“Gold Mine Stock? Fool Me Once … “

By Ralph Silberstein

If Emgold Mining Co. fails to pay the City of Grass Valley the required deposit of about $440,000 by September of 2012, the City will consider the Idaho-Maryland Mine project application withdrawn.

The deposit is for independent consultants to begin preparation of a revised Draft Environmental Impact Report (DEIR) on the proposed mine and ceramics factory. A total of $3-4 million and about   two years will be needed to finance and execute the DEIR, additional studies, another round of public hearings, and a Final EIR before obtaining a permit.

Emgold may be unable to rise to the occasion. The annual financial report for 2011 shows a loss of $2,338,060, or $0.06 per share, pushing the accumulated deficit to over $50 million. Emgold has no sources of regular revenue and is predictably out of operating capital again. This has been going on for years.

Penny stock junior mining companies such as Emgold are notoriously risky investments in general, but the Idaho-Maryland Mine project is increasingly unlikely to succeed. Working against the efforts to raise funds is the huge added risk of the ceramics factory, which should scare off investors. Fusing tailings into tiles to dispose of mine waste may seem like a good idea, but it has never been done on a commercial scale, and the tile market for this product is not promising. Furthermore, Emgold has no expertise in ceramics and the plan calls for selling 480,000 sq. ft. of tile per day; unbelievable, especially in today’s market. Add to that the obstacles of getting the Grass Valley General Plan modified, annexation approval, significant air pollution in the face of new strict carbon emissions regulations for California, and a variety of local issues such as threats to local wells and property values.

Note that, if a permit is obtained, the costs to de-water the old mine and build the mining and ceramics factory facilities will likely exceed $200 million. This will easily consume all the profits from the “measured gold reserves”.  (As per NI 43-101 report, 212,000 oz.)

To date, in an effort to promote the project, Emgold has made a number of questionable statements:

  • The revised project documents, as submitted to the City of Grass Valley, estimate the maximum number of long term jobs at 500, but in public statements Emgold is now claiming 600 jobs. It was 400  last year.
  • Promotional pieces about the Idaho-Maryland Mine repeatedly claim the project is in the “advanced stage of permitting”, when in fact they have not even submitted deposits needed to restart the DEIR process.
  • A constant claim of “community support” from a 2006 poll fails to mention that the support was conditioned upon addressing all environmental concerns, upon which it fails. Now that the project description has been made public, there is strong opposition to the mine.

In an effort to raise yet more funds, Emgold has now employed Vanguard Shareholder Solutions Inc. to disseminate news and public information to investors, at a cost of $8500/month and stock options.

As the marketing of the Idaho-Maryland Mine project becomes more expert, it becomes even more important to do one’s own research and carefully scrutinize the merits of any investment before committing funds. Buyer beware!

Ralph Silberstein: President of CLAIM-GV (Citizens Looking at Impacts of Mining), Grass Valley City resident, software engineer, served 2 years on the Grass Valley Planning Commission, former Building Contractor.

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