ALEXIS MINERALS - TECH REPORTS - ANALYST PICKS - MANAGEMENT
 GEOPOLITICAL RISK

Ben Abelson of Resource Investor
Date:  Sep 2007

LAS VEGAS -- By its nature, mining and exploration is a highly cost-intensive process, often requiring high levels of equity issuance - and the dilution of existing shareholders. In coupling fully-funded near-term production with tremendous exploration upside, Alexis Minerals [TSX:AMC] may have found a solution to the problem that has vexed mining shareholders throughout this latest cyclical turn.

Under the stewardship of David Rigg, a veteran in the Canadian mining industry, Alexis is rapidly progressing toward production on two properties in Northern Quebec - with the goal of using this cash flow to support exploration activity at its dramatically under-exploited property holdings.

Alexis’ near-term plans focus on two properties located within 100 kilometres of each other in the Val D'Or and Royun-Noranda mining camps, Lac Herbin and Lac Pelletier.

Lac Herbin, the more advanced of the two, is set to produce approximately 10,000 ounces of gold toward the end of this year, with a ramp up to around 45,000 ounces per annum by next year.

A feasibility study recently published by Alexis outlined a potential for four years of production at a cash cost of about $400 per ounce for total net cash flow over the life of mine of C$20.1 million at $625/oz gold.

The deposit currently has measure and indicated resources of 125,000 ounces, with another 167,000 inferred ounces - at very high grades of about 7-8 grams per tonne. At face value, this doesn’t appear to justify much more than Alexis’ current C$75 million market cap.

The potential from Alexis, however, comes when you factor in the potential production from Lac Pelletier, and the strong blue-sky exploration potential.

Alexis is working to develop Lac Pelletier, located in the Royun-Noranda camp, to hopefully produce another 45,000 ounces per year of gold by mid-2008, according to a recent scoping study - which would provide enough throughput for the company to process its own ore using the Aurbel mine it acquired a couple years back.

While a feasibility study isn’t yet complete on Lac Pelletier, it already contains 241,000 measured and indicated ounces, and is currently being drilled out further.

Ultimately, however, the resources at both Lac Herbin and Lac Pelletier show the promise of significant expansion. At Lac Herbin, for example, drill holes at depth in the S1 zone (below the current delineated resource base), have intersected very high-grade samples.

The nature of deposits in the area are large, oblong deposits that could extend to depth up to 1km,  Rigg said during an interview at the Las Vegas Hard Assets Conference.

Given his experience helping to develop both the Goldex and LaRonde deposits, he’s a man who should know what he’s talking about.

Investors should know soon - Alexis is currently working to deliver an updated, NI 43-101 compliant resource estimate for the project. Ultimately, Rigg vocally says that he believes the combination of the two mines could develop into a 1.5 million ounce deposit.

Coupled with the fact that Alexis has C$15 million cash in the bank and another C$17 million in exploration rebates due from the Quebec government, the company appears to be fully funded through to production, and is unlikely to have to undertake a further equity issuance to meet cash needs.

Blue Sky Potential

While undoubtedly a speculative investment, the exploration potential of Alexis (and the way it is funding that exploration), ultimately is what makes this a story one that shouldn’t be ignored.

Riggs’ ultimate hope is to discover a world-class deposit amongst the company’s 1000 square kilometres of exploration properties in some of Canada’s most prolific gold districts. While this endeavour is far from guaranteed, the company has the management team and exploration background to put it among all other serious contenders - plus the near-term production and cash-flow necessary to get it done without asking shareholders to write a check.

While the small-scale production story probably isn’t enough to interest any larger gold miners in taking control of Alexis, its massive land holdings in a highly-productive region could be. With the potential to stumble upon a large scale deposit - and the funding ability to do so – it’s not hard to believe that Alexis could go the way of another great copper exploration-development story in Val D'Or, Aur Resources [TSX:AUR].