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Current and Previous Reports
Larry Myles Reports
A Historical
Report
and not yet NI 43-101 Compliant
Golden Reign Resources Rekindles a Forgotten
Dream
….shining a light inside the historic
San Albino Gold Mine
A mission of discovery involving weeks of
research; sifting through the contents of
dusty and forgotten boxes, hauled out of the
backrooms of two of America’s most
prestigious libraries (The American Heritage
Center, University of Wyoming and The
Huntington Library, San Marino, CA). Maps,
confidential letters, drawings, mine plans,
assay results and special reports that bring
to life the exploits of three important
historical figures; each in their own way,
giants:
Augusto Sandino, Charles
Butters and Canada’s own Thayer Lindsley.
All the ingredients are in place for a
captivating story; revolution, murder,
mayhem, discovery and destruction, political
intrigue and double-cross, and the absolute
clincher – a forgotten gold mine!
It must have been a crushing moment for mine
owner Charles Butters, on the morning of
July 2nd, 1927 when the Nicaraguan
revolutionist (and his former mine employee)
Augusto Sandino, who along with a small
contingent of his armed followers splashed
across the Jicaro River toward the San
Albino Mine. There they confronted the
American mine owner and in the end, Sandino
put a gun to Butters’ head and gave him a
choice - banishment or death.
Prior to Charles Butters getting on his
horse and leaving his mine forever, the San
Albino Mine had been reported to be in full
production for an extremely short time –
probably days rather than weeks, before
being interrupted by revolutionist
activity.
I base this on information
contained in two historic reports that
clearly indicate the vitally important
uninterrupted power supply to run the
mill was not available until the ‘summer of
1927’.
A steady flow of power was necessary
to successfully operate the patented
"Butters Slime Filter Plant". Charles Butters,
renowned metallurgist and inventor
pioneered the cyanide process for
mineral separation. His revolutionary
filter-press was the important first step
upward from ordinary decantation….and
its early use was limited to processing
only high-grade gold and silver.
Whether the mill was in operation for
days or weeks is not important. What matters
are the (undisputed) production numbers;
prior to the gun-wielding Augusto Sandino
appearing on the scene, the recorded daily
average production of the San Albino Mine
was an impressive 10 tons at 31 g/t gold
per ton. I must also point out there
were decent silver values, but in 1927 no
one cared as it was the $20.64 per ounce
gold price that was the big draw.
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General Augusto Sandino, if nothing else was
passionately in love with Nicaragua and
began with a simple idea: Nicaragua for
Nicaraguans. Sandino simplified his agenda
to include the philosophy that the ends
justify the means. Our pint-sized
revolutionary was also practical and he knew
his revolution would need money; and nothing
generates cash faster than a producing gold
mine. When Sandino clerked for Charles
Butters it would be realistic to expect that he was privy to many of the mine
owner’s discussions and plans. Thus, it could be a
given that Sandino was aware of the
theory that
approximately one dozen veins of high-grade
ore were in and around the San Albino
area. So it should not have come as a
surprise to Butters that with spies in
place, Sandino would be quick off the mark
to take advantage of the mine almost as soon
it reached full production.
According to historic evidence gleaned from
USMC archives, during all of July 1927, and into August,
Sandino and seventy-five of his
miners-cum-revolutionists worked around the
clock, processing the high-grade gold from
the San Albino Mine; until catching wind of a
detachment of US Marines were preparing to
move on the mine. Prior to making his
escape, Sandino instructed one of his most
trusted Mexican allies – Manuel Echevarria,
to strategically cave portions of the
mine…but to leave the mill and power
generation facilities intact.
For what it is worth, both Sandino and
Echevarria had earned quite the reputation
for wreaking havoc and totally
destroying any American owned
gold mine; evidenced by the destruction of
the Bonanza and La Luz y Los Angeles mines.
Sandino regarded the mines as symbolic of
the betrayal of the Nicaraguan people. The
eradication of the mines reflected his deep
antagonism toward the American presence in
Nicaragua. Why Sandino left the San
Albino Mine relatively unscathed has been
largely ignored by historians.
Although one can only speculate, it is
entirely within the realm of reason that
Augusto Sandino in his capacity as records
clerk at the San Albino Mine, and intimately
familiar with Charles Butters’ long range
plans; including the planned construction of a
narrow-gauge railroad ringing the entire
property to facilitate the development of
over the theoretical dozen rich gold veins…as well as moving
past the planning stage and into initiating
an aggressive exploration program that would
see a small army of geologists and field
workers track the mineralized structures,
possibly all
the way to the town of Murra – over 12
kilometers to the northeast.
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During the early 1920's, the San
Albino Gold Mine was ‘ground-zero’
for the fledgling Nicaraguan Revolution.
Augusto Sandino understood the
importance of ‘the business of
gold’. During the summer of 1927,
Sandino funded his revolution by
minting a number of crude gold coins
directly from the ore processed from
the San Albino Gold Mine.
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I continue to draw attention to the Butters
vision…that there were a dozen rich veins
equal to the main vein at San Albino. It is
important that you understand the logic
behind man’s actions. Can you imagine being
Charles Butters and going into a remote area
of Nicaragua; spending $750,000 USD of your
own money to build a modern processing mill
in the middle of nowhere….all apparently
without doing a lick of exploration? This
appears to be exactly what happened in 1920
when Charles Butters acquired the San
Albino/Arras property. First off, he had to
construct a 53 kilometer road from the town
of Ocotal to the proposed mill site on the
banks of the Jicaro River. Following the
successful road construction, Butters began
to bring in equipment for the mill, which
was ready to go into full production by the
summer of 1927. All that certainly adds up
to a lot of
time, effort and money. So obviously
Butters was convinced the property was rich
in gold.
Why obviously: It should be
pointed out that Charles Butters was no
novice to mining; he was already the largest and
most successful mine operator in the region;
owning producing properties in Columbia,
Nicaragua, Mexico, as well as in South
Africa and Australia. His Copala operation
in Mexico included 11,000 acres of lumber
and grazing land, 2,000 acres with rich
mineral deposits, four tube mills, a state
of the art 1,000 horsepower steam boiler, a
foundry and a well equipped machine shop. If
a successful mine finder like Charles
Butters was willing to stake a personal
fortune to create a modern infrastructure in
a remote part of the Nicaraguan jungle, it
stands to reason he had a pretty good idea
there would be a handsome payback.
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Special thanks : Huntington Library,
San Marino, CA
Extracts: “Summary: Why I Bought
San Albino” by Charles Butters
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Speaking about mine finders, it is important
we mention the other man who shared the
Butters vision of veins of gold in the hills
of remote Nicaragua – one of Canada’s most
illustrious mine finders of all time. A man
who is the most famous member of the
Canadian Mining Hall of Fame: Thayer
Lindsley.
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Thayer Lindsley
1882 - 1976
Thayer Lindsley, the father of such
mining giants as Falconbridge Ltd.,
Ventures Ltd. and Frobisher, has
been described as the greatest mine
finder of all time. Not only did he
found Falconbridge, a multinational
organization ranked now among the
largest mining companies in the
world, but throughout his long and
extraordinarily dedicated career,
Lindsley either found or was
involved in the development of such
other famous Canadian mining names
as Sherritt Gordon, Giant
Yellowknife, Canadian Malartic,
United Keno Hill, Lake Dufault and
Opemiska Copper, Connemara in
Southern Rhodesia and Whim Creek in
Australia.
His geological and creative genius
touched the fortunes of perhaps more
than 185 companies in all.
In a book on exploration he
published in 1966, he aptly
described the kind of attributes
that made he himself a giant among
mining men:
"To be a successful mine finder," he
said, "one must have determination,
knowledge, tenacity, a rugged
constitution to withstand the rigors
of outdoor life, and enjoy
overcoming obstacles of every
description. Also, a little dash of
imagination and enthusiasm is
helpful."
He had an uncanny perception of
geology that helped him build a
world-girdling empire of mining
properties.
An associate said of him:
"He was a geological genius. He had
an astonishing ability to look at a
geological map in three dimensions
and quickly circle the location of
probable ore with a big red crayon.
"Two of the secrets of his great
success were his voracious reading
habits, and a true photographic
memory enabling him to discuss in
great detail, even down to assays,
little known ore deposits in parts
of the world he had never visited."
Thayer Lindsley was born in
Yokohama, Japan, where his father, a
New England American, was a Canadian
Pacific Railways executive.
Returning to the U.S., Lindsley took
a civil engineering degree at
Harvard, moving to Canada in 1924
with a $30,000 stake from an iron
mine in Oregon.
It was in 1928 that Lindsley, along
with a group of associates,
including his brother Halstead,
founded Ventures Ltd., as a holding
company for various properties. And
in that same year, on August 28,
Falconbridge Nickel Mines Limited
was incorporated as a Ventures
subsidiary.
Sherritt Gordon Mines Limited also
came into being in 1928, in a
partnership Lindsley formed with
R.J. Jowsey and several of his
Ventures associates.
Lindsley served continuously from
1928 to 1956 as president and a
director of both Ventures and
Falconbridge, almost equalling the
length-of-service record of James
Murdoch, as president, at Noranda.
In 1962, Ventures Limited was merged
with Falconbridge and Ventures
passed from the mining scene.
Lindsley remained a director of
Falconbridge, however, until 1967,
when he accepted the honor of
election as Director Emeritus.
Even at the age of 90, four years
before his death, Thayer Lindsley
was still working on gold mines in
France and Ontario, silver mines in
Utah and Mexico, and many other
projects.
He was, truly, one of the
greatest mine developers of all time.
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Thayer Lindsley took a remarkably detailed
and specific interest in the San Albino
property, compiling a comprehensive library
of information; for that, special thanks to
the University of Wyoming Heritage Centre.
Thanks to the wealth of evidence contained
in
the Lindsley/San Albino documents we are
able to discover that Charles Butters never
once gave up in his attempt to regain possession
of the San Albino Gold Mine. Long after the
death of Butters (1933), Thayer Lindsley
maintained the integrity of the extensive
San Albino library: safekeeping minutely
detailed maps, correspondence from Butters,
assay results, and much more. All the evidence
indicated
San Albino to be a rich gold mine; leaving
the only question – how extensive? The
question has been patiently waiting to be
answered for the last 80+ years. Now thanks
to the dedication and hard work in the field
by the Golden Reign Resources exploration
team, we will soon have that answer.
A Property Rife
with History
….even before Charles Butters appeared on
the scene
Gold was discovered at San Albino in 1790 by
the Spaniards. The large area quickly became
known as rich in ‘manto’ – the name
given in Central America to a rich vein of
gold lying almost wholly at surface level
either partially exposed or covered in loose
soil and rock. A crude open pit operation was the order of the day, but later was followed up
with underground mining; although the
accumulation of water prevented these early
operators from attaining any depth and
ultimately put a halt to production without
barely scratching the surface of the rich
veins.
From 1885 to 1920, four different operators
controlled and worked mainly the surface
areas of the property and produced an
aggregate 32,000 tons at between US $7.00 to
$12.00 per ton with an estimated value of US
$332,000. With the price of gold at US
$20.64 per ounce this translates to roughly
16,062 ounces of gold.
Finally, in 1920 Charles Butters acquired
the property; and invested US $750,000 to
begin the long process of
constructing a modern processing plant in
the middle of the Nicaraguan jungle. How
different the history of Nicaragua may have
turned out if Charles Butters had been able
to realize the potential of his ore-rich San
Albino/Arras property. Instead, just as all
of his hard work was on the cusp of paying
dividends, he was forced off the property;
never to return (though not for lack of
trying). Who was to know that during that
fateful and turbulent summer of 1927, when
the fabulous San Albino Mine was
deliberately caved - it would remain
closed to production for nearly an entire
century.
Post-Butters, the San Albino/Arras Mine
Fades into Obscurity
……with nary a whimper
Fickle finger of fate, or just bad timing?
Or as some of the old timers like to
hint….’Sandino’s Revenge’. It is time to
fill in the blanks.
Historical reports indicate that in 1934, Charles H. Janin was able to option the property.
Reading over some of the letters from that
time period, it soon became clear that Janin
must have suffered the patience of Job;
working with many diverse groups, often at
odds with one another over who actually
owned the property. He was able to
persevere and later that year, Janin was
able to at partially open San Albino,
Level 400 thanks to the hard work by George
Evans, a seasoned geologist with a wealth of
experience in Central America.
When I first reviewed the laboriously
hand-drawn maps and assay numbers provided
by Evans, my first thought: ‘good numbers,
but nothing that spectacular….what’s
all the fuss about?’ And then I
realized…..I was not looking at assays of
three or four grams per ton. I was
looking at results that indicated two, three and
four ounces per ton.
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I would imagine the obvious question might
be…”Okay, if this is such a stellar
property and obviously rich mine, why wasn’t
the San Albino re-opened in the early
1930’s” – especially if Augusto
Sandino understood its true worth? After
all, he had a revolution to fund!
In the case of Augusto Sandino, he had a lot
on his plate – constantly staying one step
ahead of the US Marines as he continued to
drive them crazy with a series of successful
hit and run tactics. By the end of 1932 it
must have seemed to the Nicaraguan
government, the US Marines and the Guardia
Nacional that the indefatigable Sandino was
everywhere at once, fighting for his beloved
Nicaragua. Although Sandino had been unable
to obtain any sustained outside assistance
for his movement, he thought he had
caught a break in the form of the Great
Depression; with America in an economic
shamble, overseas military ventures became
both costly and unpopular. With one eye on
the exit sign, America dealt the
responsibility of Sandino to the newly
reorganized Guardia.
Early in 1933, the last of the US Marines
left Nicaragua. There was a feeling of
change was in the air; momentum had begun to
shift as Nicaraguans felt their time had
come. But as is so often the case, fate had
a card or two to play. Before 1934 was even
sixty days old, two of our main players
would exit the stage; and the wonderful San
Albino Mine, so full of promise would again
lose focus as it faded into obscurity.
On November 28th, 1933 the 79
year-old Charles Butters; a man who never
gave up trying to regain control of the San
Albino Mine passed away. His dream of a
noted Nicaraguan mega-gold mine died with
him.
A few months later, on February 21st,
1934 Augusto Sandino was assassinated by
members of the Guardia Nacional – under the
direct orders of Anastasio “Tacho” Somoza.
Three years later, just after his 35th
birthday the same brash young guardsman
became President of Nicaragua – a position
he held until his assassination in 1956.
Sorry, I digress – “so politics aside,
why wasn’t the mine opened in the 1930’s?”
A couple of reasons: Charles Janin wanted
very much to reopen the mine and planned to
do just enough work to entice a large
American mining company with an existing
track record in Central America to get
involved, namely the New York and Honduras
Rosario Mining Company. A good thought, but
America was in the throat of the Great
Depression. Money was tight – even for a
world class mining company. To be fair,
NY&HR was extremely interested, but their
decision was between a ‘good’ property
in El Salvador, a country friendly to the US
and the potentially ‘great’ San Albino
mine in Nicaragua. NY&HR was
certainly aware of the compelling evidence
regarding multiple rich veins coursing
through San Albino/Arras; they were also
aware the Nicaraguan countryside was still
in transition and safety remained a question
mark. In the end, the company opted for the
stability of El Salvador.
Over a decade later, during the turbulence
of the 1940’s, the same question –
“why wasn’t the San Albino Gold Mine
reopened for business.” Once again,
two very valid reasons. The first one being
focus. In 1944 President Somoza was
in firm control of the country. Earlier in
the decade he was one of the first Central
American leaders to openly declare war on
Germany. I doubt if fighting Hitler was on
his mind; more like the opening salvo in
making his intentions clear to the wealthy
German-Nicaraguan landowners. Although it
took him eight years, in the end Somoza
wound up owning nearly four dozen well run
and highly profitable coffee plantations.
After the coffee farms, the fearless leader
of all Nicaragua went after the German owned
cattle ranches. Gold?
According to Jacob
Landau, writing for the Delaware Star on
December 17th, 1944 – “there
are nearly 1500 small gold mines in
Nicaragua….but only four of them are
in partial production.” Reason: a total
lack of infrastructure, machinery and
equipment and a dearth of skilled miners. By
the way, in case you were wondering…the San
Albino was not one of the four
mines in production.
In 1948, Mr. Rodgers Peale visited the
property and prepared a historical resource
estimate for just the San
Albino Mine. The report is obviously not NI
43-101 compliant. In his report, Peale
calculated a gold resource of over 80,000
tons grading approximately 0.5 ounces per
ton, equivalent to approximately 42,000
ounces of gold.
It should be pointed out that Peale was only
able to enter only part way into the San
Albino, Level 400. He was not able to sample
levels, 150, 200, and 300. Although
Rodgers was able to understand the
connection between San Albino and Arras (300
meters to the southwest) he was not able to
discover hard evidence of the additional dozen
veins that Butters believed were part of the
greater structure, although he appeared to
agree with
the theory.
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Getting back to the apparent lack of
interest in gold mining in Nicaragua, there
is more to the story than meets the eye.
Studying the history of the four decades of
the “Somoza Dynasty” it becomes clear that
Anastasia Somoza was all about control.
I feel that he was as cunning as they
come, but limited in his level of ‘smarts’.
By appointing trusted family members to key
positions in both government and industry,
as well as doting on his military, Somoza
was able to rule Nicaragua with an iron
fist, albeit wrapped in a velvet glove. The
story changed when his sons took over and
without getting into details, I think it is
safe to say….the velvet glove came off.
The point being, although the senior Somoza
did not neglect gold mining entirely,
he deliberately down played the importance
of gold mines in Nicaragua. First off, gold
was only worth $35.00 an ounce. But more
importantly it was all about control. By
marrying his family and friends to positions
of power that in one way or another related
to the land (coffee plantations and
cattle ranching), Somoza was able to hold
his appointee’s financially hostage and
beholden to his whim and wish.
Moving forward it is important to point out
that although Anastasia Somoza may have
ignored the importance of gold mining in
general and in particular the San Albino
Mine, others did not!
In 1957 the San Albino Gold Mine received a
more than honorable mention in the
prestigious “Important Mineral Deposits of
Central America” bulletin released by the
American Geological Survey Bulletin #1034 (Department
of Interior)…..”including the long thick
vein of 32 grams per tonne (gold)
material was only one
of many such veins.”
“The ore body is a thick, lenticular
quartz-pyrite vein several hundred feet
long. It dips about 40 degrees, parallel to
the dip of the enclosing phyllites.
Chalcopyrite is locally abundant in the
lower levels.”
After Anastasia Somoza was assassinated in
1956, the political and economic climate in
Nicaragua deteriorated. Without getting into
decades of turmoil, grief and increased
political upheaval, let us move directly to
present day Nicaragua.
From an investment and business point of
view, my guess is that you felt the strength
of the undercurrent of anxiety while reading
my brief outline of the historic San Albino
Gold Mine. The difficulties faced in trying
to do business in Nicaragua – be it in the
1920’s or right into the last decade,
investing has been a challenge. I am happy
to report that all of that has changed.
Investing in Nicaragua?
Without question, and contrary to popular
belief, Nicaragua is proving to be a stable,
safe, and peaceful country that is motivated
in attracting foreign investment. Obviously
Nicaragua is a developing country and is one
of Central America’s poorest nations. And
although to the outside world the political
street demonstrations may seem unruly, this
is simply Nicaraguan’s practicing ‘democracy
with passion, Central American style’. But
when it comes to the nitty-gritty of safety,
fact: Nicaragua is the second safest country
in all of Latin America (behind Uruguay),
and Nicaragua has a lower reported crime
rate than France, Germany and the United
States, according to a recent United
Nations/Interpol study.
In recent years, Nicaragua has privatized
nearly all of its old state-owned
monopolies, save for public utilities, and
has reduced the amount of government red
tape. A foreign investment law ensures that
you can repatriate 100% of your profits and,
after three years, the initial investment as
well. You will find no legal ground for
discrimination against you when you invest.
The law allows for 100% foreign ownership in
every economic sector.
Like Augusto Sandino, we should all be in 'the
business of gold'
So it appears that the stage has finally
been set for the historic San Albino Gold
Mine to gain its long postponed recognition
as possibly one of the premier gold mines in
Nicaragua. And the timing could not be
better.
On the national stage, Nicaragua is working
hard to both benefit from, and contribute to
the world markets. The democratically
elected government is emphatic that besides
being the largest country in Central
America, it
strives to
become one of the region’s
most important countries.
Larry Myles
604-408-7600
1-877-405-7600
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Larry Myles is neither a
geologist nor a financial analyst. I do not
purport to offer personal investment advice
nor recommendations. While all statements of
fact are derived from reliable sources, an d
are believed to be accurate, I make no
warrant that they are so. You must do your
own research and check statements of fact
for yourself. My opinions are precisely
that, my opinions. I do not accept any
responsibility for any gains or losses you
may experience resulting from actions taken
based on my opinions. If not otherwise
qualified, you should consult with your own
personal financial advisor before engaging
in any investment activities. Larry Myles
Reports does not provide individual
investment advice, act as an investment
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in the investments discussed in this
publication. Larry Myles may have a
substantial position in the securities
recommended and may increase or decrease
such positions without notice.
I do not know
your personal financial circumstances. I am
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