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Show PLANNING & DEVELOPMENT 15 MAY 1972 MINING DIVISION UTAH INTERNATIONAL INC. Paradise, California May 13, 1972 Mr. Weston Bourret Vice-President Utah International 550 California Street San Francisco, California 94104 Dear Wes; Following your request, I have compiled and now submit some preliminary figures on which I believe a realistic first and second year budget may be submitted. This budget should co ver the preliminary reconn-aissance and follow up exploratory program on a selected 1,000 km. area. To be most effective and comprehensive, and to make the best use of the organization, this project should be a two-pronged efforts:- (1)- Thepreliminary reconnaissance and follow-up on a concession-ed area whose selection is based on present geological knowledge. (2)- A study and approach to the several existing concessioned copper areas, with the probability of getting an option or working interest in these as they become available, jf this proves to be desirable. The organization, as outlined, should permit completion of the "two-pronged "effort in the allotted time. Normally two years are granted on the concessions before full commitment is required. The first major outlay on the contemplated project would normally occur at the end of the second year and after approval of the feasability study at which time the Government will require a substantial deposit. If an explored or partially developed copper deposit were acquired the budget could be applied to more advanced work such as development drilling. There is a reasonably good chance of finding two billion pounds of copper in a plus 0.5% copper ore deposit, or a cluster of deposits), The most difficult problem is to find reliable associates on acceptable terms, for the long pull. The Government appears to be the only possibly financially qualified candidate at present. The "dry season" in most of Mexico, 3eptember20 to June 20, should be assigned to field work. Hopefully a concession could be optioned and the mexican associates and staff lined up by September 20, but this would require prompt action on all fronts, and probably $30,000 to $50,000 in pre-reconnaissance expense. Please call me if I can be of assistance. With best regards, Sincerely, Al Rodriguez A. I. Rodriquez SUPPLEMENT TO SAMPLE BUDGET. FOR FIRST YEAR RENNAISSANCE I. The direct operating costs for the firdt year of the project have been estimated at about ------------------------- $175,000 2/-Representation, office, legal services and accounting can be assigned to the mexicanized company. Typical annual cost : $36,000 This mexicanized company will normally have some prior assurance of being able to obtain the required concession. 3. Unless the mexiacnized company has a capable and experienced manager who can devote full time to the project, such a man will have to be engaged. Salary and expenses for =;such a manager who should reside in Mexico are estimated at------ $39,000 TOTAL ESTIMATED AMOUNT OF FIRST YEAR BUDGET Excluding equipment, U.S. Travel and insurance--------- $250,000 SECOND YEAR BUDGET ESTIMATE With a successful Conclusion to the first year of reconnaissance, it is assumed that the project will advance to the stage of preliminary core - drilling, & detailed geological mapping, but that metallurgical research and feasability studies will be initiated in the U.S., so will not be included in this budget. Assuming that four drills will complete 30,000 feet of NX core-drilling during the second year at a contract cost of $20/ft. so that the overall cast will be about $25/ft. ----------Drilling cost------- $750,000 ** The Company controlled project services, managaent and Mexico office and legal expenses should be maintained at about the level of the first year-------- $165,000 * TOTAL ESTIMATED AMOUNT OF SECOND YEAR BUDGET------ $915,000 * After the conclusion of the second year detailed feasability and design, time and cost estimates will have to be submitted to the Goverment and if approved , a substantial deposit or performance bond will be required. These expenses should be allocated to the third year budget. **. If the mexican Government takes an equity interest in the project, The geologist's salaries, and possibly the aereo-photo. services may be provided at Government expense. These are matters for careful and protracted negotiation, once the government accepts the application for a concession and the concession is awarded to the highest bidder. |