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Property Acquisition 101: How It's Done in Practice

Property Acquisition 101: How it's done in Practice
By Doug Hadfield, Resourcex.com

Since then Yale Resources (TSX: V. YLL) started picking up exploration projects in Mexico in August 2006, the company began to make out what is perhaps the most obvious form since its inception in 1989.

Urique was the first Mexican property to pick up, closely followed by Zacatecas, both of which are joint venture projects in which Yale is not the operator but for which the company has financial obligations in return for up to 75% and 80% interest respectively. Yale also bought a 100% interest in the property Carol, which is now the only company wholly owned projects.

In the preceding month, Yale has fulfilled its financial obligations, has seen desirable part a result of exploration, and in turn decided it was time to consider a serious round of fundraising.

Investors have begun to record Yale's development is clear from trading patterns. In 2005 the daily average trading about 50,000 shares and the company's share price ranged between $ 0.15 and $ 0.30 cents per share. By the time the company has announced its Mexican acquisitions in August 2006, more than 100,000 shares were trading hands on average. Trading volume continues its bullish ascent and Yale's stock price has mirrored his slow climb force sound, rising to $ 0.40 cents per share, and finding a new floor at $ 0.30 cents, seemingly waiting for the next move by the company.

Yale's President and CEO is Ian Foreman, an impressive figure at six feet three inches, but in front of a microphone is clearly more cerebral than physical. In an interview with Resourcex, Foreman explained how sometimes the path to cash is through the proper acquisition.

"We've gone to brokers to discuss it, "Forman said." They said, "Great, but why not find something with an asset with the potential to increase in strength sound and size, and that there was some work done on it, rather than a pure exploration play? "

So that's what Foreman – in consultation with his board of directors – is doing.

"Every week, I get some things passed me," he said of the process of finding out a new acquisition.

"You look at each other and say," he gestures with his hands, as if making two piles in front of him, a significantly more larger than the other, "-crap … crap crap … hmm … not bad … crap … crap … crap … interesting! Send me some more details on this one! "

If the reports and historical documents – which sometimes include detailed accounts of past exploration and mining activity, and sometimes does not – fulfill the Foreman's stringent requirements, he travels to the site for a thorough inspection.

"That's the acid test," he explains. "To actually be able to go on the field and say," Ok, it's here – or it would not be here – and put the property in three dimensions …. As a geologist who is my responsibility. "

In the last two months, Foreman was in Mexico five times to inspect the various attributes of the candidate. This, he says, is the advanced stage of the acquisition game.

I asked him about the historical data and other records. In response, he pointed to some big black binders on the desk in front of him. "It has all the data."

The property – which he could not identify until Yale has completed the required disclosure in a press release – is a copper-zinc property, with huge silver.

"It [the property] is a past producer, with a small onsite mill, a mill offsite. We are going through the old data base and say, "This is what is there." Nobody's worked on it since 2001. And since 2001 the amount of metal contained increased by 433 percent. "

He chuckles.

"It certainly more interesting now than it was in 2002! "

So what's next in the process?

"We put an offer and If they want it we will sign the deal. We will announce it when it's done. "Investors can expect to see a statement about getting over the next few weeks, he says.

According to Foreman, negotiating the price of the property came second in search of a solid resource.

"May's A great quote from Ian Telfer, "Foreman said, referring to the mining visionary who raised more than $ 450,000,000 for the Wheaton River and made some the lowest cost gold in modern mining for Goldcorp. "He said," Do not be afraid to pay a little too much for an asset – at least to get it. ""

Involved in the property acquisition process is a day of pouring over historical documents, weeks and years of research experience in the field. Still, after all the empirical work is complete, there is always an element of fatalism, too.

Here Foreman makes an analogy that reveals his Canuck-ness, "Look at [Pavel] Bure for [trade Ed] Jovanovski. At the time it looked pretty expensive, but the Canucks got a much better deal out of it eventually because Bure blew out his knee and played for a year and a half after that. "

In other words, "You pay your money, you takes your chances. "

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