A Diverse Portfolio Has Cline Mining on Firm Footing

For any small mining and exploration company, holding a diverse portfolio of properties while concentrating funds and development assets on one, key project, has been a tried and proven strategy. Taking advantage of varied end products, while focusing efforts first on those projects that offer the best potential for quick revenue streams, allow companies to reduce risk and raise funding for future development.

Cline Mining Corporation (TSX: CMK) is almost a picture perfect example of this kind of company profile, focusing efforts on its highly developed New Elk Coal Mine Project, while holding an additional half dozen properties, covering gold and iron ore, as well as a series of coking coal mining projects. Cline say they are a growth orientated company in the business of acquiring, exploring and developing mine mineral resource properties into a state of production, and is supported by the Japanese coal miner and conglomerate, Mitsui Matsushima (TSE: 1518). It is this backdrop that places Cline on a firm footing going forward and one that undoubtedly warrants further consideration when assessing the company’s strength.

The New Elk Coal Mining Project is located near the town of Trinidad, in Los Animas County in Southern Colorado. Cline own the existing New Elk Coal Company surface assets, including the coal preparation plant, silos, buildings, railway rights, real estate, mining equipment, conveyor systems, electrics and coal waste dump. These surface assets are key in the development of New Elk coal resources, and are why Cline expects to bring the first production from the site online by the fourth quarter of this year.

The mine itself has a long and successful history of producing and delivering high quality coking coal from its underground mine, and in fact already has a documented 315 million tons of in place coal (documented in the 2008 Behre Dolbear independent NI 43-101 technical report, followed by the Agapito Associates NI 43-101 compliant technical report in March this year).

Cline has commenced a rehabilitation program of the New Elk Coal mine, and recently reported the miners have now completed installations and clean up of roof support in two thirds of the access slopes, and have advanced to within 400 feet of the coal seam.

Additionally, the rehabilitation and upgrading of the surface infrastructure has begun on schedule, with crews accessing existing equipment on site and preparing for the installation of new processing equipment. Cline expects the first production from the site to commence in Q4 2010, and expect it to reach a capacity of 1.3 million tons per annum in 2011. Going forward, they expect an ongoing ramp up of production up to 3 million tons per annum, and note that the large in place compliant coal resources mean that increases in production over the 3 million tons mark can be contemplated in the future. Considering the state of the New Elk Coal Mining Project, and the potential for a quick and ongoing revenue stream, the benefits Cline gains from focusing its efforts on the site are clear to see. A well developed and proven resource prospect, allowing the company to start production, and thus secure finances, quickly, will itself be a platform that underpins strength while Cline begins to shift its focus to other projects going forward.

In addition to the New Elk Coal Mine Project, Cline has another significant metallurgical coal property in northeastern British Columbia, Canada, known as the Lossan Project. The Lossan Coal Project is located in the Peace River Coalfield in North East British Columbia, and contains coal of two grades; one a medium volatile bituminous pulverized coal injection (PCI) product and the other a metallurgical coking coal product. A study adhering to CI 43-101 standards showed 108.8 million tons of measured in place resources, with a further 77.3 million tons indicated and 53.5 million tons inferred, for a total resource estimate at the site of just under 240 tons of coal.

As discussed earlier, Cline is not just focusing on the coking coal market, but rather, is holding a relatively diverse portfolio of mining properties covering both gold and iron ore, implicitly reducing risk of fluctuations in end product prices and market volatility.

The company holds the Cline Lake gold mine property in Ontario, Canada, and the Bekisopa iron ore deposit properties in Madagascar. The Cline Lake gold mine property is located in the Wawa gold camp in Ontario, with four mine shafts on the property with eight development headings, the deepest shaft reaching 1,165 feet. The company is undergoing an extensive diamond drilling programme at Cline Lake, down to depths never before drilled in the area (below 2,000 vertical feet). Phase I of the drilling program has been completed, and Phase II is currently in progress. Assay results from the study were strong, with the wide spaced deep intercept drilling showing higher grades and core lengths, and are very encouraging as to increasing commercial potential in depth and strike length.

The Bekisopa (Beki) Iron Ore Deposit properties, consisting of Beki East and Beki West, are located in South Central Madagascar, and an initial report by the United Nations (UN) showed two types of mineral present; primary and lateritic. The primary mineralization consists of magnetite, in layers and concentrated intervals. The lateritic material consists of magnetite partially converted into martite and secondary iron minerals. Both mineralizations are reported to be “excellent” quality, with low traces of sulfur and phosphorus. Following the UN study, Cline undertook its own exploration programme in the area in 2007, to increase the known Beki iron deposits to world scales and with the hopes of additional discoveries. The study encompassed an initial airborne survey, and following that ground geophysical work which included 21 detailed gravity and magnetometer surveys on approximately 60 kilometers of lines. The results showed three high density zones of expected mineralization (at varying blends of magnetite and non magnetic hematite), labeled Beki 1, Beki 2 and Beki 3, each having a thickness of 50 meters. The gravity data has been sued to estimate total mass of the deposits, and shows each zone has an estimated 575 million tons each. Assuming a 150 meter cut off point for open pit mining, the total estimated mass of the combined deposits comes in at 560 million tons.

Each of Cline’s mining properties has strong potential in their own right, and by focusing primarily on the New Elk prospect, the company is taking advantage of the well established, highly developed infrastructure to start production and bring in revenue, as soon as possible.

By not limiting themselves to one specific type of mineral product, and indeed showing some geographical diversity with their holdings, the company has placed itself in a position to limit its risk exposure. Couple this with the strong financial backing that Mitsui Matsushima brings to the table, and with the recent private placement of 30.5 million shares, raising over C$45 million, Cline Mining Corporation mining appears to have a firm platform for any future plans and developments it wants to undertake.