321 Gold

Risk Free Gold, part 2

October 10th, 2007

By Bob Moriarty

As I said in my last piece released on Friday Oct 5th, the Bernanke panic of September 18th has made gold risk-free. And the world faces two systemic events at the same time. The implosion of 8,500 hedge funds with its associated $460 trillion derivative fraud along with an unprovoked nuclear attack on Iran planned by Israel 15 years ago and soon to be executed by the United States. Your world is fixing to change in ways we can only dream of in nightmares. It's a good time to own gold.

On my latest visit to Alaska and Northern BC, I stopped in to visit the nice people at American Creek Resources. (AMK) It's a new company, only formed in 2004, they executed their first private placement in the summer of 2006 and began trading as a public company on September 1, 2006.

American Creek is an exploration company betting their fortune on the Golden Triangle of Northwest British Columbia. They are running an extremely aggressive, high-risk, high-reward, multi-prong approach on a number of targets in the area. If they succeed, they are going to succeed wildly. But they are walking on a very thin tight rope and it wouldn't take much to fall.

The good side is that they are entering into joint ventures on properties with either past production or advance exploration on them. I was only there for one day and only managed to see one property due to bad weather so I didn't see the crown jewels and you will have to visit their site for more information.

AMK is using a shotgun approach to exploration that I'm not sure I agree with. They have half a dozen projects that they are attempting to advance all at the same time. I'd be a lot more comfortable with more work on fewer projects. I don't understand half a dozen projects and I don't know many investors who do either.

They suffer from the 'Northern BC effect' as well, which means a relatively short season and a lot of assays released at one time and then nothing at all for nine months. This is a stock that you are going to have to trade; there will be wild swings in the price. The range this past 52 weeks has been from $2.61 to a low of $.62.

For 2006, the company appears to have spent more money on acquiring properties than in exploration. This is a company based on the business experience of management rather than a mining background. The business experience is great but it also puts them into a position they have to pay up for projects and they have paid a high whack. It's hard to determine just how much they have spent on picking up properties but money going into the hands of a promoter is money not going into the ground.

The Electrum property was the home of an ultra-rich but ultra-tiny mining venture in the past. The grades are excellent, in the 440-g/t range, over narrow, .5-meter width. They need a lot more than that. The company has completed 8,700 meters of drilling this year but with labs backed up, few results have been announced to date.

I visited the Treaty Creek project adjacent to projects owned by Seabridge containing 17 million ounces of gold and 4.5 billion pounds of copper as well as being just north of a project owned by Silver Standard containing 3.5 million ounces of gold. Since there are no results from this year's 5,000-meter drill program, all I can say it that they have some interesting potential.

American Creek is committed to $5 million in exploration and 100,000 shares to earn 51% of the project though they can earn another 9% by completing a feasibility study. That's a big whack. It's an interesting property loaded with bright red mineral indicating gossans. It's an area play more than anything else. Should Seabridge or Silver Standard make a production decision, they would want the AMK Treaty Creek property should drill results indicate a real resource.

I went to Seabridge's web site and looked at their numbers on the grade of the gold and copper resource. They show a grade of .72 g/t for gold and .18% for copper. That's $32 rock and even with a giant almost 600 million-ton resource, it's barely economic that far out in the boonies. I would want to see a far higher-grade starter pit for American Creek if they want to be serious about being a buy-out candidate.

American Creek need to focus on their core projects. I couldn't even figure out from their website what they were. They are trying to keep too many balls in the air and no one I know can do it successfully. The lack of hard assays on drill results is crippling the company and has whacked 75% off the value of the shares.

AMK is up to 60 million shares on a fully diluted basis already. If they don't focus, the company runs a very real risk of spinning wildly out of control. It's far better to have one great project than 10 mediocre projects which investors can't understand in any case. Their immediate future rests on coming up with some really solid drill results. That's dangerous.

We don't own shares. I like the management but they do need more Indians and fewer Chiefs. A lot of money is going for management in relation to what is going into the ground. The company is far more focused on promotion than on exploration. They need to define their core competancy and stick to it.

American Creek Resources
AMK-V $.70 Canadian (Oct 9, 2007)
49.1 million shares outstanding
American Creek website

321 Gold
http://www.321gold.com

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