Bullion said it hired an agent in regards to an offering of its shares in Canada, and that the financing could consist of up to 10.0 million common shares.

The funds that the gold-focused exploration royalty company secures would be allocated to accelerate its exploration projects in the historically gold-rich Tapajos region of Brazil, Bullion said. The proceeds would also provide Bullion with a reserve of cash, allowing it to take advantage of future acquisition opportunities.

The company acquired several properties in this region of Brazil when it purchased Brazilian mining and exploration company Dourave in an all-share deal in March, including the Bom Jesus, Bom Jardim, Oro Mil, Pontal do Paraita, Caldeira and Niquelandia properties.

It has been working extensively at Bom Jesus, where, earlier this year, it extended a gold anomaly after results from a sediment sampling program exceeded expectations.

The company said that traditionally, any values between 50 and 100 ppb gold would be considered anomalous. Several results, according to Bullion, were returned with over 3000 ppb gold, or 3 grams of gold per ton, with the highest result being over 20,000 ppb gold, or 20 grams of gold per ton.

In early June, the company said it had begun exploration at the Niquelândia property in Goiás, Brazil, representing the first aluminum project for Bullion.

On the OTC, Bullion shares rose 2.04% to trade at $1.00 as of 1:33 pm EDT.

The Niquelândia project represents the first aluminum project for Bullion Monarch, whose stock on the OTC was trading at $1.50 as of Thursday afternoon.

Bauxite is an aluminum ore, the demand for which has increased over 35% in the last decade. Geologists believe the bauxite deposit on the property may extend up to 25 kilometres in length, and up to five kilometres in width, the company said.

Previous exploration on the property returned surface samples of up to 61.8% aluminum oxide, above the cut-off grade for operating bauxite mines.

The two phase plan, which has a budget of $1.5 million, involves mapping, geophysical analysis and metallurgical sampling, followed by definition drilling, metallurgical analysis and resource calculation.

Reserve modeling will be performed based on the results of phase one and two, and will involve the assessment of mineability, and the economic feasibility of the Niquelândia project.

“The Niquelândia Property is an incredible opportunity for our company to gain a position in the very strong aluminum market," said president James A. Morris.

Bullion Monarch, based in St. George, Utah, also has several gold and copper projects in Oregon, Utah and Nevada.

Through the purchase, Bullion will be acquiring six gold and other mineral properties in Brazil, including Bom Jesus, Bom Jardim, Oro Mil, Pontal do Paraita, Caldeira and Niquelandia.

"The synergy of adding Dourave, their portfolio of valuable properties and a management team seasoned with years of professional experience in the Brazilian mining industry will enhance our value," said Bullion CEO R. Don Morris.

"Bullion now has a South American team that will help increase and diversify our pipeline of promising mining prospects."

Under the agreement, which is still subject to due diligence, Bullion will pay 5 million of its shares for 100% of Dourave's shares. An additional 2.78 million warrants will be granted to Dourave, at an exercise price between US$1.20 and US$4.78.

Bullion said that Sergio Aquino and Rauri McKnight will continue to function as president and vice president of Dourave, respectively. The company will operate as a subsidiary of Bullion.

Dourave's projects are located in the Tapajos Gold Province in Para State and Mato Grosso State.

For the third quarter of fiscal 2011, the gold-focused royalty company recorded net income of $0.75 million, or $0.02 per share, representing a 192% increase from the prior year period.

Bullion also posted record royalty revenue of $1.78 million, due to improved production from Newmont Mining's Leevill Mine in Nevada, and a 23% increase in the average price of gold.

The majority of Bullion's revenues are derived from a claim block located in northeastern Nevada's Carlin Trend, for which it holds a 1% royalty.

The average price of gold during the third quarter was 1,377.00 per ounce, compared to $1,118.00 per ounce a year earlier.

"Our record third quarter results reflect strength in our royalty revenue stream and the continued upward trend in the price of gold," said CEO R. Don Morris.

"We are excited with our developing pipeline of projects that we believe have the potential to greatly enhance the value of our company."

For the nine month period ending January 31, 2011, net income was $1.52 million, or $0.04 per share, on royalty revenue of $4.55 million. This compares to profit of $1.17 million, or $0.03 per share, on royalty revenue of $3.93 million for the year-ago period.

Bullion rose nearly 2% on Friday to trade at $1.05 as of 1:44pm EST.

The company said that for the quarter ending January 31, 2011, it collected royalty payments from Newmont Mining of $1.78 million, representing a 12.5% increase over the prior year period. The royalties collected were for properties located on the Carlin Trend in northeastern Nevada.

"Continually increasing revenues, from our royalty interests, allows Bullion Monarch to focus on becoming a leader in the mineral exploration sector," said CEO R. Don Morris.

"With this strong financial foundation, we can continue to aggressively explore the Americas for precious metals and other mineral commodities."

Bullion Monarch is a gold-focused exploration royalty company with additional interests in bauxite and oil-shale technology.

The company said that traditionally, any values between 50 and 100 ppb gold would be considered anomalous. Several results, according to Bullion, were returned with over 3000 ppb gold, or 3 grams of gold per ton, with the highest result being over 20,000 ppb gold, or 20 grams of gold per ton.

The results have extended the existing gold anomaly, in the west and southwest direction of previous work, to more than six kilometres.

Bullion said that drilling intersections suggest the company is "close to, or in, the periphery of the main mineralization source".

"The Bom Jesus property continues to demonstrate its potential as each round of exploration progresses. The new anomalies discovered seem to be significantly larger, with greater values than the initially targeted areas," said CEO R. Don Morris.

Bullion makes money through acquiring new royalties or interests by financing mine development or exploration. The majority of its current royalty revenues come from a claim block located in northeastern Nevada's Carlin Trend.

Bullion, which collects royalties from its interests in gold mines as a primary source of revenue, posted net income of 604,639, or $0.01 per share, for the quarter ending October 31, 2010. This is down from 655,423, or $0.02 per share, in the year-earlier period.

Revenue also declined to $1.41 million from $1.45 million in the second quarter of 2009. This was due to a slight decrease in production at Newmont's (NYSE:NEM) Leevill/East Ore mine, its largest source of revenue from which it collects a 1% royalty.

The company said it is continuing to invest in mineral properties to expand its portfolio of interests. During the quarter, Bullion began exploration at the recently acquired La Reyna property in Chihuahua, Mexico.

"Bullion Monarch remains profitable, debt free and continues to grow the assets of the company by investing in exciting gold exploration projects from cash flow," said CEO R. Don Morris.

Progress is also being made with the company's planned acquisition of Dourave, a private Canadian company with properties in Brazil. Exploration plans to identify new targets for the properties will be released once agreements are finalized, it said.

At quarter-end, the company had $656,542 in cash and equivalents. Bullion currently has interests in properties in Utah and Nevada, as well as in Brazil and Mexico. The company also has three mines producing royalties in the Carlin Trend, Nevada.

Bullion said that while financial details of the transaction remain undisclosed, the consideration of the deal will be a combination of shares and warrents of Bullion.

The assets included in the purchase all reside in the traditionally mineral rich Para state of Brazil; Bom Jesus, Bom Jardim, Ouro Mil, and Pontal do Paranaita and Caldeiras.

Bullion Monarch, as part of previous joint venture agreements, already conducted a diamond core drilling exploration project on the Bom Jesus property, it said.

“This agreement to acquire the remaining two-thirds of Bom Jesus and Bom Jardim, which we have already begun to explore, is a major step forward for the future of Bullion Monarch Mining,” said CEO R. Don Morris.

Key members of the Dourave team will also be joining Bullion, including Mr. Sergio Aquino, president of the West Para State Gold Miners Syndicate, and Mr. Rauri McKnight, a founding partner of Dourave and vice president of exploration.

The majority of Bullion's current royalty revenues are derived from a claim block located in Northeastern Nevada’s Carlin Trend.

One of Bullion Monarch’s key assets is a 1% GSR (gross smelter royalty) on Newmont Mining's (NYSE:NEM) Leeville mine on the Carlin trend, which generated revenues of US$5.2 million in fiscal 2010.  The value of the royalty recently attracted an unsolicited approach from Eurasian Minerals (TSX-V:EMX), which valued Bullion Monarch at approximately $43 million. Bullion Monarch swiftly rejected the offer.

The company instead has chosen to focus on raising the profile of the company through a listing on North America’s premier market for natural resources focused companies. Petersen Law, a corporate finance law firm has been engaged to assist with the listing process, and preliminary discussions with the TSX has commenced.

“Bullion Monarch Mining management feels that a TSX listing is a top priority to continue the rapid growth of the Company. The Company’s goal is designed to expose the Company to a very knowledgeable, sophisticated and active base of institutional and individual investors,” the company stated.

Beyond the 1% GSR, Bullion Monarch has exploration projects in Brazil and Mexico, and also owns a proprietary technology for extracting oil from shale.

Eurasian initially offered 0.44 shares of its company for every one share of Bullion stock in early August, which at the time equated to $0.80 per share. Currently, the offer, which was re-iterated in mid-September, stands at $1.11 per share due to share price fluctuations, representing a 71% premium to yesterday's closing price of $0.65.

Bullion, however, has rejected the proposal, as the company's board decided the deal was not in the best interest of its shareholders. The company did seem open to future offers though, saying it would provide updates on any new developments "if and when it has entered into a definitive agreement".

The takeover target is a gold-focused royalty company with additional interests in oil-shale technology. The company is continually looking to create new royalties or participating interests through the financing of mine development or exploration, or to acquire companies that hold royalties.

The majority of its current revenues are derived from a royalty claim block located in Northeastern Nevada’s Carlin Trend. Bullion Monarch also has an interest in various mineral assets in North and South America in exploration and development stages.

Bullion's royalty portfolio generates high-margin free cash flow with lower exposure to operating and capital costs than operating companies. The company has recently been on the prowl for M&A oppportunities, as it looks to take advantage of its royalty cash flow position.

Eurasian Minerals, which is headed by former Newmont Mining executives and senior geologists, is aggressively looking to add properties to its portfolio. The company has precious and base metals exploration programs in some of the world's most promising, yet under-explored regions, such as Turkey, Europe, the Kyrgyz Republic, Austral - East Asia, United States, and Haiti. The company's share price rallied from around $2.00 in early August to $2.71 at present.

The belt hosts multi-million ounce gold +/- silver deposits such as Ocampo, Dolores, Mulatos, and El Sauzal, as well as the Tayoltita silver deposit.

The La Reyna property is located approximately 10 km north of El Sauzal mine, which is owned and operated by NYSE-listed gold producing major, Goldcorp. The El Sauzal mine has produced over 1,400,000 ounces of gold, with low operating costs.

"The surface geology, proximity to known deposits, and regionally low cost of production combine to make the La Reyna property a promising project," the company said in a statement.

Preliminary geochemistry at the site indicates a large anomalous polymetalic altered zone, with visible surface mineralization.

The company plans to begin phase 1 exploration, including expanded geochemical and geophysical studies, to define drill targets immediately.

Bullion signed an agreement to purchase 100% of La Reyna through its Mexican subsidiary, subject to a 2% net profit royalty on the project.

The deal also gives Bullion an option to purchase a second property, known as the San Antonio mine, until May 2012.

Bullion Monarch is a gold-focused royalty company with additional interests in oil-shale technology and other assets. The company seeks to acquire existing mineral royalties or to finance mining projects that are in production or in development stage in exchange for royalty interests or a participating interest.

North Lantern is the third mine operated by Newmont (NYSE:NEM, TSX:NMC) to produce inside Bullion`s core royalty claim block, alongside Leeville underground and East Ore Body.

By contract, Bullion receives a 1% royalty on all production in this approximately five square-mile claim block. The company’s revenue model is to develop its properties through joint ventures or retained royalties on developed properties, thus maintaining a low liability and expense structure.

The majority of its current revenues are derived from the royalty claim block located in Northeastern Nevada's Carlin Trend, as both Leeville and East Ore are already producing royalties.

But the relationship between Bullion and Newmont has been strained for some time. Bullion initiated a legal battle with Newmont, as the company believes it is owed additional royalty payments relating to a 1979 agreement between predecessors of Bullion and Newmont. 

Under the terms of the 1979 agreement, Bullion ceased mining and exploration activities in the Lynn Mining District located in Northern Eureka County in Nevada, as well as a defined multiple square mile area surrounding this area. In exchange, it is claimed that Newmont (through its predecessor), agreed to pay Bullion a 1% royalty on any production in the Lynn Mining District and the surrounding area.

Bullion also named Barrick Gold (TSX:ABX, NYSE:ABX) as a defendant in the case, after Bullion's counsel supposedly received information uncovering a joint venture between Newmont and Barrick that was dissolved in 1999. It is claimed that the information suggests that both Newmont and Barrick knew of the royalty obligations to Bullion, and therefore Barrick may also be responsible for the royalties owed.

"The court has recently granted Summary Judgment in favor of Newmont on its defense of Laches. We are seeking clarification of the extent of the ruling and will seek reconsideration of the ruling. We also expect that Bullion will appeal the ruling," the company said in a statement.

With regards to the North Lantern monies owed, Bullion has said that it has no projections for the amount of the new royalty payments or their duration, and has requested more detailed account information of the royalties from Newmont.

According to Bullion, however, Newmont has refused to provide the data.

Bullion Monarch Mining is a natural resource company focused on its various mining properties in Nevada and the Western United States. The company has a market capitalisation of around $24 million. Bullion’s primary assets are various royalties from a number of gold projects (including Newmont’s new, large Leeville underground mine and the East Ore Body Mine), with total royalty payments for 2010 (according to the latest 10-K) almost $400,000. It is also worth noting that Bullion are currently in litigation over unpaid royalties that are due on their Carlin property, and potential future royalties also due.

The company suggest that “the combination of past royalties due, current royalties being paid and future royalties could put Bullion in a much stronger cash position which would enable them to compete in a more favourable and profitable way within the mining industry”. In addition to the company’s royalty holdings, they have an 80% interest in the oil shale exploration and production company EnShale, through which Bullion holds under lease some 4,650 acres of oil shale property.  According to the US Geological Survey (USGS), this property holds approximately 667 million barrels of oil, which at a price of $75/bbl, sets a value of over $0.5 million in shale oil alone.

The majority of Bullion’s current revenues are derived from a high quality royalty claim block, located in the Carlin Trend in North East Nevada. Bullion is collecting a 1% gross smelter return (GSR) royalty from Newmont’s operations on this claim block, which covers five mines; the Leeville Mine, East Ore Mine, North Lantern Mine, Turf Mine and the Four Corners Mine.

Over the last three years, this royalty has generated in excess of $10 million in revenue for Bullion, and the company note it continues to grow both in gold production and gold reserves. not only is the mine life of these assets expected to be over ten years, but Newmont see a lot of potential for further exploration, particularly as the Leeville Turf complex ore bodies were found to be more continuous and thicker than originally modelled. Newmont are aiming for a 500,000 ounce gold production from Leeville this year, over 13,000 ounces higher than 2009.

Newmont have said that exploration drilling is targeting both the Turf and Four Corners deposits, and rigs are working both underground and on the surface on the complex of deposits that includes the West Leeville deposit, which is now being mined.

One area where bullion expects significant royalty revenue to come from in the future is their Maggie Property located in Eureka County, Nevada. This is approximately 7 miles north of Carlin, and lies just south of Newmont’s largest open pit operation, the Gold Quarry Deposit. The Maggie Creek property is in a direct line from Newmont’s Tusc Pit to the Mac Open Pit to the Gold Quarry Mine. The Gold Quarry Mine is located less than half a mile from the northern border of the two square miles of land, which Bullion hold a 3% GSR interest in. At the Gold Quarry Mine, Newmont continues to go wider and deeper in their production, helped by the increasing price of gold over the past few years.

As these open pit mines continue to deepen, higher grade underground mines have also evolved.  The Gold Quarry Open Pit is becoming increasingly deeper and closer to Bullion’s Maggie Creek property border. Bullion believes that at some stage in the future, possibly over the next few years, the pit will begin to infringe on their property and so will allow them to begin to collect the 3% GSR on gold produced under their license.

As highlighted earlier, Bullion does in fact hold numerous properties (at varying states of interest) across America, and the potential revenues from EnShale and there recently patented oil shale production method may prove to be highly significant in coming years. But the benefits to a company of holding a royalty based portfolio of properties are there to be seen already in the top line of Bullion’s latest 10-K annual report. This is something well worth considering when looking to invest in the junior mining and exploration sector, and seems to be strategy that Bullion Monarch are happy to take advantage of.

While some of these projects are currently on the back burner the projects and issues which are most likely to be generating newsflow in the short to medium term are the EnShale operation, Newmont’s Leeville mine where the 1% royalty gross smelter royalty provides Bullion Monarch with the majority of its revenues, the new projects in Brazil and the lawsuit with Newmont and future lawsuit with Barrick.  Taking each in turn:

EnShale Inc (80% owned by Bullion Monarch) 

Oil shale is a sedimentary rock which contains significant amounts of kerogen, a solid mixture of organic chemical compounds.  Oil shale can often burn without any processing, (and indeed it has been used as a fuel in this form in small quantities since pre-historic times), but it is more efficient to mine it and then heat it to extract petroleum-like liquids from the kerogen.  However the energy required and the processing cost of oil derived from oil shale has historically been significantly higher than for conventional oil and until recently the price differential and the environmental impacts of mining and processing oil shale inhibited the development of better technologies that might reduce its cost and impact. 

In recent years however improvements in technology, high oil prices and increased geo-political uncertainty have increased interest in the potential of oil shale. EnShale Inc. was formed in 2005 to capitalise on this interest. The company argues that since the US has 82% of the world’s known oil shale reserves it should use oil shale as part of a policy to ensure energy independence, along with an across-the-board reduction in energy consumption through conservation initiatives, continued expansion of traditional hydrocarbon sources, and the promotion of renewable energy sources such as solar and wind power.

EnShale’s ultimate objective is to see that the company becomes a large scale producer of oil from oil shale.  It began by acquiring leases on 4,650 acres of state-owned land in Eastern Utah.  The land lies on the Green River formation of Wyoming, Colorado and Utah which has by far the largest oil shale resources in the world.  In 2006 Gary Aho, Certified Professional Geologist, a renowned expert on oil shale, issued a report based on USGS data which estimates EnShale’s leased oil resource at 667 million barrels of oil (note: that the term resource does not denote a proven or probable reserve as defined by the Securities and Exchange Commission Industry Guidelines). The company has also acquired and developed a patent pending petroleum extraction process for oil shale which uses either gasified coal or cheap and abundant natural gas as a heat source.  The high capital costs associated with coal gasification, makes natural gas the logical choice for a heat source The Idaho National Laboratory of the U.S. Department of Energy, using an Aspen model, developed a 600 page report which indicates that EnShale could potentially produce oil from shale for less than $30 per barrel.  The process is predicted to be significantly cleaner and more efficient than past production, will use less than 3 gallons of water per barrel of oil and the carbon dioxide produced can be sequestrated.

In 2008 the company began construction on a pilot plant to demonstrate the production process.  Recently tests began on the oil shale stockpiles. Tests are anticipated to last for six months or so, though of course this will depend on results. If all goes according to plan then EnShale will be looking to develop an underground mine, (in order to disturb as little of the surface as possible), and a large scale processing operation. Various production plant options are under review with one under consideration at 1500 barrels per day, while another is larger by a factor of ten, at 15,000 barrels per day. 

EnShale’s long term priorities are now to:

·    secure a long-term supply of shale ore through strategic land acquisitions
·    optimize the production process and to minimize the environmental impact of mining and production operations by minimizing water use, diminishing surface disturbances, and identifying commercial markets for the byproducts
·    protect its proprietary technology with patents and to establish a leadership role in the industry through commercial success
·    drive growth and optimize its financial and operational efficiency
Leeville/East Ore Mine

The Leeville Mine began production in the fourth quarter of 2006.  Under an agreement which dates from 1979 the current operator of the mine, Newmont, pays a 1% gross smelter return royalty to Bullion Monarch.  The company received royalties of $3.7m in FY 2009 while in the first half of FY2009/2010 revenues are running at $2.3m, benefiting both from Newmont’s increased production at the mine and from higher gold prices.  

Bullion’s royalties from Leeville could well continue for another decade.  The Leeville mine manager, Joe Driscoll, was recently quoted in the local press as saying , “We have got a great mine life of at least 10 years plus, and I am cautiously optimistic we will have good news on the exploration.” Additionally, based on Mr. Driscoll’s comments Bullion is expecting Newmont’s gold production to increase up to as much as 500,000 oz. from the Leeville Mine. This revenue stream is of great significance to the company as it has allowed to it to be self-funding in investing in other property, technology and exploration.

According to an article in Mining Quarterly Newmont drilling is targeting both the Turf and Four Corners deposits, both of which lie within the 5 square mile area where Bullion currently derives royalties.  


Lawsuits with Newmont

Although Bullion Monarch is receiving royalties from Newmont at Leeville it is currently in litigation with Newmont concerning additional unpaid royalties in the neighboring area. The 1979 agreement between the forerunners of both Bullion and Newmont centered on the original 5 claims (which include Leeville) and an 256 square mile area of interest around the claims in the Carlin Gold Trend where Newmont now have several mines.  Under the original agreement Bullion ceased its mining and exploration activities in exchange for a 1% royalty on future production.  In March this year the district court denied Newmont’s claim that a 1993 Nevada court judgment invalidated or adjudicated Bullion’s royalty interest.  Bullion Monarch are now awaiting a further trial date which will now probably be sometime in the New Year.  Of course it is not possible to foresee what will happen at the trials, but if Bullion is successful it could increase royalties received from Newmont.


Bom Jesus and Bom Jardim properties, Brazil

In May Bullion Monarch announced an agreement with Dourave Brazil, a 99.9% owned subsidiary of the Canadian company Dourave Mining and Exploration Inc, whereby Bullion will pay $2m for a one third interest in the Bom Jesus and Bon Jardim properties.  Dourave will use the funds to continue exploration on the projects which are located in the Tapajos area which has a history of significant gold production by artisanal miners using low tech methods. However these artisanal miners have neither the technical background nor the finance necessary to explore further, or to establish hard rock mines below the alluvial workings and so Dourave/Bullion along with several other major and junior gold companies believe that the area has considerable potential for both large tonnages and bonanza grade vein systems. The JV is now just finishing initial geological studies with a view to identifying targets for drilling in 2010.


Summary

For the moment Bullion is profitable and debt free and has a likely future revenue stream of several million dollars annually from its Leeville royalties.

Nonetheless, of course, there are plenty of risks facing the company – the latest 10K annual report lists 17 different categories of risk of which the greatest, perhaps, are that the oil shale operation may not be commercially successful or that Bullion’s revenues may be less than anticipated if the gold price falls or if production at Leeville were to fall.

However Bullion Monarch Mining has taken steps to mitigate risk by remaining debt free.  To date it has been successful in generating income while acquiring properties and self-financing the construction of EnShale’s pilot plant without diluting shareholder’s interests.  Looking ahead it could be well positioned to benefit from continuing high prices of gold, silver and oil and it has potentially huge upside from its oil shale operation, from its Brazilian gold mining projects and, perhaps, from a favorable outcome to its lawsuits on the royalties in the Carlin Trend.