Vancouver Resource Investment Conference
Here are some of the companies I visited and a quick note:
AZK Casa Bernardi gold deposit is producing now. Asked CEO if there were water problems. He said no. They had structural problems in the underground area. The former operators didn't take precautions due to shifting sand and poor materials underground. AZK is taking extra steps to secure and fortify weak structure areas to ensure safety.
ADA.v CEO very happy with progress. Moving towards Q1 production of zinc/lead/silver.
CS.to Company has exceeded all production goals. 1000tpd mill is being expanded to 2000 tpd by yearend. Anxious to see earnings. Should help stock price, once they prove up cashflow. Has already generated 13 million in revs since startup in October.
CML.v Bought more today after talking with CEO. Cashflow should be big. Share price should double/triple after production starts in 3/08. Need financing to close so they can start construction full blast.
EPM.to European Minerals IR folks shared my dismay at low share price. They think stock will perk up once production becomes imminent this fall. Everything looks good for fall start. Immediately will be medium size gold producer with heavy copper byproduct.
EQN.to Big copper project in Africa. Set for 2008 startup. Uranium is discrete deposit and will be set aside so that when country gets permission to mine uranium, EQN will be ready to process the ore and become a producer. Will generate significant credit that will reduce copper costs. Could be 140million per year. EQN.to will be a billion dollar copper mine per year. Undervalued but again need to get closer to production so mine construction or financing isn't a possible problem.
EXN.v Excellon made .05eps last qtr from silver/lead/zinc. IR indicated they had another good qtr.
ROK.v Moly Mine has been delayed until 3/07. Weather didn't allow construction to proceed as planned. IR feels everything will work out in a few months. Cashflow should be very strong with payback of all capex within the first year.
STM.v Undervalued compared to several contemporaries due to later start date for their mine. First one won't produce until 2010. EMU will have a mine operating as early as 2008. So market is discounting revs for STM. Price has doubled in one year but still behind several similar companies. IR thinks some companies are overestimating how quickly they can get to production.
SGR.v San Gold is producing gold from two mines. The reopened Rice Lake mine and new discovery San Gold #1. Cartright mine will also be opened in the near future. Ongoing deep drilling in Rice Lake is bringing up excellent gold values. Down to 4,000 feet now.
TWD.v TradeWinds Ventures. Sold out of this stock after talking with geologist from nearby Pelangio. She explained that TWD grades were lower than PLG and some of the ounces are too deep for pit mining. The grades are too low to be economic for underground mining. Also TWD doesn't have their own mill so would need to use mill developed by PLG. TWD probably won't be a standalone mine with it's own mill. Again grade too low.
TWD is still drilling and could signficantly increase reserves but I decided not to wait or take the chance. Another interesting tip. Geologist said TWD.v did an unusual thing. They didn't cap their grades. If a drill core came in above 20gm/tonne, PLG capped it at 20. TWD didn't. This raises the possibility of one non repeatable nugget influencing TWD grades. Geologist said banks won't allow uncapped results because they might not be repeatable when the mine starts if grades are due to isolated high nugget values. PLG results would have increased almost 1 gm/tonne if they had used uncapped values. So if TWD was capped at 20gm/tonne, maybe their grade would have been even lower than what was published. That was the straw that broke the camel's back for me. I sold out completely this morning.
PAX.v Recent drilling has extended zinc deposit even further. This deposit is many kilometers in length. Billions of dollars of zinc in fairly shallow open pittable deposits. Potentially largest zinc deposit in the world. Billions versus tiny market cap of 80 million for pax. Market cap of Pax.v versus zinc value in ground is .001/pound. Competitors are much much higher. Drawback is length of time to production, size of project and remoteness of mine. Will require 160km highway to be built or same length railroad. Also requires a coal fired electrical plant just for this huge mining operation.
I asked why they keep drilling when they already have such a huge resource. Said they have to keep drilling to prove up 25 year reserves at 20,000tpd operations so electrical plant can rely on them to last long enough to payback capex on electrical power generation plant.
I bought a little more today because they have an updated NI 43-101 due in March which should be big. They also could sell a 10% interest to a big partner who might eventually take over the construction of this giant mine. Either event could send stock higher. Especially a big major joining forces with them. Would give project credibility and increase chances of a buyout.
LBE.v Very impressed with CEO Nash. Very thorough. Analytical. Going to lease trucking fleet when second mine comes online. If they own the trucks and excavators, they would have to build a very large maintenance facility and hire technical staff to maintain these huge machines. Doesn't want to do it for one mine. If second open pit mine is drilled and reserves confirmed, then he might consider owning equipment.
Even if subcontracts trucks, will own excavator and have his employee as operator.. Wants control of which ore is sent to mill because he is charged for the hauling regardless if it is waste rock overburden or high grade ore. Also looking forward to new mill coming in April. Will give him control over milling process. Current custom mill is not reliable and results have been spotty.
SAM.v Starcore buying San Martin mine from Goldcorp. Closing 1/24/07. Will make Starcore instant 35,000 oz gold producer plus silver by products. Should have instant cashflow.
Bobwins
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If the Commodities Boom is Over, I am just a Gold Bug headed for the Windshield of LIFE