Why Junior Mining Companies

In 2004, mining companies produced 79 million ounces of gold, 879 million ounces of silver and 14.5 million tons of copper.

Producing companies have to maintain their reserve and resource base to be able to create future shareholder value. So, all this production has to be replaced by new discoveries, which add resources in the ground.

Since 1997, when gold prices fell dramatically, the larger companies had retrenched massively. They hedged future production (which locked in prices but helped suppress the future price of gold) and laid off many highly qualified geologists as they went into defensive mode.

Many of these geologists then got involved with junior mining companies that adopted the role of finding new ore deposits as the major companies avoided exploration risks in retrenchment mode. When commodity prices recovered in 2001, junior mining companies raised substantial amounts of cash to fund exploration activities.

Junior mining companies (which are primarily listed on the TSX Venture Exchange) raised 2.1 billion in 2003, 2.8 billion in 2004 and $ 5.7 billion by the end of Nov 2005.

In the Acamar Journal, I highlight producing companies in the resource sector. But junior mining companies offer a significantly higher risk-reward profile that should be considered by investors.

In a gold bull market, as I believe we are in now, junior mining companies offer high growth (with high risk) potential to investors seeking this trade-off as part of their overall portfolio.

Junior companies can benefit from:

• Rising valuations as the price of their underlying commodities rises
• Sharp price increases as new discoveries made/good drilling results released
• Premiums due to takeover offers
• High degree of leverage as they have small market capitalisations
• Potential for sharp price escalations when speculative interest rises

The risks include a high degree of volatility; potential for sharp price declines due to poor drilling results or adverse market conditions; limited liquidity when interest in the sector declines periodically.

While the price of the stocks of many junior mining companies will generally rise as gold and other commodity prices rise, some junior mining companies offer the potential of extra-ordinary returns during Stages 2 and 3 of the gold bull market.

The last time Stage 3 of a gold bull market occurred was during 1978-1980. Doung Casey has written an essay on what happened during Stage 3 of the last bull market in gold: Gold Bullion Takes Off. When Will Gold Shares Follow?

Here is what happened to the share prices of some of the producing and junior mining companies at that time (reproduced from the Casey article above). Note that the returns achieved by producing companies are dwarfed by those gained by the junior mining companies:

This is a high risk-reward strategy and therefore there should be a limited allocation of capital into the junior mining sector. If you believe that gold is going to rise a lot higher, then an allocation in this sector should be considered, based on your investment goals and criteria.

Saudi Arabian Investments in Canadian Junior Mining Companies

Investors from the UAE and Saudi Arabia have long been shareholders of the mining companies in the Hunter Dickinson Group based in Vancouver.

Recently, Unigold Inc. (a Vancouver based junior exploration company exploring for gold in the Dominican Republic), raised $ 3.2 million at $ 0.16 from Shairco Ltd., a diversified operating group based in Jeddah, Saudi Arabia. Some good drilling results, combined with a strong new majority shareholder, sent the share price soaring.

This deal follows another investment made in late 2004 by a Saudi investor group in a Vancouver company called Oromin Explorations.

Investors in the Middle East have a natural affinity for precious metals and resource commodities. Investing in shares of companies involved in the production of, and exploration for, commodities provides (in a commodities bull market) a way to leverage that investment to enhance returns.

CONSOLIDATED SPIRE VENTURES LTD.
(TSX Venture Symbol: CZS)

THE COMPANY

Consolidated Spire (“Spire”) is an early stage junior mining company focused on gold exploration on its properties in the emerging Spences Bridge Gold Belt area in British Columbia and in Mexico.

On both properties, Spire has encountered gold mineralisation and is in the process of drilling to expand its knowledge of the gold systems that the properties may contain.

Having properties in two jurisdictions allows the Company to continue its development and drilling programs year round as weather changes affect progress in either location.

THE PROPERTIES

Prospect Valley Gold Property, Canada

In March 2004, Spire signed an option agreement with Almaden Minerals for the PV and NIC gold properties near Merritt, BC, whereby Spire can earn a 60% interest in the project. With further claims filed, the two properties are now combined into the Prospect Valley Property, which covers an area of 10,796 hectares or 107.9 sq. kilometers.

The property is located near the large high-grade Highland Valley porphyry copper district and Craigmont iron-copper skarn desposit. Despite their proximity and the identification of the area of Spences Bridge Belt as a belt of Cretaceous volcanic rock which had the potential to host a new epithermal gold mineralized target, there had been no previously documented gold occurrences at this site. This makes this property a new gold discovery.

The property is road accessible from Merritt, BC and in close proximity to good infrastructure as Merritt is a regional transportation and supply centre.

Spire has demarcated the property into five target areas: NIC, PV, RM Area (previously Anomaly Cluster 1) and Anomaly Clusters 2 and 3.

RM Area

Work done in 2005 focused on the RM Area, where a structural trend is identified over a 3-kilometer strike length with a 200-400 meter width and open for expansion to the north. Results to date have demonstrated the large size and open pit mine potential of the RM gold system. This continuing fieldwork is intended to outline the entire extent of the RM gold system in order to prioritize targets for later trenching and drilling.

In a news release dated September 23, 2005, Spire announced significant gold values in trenches over an area of 350x100m.

Spire released results of the excavation of 21 hand trenches: results showed six trenches were gold bearing, ranging from 0.22 grams/ton (g/t) over 20 meters (Trench 3) to 0.52 g/t over 9 meters (Trench 21), with individual samples up to 2.4 g/t over 1 meter.

A further 11 trenches were excavated in late 2005 and some of the more interesting results include 0.85g/t gold across 4.9m (Trench 26) and 1.38g/t gold across 5.7m (Trench 27). Individual samples returned up to 5.48g/t gold across 1m. Trace element geochemistry and mineral textures indicate this trenching has probably tested the upper portions of the epithermal gold system suggesting potential for higher gold grades at depth.

Winter geophysics followed by drilling in the early spring is planned to test the grade potential of the RM Zone at depth.

PV

In the PV Gold Prospect, earlier reconnaissance prospecting found numerous float cobbles of quartz veins and breccias which returned values ranging up to 43.3g/t gold and 130.7 g/t silver in grab samples.

Spire has committed to spend a minimum of $ 1.3 million and to issue Almaden 600,000 shares before the end of 2007 to earn its 60% interest.

Campanario Gold Property, Mexico

In November 2005, Spire signed another agreement with Almaden whereby it acquired the right to earn a 60% interest in this property.

Campanario is a 10,003-hectare property, located 25 kilometers southwest of Oaxaca City, Mexico.

In December, an eight-man field crew from Rio Minerals Ltd., under the supervision of two board members of Spire began a field program of line cutting soil sampling, geological mapping, rock sampling and trenching.

The initial grid located on the Hilltop Zone is to be expanded one kilometer to the south and west, using lines spaced at 100-meter intervals. Ongoing geological mapping has expanded the previously outlined Hilltop Zone of silica-kaolinite alteration and hydrothermal brecciation from 100 x 75 meters to 600 x 400 meters.

In total fifteen trenches are planned over selected targets. Trench #1, intended to expose bedrock underlying a rock grab sample that assayed 3,590 ppb gold (Almaden press release dated January 20th, 2005) is now complete and sampled.

Furthermore, a new geological interpretation now suggests that the Hilltop Zone may extend an additional kilometer to the south joining up the Ridge Zone, where previous soil sampling has encountered four anomalous gold in soil samples (80 to 290 ppb gold), also within a zone of silica-kaolinite alteration.

Spire can earn a 60% interest by expending $3.5 million in staged exploration expenditures, and giving Almaden a total of 500,000 shares of Spire over a five year period.

BOARD OF DIRECTORS / MANAGEMENT

Robert Brian Buchanan (CEO and Director): Mr. Buchanan has been a Director of the Issuer since October 1995. He became the Chief Executive Officer and President in November 1996. He has been an independent businessman and management consultant for over fourteen years to various companies in Canada and Southeast Asia. In the past ten years he has been involved in the structuring, capital raising and development of numerous private and public companies.

George Gorzynski (Director): Mr. Gorzynski has been a Director of the Company since March 10, 1997. He has over 20 years experience in all aspects of mineral exploration, evaluation and management of grassroots generative programs to mine geology. He received a Bachelor of Applied Science (Mineral Exploration) from the University of Toronto in 1978 and a Master of Applied Science (Economic Geology) from the University of British Columbia in 1986. He is a Professional Engineer registered in the Province of British Columbia.

Shiraz (Raz) Hussein (CFO): Mr. Hussein has been the Company's Chief Financial Officer and Secretary since September 13, 1996. He is the owner and president of Razzle Accounting Inc. which was incorporated to provide accounting services to public and private companies. He has over 15 years experience as a controller/accountant with companies, providing accounting services to the natural resource, retail and construction industries.

Brian V. Hall (Director): Brian V. Hall, most recent to the board, is a Geologist, University of British Columbia (1975), University of Waterloo (1978), Fellow of the Society of Econonic Geologists, Fellow of the Geological Association of Canada. He has 35 years experience in mineral exploration internationally (North America, Asia, Europe and Africa), with a strong background in gold and volcanogenic massive sulfide deposits. Previously he has been the president of two publicly trading companies, and served on the boards of three other companies.

For more information on the Company, including maps and photos, visit: