewellery showed the strongest surge, reaching a record $14.5 billion, 37% higher than Q2 2006, with particular strength across the key gold markets of Greater China, India, the Middle East and Turkey.
A return to more normal levels of gold price volatility, growing acceptance by consumers of a price that averaged 6% above the same period a year ago, and strong economic performances in the key consuming regions all helped gold to set records in the second quarter, according to Gold Demand Trends, released today by the World Gold Council (WGC).
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