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Dear shareholders
In last year´s annual report we proudly reported that we had transformed Crew from an exploration company to a producing company. We are even more proud that this year, on our 25th anniversary, we can report that we have taken a made a major step towards becoming a mid tier producer by 2006/2007. Major progress has taken place on a number of our projects and Crew´s fundamental outlook has, in management’s view, never been better. Again my sincere gratitude has to go to our staff, consultants and contractors in Weybridge, Greenland and the Philippines who have made this possible.
Since new management assumed control 3 years ago shareholders have enjoyed a return well above our peers. We believe this is due to hard disciplined work and project delivery, but also due to a clear understanding, and possibly a different approach on the risk associated with mining. Some of Crew’s decisions in the last three years have been viewed as “untraditional”, but they have been driven by conscientious choices linked to economy and risk assessment.
In the fall of 2004, the board and management of Crew held a number of strategy discussions which concluded, after looking at financial and operational risk and valuations of comparable mining companies, that it was important for Crew to have more than one producing asset to reduce general operational and financial risk, but also to obtain a better valuation, more analyst visibility and easier access to human resources and financing. Based on this, management was given a mandate to grow Crew to a mid tier producer of 250,000-300,000 ounces by 2006/2007 through acquisitions and/mergers.
It was with great pleasure that in February 2005 we announced that a bid for 72.5% of Apex Mines in the Philippines was accepted. We took over formal operation of Apex October 4 2005 and substantial exploration and confirmation drilling has commenced in parallel with the refurbishment of the plant and mine planning. Production from Apex is expected to commence by late 2005/early 2006 at a rate of around 500 t/d and increasing to around 2,000 t/d by end of 2006. This is expected to bring gold production from Apex to around 200,000 oz/y or higher from 2007 and onwards. We view this property to have a considerable resource potential outside those resources identified from old data. Considerable exploration drilling will take place, on a local as well as regional level over the next 1-2 years. The Apex property, in additional to the pure gold resources, also holds large copper porphyry (Cu-Au) potential and the company will seek to both explore and increase this potential through the use of its own resources or strategic partnership. Crew is evaluating further land expansion in the Philippines, a country that we view as particularly interesting from a mineral resource point of view. Based on our long lasting presence in the Philippines we could early identify, and have been very pleased, to follow the Philippine government’s active promotion of mining in the country. The Philippines represents a major future growth potential for Crew within gold as well as other metals/minerals.
The first operational year at Nalunaq has identified a number of issues that has caused lower than planned production for the past year. We have always known Nalunaq would be a challenging mine with its initially limited resource, narrow vein, nuggetty deposit in a remote location. All these facts were the basis for us taking the “untraditional” decision to ship ore for the first few years to confirm that we could increase the resource base, obtain operational experience and give ourselves time to “fine tune” the mine. In spite of the lower than expected gold production for the last year, we believe we have now identified where the operational challenges are and have acted accordingly to improve on these.With the considerable increase of 762,000 ounce inferred resource reported this summer, and subsequent encouraging drilling, we see a mine life well beyond 10 years for Nalunaq. We are confident we will be able to meet earlier declared production and cost targets during the present financial year.
Other key events for the year has been the sale of Seqi Olivine to Minelco AB, the MOU with Jilin Nickel on Mindoro, the sale of Hwini Butre Minerals (after year end) to St. Jude and the securing of the Hurdal Molybdenum project in Norway. The sale of both Seqi Olivine and Hwini Butre Minerals created considerable profit for the Company and is in line with our declared strategy of constantly improving our portfolio of projects. As we develop and/or acquire larger more mature projects we will consider selling smaller and/or less strategic assets. Crew has demonstrated its ability to see an opportunity, take it and to materialize on it within a short period of time.We believe this is an ability that will prove to create considerable value for the Company over time.
Whereas the sale of Seqi Olivine and Hwini Butre are relatively small but profitable transactions, a final agreement on Mindoro would be a major value creator for Crew. Jilin Nickel, as well as a number of other major nickel and iron ore companies are performing test work and/or are evaluating the Mindoro project as I write this report. We believe the work that has been done the last year confirms the projects`s potential and viability and has increased the possibility of finding a partner for the project. Considerable focus is being allocated to identify and conclude a joint venture or partnership on Mindoro.
I think I can safely state the fundamental situation for Crew has never been better or more promising for the future. Our focus has been, and will continue to be, to create maximum shareholder value and above market performance over time. As per last year my sincere thanks go to staff, customers, partners, shareholders and all other individuals, firms and authorities that we have worked with, for having supported us over the last year and we hope to be able to build further on this in the years to come.
Yours Faithfully,
Jan A. Vestrum
President & CEO
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