Tuesday, May 18, 2010 7:27:18 PM
KATX Summary of Current Opportunity – Updated 18th May 2010
Below I have set out the major part of the findings from the DD I completed to satisfy myself that KATX is a good investment. This DD was for my own use and I am simply offering here as a good starting point for others to do their own DD. It is definitely not investment advice, just my DD. Disclosure – I have bought and am holding shares in KATX.
Overview
KAT Exploration (KATX) is a Canadian junior exploration company on the brink of massive, MASSIVE success. KATX has filed no less than SEVEN claims totalling 285sq km, recently adding further substantial claims around two of its prime properties, attracted private investment of $5m ($1m now and $4m upon meeting investors’ criteria) and is (almost certainly) in partnership discussions with VALE Inco – the world’s second largest mining company – over one or both of their main copper claims Rusty Ridge and Lucky. Additionally, following better than anticipated results from their Handcamp claim soil sample analysis which show very significant levels of gold up to 158g/t , test drilling starts in May at the Handcamp site and KAT Exploration will be filing a full NI 43-101 report on Handcamp in the next few weeks.
New: On top of this, they have recently bought an empty shell company which is fully up-to-date on the OTC and never traded, making it the ideal candidate for a reverse merger or spin off, giving KATX instant OTC/BB capability.
Here’s the exciting news – because they have not yet got to the stage of filing an NI 43-101, uplisting to the OTC or announcing a JV partnership, the current PPS DOES NOT REFLECT THE TRUE VALUE OF KATX and as such IMO KATX makes for a fantastic investment opportunity, because all of these events look imminent!
First I’ll summarise each of KAT Exploration’s seven claims and then I’ll review the company itself (thanks to Investor911 from $heff’s Station of Stocks and DD and KATX board moderator and to Er0ck, a KATX board assistant moderator and contributor, from both of whom I have plagiarised some of this content, plus Birdman Bob who did much of the deep research to uncover the facts, especially regarding Handcamp):
Claim 1: Handcamp
Handcamp is a very special and unique type of gold deposit known as a "Felsic" VMS deposit. World wide there are only something like 800 VMS deposits and only the best of these are "Felsic". According to the USGS, Handcamp is the highest grade VMS gold site in all of Newfoundland. Surface rock and soil samples show a level of gold FAR higher than any of the surrounding mining sites owned by other companies and to find these levels of gold in just the surface rocks implies FAR more gold in deeper deposits.
The full soil sample analyses results are now back from the independent lab and have been digitally plotted onto a map which can be seen here. These results are very exciting as they show up to 158g/t of gold as well as extensive deposits of zinc and copper. To put this in perspective, even 3g/t is considered a good find.
KAT Exploration has recently added a further 5,311 acres to its Handcamp claim. A test drilling programme has been planned and the drilling company has been appointed. This is a well respected multinational drilling company called Cabo Drilling - http://www.cabo.ca/. The drilling starts in May and is likely to take 3 to 4 weeks to complete, although updates as to progress during this period are expected.
According to CEO Ken Stead: “[Handcamp] is just south of the new gold processing facility which just opened this year by Anaconda Mining. That in itself is just south of what used to be the Nugget Pond Gold Mine, which is now being operated by Crew Gold and then there’s the Duck Pond Deposit, which is being mined as a massive sulphide deposit, and is a bit to the south also.” Handcamp’s situation so close to existing gold mines and Anaconda Mining’s gold processing facility could make a potential JV with Anaconda a good prospect for both companies.
What is also of interest is the fact that Handcamp lies absolutely dead central within an area marked out by the Canadian Government as being of special interest due to its underlying geology, and was given special attention in an air survey of Canada.
Claim 2: Lucky
Lucky is one of KAT’s copper claims and the reason why Lucky is so exciting is that on 23 November, KAT announced the results of initial sample and analyses for Lucky and by 11 December, VALE Inco, the world’s second largest mining company had staked claims all around it to an annual cost of $1m. Now why would a billion dollar company like VALE want to do that? My conclusion is that VALE and KAT are in negotiations for a JV. KAT CEO Ken Stead says he ”cannot answer that question” and my conclusion is that these discussions with VALE are being conducted under a non disclosure agreement. A JV with a mining company like VALE is the Holy Grail for junior exploration companies like KAT. KAT looks to be on the brink of an amazing partnership – but the news hasn’t been announced yet, which means KATX is an amazing potential investment opportunity right now.
Of additional interest at Lucky is the fact that on 19 November, just prior to the announcement of the initial sample analysis results on 23 November, KAT Exploration claimed an additional 18sq kilometres of land just north of the original 2sq kilometres claim that has so far been explored.
New: VALE Inco and Cornerstone have signed a JV partnership deal, part of which is for Cornerstone’s claim to the north of our Lucky claims and just on the edges of VALE’s claims which surround Lucky in its entirety. Whilst this JV deal is not massive it does hint at things to come. This looks to me like VALE doing a quick mop-up of the area, prior to dealing with the big issue of Lucky. Remember that Lucky (and specifically lucky South) is the reason they are there in the first place!
Claim 3: Rusty Ridge
Rusty Ridge is KAT’s other big copper claim. An airborne magnetic IP resistivity survey of Rusty Ridge showed a strong magnetic anomaly and this combined with soil geochemical analysis strongly indicates the presence of high levels of minerals including copper and rare earth elements (REE). In an interview for CEO/CFO Interviews, our CEO Ken Stead said: ”There was an interpretation done by an independent geophysics company from Vancouver, on the other side of Canada, who likened many of the signatures that we are finding to that of the Olympic Dam in Australia. That is actually their words not ours.” (Olympic Dam is the world’s fourth largest copper mine, valued in the billions of dollars.)
The PR released in June 2009 described Rusty Ridge thus: Anomalous levels of the Light Rare Earth Elements (LREE) cerium and lanthanum, all present in Olympic Dam (and others), were not only detected in soils but also in rock samples. Other rare earth elements such as Yttrium(Y), Niobium(NB), Zirconium(ZR) along with Uranium, were all detected in both soil and rock samples. In addition, the soil geochemistry also produced anomalies in silver, gold and copper.
According to the KAT Exploration website “This property has already generated a lot of interest from mining companies” and according to CEO Ken Stead this claim ”is ready for drilling”. What conclusions can we draw from this? IMO Rusty Ridge has a very good chance of becoming absolutely massive. Copper and Rare Earth Elements are of massive strategic importance right now and these commodities are set to rise even further in value as reserves come under greater pressure. It’s still all to play for in the sense that (so far as we are aware) no test drilling has yet occurred at Rusty Ridge. Finally, on 16th April, Ken Stead said “…we have made a few new and unexpected discoveries on the RR during our last period of sampling so we will continue with a summers program of the same and spend some time on the Shaylee right next door”.
My opinion is that Rusty Ridge will be drilled this summer, possibly in a joint venture with VALE or another large mining company.
New: KAT Exploration is not the only ones looking for REE (Rare Earth Elements) in this area. A new company has recently started searching specifically for REEs in the Rusty Ridge vicinity, and when I say vicinity I really do mean immediate vicinity. Fortunately for us they are looking in an area that I happen to know our CEO Ken Stead has already looked in and rejected in preference for Rusty Ridge (and Shaylee)! But it just goes to show – this area has very high potential for REE and thanks to CEO Ken Stead and his years of experience, Kat Exploration has taken the cream of the claims for REEs in Newfoundland.
Claim 4: Twi-Lite
Twi-Lite is KAT’s other exciting gold claim. Twi-Lite includes:
• The Discovery Prospect: Zone of quartz veining and associated silicification, high of 202 g/t Au (Visible Gold)
• The Spring Pit Prospect: bedded pyrite/mafic fault gouge (high of 14.9 g/t)
• The 320 VeinProspect: zone of quartz veining and quartz breccias (high of 16.6 g/t)
• The Paddy's Pitt Prospect: silicified and brecciated siltstone (high of 23.80 g/t)
A data sheet for Twi-Lite can be found here
Less is known about Twi-Lite than about the first three claim areas described above, however, what is particularly exciting is first of all the very interesting figures of up to 202g/t of gold from the initial samples, and secondly the fact that on 19th January 2010, KAT Exploration added a huge new, additional 34sq kilometres to the claim area, bringing it to a total of 41sq kilometres. Just taking that first fact into consideration – 202g/t of gold is massive, and I do mean massive. Better than at Handcamp even. My understanding is that exploration at Twi-Lite is still at an early stage, but I think we can expect more information about it this summer.
One additional benefit of Twi-Lite is that a road runs straight through the claim area, making it relatively inexpensive to explore further and cheaper to transport equipment to the site and minerals from the site in the future. Twi-Lite is definitely one to watch!
Claim 5: Shaylee
Shaylee is a region of volcanic rock traversed by numerous faults which early indications appear to indicate contain high levels of copper. Even less is known about Shaylee than about Twi-Lite. Shaylee sits adjacent to and very nearly abutting Rusty Ridge, and was an area that Ken and Tim Stead have only very recently claimed on 11 February 2010, although they had explored the area beforehand. Shaylee has two very interesting copper anomalies, the first 1km long by 75m wide and the second 200m long by 50m wide. It’s proximity to Rusty Ridge means that KAT Exploration can include further exploration at Shaylee into its plans for exploration at Rusty Ridge, and this precisely what our CEO Ken Stead intends to do. What I also think is interesting is the idea that KAT Exploration could potentially find a JV partner for Rusty Ridge but retain the mineral rights at Shaylee, then piggyback off the work carried out at Rusty Ridge to add further value to KATX shareholders. Just an idea!
The image below shows Rusty Ridge to the right (three claim areas together) and Shaylee to the left…
Claim 6: Colliers
Colliers contains deposits of both copper and silver. The work at Colliers has as yet been preliminary but copper mineralisation in the form of VRC (Volcanic Redbed Copper) is strongly indicated and both grab sampleas and channel samples have produced high levels of silver as well as copper. In fact, assays from the surrounding host rock yielded results as high as 23.60% copper and 236.30 g/t silver. I have very little information as yet about KAT Exploration’s plans for Colliers, but as previously mentioned, copper is a valuable commodity and precious metals such as silver are also excellent and highly valuable minerals.
New: Here is something new for you – at least actually it’s old, but not everyone will have seen it. It’s a 38 page PDF document on the Colliers property prepared by an independent Geologist called Rod Churchill of Altius Resources in October 2006. Lots of great detail and well worth the read: http://r.b5z.net/i/u/10049316/i/REPORT_ON_PROPERTY_EXAMINATION.pdf
Claim 7: Clifton
Clifton is a brand new claim area for KAT Exploration and by far our largest, reaching a whopping 124sq kilometres in size – that is a huge area and quite costly to claim and to maintain that claim (to keep a claim active, a certain amount of exploration activity must occur within a specified period, else the claim lapses).
Clifton lies south of the Lucky claims and appears to share a lot of the same underlying geology. It also has great accessibility. Our CEO Ken Stead has said that the company will carry out further exploration of this new claim area in the late spring or summer.
New: Part of the recent JV between Cornerstone and VALE was for Cornerstone’s claim to the north of Lucky and next to the VALE claims that surround Lucky. What I don’t think anyone except me has realised is where the other part of that JV is for. It’s for Cornerstone’s claims that lie just south of our Clifton claim. So VALE are JV partnering in the Clifton area as well as in the Lucky area. I hope you like that new piece of DD!
The Company
KAT Exploration is managed by brothers Ken and Tim Stead who have excellent tracks records and experience and between them own a controlling interest, making for a very safe and trustworthy investment. KATX is a fully reporting pinksheet with “Current” status on pinksheets.com.
• A/S = 700m with 500m maximum for common issuance (reduced recently from 3bn and no dilution will occur unless required for a JV with a mining company)
• O/S = 601,603,644
• There are 330m restricted shares
• Float = 311m (we can assume a lot of these are now in strong long hands)
• The company has zero debt
• The T/A is ungagged
Recent Events
• January 5th KAT meets pink sheets requirements and achieves “Current” status
• January 14th KAT massively reduced its A/S from 3bn to 1bn
• January 15th KAT secured $5m investment to fund operational support for the next 5 years
• January 19th KAT reduced its A/S from 1bn to 730m, appointed private independent consultants and announced its intention to dual list on an Asian exchange
• January 27th KAT discovers significant amounts more copper at its Lucky site
• February 1st KAT publishes “very exciting” gold results from initial sample analyses from Handcamp and promises completed sample analyses will be shown in full on the website in the near future. PR here
• February 8th KAT adds over 5,311 acres to its claim at Handcamp and 5,805 acres to its claim at Twi-Lite and states will be exhibiting at PDAC in March. PR here
• February 11th Ken Stead states in an email that he has “several mining companies” requesting to meet him at the PDAC conference in March. PR here
• March 1st KAT publishes the final test results for Handcamp and they are considerably better than expected, showing extensive deposits of gold, copper and zinc. PR here
• March 4th KAT announces appointment of a corporate attorney to the Board of Directors. PR here
• March 15th KAT calls tenders for bids from drilling companies for the Handcamp test drilling. PR here
• March 17th KAT claims a huge new area of 124sq kilometres south of the existing Lucky claim. PR here
• April 5th KAT accepts drilling bid from Cabo Drilling and announces drilling will commence second week in May. PR here
Why might KATX PPS increase in value?
Junior exploration companies are worth pretty much nothing at all until they find file a claim, analyse what’s in the ground and file their NI 43-101 to prove it. Most exploration companies would be over the moon with just one good claim, but KAT has six! Not only that, but early sample analysis from Handcamp suggests KAT is sitting on an incredible amount of gold and recent activity around Lucky not only show the same thing for copper, but also hint strongly at a JV partnership with a world leading mining company VALE, who have staked massive claims around Lucky at a cost of roughly $1m in the first year. VALE would not be willing to spend this money if they weren’t seriously excited about Lucky, and Ken Stead “cannot comment” on whether he’s in discussions with them, and we all know what that means… KAT Exploration is therefore something out of the ordinary.
One year ago an exploration company called US Gold (UXG) were in a similar position to where KAT is now, with a similar share structure. They were trading at around 0.30 and were waiting on the results of test drilling so they could file their 43-101. Within weeks of filing their 43-101 the PPS went from 0.30 to $1.20 and a few months later hit $3.00. UXG’s best results were 2.9 g/t Au. By comparison, KAT’s initial sample analysis indicates 158g/t Au, 94g/t Au and 82g/t Au. Not only this, but as well as Handcamp, KAT has Lucky and four other claims as well. If UXG can hit $3.50 there is absolutely no reason why KAT cannot hit $4 OR MORE if we get a DOUBLE announcement – a 43-101 for Handcamp and a JV with VALE for Lucky.
It's very common for these type of companies to go from a few cents to multiple dollars on great drill results alone. This is because the NI 43-101 basically confirms exactly how much gold is in the ground and how much it's worth. So there’s no need to actually be mining it to make this stock go up, once people know exactly what they are sitting on and what it's worth, this will shoot up accordingly to reflect that.
We have seven claim areas, two of which look to have massive amounts of gold, three of which look to have massive amounts of copper and at least one appears to have massive amounts of silver. So when you factor in all of the properties and the potential JV with VALE, this company "could" be worth quite a bunch of money. I expect KATX to continue a steady rise with spikes on good new until the test drill program is complete and the NI 43-101 compliant report is filed for Handcamp, or until a JV partnership is announced.
KATX has a relatively small O/S and a very tight float for a junior exploration company (they usually have to keep issuing more and more shares to stay afloat whilst they explore, claim, prove up and sell their claims, taking several years to do so and diluting all the time to keep in the game). KATX has the funding and the CEO has stated that dilution in the future will only occur if there’s a positive reason to do so, ie a JV partnership. In a recent statement, the CEO has also said that he intends to take either KAT Exploration itself or possibly a spin off company containing certain of the claim areas off pinksheets and onto another exchange or market. We do not have a timescale for this but the assumption has to be “within the next few months”.
New: The BVIG Deal
A week or so ago, we found out that Ken Stead had bought another company called Bella Viaggio (BVIG). BVIG is a fully SEC reporting, empty shell on the OTC/BB. The OTC/BB listing is a major step up from the pinksheets where KATX is currently, and BVIG is a complete, out-of-the-box OTC/BB listed company that has never traded and is ready to use. This alone is worth a lot of value to Kat Exploration. All OTC/BB listed companies have to be fully SEC reporting, and this means transparency, which in turn means trust. Many investors including a lot of institutional investors will start to invest at this level, and a move of any kind from pinksheets to OTC/BB will be a winner for KATX.
There are two possibilities for KATX – Reverse Merger (R/M) or a Spin-Off. A R/M is where the entirety of KATX merges into, takes over and becomes BVIG. In all other respects everything remains the same. Bella Viaggio will then get a name change to KAT Exploration and be issued with a new ticker and we move on as we were but listed on the OTC/BB instead of pinksheets.
The other possibility is slightly more complicated. In a spin-off KAT Exploration takes some of its existing mineral rights assets and gives them to BVIG. For example the Handcamp property could go into BVIG. Now BVIG owns Handcamp (in this example) and so because KATX has lost an asset its shareholders would need to be compensated. To compensate the shareholders, they would all be issued with shares of BVIG, proportional to the value placed on Handcamp. Now there would be two separate trading entities – KATX and BVIG – and KATX shareholders would also become BVIG shareholder. Again, Bella Viaggio would get a name change (eg Handcamp Mining Inc) and a new ticker.
Why would this be done? Well the main reason would be because KAT Exploration is just that – an exploration company, Once a property such as Handcamp has reached the JV stage and we have a partner such as for example Teck in the game, we might want to separate this new activity out. Mining is a different game to exploring and requires massive up front investment. We wouldn’t want these investors and our mining partners to own a slice of all of our claims, but it would only be fair that they owned a slice of the property to be mined (in my example that would be Handcamp). So Handcamp goes into the BVIG shell and KATX shareholders get shares in it, as do any investors and/or mining partners who are going to be putting up the cash and doing the hard work of extracting the minerals. The remainder of KAT Exploration then continues as normal, and BVIG becomes a mining company.
Other possibilities and permutations for BVIG exist, but the above is to my mind the most likely scenario, and it could equally be played out with say Rusty Ridge and VALE as it could with Handcamp and Teck. There is much speculation about how BVIG will be used. This is all it is right now, until KAT Exploration releases an announcement about it.
One final thing that we also know is that our new Wall Street attorney firm specialises in listings, mergers, acquisitions and so forth. Ken Stead is getting the very best advice and assistance that money can buy, so whatever happens I believe we are in very good hands. This is a major deal for KAT Exploration and could bring a very big increase to our share price.
Call to Action
Look at the list of recent events and draw your own conclusions, but I believe KATX to be a once in a lifetime investment opportunity. This is a fully reporting pink with an open, transparent, communicative CEO and fantastic announcements imminent. It’s all there in terms of the provable DD and to my mind it’s a complete no brainer once you’ve done the research. Here’s where to go:
• Post from Er0ck about KATX valuation and the Handcamp gold opportunity: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=46213134
• Post from Investor 911 about the Lucky/VALE JV partnership: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=46255277
• KAT exploration website: http://www.katexploration.com
• KATX iHub site: http://investorshub.advfn.com/boards/board.aspx?board_id=15632
• Pink Sheets listing: http://www.pinksheets.com/pink/quote/quote.jsp?symbol=katx#getQuote
• Gusrae, Kaplan, Bruno & Nusbaum website: http://www.gkblaw.com/
• VALE Inco website: http://www.inco.com/
• Anaconda Mining website: http://www.anacondamining.com/
• Teck Resources Ltd website: http://www.teck.com/
• Marketwire for press releases and news: http://www.marketwire.com
• Wikipedia entry for Olympic Dam: http://en.wikipedia.org/wiki/Olympic_Dam,_South_Australia
• Wikipedia entry for rare earth elements: http://en.wikipedia.org/wiki/Rare_earth_element
Top Ten Key Points
1. Two properties (Handcamp and Twi-Lite) returned very high and widespread g/t for gold in initial sample analysis. Handcamp’s soil analysis is now completed and has confirmed high levels of gold plus copper and zinc as well. Drilling has commenced in May and completed results will be filed in June, with some results likely to be seen beforehand
2. Another property (Lucky) has recently had VALE (the world’s 2nd largest mining company) staking every piece of land around it and our CEO Ken Stead can neither confirm nor deny whether he is in JV discussions with VALE, but he’s added substantially to the claim area and has met VALE at the recent PDAC conference in Toronto
3. A further property (Rusty Ridge) has been likened by an independent geologist to Olympic Dam – the world’s 4th largest copper mine and the consensus is that this property may turn out to be the most valuable of all KAT’s claim areas. Ken Stead has indicated to a shareholder who visited the KAT Exploration stand at the PDAC conference that Rusty Ridge has generated a lot of interest from mining companies looking for potential JV partnerships with junior explorers.
4. Up to five years funding is now in place ($1m now, up to $5m if conditions are met), which means that the company has the capital it needs to claim new areas and to prove up existing areas without the need to raise more money. This also means that share dilution is unlikely, unless to cater for a large JV partnership (ie good dilution). Finally it means that a savvy investor who may well be party under NDA to more information than us thinks that KATX is a good purchase
5. A number of mining companies have requested talks with KAT at the PDAC in Toronto from March 7-11 and events following this have included the appointment of an attorney to the BOD and an announcement of a potential uplisting from the CEO Ken Stead
6. KATX is a pinksheet with a great share structure, an ungagged T/A, pinksheets "Current" status and an OTC/BB shell BVIG purchased “ready” for either a reverse merger or a spin off of one or more properties into it
7. Our CEO Ken Stead is open and honest with his shareholders and has an excellent standing within the Canadian mining community
8. The company has recently appointed an upmarket Wall Street attorney firm called Gusrae, Kaplan, Bruno & Nusbaum that specialises in mergers, acquisitions and uplistings
9. Forward looking anticipation for the announcement of a JV with VALE for the Lucky and/orRusty Ridge copper and REE (rare earth elements) claims and a JV with Teck for the Handcamp and maybe even Twi-Lite gold, silver, copper and zinc claims
10. Forward looking anticipation for the announcement of a reverse merger or spin off utilising our recently purchased OTC/BB shell Bella Viaggio BVIG
The current PPS does not allow for the anticipated news indicated in all of the points above and as such KATX indicates a great potential investment IMO
Below I have set out the major part of the findings from the DD I completed to satisfy myself that KATX is a good investment. This DD was for my own use and I am simply offering here as a good starting point for others to do their own DD. It is definitely not investment advice, just my DD. Disclosure – I have bought and am holding shares in KATX.
Overview
KAT Exploration (KATX) is a Canadian junior exploration company on the brink of massive, MASSIVE success. KATX has filed no less than SEVEN claims totalling 285sq km, recently adding further substantial claims around two of its prime properties, attracted private investment of $5m ($1m now and $4m upon meeting investors’ criteria) and is (almost certainly) in partnership discussions with VALE Inco – the world’s second largest mining company – over one or both of their main copper claims Rusty Ridge and Lucky. Additionally, following better than anticipated results from their Handcamp claim soil sample analysis which show very significant levels of gold up to 158g/t , test drilling starts in May at the Handcamp site and KAT Exploration will be filing a full NI 43-101 report on Handcamp in the next few weeks.
New: On top of this, they have recently bought an empty shell company which is fully up-to-date on the OTC and never traded, making it the ideal candidate for a reverse merger or spin off, giving KATX instant OTC/BB capability.
Here’s the exciting news – because they have not yet got to the stage of filing an NI 43-101, uplisting to the OTC or announcing a JV partnership, the current PPS DOES NOT REFLECT THE TRUE VALUE OF KATX and as such IMO KATX makes for a fantastic investment opportunity, because all of these events look imminent!
First I’ll summarise each of KAT Exploration’s seven claims and then I’ll review the company itself (thanks to Investor911 from $heff’s Station of Stocks and DD and KATX board moderator and to Er0ck, a KATX board assistant moderator and contributor, from both of whom I have plagiarised some of this content, plus Birdman Bob who did much of the deep research to uncover the facts, especially regarding Handcamp):
Claim 1: Handcamp
Handcamp is a very special and unique type of gold deposit known as a "Felsic" VMS deposit. World wide there are only something like 800 VMS deposits and only the best of these are "Felsic". According to the USGS, Handcamp is the highest grade VMS gold site in all of Newfoundland. Surface rock and soil samples show a level of gold FAR higher than any of the surrounding mining sites owned by other companies and to find these levels of gold in just the surface rocks implies FAR more gold in deeper deposits.
The full soil sample analyses results are now back from the independent lab and have been digitally plotted onto a map which can be seen here. These results are very exciting as they show up to 158g/t of gold as well as extensive deposits of zinc and copper. To put this in perspective, even 3g/t is considered a good find.
KAT Exploration has recently added a further 5,311 acres to its Handcamp claim. A test drilling programme has been planned and the drilling company has been appointed. This is a well respected multinational drilling company called Cabo Drilling - http://www.cabo.ca/. The drilling starts in May and is likely to take 3 to 4 weeks to complete, although updates as to progress during this period are expected.
According to CEO Ken Stead: “[Handcamp] is just south of the new gold processing facility which just opened this year by Anaconda Mining. That in itself is just south of what used to be the Nugget Pond Gold Mine, which is now being operated by Crew Gold and then there’s the Duck Pond Deposit, which is being mined as a massive sulphide deposit, and is a bit to the south also.” Handcamp’s situation so close to existing gold mines and Anaconda Mining’s gold processing facility could make a potential JV with Anaconda a good prospect for both companies.
What is also of interest is the fact that Handcamp lies absolutely dead central within an area marked out by the Canadian Government as being of special interest due to its underlying geology, and was given special attention in an air survey of Canada.
Claim 2: Lucky
Lucky is one of KAT’s copper claims and the reason why Lucky is so exciting is that on 23 November, KAT announced the results of initial sample and analyses for Lucky and by 11 December, VALE Inco, the world’s second largest mining company had staked claims all around it to an annual cost of $1m. Now why would a billion dollar company like VALE want to do that? My conclusion is that VALE and KAT are in negotiations for a JV. KAT CEO Ken Stead says he ”cannot answer that question” and my conclusion is that these discussions with VALE are being conducted under a non disclosure agreement. A JV with a mining company like VALE is the Holy Grail for junior exploration companies like KAT. KAT looks to be on the brink of an amazing partnership – but the news hasn’t been announced yet, which means KATX is an amazing potential investment opportunity right now.
Of additional interest at Lucky is the fact that on 19 November, just prior to the announcement of the initial sample analysis results on 23 November, KAT Exploration claimed an additional 18sq kilometres of land just north of the original 2sq kilometres claim that has so far been explored.
New: VALE Inco and Cornerstone have signed a JV partnership deal, part of which is for Cornerstone’s claim to the north of our Lucky claims and just on the edges of VALE’s claims which surround Lucky in its entirety. Whilst this JV deal is not massive it does hint at things to come. This looks to me like VALE doing a quick mop-up of the area, prior to dealing with the big issue of Lucky. Remember that Lucky (and specifically lucky South) is the reason they are there in the first place!
Claim 3: Rusty Ridge
Rusty Ridge is KAT’s other big copper claim. An airborne magnetic IP resistivity survey of Rusty Ridge showed a strong magnetic anomaly and this combined with soil geochemical analysis strongly indicates the presence of high levels of minerals including copper and rare earth elements (REE). In an interview for CEO/CFO Interviews, our CEO Ken Stead said: ”There was an interpretation done by an independent geophysics company from Vancouver, on the other side of Canada, who likened many of the signatures that we are finding to that of the Olympic Dam in Australia. That is actually their words not ours.” (Olympic Dam is the world’s fourth largest copper mine, valued in the billions of dollars.)
The PR released in June 2009 described Rusty Ridge thus: Anomalous levels of the Light Rare Earth Elements (LREE) cerium and lanthanum, all present in Olympic Dam (and others), were not only detected in soils but also in rock samples. Other rare earth elements such as Yttrium(Y), Niobium(NB), Zirconium(ZR) along with Uranium, were all detected in both soil and rock samples. In addition, the soil geochemistry also produced anomalies in silver, gold and copper.
According to the KAT Exploration website “This property has already generated a lot of interest from mining companies” and according to CEO Ken Stead this claim ”is ready for drilling”. What conclusions can we draw from this? IMO Rusty Ridge has a very good chance of becoming absolutely massive. Copper and Rare Earth Elements are of massive strategic importance right now and these commodities are set to rise even further in value as reserves come under greater pressure. It’s still all to play for in the sense that (so far as we are aware) no test drilling has yet occurred at Rusty Ridge. Finally, on 16th April, Ken Stead said “…we have made a few new and unexpected discoveries on the RR during our last period of sampling so we will continue with a summers program of the same and spend some time on the Shaylee right next door”.
My opinion is that Rusty Ridge will be drilled this summer, possibly in a joint venture with VALE or another large mining company.
New: KAT Exploration is not the only ones looking for REE (Rare Earth Elements) in this area. A new company has recently started searching specifically for REEs in the Rusty Ridge vicinity, and when I say vicinity I really do mean immediate vicinity. Fortunately for us they are looking in an area that I happen to know our CEO Ken Stead has already looked in and rejected in preference for Rusty Ridge (and Shaylee)! But it just goes to show – this area has very high potential for REE and thanks to CEO Ken Stead and his years of experience, Kat Exploration has taken the cream of the claims for REEs in Newfoundland.
Claim 4: Twi-Lite
Twi-Lite is KAT’s other exciting gold claim. Twi-Lite includes:
• The Discovery Prospect: Zone of quartz veining and associated silicification, high of 202 g/t Au (Visible Gold)
• The Spring Pit Prospect: bedded pyrite/mafic fault gouge (high of 14.9 g/t)
• The 320 VeinProspect: zone of quartz veining and quartz breccias (high of 16.6 g/t)
• The Paddy's Pitt Prospect: silicified and brecciated siltstone (high of 23.80 g/t)
A data sheet for Twi-Lite can be found here
Less is known about Twi-Lite than about the first three claim areas described above, however, what is particularly exciting is first of all the very interesting figures of up to 202g/t of gold from the initial samples, and secondly the fact that on 19th January 2010, KAT Exploration added a huge new, additional 34sq kilometres to the claim area, bringing it to a total of 41sq kilometres. Just taking that first fact into consideration – 202g/t of gold is massive, and I do mean massive. Better than at Handcamp even. My understanding is that exploration at Twi-Lite is still at an early stage, but I think we can expect more information about it this summer.
One additional benefit of Twi-Lite is that a road runs straight through the claim area, making it relatively inexpensive to explore further and cheaper to transport equipment to the site and minerals from the site in the future. Twi-Lite is definitely one to watch!
Claim 5: Shaylee
Shaylee is a region of volcanic rock traversed by numerous faults which early indications appear to indicate contain high levels of copper. Even less is known about Shaylee than about Twi-Lite. Shaylee sits adjacent to and very nearly abutting Rusty Ridge, and was an area that Ken and Tim Stead have only very recently claimed on 11 February 2010, although they had explored the area beforehand. Shaylee has two very interesting copper anomalies, the first 1km long by 75m wide and the second 200m long by 50m wide. It’s proximity to Rusty Ridge means that KAT Exploration can include further exploration at Shaylee into its plans for exploration at Rusty Ridge, and this precisely what our CEO Ken Stead intends to do. What I also think is interesting is the idea that KAT Exploration could potentially find a JV partner for Rusty Ridge but retain the mineral rights at Shaylee, then piggyback off the work carried out at Rusty Ridge to add further value to KATX shareholders. Just an idea!
The image below shows Rusty Ridge to the right (three claim areas together) and Shaylee to the left…
Claim 6: Colliers
Colliers contains deposits of both copper and silver. The work at Colliers has as yet been preliminary but copper mineralisation in the form of VRC (Volcanic Redbed Copper) is strongly indicated and both grab sampleas and channel samples have produced high levels of silver as well as copper. In fact, assays from the surrounding host rock yielded results as high as 23.60% copper and 236.30 g/t silver. I have very little information as yet about KAT Exploration’s plans for Colliers, but as previously mentioned, copper is a valuable commodity and precious metals such as silver are also excellent and highly valuable minerals.
New: Here is something new for you – at least actually it’s old, but not everyone will have seen it. It’s a 38 page PDF document on the Colliers property prepared by an independent Geologist called Rod Churchill of Altius Resources in October 2006. Lots of great detail and well worth the read: http://r.b5z.net/i/u/10049316/i/REPORT_ON_PROPERTY_EXAMINATION.pdf
Claim 7: Clifton
Clifton is a brand new claim area for KAT Exploration and by far our largest, reaching a whopping 124sq kilometres in size – that is a huge area and quite costly to claim and to maintain that claim (to keep a claim active, a certain amount of exploration activity must occur within a specified period, else the claim lapses).
Clifton lies south of the Lucky claims and appears to share a lot of the same underlying geology. It also has great accessibility. Our CEO Ken Stead has said that the company will carry out further exploration of this new claim area in the late spring or summer.
New: Part of the recent JV between Cornerstone and VALE was for Cornerstone’s claim to the north of Lucky and next to the VALE claims that surround Lucky. What I don’t think anyone except me has realised is where the other part of that JV is for. It’s for Cornerstone’s claims that lie just south of our Clifton claim. So VALE are JV partnering in the Clifton area as well as in the Lucky area. I hope you like that new piece of DD!
The Company
KAT Exploration is managed by brothers Ken and Tim Stead who have excellent tracks records and experience and between them own a controlling interest, making for a very safe and trustworthy investment. KATX is a fully reporting pinksheet with “Current” status on pinksheets.com.
• A/S = 700m with 500m maximum for common issuance (reduced recently from 3bn and no dilution will occur unless required for a JV with a mining company)
• O/S = 601,603,644
• There are 330m restricted shares
• Float = 311m (we can assume a lot of these are now in strong long hands)
• The company has zero debt
• The T/A is ungagged
Recent Events
• January 5th KAT meets pink sheets requirements and achieves “Current” status
• January 14th KAT massively reduced its A/S from 3bn to 1bn
• January 15th KAT secured $5m investment to fund operational support for the next 5 years
• January 19th KAT reduced its A/S from 1bn to 730m, appointed private independent consultants and announced its intention to dual list on an Asian exchange
• January 27th KAT discovers significant amounts more copper at its Lucky site
• February 1st KAT publishes “very exciting” gold results from initial sample analyses from Handcamp and promises completed sample analyses will be shown in full on the website in the near future. PR here
• February 8th KAT adds over 5,311 acres to its claim at Handcamp and 5,805 acres to its claim at Twi-Lite and states will be exhibiting at PDAC in March. PR here
• February 11th Ken Stead states in an email that he has “several mining companies” requesting to meet him at the PDAC conference in March. PR here
• March 1st KAT publishes the final test results for Handcamp and they are considerably better than expected, showing extensive deposits of gold, copper and zinc. PR here
• March 4th KAT announces appointment of a corporate attorney to the Board of Directors. PR here
• March 15th KAT calls tenders for bids from drilling companies for the Handcamp test drilling. PR here
• March 17th KAT claims a huge new area of 124sq kilometres south of the existing Lucky claim. PR here
• April 5th KAT accepts drilling bid from Cabo Drilling and announces drilling will commence second week in May. PR here
Why might KATX PPS increase in value?
Junior exploration companies are worth pretty much nothing at all until they find file a claim, analyse what’s in the ground and file their NI 43-101 to prove it. Most exploration companies would be over the moon with just one good claim, but KAT has six! Not only that, but early sample analysis from Handcamp suggests KAT is sitting on an incredible amount of gold and recent activity around Lucky not only show the same thing for copper, but also hint strongly at a JV partnership with a world leading mining company VALE, who have staked massive claims around Lucky at a cost of roughly $1m in the first year. VALE would not be willing to spend this money if they weren’t seriously excited about Lucky, and Ken Stead “cannot comment” on whether he’s in discussions with them, and we all know what that means… KAT Exploration is therefore something out of the ordinary.
One year ago an exploration company called US Gold (UXG) were in a similar position to where KAT is now, with a similar share structure. They were trading at around 0.30 and were waiting on the results of test drilling so they could file their 43-101. Within weeks of filing their 43-101 the PPS went from 0.30 to $1.20 and a few months later hit $3.00. UXG’s best results were 2.9 g/t Au. By comparison, KAT’s initial sample analysis indicates 158g/t Au, 94g/t Au and 82g/t Au. Not only this, but as well as Handcamp, KAT has Lucky and four other claims as well. If UXG can hit $3.50 there is absolutely no reason why KAT cannot hit $4 OR MORE if we get a DOUBLE announcement – a 43-101 for Handcamp and a JV with VALE for Lucky.
It's very common for these type of companies to go from a few cents to multiple dollars on great drill results alone. This is because the NI 43-101 basically confirms exactly how much gold is in the ground and how much it's worth. So there’s no need to actually be mining it to make this stock go up, once people know exactly what they are sitting on and what it's worth, this will shoot up accordingly to reflect that.
We have seven claim areas, two of which look to have massive amounts of gold, three of which look to have massive amounts of copper and at least one appears to have massive amounts of silver. So when you factor in all of the properties and the potential JV with VALE, this company "could" be worth quite a bunch of money. I expect KATX to continue a steady rise with spikes on good new until the test drill program is complete and the NI 43-101 compliant report is filed for Handcamp, or until a JV partnership is announced.
KATX has a relatively small O/S and a very tight float for a junior exploration company (they usually have to keep issuing more and more shares to stay afloat whilst they explore, claim, prove up and sell their claims, taking several years to do so and diluting all the time to keep in the game). KATX has the funding and the CEO has stated that dilution in the future will only occur if there’s a positive reason to do so, ie a JV partnership. In a recent statement, the CEO has also said that he intends to take either KAT Exploration itself or possibly a spin off company containing certain of the claim areas off pinksheets and onto another exchange or market. We do not have a timescale for this but the assumption has to be “within the next few months”.
New: The BVIG Deal
A week or so ago, we found out that Ken Stead had bought another company called Bella Viaggio (BVIG). BVIG is a fully SEC reporting, empty shell on the OTC/BB. The OTC/BB listing is a major step up from the pinksheets where KATX is currently, and BVIG is a complete, out-of-the-box OTC/BB listed company that has never traded and is ready to use. This alone is worth a lot of value to Kat Exploration. All OTC/BB listed companies have to be fully SEC reporting, and this means transparency, which in turn means trust. Many investors including a lot of institutional investors will start to invest at this level, and a move of any kind from pinksheets to OTC/BB will be a winner for KATX.
There are two possibilities for KATX – Reverse Merger (R/M) or a Spin-Off. A R/M is where the entirety of KATX merges into, takes over and becomes BVIG. In all other respects everything remains the same. Bella Viaggio will then get a name change to KAT Exploration and be issued with a new ticker and we move on as we were but listed on the OTC/BB instead of pinksheets.
The other possibility is slightly more complicated. In a spin-off KAT Exploration takes some of its existing mineral rights assets and gives them to BVIG. For example the Handcamp property could go into BVIG. Now BVIG owns Handcamp (in this example) and so because KATX has lost an asset its shareholders would need to be compensated. To compensate the shareholders, they would all be issued with shares of BVIG, proportional to the value placed on Handcamp. Now there would be two separate trading entities – KATX and BVIG – and KATX shareholders would also become BVIG shareholder. Again, Bella Viaggio would get a name change (eg Handcamp Mining Inc) and a new ticker.
Why would this be done? Well the main reason would be because KAT Exploration is just that – an exploration company, Once a property such as Handcamp has reached the JV stage and we have a partner such as for example Teck in the game, we might want to separate this new activity out. Mining is a different game to exploring and requires massive up front investment. We wouldn’t want these investors and our mining partners to own a slice of all of our claims, but it would only be fair that they owned a slice of the property to be mined (in my example that would be Handcamp). So Handcamp goes into the BVIG shell and KATX shareholders get shares in it, as do any investors and/or mining partners who are going to be putting up the cash and doing the hard work of extracting the minerals. The remainder of KAT Exploration then continues as normal, and BVIG becomes a mining company.
Other possibilities and permutations for BVIG exist, but the above is to my mind the most likely scenario, and it could equally be played out with say Rusty Ridge and VALE as it could with Handcamp and Teck. There is much speculation about how BVIG will be used. This is all it is right now, until KAT Exploration releases an announcement about it.
One final thing that we also know is that our new Wall Street attorney firm specialises in listings, mergers, acquisitions and so forth. Ken Stead is getting the very best advice and assistance that money can buy, so whatever happens I believe we are in very good hands. This is a major deal for KAT Exploration and could bring a very big increase to our share price.
Call to Action
Look at the list of recent events and draw your own conclusions, but I believe KATX to be a once in a lifetime investment opportunity. This is a fully reporting pink with an open, transparent, communicative CEO and fantastic announcements imminent. It’s all there in terms of the provable DD and to my mind it’s a complete no brainer once you’ve done the research. Here’s where to go:
• Post from Er0ck about KATX valuation and the Handcamp gold opportunity: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=46213134
• Post from Investor 911 about the Lucky/VALE JV partnership: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=46255277
• KAT exploration website: http://www.katexploration.com
• KATX iHub site: http://investorshub.advfn.com/boards/board.aspx?board_id=15632
• Pink Sheets listing: http://www.pinksheets.com/pink/quote/quote.jsp?symbol=katx#getQuote
• Gusrae, Kaplan, Bruno & Nusbaum website: http://www.gkblaw.com/
• VALE Inco website: http://www.inco.com/
• Anaconda Mining website: http://www.anacondamining.com/
• Teck Resources Ltd website: http://www.teck.com/
• Marketwire for press releases and news: http://www.marketwire.com
• Wikipedia entry for Olympic Dam: http://en.wikipedia.org/wiki/Olympic_Dam,_South_Australia
• Wikipedia entry for rare earth elements: http://en.wikipedia.org/wiki/Rare_earth_element
Top Ten Key Points
1. Two properties (Handcamp and Twi-Lite) returned very high and widespread g/t for gold in initial sample analysis. Handcamp’s soil analysis is now completed and has confirmed high levels of gold plus copper and zinc as well. Drilling has commenced in May and completed results will be filed in June, with some results likely to be seen beforehand
2. Another property (Lucky) has recently had VALE (the world’s 2nd largest mining company) staking every piece of land around it and our CEO Ken Stead can neither confirm nor deny whether he is in JV discussions with VALE, but he’s added substantially to the claim area and has met VALE at the recent PDAC conference in Toronto
3. A further property (Rusty Ridge) has been likened by an independent geologist to Olympic Dam – the world’s 4th largest copper mine and the consensus is that this property may turn out to be the most valuable of all KAT’s claim areas. Ken Stead has indicated to a shareholder who visited the KAT Exploration stand at the PDAC conference that Rusty Ridge has generated a lot of interest from mining companies looking for potential JV partnerships with junior explorers.
4. Up to five years funding is now in place ($1m now, up to $5m if conditions are met), which means that the company has the capital it needs to claim new areas and to prove up existing areas without the need to raise more money. This also means that share dilution is unlikely, unless to cater for a large JV partnership (ie good dilution). Finally it means that a savvy investor who may well be party under NDA to more information than us thinks that KATX is a good purchase
5. A number of mining companies have requested talks with KAT at the PDAC in Toronto from March 7-11 and events following this have included the appointment of an attorney to the BOD and an announcement of a potential uplisting from the CEO Ken Stead
6. KATX is a pinksheet with a great share structure, an ungagged T/A, pinksheets "Current" status and an OTC/BB shell BVIG purchased “ready” for either a reverse merger or a spin off of one or more properties into it
7. Our CEO Ken Stead is open and honest with his shareholders and has an excellent standing within the Canadian mining community
8. The company has recently appointed an upmarket Wall Street attorney firm called Gusrae, Kaplan, Bruno & Nusbaum that specialises in mergers, acquisitions and uplistings
9. Forward looking anticipation for the announcement of a JV with VALE for the Lucky and/orRusty Ridge copper and REE (rare earth elements) claims and a JV with Teck for the Handcamp and maybe even Twi-Lite gold, silver, copper and zinc claims
10. Forward looking anticipation for the announcement of a reverse merger or spin off utilising our recently purchased OTC/BB shell Bella Viaggio BVIG
The current PPS does not allow for the anticipated news indicated in all of the points above and as such KATX indicates a great potential investment IMO
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