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Dhanoa
is a production stage company formed for the purpose of acquiring,
exploring, and developing natural resource properties. Activities
during the production and exploration stage include further development
of the Company's business plan and raising capital. The Company has
recently initiated a new program to evaluate undervalued assets for
potential addition to its mineral claim portfolio.
Dhanoa’s Current Operations
Dhanoa’s Bella Rica project consists of
three mines in Southwest Ecuador, with a
current production cost of $280.00 per
ounce.
These mines currently operate at a cost of
$280.00 per ounce and are producing
enough to reach 100,000 ounces of high
grade gold in 2007.
With gold at $680.00 per ounce, this
equates to $40 million dollars in revenue
for Dhanoa.
Dhanoa’s Property Study Results
Dhanoa’s Bonanza properties were most recently part of a study
performed by independent geologist Larry Sostad, an expert
in geophysics, mining exploration, geology, and geochemistry. The
random samples were taken using the various tunnels at the company’s
three gold producing mines in southern Ecuador and then
sent to an Assayers laboratory in Canada where they were certified.
Of these, the following three were the most encouraging:
A2709-2 238.20 Au g/tonne
A2712-1 24.50 Au g/tonne 300.30 Ag g/tonne
A2712 78.20 Au g/tonne 144.00 Ag g/tonne
The industry standard is approximately 20 g/ton.
Reserve estimates, resource samples and estimates are not Ni
43-101 certified.
Ecuador 
Southern
Ecuador has rapidly become an attractive choice for mineral
exploration/development companies. Permissive geology in unexplored or
under explored areas, a stable mining code, an opportunistic labour
pool, no restrictions on capital flows, and relatively good
infrastructure has led to the recent interest in the country.
Compounding the new exploration interest in Ecuador is a series of discovery/
development projects that have potential to be world class. The most recent find is
Aurelian’s Fruta Del Norte epithermal gold discovery in southeastern Ecuador. With
less than 20 drill holes in the discovery area ARU market cap is already at C$600
million.
This suggests to us the market believes ARU is on to a 5-6 million oz target
(using US$100/oz Au). Corriente’s Mirador Cu-Au project is 14km north of Aurelian’s
new discovery and based on current development plans could be operating by 2008,
and within 18 months of start up producing about 250 million lbs of Cu/yr. In south
central Ecuador, IAMGOLD is developing its Quimsacocha high sulphidation Au project.
The company has outlined thus far a 2.8 million ounce gold resource. The resource is
open as evidenced by step out drilling along strike and we expect an updated resource
calculation this fall. Preliminary mine plans suggest that an open pit operation could
produce about 230,000 ounces of Au per year.
 Mining Law
There are internal and international pressures for Ecuador to reduce its reliance on
agriculture and oil. In August 2000, Ecuador revised its mining law to make it more
attractive for foreign investment including the ability for foreigners to own 100% interest
in mining properties. In 2002, government royalties on mining were eliminated. The
current tax rate in Ecuador is 25%.
The right to explore for and exploit minerals is granted via way of mining concessions
that are valid for 30 years and renewable. Concessions have exclusive rights and are
defensible against third parties. Concessions are up to a maximum size of 5,000 hectares
each, but there is no limit on the number of concessions held. Annual concession fees are
payable with fees ranging from US$1.00 per hectare up to US$16.00 per hectare starting
in year 13 of holding the title.
Upon a production decision the operator submits an Initial Declaration of Production
(IDP) together with an Environmental Impact Study (EIS). The EIS must be approved by
the Ministry of the Environment. Surface rights are independent of mineral rights.
General Geology 
Ecuador
can be divided into five north – south trending physiographic regions
that extend north and south respectively into Columbia and Peru. The
main metallogenic regions of interest include: the Western Cordillera
(accreted Cretaceous to Eocene volcanics and intrusive rocks), and the
Eastern Cordillera (includes Mesozoic intrusives) that occur in central
and eastern Ecuador. Regional north trending basement structures are
important controls on Tertiary volcanism in the Western Cordillera, and
thus emplacement of porphyry, skarn and epithermal styles of
mineralization. In the Eastern Cordillera, Corriente Resources is
targeting Cu porphyry mineralization in older Jurassic intrusive rocks.
Aurelian Resources has discovered epithermal Au mineralization within
the same belt of Jurassic rocks as those being explored by Corriente.
In addition, epithermal gold associated with skarn hosts exist in the
same eastern belt; the Nambija prospect is believed to have been one of
the most prolific Spanish mining operations in the sixteenth century.
The most easterly physiographic region, the Oriente, is host to
Mesozoic sediments which contain most of the hydrocarbon reserves in
Ecuador.
Growth Strategy
Dhanoa Minerals LTD is on schedule to complete
its acquisition of an 80% interest in three
gold mining operations in Southern Ecuador,
referred to as the Bella Rica project.
The Guanache Mine is the lowest in elevation,
the Mollopongo Mine is at the top of
the mountain, while the
Bonanza Mine is in between.
The vertical
extent is a little more
than 1000 feet, and the
continuity of the gold
vein systems run horizontal
as well as vertical.
It has become very clear
that Dhanoa has established
itself on favorable
ground for extraordinary expansion and
development.
Part of Dhanoa’s growth strategy is to
undertake underground expansion, open pit
development, and creating a centralized
modern treatment plant for the production
of gold and silver. Dhanoa anticipates the
Bonanza mine to reach a rate of 100,000
ounces of gold through the next 12 months
and then building to 300,000 ounces annually,
as indicated by increasing production
levels already being achieved. The goal is
to produce 12 gr. per ton average in high
grade gold.
Dhanoa wants to continue to pursue new
exploration interests using revenues
(projected at $ 40 MM for 2007) for acquisitions
and facility upgrades or installations.
All the properties, and most formidably
the Bonanza mine, are also located
in an area where Dhanoa
is strategically positioned
within an emerging gold
arena of international stature.
They are actively employing
state-of-the-art concepts
for production and
security. In mines such as
these, where grades are
high and the gold grains
are visible, losses may exceed 15%. By
the end of June, they will be installing
cameras for 24X7 monitoring of their gold
processing. Their intent is to make the live
camera feed available on-line through their
website as a means of providing security
and enabling shareholders to view the extent
of the operations up close.
Dhanoa’s Modernization of
Operations
It’s expected that modernization will cost about $5 million and
be complete by the end of 2007. This upgrade process is expected
to increase production by 3x, meaning an increase of
revenue from these properties to roughly $120 million or
300,000 ounces by 2010.
Dhanoa’s Acquisitions
Expert evaluation from industry and regional professionals are ongoing on
properties that can contribute long term quality production and revenue.
Working with the benefits of shareholders in mind, and cash obligations
complete, financing of such activities may be accomplished based on revenue
generated cash and stock.
Recent DHNA News:
May
25 - Dhanoa Minerals Projects Annual Revenues of $170 million by Second Year of Production
Dhanoa
Minerals Ltd. (OTCBB:DHNA) announced that it has completed a resource
extraction estimate for its three mines in the Bella Rica region of
southern Ecuador. End of first year production (ending in June, 2008)
is expected to be around 100,000 ounces of gold, generating revenues of
around $68 million, with gold at $680 per ounce. By the second year,
production is projected to reach 250,000 ounces of gold per year. The
three mines (Bonanza, Guanache, and Mollopongo) sit on the western end
of the Ecuadorian metallurgical gold belt, which holds over 10 Million
ounces of gold.
Even
if gold remains at their current value, the company is confident that
it will generate gross revenues to total $170 million each year after
year two of production. However, since the price of gold is predicted
to increase substantially, Dhanoa's revenues could be correspondingly
higher.
"Our
company has reached a significant milestone, and we're excited about
the prospects for the next two years," says Mr. Lee Andrew Balak,
president of Dhanoa Minerals, Ltd. "With the current price of gold and
our vast reserves, our revenues should considerable."
May
9 - Dhanoa Appoints Daniel Kuhn as Consultant to the Company
Dhanoa
Minerals Ltd. (OTCBB: DHNA)(FRANKFURT: D7Z) is pleased to announce that
they have hired Daniel Kuhn as a consultant to the company.
Mr.
Daniel Kuhn is a long time mine captain who will be Dhanoa's on site
person to ensure that the company's expansion plans are executed as
planned. Mr. Kuhns mining career spans more than 40 years.
Daniel
Kuhn has worked as a mine captain with INCO in Sudbury, Ontario for a
period of 30 years. He has extensive experience in Latin American for
many years and has assisted in building many successful mining
companies in South America as well. The last 5 years at INCO was spent
in management after having gone through an extensive training course
based on Loss Control Management. He currently is working as a mining
consultant with International Minerals. He works on mine design and
plans for the Rio Blanco property in the south of Ecuador which is next
door to Dhanoa's project.
Mr. Kuhn is an expert in loss prevention and security measures on mine
sites. Dhanoa hopes that his presence on the mine site will be a great
tool when it comes to loss prevention for the gold that comes out of
the mine. Many mines have a loss rate of approx 15%, with Mr. Kuhn's
presence at the site, Dhanoa hopes to completely abolish the loss rate
as he will be implementing certain measures in order to secure the mine
site and ensure that loss rates are eliminated.
Having spent at least 21 years as a miner Mr. Kuhn is highly qualified
in driving tunnels, down and up-ramps, raises, ore passes, shafts and
stopes. Both mechanized and conventional. At Milpo (Peru) he was
responsible for driving the bins and shaft stations in the worst ground
conditions at Porvenir. Because he can physically demonstrate the
processes involved in any of these jobs, he is perhaps one of the best
mining instructors working in South America at this time.
Development is the most important work in the mine when opening up ore
reserves. Mines thrive on good development miners. The design of
stopes, tunnels and raises is important , but it is much easier to find
people who can do the design than it is to find and train a crew to
drive them. This is where his management style pays off in mines. Mr.
Kuhn can train the supervisory staff in all of those most important
tasks and they in turn can better instruct and supervise their miners
on how the job should work. Having spent considerable time in gold
mines in South America he is also able to design efficient stopes, open
them up, and get them producing in a timely fashion. In this area above
all others, a broad and diversified mining experience is invaluable to
a mine.
Mr.
Kuhn will also be present for the pouring of all gold bars and will be
taking proper accounting of all bars that are produced at the site and
will ensure that they reach their final destination. It is essential
that any producing company must have an expert on site in order sustain
the companies operations and assets that are being taken out.
April
10 - Dhanoa Minerals Announces Installation of Cameras
The
Company has entered into an agreement with a local provider to install
within two months cameras and satellite dishes at key processing points
to broadcast 24 hours a day 7 days a week to view live on the Dhanoa
website. This will allow all shareholders of Dhanoa to view the pouring
of the gold bars and to view the property and processing plant. The
installation of these cameras will also greatly enhance security and
efficiency. Dhanoa prides itself on providing all shareholders tools
such as these cameras to be in touch with the companies operations.
April
5 - Dhanoa Announces Production Plans
Dhanoa
Minerals Ltd's (OTCBB: DHNA)(FRANKFURT: D7Z) three gold mining
operations are located in southern Ecuador. The Guanache Mine is the
lowest in elevation, the Mollopongo Mine is at the top of the mountain,
while the Bonanza Mine is in between.
The
vertical extent is about 300 meters (over 1,000 feet). The continuity
of the gold vein systems is remarkable from top to bottom as well as
laterally, i.e. along strike. Thus, the favorable ground for future
exploitation is extraordinarily substantial.
Dhanoa is finalizing plans to increase the current underground
production almost five-fold within a six month period. The Mollopongo
Mine is surrounded by a strong halo of gold mineralization, which would
be amendable to open-pit mining at an initial rate of about 2,000
metric tonnes per day. In 1997, Cambior Inc., a major Canadian gold
producer, conducted a thorough evaluation, which provides the basis of
Dhanoa's planning.
When on stream, total output of gold could surpass 40,000 ounces
annually. This estimate assumes a relatively modest increase in gold
recovery from presently depressed levels. Dhanoa has identified the
methods and equipment necessary that will help us reach this production
goal. Additionally, Dhanoa will be evaluating several acquisition
targets nearby.
Security is a vital concern in gold mines. For operations such as
Dhanoa's, where grades are high and the gold grains are visible, losses
may exceed 15%. The company is in the process of hiring a local
supervisor to monitor everything from blasting rock to sale of the
gold. When the new centralized milling complex is complete, it will
treat all feeds from the mines directly, significantly lowering losses
while materially reducing costs.
April 4 - Dhanoa Minerals Arranges U.S. $1.3 Million Financing at $1.90 per Share
Dhanoa
Minerals Ltd. (OTCBB: DHNA)(FRANKFURT: D7Z) is pleased to announce
recently that it has arranged a private placement of 684,210 shares at
a price of $1.90 U.S. for a total gross proceeds of $1,300,000.
Dhanoa
Minerals Ltd. is arranging a non-brokered private placement of 684,210
units at a price of $1.90 per unit for total gross proceeds of up to
$1,300,000. The units consist of one common share and one-half of a
share purchase warrant, with each warrant exercisable for $2.00 for
another 18 months from the closing date of the private placement. A
finder's fee in accordance with exchange guidelines may be payable on
this financing. The Warrant is redeemable by Dhanoa without
consideration upon thirty (30) days notice to the Subscriber. The
shares of common stock included in the units as well as the common
shares underlying the Warrants are "restricted securities" as that term
is defined in Rule 144 of the Securities Act of 1933 and the units were
sold pursuant to an exemption from registration requirements provided
by Regulation S.
Proceeds
from the private placement will be used to finance our planned
acquisition in Ecuador, working capital to modernize plant, purchase
equipment and hire more labor and begin the business strategy that we
have set out for 'Dhanoa'.
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