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WEX - Thanks for clearing out those 1.71 shares. I would've liked to buy a little more, but didn't have any free cash. Hopefully the current 1.94 will stick and we'll see it move north of $2 in short order.
WEX - I'm not sure if my timing is right with WEX, but I nibbled a bit today. The fact is, the Ashdown moly property is in full production right now, and should be showing increasing revenues and profits as the months go on. By Q1 2008, the mill should be fully optimized for recovery and grade.
The float is only 14.4m and moly grades are some of the highest reported. As a drawback, the dispute with WEX's partner Golden Phoenix over 9% interest in the property is really holding the price down. But, WEX has corrected quite considerably from its high of 3.44 this summer. 1.71 looked like a good entry point for a stock with so little o/s shares (and only 6.5m public float)
Agreed. It's all about the debt for TAM. Anything significantly less than 80% debt financed, and shareholders will probably head for the exits. Although the revenues are astounding, excessive dilution would kill the share price. The coming weeks are critical, and management MUST execute. I'm gambling on a positive financing deal, but who knows what will happen in this market.
Although TAM is my only current zinc play (I sold out of ADA about a month ago), I'm also looking at SRZ and BN. I like them both, but was waiting to see an upturn in zinc prices before I overweighted myself in zinc plays. I don't like BN's float at all, but I think the next Q revenues should be significantly higher and could propel BN for a nice pop.
Thanks for sharing your perspective on TAM.
TAM - Nuts, I do share some of your concerns, but moreso with management than with the economics of the project. I still think the economics of R-190 and at least the additional 5 deposits are quite stellar (mined through 2014). A few points:
Although recovery rates at 87%-90% do seem rather robust to me, management emphasizes that they are accurate. The explanation provided is that "Our recovery will be superior to other companies because the Pine Point deposits are one of the cleanest in the industry. In other words, there are almost no impurities in the ore, thus allowing high recovery rates." So, you really can't compare TAM's recovery rates to that of BN.
As for smelting costs, TAM calculated using an average 2006 smelting rate. Zn 85%, treatment charge 258$/tonne concentrate. Pb 95%, 226$/tonne concentrate. Mgmt stated that quotations have been coming in better than this, so the approx 15% smelting cost is even a bit conservative.
The rising Canadian $ hurts just about every Canadian miner, but TAM did their feasibility in USD. So, based on the feasibility's assumptions of 1.30zn and .80pb, TAM will be extremely profitable.
Is lead going to remain at 1.80US? I'd also say unlikely. I only used it because you stated that "I have some serious doubts that this project will proceed at today's prices". At 1.80pb, TAM becomes profitable based on the lead payable alone, and the Zinc is just a bonus. With zinc and lead LME inventory dropping about every day, the economics should just get better and better. Lead will eventually fall back, I'm sure, but Zinc has yet to make a move to coincide with the LME draw-downs.
TAM is obviously very speculative until the permits are finalized and the proposed 80% debt package is secured. But, I would argue that if the debt package is indeed secured as planned that my estimation of $30m in equity at $2 a share is probably too conservative. They most likely won't have to raise the equity portion until much later in the pre-production cycle since they will be drawing down from the debt. I could easily see a $2.50 - $3.00 share price when Tamerlane goes to do a PP. So, the share dilution could be less than my expectation. Heck, shares are trading in the $1.50 area today. It's not a stretch to expect a nice pop if indeed the 80% debt is secured.
Once R-190 is complete, there would have to be an utter collapse in metal prices for Tamerlane not to target the additional 5 deposits done in the scoping study. Because the 5 follow-on deposits reuse R-190 infrastructure, the capex per lb of production drops significantly. Even though the grades decline from 16.65% to 7.12% on average, operating costs remain stable. Offset by minimal capex and higher recovery rates due to the DMS, the remaining 5 deposits are at least as profitable as R-190. You might want to look at slide 24 of the presentation on TAM's website. Based on $US 1.30/lb zinc and $US 0.80/lb lead, R-190 plus the other 5 deposits will throw off $490m cumulative cash flow by 2014.
Since production isn't until 2009, there's ample opportunity for set-backs, but if management can execute, the story is compelling. Only time will tell if the permitting, financing, freeze-ring technology, DMS assumptions, timeline, etc. work out as hoped. But, for a speculative play, this is one of my favorites for a nice share price ROI in a few years. I'm looking forward to watching this one play out.
Nuts, are you nuts? TAM at current prices is going to throw off approximately $400 million in revenue alone from the R190 deposit:
R-190 = 1m tonnes grading 11.16% zinc and 5.49% lead
Zinc = 246m lbs x 90% (recovery rate) = 221m lbs x 80% (20% smelter fee) = 177m lbs x 1.40/lb = 248m revenue
Lead = 121m lbx x 87% (recovery rate) = 105m lbx x 80% (20% smelter fee) = 84m lbs x 1.80/lb = 152m revenue
Total Revenue: $400m
Cash costs are .60/lb, so we can deduct $157m from revenue to get $243m cash flow from R-190 alone.
Assuming $80m financing via debt and $30m via equity at $2.00/sh, that's another 15m shares plus 7.5m warrants to give us 65m shares fully diluted. With $243m cash flow from R-190 and 65m shares fd, that's about $3.74 PER SHARE cash flow from just R-190. (admittedly, a bit aggressive considering that I assumed a 12 month recovery on R-190. Also, I'm not calculating the "net" cash flow or I'd have to add in the capex of $93m + $34m working capital)
Even at the feasibility prices of 1.30zn and .80pb, the study results show the Pine Point Project is feasible and will provide "exceptional returns" by industry standards (quote from Octagon Capital).
Now, here's the trick with the other deposits. Tamerlane will develop drifts to access other deposits from the R-190 deposit. Approximately 6 million tonnes of resources from five different deposits are accessible from the R-190 shaft after mining of the initial deposit is completed. This amounts to 1.2 billion tonnes of recoverable metal. And, Capex is minimal for these additional 6 million tonnes since they are all accessible from the R-190 shaft. This will allow Tamerlane to mine until 2015 (and there are approx. 30 more deposits still to mine after that).
The key with the lower grade deposits is that TAM will employ Dense Media Separation. By using this process, the lower the grade ore, the better the relative economics as more of the gangue is stripped. All they need to do is set up a portable DMS plant and upgrade the ore to ~16% zinc-lead. A DMS allows for up to 300% better recovery rates. Without any capex on these deposits (DMS capex assumed in R-190) and comparable recovery rates to R-190 once DMS is employed, Tamerlane will obviously be very profitable at least through 2015. Then, the remaining deposits will require additional capex, but should be fully funded with positive cash flow. In other words, Tamerlane will be swimming in cash at least through 2015 and offers one of the better values (although still speculative) in the mining industry today IMO.
There's absolutely no doubt in my mind that this project would proceed at today's prices.
TAM - Worthylion, Tamerlane's current financing plan is to debt finance 85% of the capex, I believe. Peggy Kent is supposedly shopping around right now for the financing. With an IRR of ~100% using hedged prices in the feasibility study, getting financing should be pretty easy (considering that lead is about double the estimated .80 in the feasibility study).
As long as some form of debt financing is secured like planned, I imagine that TAM will be somewhere in the neighborhood of 65m-70m shares FD.
"He's the CEO and makes all the decisions - good or bad. I doubt he's going to change his Method of Operation, at this late stage.
The SH'ers have little choice - keep it and accept his leadership or sell it."
And that's why I sold when it was flirting with $1. I remember being frustrated with lack of filings as far back as when it was AMRS (find my posts on RagingBull if they are still archived). It's not that I think that Rich isn't a capable CEO; he's obviously a very smart character to have come so far with Tara, but I find the constant "lack of financials" excuses intolerable. I've wanted to jump back in for months now, but I seem to continually read another poor excuse for why the financials aren't up to date, which causes me to hesitate. I truly believe that the lack of filings DOES keep the share price down. Rich either needs to publicly state that he has no intention of releasing audited financials, or to get them up to date. It's not about the size of the Company or whether he's running the business out of his home or not. He must answer to the shareholders, and it seems that the majority want audited financials.
I'll be back...when I have total assurance that the financials are up to date and accurate. I may miss a big gain, but I've just had too many poor experiences with pink sheet stocks. I'd love for Tara to be the exception, but I can't afford to get burned by false promises.
Good luck all!
ZMR.v - I added 20k at the close at .175. Did you get your order filled, Bobwins?
ZMR - I've been watching Zaruma for a few weeks now and almost bought at .155, but went for Carlisle Gold instead (CGJ.to). Now that Zaruma has solid financial backing, I think I will take my lumps and try to pick some up at .175. It does seem quite cheap based on today's copper prices and potential cash flow.
Although TAM continues by far to be the most undervalued pre-production play that's slightly over a year from production, I think I can add some Zaruma to grow and mold with Tamerlane.
WHD - Yeah, I lost all my shares. I wonder though, if news was released in China about the deal via a public newswire (per their partner Lu'An), does that make it "insider knowledge"? How can the TSX rightfully cancel the transactions when the information was readily available via a public news source?
Yes, WHD is halted. I managed to buy 30k at .26 this AM. I'm betting on good news...
I definitely agree with both you and nuts, production value per dollar invested doesn't paint the entire picture. I thought the analysis was extremely interesting and offered some great insight into "what if" production and revenue estimates, and it does make a few on the list look really compelling.
Yet, if one were to try to equate in terms of current market cap and share price, the analysis is a bit useless. A couple are in production, a few are slated for 2008 production, and a few (yes, TAM, one of my favorites) aren't slated for revenues until 2009. The author does state that his intention wasn't to equate to current share price To look forward to 2009 revenues and try to value existing companies using current market cap doesn't work. TAM trades at a significant discount due to all the uncertainity of permitting, financing, commodity prices, etc. It's impossible to compare multiples, etc. with say QUA.
And, grades and extraction costs can obviously completely change the outlook. Still, I rather enjoyed looking at these stocks simply from a payable production perspective.
BTW, I own or have owned SRZ, NRDS, BMC, TAM, ROK, CML, and GMI .
Near Term Producer Comparisons:
Aztec02, a poster on InvestorVillage spent a vast amount of time putting together a great comparison of some of our favorite near-term producers. The valuation method isn't based on cash flow and NPV necessarily, but instead offers a differing method based on 2009 production per dollar invested.
It's well worth a read, and puts some of this boards favorites up in a head-to-head comparison, CML, BMC, SRZ, TAM, NRDS, FNI, etc.
The link is:
http://www1.investorvillage.com/smbd.asp?mb=4923&mn=24939&pt=msg&mid=3003937
Re: TAM Feasibility shows excellent results
I know I'm a bit biased towards TAM since it's a good portion of my portfolio, but I was really impressed with Peggy Kent and team on the conference call today. I left the call even more sure of my investment that I was after the release of the Feasibility. Since production isn't until Q1 2009, Tamerlane is obviously a bit speculative, but in absence in a collapse of metals, the cash flow TAM will generate is HUGE. Do you realize that TAM is sitting on an NPV that will be over $1 Billion if you look at their entire 62m tonne resource.
Per another poster (MontyHigh) on the InvestorVillage RNO board, here is a synopsis of the conference call Q&A discussion:
TAM Questions (in priority order):
(1) What is the outlook for when the 12 to 15 months construction schedule starts? Is it after financing is finalized and permits are granted? ANSWER: Permitting must come first and should come this fall (hopefully Dec) or winter.
(2) Does the entirety of R-190 and the five additional scoping study deposits get mined in the first six years of production, 2009..2014? ANSWER: Yes, absolutely...all of it will be mined.
(3) What are the next steps on promoting the TAM.V story? ANSWER: Road showing in September in Europe, Toronto, etc. Have been working with Octagon securities already. Will be looking for research support and institutional support now that they have financial numbers. There will be power point coming.
(4) How do you model the smelting cost? Is it a fraction of the production? Is two costs /lb (zn and pb)? NOTE: For my own spreadsheet, I'm assuming 30% of production. ANSWER: From a consultant for end of 2006, start of 2007. Zn 85%, treatment charge 258$/tonne concentrate. Pb 95%, 226$/tonne concentrate. Quotations have been coming in better than this. Took the averages from 2006. Concentrate is tighter right now. Pinepoint is one of the cleanest in the industry. Its well known from its history.
(5) What is the model for payable metal. If you mine ore with 1,000,000 lbs of contained zn, how many lbs of payable zn (after DMS, mill/flotation and smelting) do you get. Same question for Pb. ANSWER: Overall recovery 89% and 88.5%. Then another 15% for smelting.
(6) What fraction of the total capital expenditure for R-190 and the other five deposits will be usable for subsequent deposits beyond R-190 and the other five deposits?
(7) How do we get a complete copy of the Feasibility Study along with any backup financial spreadsheets? ANSWER: Must be on SEDAR in 45 days, but are trying to get it in a couple weeks.
(8) I see that the five deposits following the R-190 deposits include two out of three of the WestMin deposits, but that the mineral resources for WestMin deposits are not broken out by deposit by are totaled for all three. What are the resources for the two deposits that are included? Answer: V-46 522K tonnes 8.5%. V-156 615K tonnes at 13%
(9) Does the capital expenditures for the additional five deposits include everything needed? Will the mill need to be upgraded given that lower-grade ore will be processed?
(10) What is the scope of the forthcoming 43-101 report. What deposits are included? ANSWER: R-190 and 10M tonnes.
(11) How about listing on the Hong-Kong exchange? ANSWER: Maybe later.
NOTES: Not directly associated with the questions above.
(1) Exploration now makes sense given that the feasibility of mining some deposits has not been established.
(2) Three months to move indicated reserves into measured and reserves category. Need two additional holes in each deposit.
(3) Dense Media Separation (DMS) is really key to getting all these deposits into production because it can be performed at the deposit and then upgraded ore can be trucked to the mill. Some of these deposits can be open pit mined (because they are up and high and dry).
(4) They are looking at something far larger than the 11MM tonnes. Are expecting a NPV of over 1B$. Right now with R-190 and the scoping study is 490M$.
(5) The really low capex to get started also makes Tamerlane attractive.
(6) The lead exposure is very timely.
(7) Operating cost of $.20/lb. Cash flow is $600MM. Looks very, very lucrative.
(8) Tamerlane has RFPed smelters with specifics and we’ll be getting proposals in mid-September. Payable zinc 125 MM lbs/yr, 70 MM lbs/yr for additional deposits. 150? MM lbs/yr zinc, 90 MM lbs/yr Pb for R-190.
(9) 3200 tonnes / day for additional deposits.
(10) After freeze ring goes in, they may start open-pit with DMS at the deposit.
(11) Permitting – public hearing coming 10/16/2007. After that review board writes the report and sent to the board for a 45 day process. Hoping to have permits by the end of the year.
(12) Have started design of freeze ring. Working with Tyson mining for the shaft sinking and underground development. FKC lakeshore for vertical conveyor. Design is moving along.
(13) The moment they have the permits they will start construction (12 – 15 months) because the design will be completed.
(14) Financing – want to finance with as little equity/dilution as possible. No numbers. One alternative is high-yield debt market in NY. Another is an end-user who would finance. Have been approached by two such users. Alternatives will be persued between now and December. Announcement in the next couple of months.
(15) Coming up. More scoping studies. Plus the increasing of reserves.
(16) Peggy on Sub-prime: Sub-prime is blowing over and this won’t affect TAM.V financing. It will have completely blown over by mid-september.
(17) Total tax rates are 33.7% for federal and territory. No discounts at this time. Training dollars may get some subsidy, but that’s not a big deal.
(18) How about letting existing share holders do some of this investment to get it into production? ANSWER: We can’t count on a big enough percentage of our share holders to do this.
(19) Will you be able to skip BFS for other projects given that it can be financed from R-190? ANSWER: If they use a bank for financing, they’ll need to have feasibility studies for additional deposits to get them into reserve status. But it won’t take much: a little more drilling (could be next spring) and a little more engineering.
(20) What kind of conversion rate would you see for the 10,000,000 tonnes into reserves. ANSWER: Nearly 100%.
(21) Ross: Exploration potential has 15 km with one deposit, the rest have a deposit per km. Wet, deeper locations now look like they can be explored. E.g. 14 more deposits. Also near R-190 there may be more deposits.
(22) Vertical conveyor is rated for 250 tonnes/hour (more than what they need today). There’s also some redundancy from having two drive motors.
(23) R-190 has a diameter of 150x200 meters. Its prismatic as are the others. The height is 40 meters. The freeze ring is probably bigger. Additional deposits are along a linear basis.
(24) Note: Pinepoint is a big swamp. Can only drill when the ground is frozen well. This could hold off a lot of stuff including getting financing done. If the financing is done with a bank drawing it down will be conditional on getting the drilling done and those deposits turned into reserves. Same as for permits. Might get an intermediate.
(25) The only callers were private investors. QUESTION: Where are the institutional investors? Answer (Peggy): We’ll be meeting them in person over the next couple of weeks. MONTY’s opinion: Means that if they can rally some institutional interest the stock price could really could start hopping.
(26) Hedging: if they can get 100% financing and the cost is hedging for three years they might take it. Thinks locking in Pb makes a lot of sense. May be able to get what they want from an end-user.
NRDS.pk - Nord Resources
Bobwins, I also like Nord Resources and think it can be an easy multi-bagger.
As you mentioned (and as noted in yesterday's incentive targets in the 8-K), Nord plans to produce 25m lb/yr of copper, and will start to ramp up production sometime in 2008 (with extraction from tailings done by Dec 2007). With the latest $23m equity financing, I show that the outstanding shares are 65m or 87m fully diluted (with the $1.10 warrants).
I believe I read somewhere that Nord expects cash costs to run the mine in the neighborhood of $1 per lb extracted. So, at today's prices of $3.60 / lb, we get about $2.60 / lb in cash flow. That's $65m in cash flow. Even if we discounted copper down to $3.00 / lb, we'd still get about $50m in cash flow. Using the fully diluted outstanding shares (which assumes that all the warrants will be exercised), the market cap is approx. $76m. Based on the two cash flow scenarios, Nord is trading at 1.2x - 1.5x cash flow. I think you'd be hard pressed to find another near-term producer with a better cash flow multiple.
And, unlike Tara, Nord already has up to date financials and should easily be able to move off the pinks at some point (back to AMEX if/when they reach the $3 share min?). It's going to take another 6 months or so to play out, but as long as copper prices don't completely hit the floor, Nord seems like it has amazing potential and almost assured cash flow and profit when production goals are realized. I really like this one and have recently bought 10k shares.
TAM now up .77 cents or 64% over the last 11 trading days. (It printed 2.15 so far today) This has been a very profitable stock for me and I fully expect to see $3 before the end of the year.
TAM.v up over 55 cents or 40% over the course of the last 10 trading days!!! Hopefully news has leaked about the impending feasibility. We already know it is going to be a highly profitable resource, but this will finally make it official for all those skeptics. This is still one of the most undervalued base metal stocks around. As long as zinc and lead prices remain steady, TAM is going to generate some serious cash flow. It should be a fun ride!
TAM touched 1.70 earlier today, up almost 300% in two weeks (traded at .57 on March 29th). What a fun ride this has been!!!
Global E-Trade - I should hopefully be up and running by mid-week. I had an account related problem that I've since resolved, so I'm excited to trade directly on the Canadian Exchange (without using the pink sheet equivalents). I'll report back as soon as I make my first trade!
Nice to see a 27% increase in TAM today (up .15). I still think TAM has room to run a bit more, and a feasibility study due out in a few weeks will help to propel this play to the next level. They're still targeting production at Pine Point for 2008.
Speculative Mining Stocks - BTW, I get a lot of great ideas on the more speculative mining stocks at a forum called "Canadian Small Caps".
Most of these are junior mining companies with good properties, strong early drill results, but with no near-term production expectations. Truly speculative, but may be fun to add to the portfolio for the real risk takers.
http://forums.smallcaps.ca/
Hi Nosleep - Mining stocks under 0.30
I do like quite a few mining stocks under .30. Obviously, these are more than likely very speculative in nature, but most have at least had very positive initial drill results. My favorites are:
CZS.v - Consilidated Spires Ventures
O/S Shares: Approx 39m
Current Price: 0.22
CZS is currently preparing drilling on their Yago Mexico Gold/Silver Property, which has good potential. Also has property in Prospect Valley, BC. Drilling took place in Summer 2006 to encouraging results:
In drill hole RM2006-21, the weighted average grade across 45.7m (37.2-82.9m) is 1.57g/t Au. Within this 45.7m interval, higher grade intercepts include:
43.1–48.8 (5.7m) 2.51g/t Au
50.9–52.4 (1.5m) 9.54g/t Au
54.0-57.0 (3.0m) 1.99g/t Au,
8.85g/t Ag
63.5-76.8 (13.3) 1.75g/t Au,
14.77g/t Ag
Drill hole RM2006-21 demonstrates a widening of the gold-silver epithermal system towards the more southerly RMX portion of the continuous RM/RMX gold zone. Drill hole RM2006-21 contained consistent significant gold and silver values across an interval exceeding 50m. An assay value of 9.541g/t Au was returned from the interval 50.9-52.4m (1.5m). The recent drilling work has substantiated the strong potential for a bulk tonnage, near surface mineral resource in this portion of the mineral property.
AZX.v - Alexandria Minerals
O/S Shares: Approx 36m
Current Price: 0.30
Alexandria is another play in the Abitibi Belt in northern Ontario and Quebec. (Much like one of my favorites, NOX.v, which is trading around 0.38). Alexandria has a 15000 meter drilling program planned for 2007, and they just released encouraging results on their Cadillac Lake area.
"Alexandria Minerals Corporation has intersected favorable gold mineralization in a new area along the Cadillac Larder Lake Break in Val d'Or, Quebec, where diamond drill hole (DDH) AAX-07-9 intersected 8.41 meters (true width) grading 1.97 g/t gold, including 0.83 m grading 13.23 g/t gold."
Other sub 0.30's that I have on my watch list are:
AUX.v - Auromex Resource Corp
GRH.v - Gold Reach Resources
MSU.v - South Malartic Exploration
VIO.v - Vior Exploration
YGI.v - Yamiri Gold
E-Trade Global Trading Accounts
Is anyone using the E-Trade Global Trading platform? It is in BETA test now, but should allow us to purchase directly on global markets. I've been selected to participate in the BETA, so hopefully it will be a great platform for me to buy Canadian stocks directly without having to use the pink sheet equivalents.
I just wondered if anyone else had been using this or not? This comes at a perfect time now that Interactive Brokers upped their %commissions from .2% to .5% per share.
AUQ - Yes, their interest in the first mine is only 50%. So, it's not a large producer even at full capacity (10,000 - 15,000 oz's maximum to Aurogin). But, it is cash flow, and it will help with drilling on their remaining locations.
I think the 1 million oz resource is a best case scenario for them. Still, in their latest presentation management states "Aurogin's properties cover a system with potential for at least one million ounces of gold, contained in 15 to 20 million tonnes grading 1.5 to 2.5 grams/tonne gold."
I think it's a bit undervalued at .32cdn. Now, whether the market thinks so or not is the big question. I'm hoping for some upward movement when the 43-101 is established and the gold 2nd pouring is complete.
It's not a table pounder until they prove up their resources, but definitely one for the watch list.
Guy, Re:AUQ
Now, that's funny. I didn't realize that I had ever mentioned AUQ before. I certainly didn't do anything about it at the time, which is definitely a good thing since it was trading at .52cdn when I posted. It completely dropped off my radar, but I took a new look this week based on a recommendation on the SH boards.
It's an awful lot more attractive at .32 than it was at .52. If Aurogin does shore up 1 mil oz's in gold resources, it's a steal at these prices. Time will tell I guess.
AUQ.v Aurogin - Near term gold producer
I also own CMM, NOX, TRGD, and more recently SAM. Another gold producer I stumbled across that compares well with NGG.v is Aurogin Resources. (I don't have the search function at Ihub right now, so don't know if it's been mentioned before...) I do think that Aurogin is very undervalued at today's prices. It's also a producer, so is much less risky than the likes of NOX (although NOX is still one of my wild card favorites!).
AUQ.v – Aurogin Resources (AROG.ob)
Current Price: .32 CDN
Outstanding Shares: 63,534,721
Primary Project: El Sastre gold project in Guatemala – 50% ownership
Producer? Yes, first gold bars poured in December 2006
NI 43-101 Compliant? No, filing to be completed in Q1 2007
Aurogin has completed the construction of its first gold mine on its El Sastre gold project. The leach pad was completed on Oct 24th 2006 and has been designed initially to produce gold at a rate of 20,000 oz/year (but is more recently being expanded to 30,000 oz/year).
Aurogin’s first gold pour was on Dec 5th 2006. The gold was sold on the open market for gross proceeds of $500,000 (1,615.246 ounces x $619.20 US price per oz x Aurogin’s interest in the project of 50%) Based on production of 20,000 oz per year alone (which may increase to 30,000 oz per year), AUQ’s net cash flow for their 50% share at a cash cost of $200 per oz and a price of gold of $600 US per oz would be about $4million US.
Also, Aurogin recently confirmed significant gold mineralization at the El Arenal Zone (2 km southeast of the El Sastre Main Zone gold mine) and is in the process of completing the NI 43-101 as soon as possible for the El Arenal zone, the El Sastre Bridge zone, and the current El Sastre mine.
The Company’s plans call for mining 300,000 tonnes of resources grading 2.5 to 4.0 grams/tonne gold to produce 20,000 to 30,000 ounces of gold in 2007. Management’s current aim is to define a resource of at least 1 million ounces of gold at the El Sastre Project. The Company anticipates funding its 2007 exploration program out of free cash flow generated from the El Sastre Main Zone gold mine.
Here's a new presentation for Aurogin:
http://www.auroginresources.com/Investors/Presentation/AUQ_JAN_2007.pdf
NRX - Norex Exploration
Yes, Norex is a great service stock. I actually bought at .80 and rode it up almost to $3 last year. The acquisition of Conquest Seismic Services more than quadrupled the size of the Co. at the time. Revenue growth has been astounding, and it is fundamentally a good buy.
The problem with Norex for me was that the market never seemed to give it the recognition it deserved. Because it is tightly held, the erratic swings in price would drive me nuts. Over the course of a week, it would walk down from $2.50 to $1.50 and then drift right back up. There was a lot of manipulation in the share price.
Now that Norex is listed on the major Toronto exchange, maybe that has subsided. I cashed out right at the transition time because oil services stocks were in such disfavor.
I think Norex would be a safe bet and is becoming a major player in the oil services industry. But be prepared for some major swings in the market due to seasonality, manipulation, etc.
Indium - Indium is a by product of zinc but very rare in any concentrated form and sells for 1000 dollars a kg.
I found this rather interesting since I previously knew nothing about the metal. Since, I have found two promising juniors who have found significant indium deposits:
NIB.v - Niblack Mining
TBM.v - Tribute Minerals
(I'll try to summarize some DD on these shortly)
BALTIMORE, MD -- Indium: It's a metal that most folks have never heard of. But in today's high-tech economy, demand for this material is soaring in everything from thin-film solar panels to flat-screen TVs. The mounting demand for this unknown metal presents us with an unique investment opportunity.
Before we start talking about the investment side, let me briefly tell you a bit about the history and properties of indium.
Discovered virtually by accident in 1863 by two German chemists, Ferdinand Reich and Theodor Richter, indium was once thought to be incredibly rare. In fact, prior to 1924, only a single gram of indium existed in its isolated form.
Since then, however, we've found that this metal is fairly plentiful. As is turns out, indium is the 61st most abundant mineral in the earth's crust. That means it's about three times more abundant than silver or mercury. But that doesn't necessarily mean that we're busting at the seams with the stuff. Fact is: finding indium in high concentration is extremely difficult. For mineral firms, that means having a property with a lot of indium can be jaw-droppingly profitable.
Indium - seen above - is a soft, silvery-white element named after the brightest line on the color spectrum, indigo. which has the abnormal characteristic of producing an odd sound when being bent. Metallurgists call this sound a "scream." I've personally heard this sound. And to be honest, it sounds more like the soft crackle of a fire and less like a scream.
Although it is reactive with certain acids, indium is highly stable in air and water. It is also faintly radioactive. But it is not regarded as dangerous, as the decay rate is almost 50,000 times slower than that of natural thorium. With such a low toxicity, scientists can safely handle, work with, or even lick a bare piece of indium . . . should they get the uncanny desire to do so.
So what the heck do they use this stuff for, anyway?
Some of indium's uses include: making semiconductors, high speed transistors, specialized solders and other specialized alloys. It is also used in the control rods for nuclear reactors. But the main use of indium, which accounts for almost 50% of the consumption of the element, is in the creation of thin-film coatings to make electronic devices such as thin-film solar panels and liquid crystal displays (LCDs), screens that transform electricity into light energy.
Now, even if you aren't as tech-savvy as you would like to be, I can promise that you've used LCDs at one point or another. In fact, it's likely that you're staring at a liquid crystal display right now. LCDs are used in a wide variety of products, including projectors, cameras, televisions, watches, cell phones, desktop monitors and laptop computers.
As you can imagine, with the explosion of the high-tech information age, the demand for LCDs is soaring. In fact, the Japanese electronics manufacturer Sharp Corp., the world's largest producer of LCD televisions, says that it expects this year's sales of LCD TVs to expand by 50% over 2006, to 68 million units.
Remember, all LCD products contain a thin film coating of indium. That's where our investment angle comes in.
Now, here's the best part.
Decades of underinvestment in the indium sector has led to an acute supply deficit. Global demand now far outstrips both main production and capacity. More importantly, demand growth over the past few years has been increasing heavy, while producers struggle to ramp up production.
This supply-demand imbalance has propelled indium prices nearly 900% higher since 2002! But the party's not over yet. Not by a long shot. The increasing demand for LCDs alone is enough to continue to push prices even higher.
For investors like us looking to cash in on the metal, this means mineral firms that are exploring for or producing indium are likely a pretty safe bet.
Now, like I mentioned earlier, finding indium in high concentrations is extremely difficult. This makes increasing production nearly impossible.
According to the U.S. Geological survey, the top five indium producing countries in the world in 2005 were China, Japan, Russia, Canada and Belgium. But as you can see in the chart below, of these five countries, only China was able to increase production in 2005 (figures for 2006 are not yet calculated).
The fact is these producing countries won't be able to keep up with the staggering increases in demand. For consumers, that presents a problem with limited solutions.
Recycling is one of the promising opportunities to counter slipping indium supplies. In 2002, a Japanese program was able to recycle 155 tons of indium, 45% of the country's total consumption. But the process for recycling indium tin-oxide is very difficult and involves high costs and lengthy time periods (about three months) to complete.
The second solution to demand deficits is to use substitutes. Unfortunately for consumers, however, this is an even less promising outlook. Not only is it not very cost efficient to use an indium substitute, but many times consumers end up with an inferior product. Furthermore, in some cases the indium substitute is very toxic and harmful.
For example, gallium arsenide can be used in place of indium in solar energy cells, but the cost is so much higher that it can be considered uneconomical.
Bottom line: There's no question that the demand for indium is going to continue increasing over the next few years. With the increase in demand and the lack of new supplies coming online, indium prices are set to go even higher.
So how can you cash in on this metal?
Well, indium doesn't trade on any futures exchange. But you can easily invest in the companies that explore for and produce it.
NOX.v - There's still rumor of a big newsletter writer planning to promote NOX. It's possible thats why Pacific International is buying in such a large way this week in anticipation.
I think Niogold has real value in it's properties, and I didn't invest in anticipation of newsletter momentum. Niogold is getting good drilling results and should have news on its drilling at the highly prospective Gold Hawk area.
But, newsletter promotion never hurts :) We'll see...
You can't win them all. The same thing happened to me with Crowflight. I was hoping for an entry point last week but didn't have any cash available. Now that I have cash, it's run up close to 40% in the past week or so. I'm probably going to wait and see if drops a few pennies before I buy.
NOX.v - Niogold up 20% +.075 today to .445.
No news, but word is that a large house is buying, Pacific International Securities. It has been on a tear this week, and really impacting the stock price.
NOX has properties in a proven gold intensive area (Val-d’Or and Malartic Gold Mining Camps), and both NOX and it's neighbors are having very positive drill assays. That coupled with the fact there there is existing infrastructure in place and that there is an opportunity for low cost open pit mining makes it an interesting play.
Not sure how much run is left near-term, but should be a good stock to follow in 2007.
cl - it's not that I don't believe that Rich is a genuine, trustworthy person. If that were the case, I'd have taken my profits and run. What he's put together with Tara Gold is nothing short of astounding. I guess I am just frustrated that the financials have been dragging along at a snails pace. I am an accountant by trade, so it's hard for me to sit back and wait.
I agree, the operational aspects of what Rich has done (tying up properties, joint venture deals, etc.) is much more important than financial statements. But, for shareholders, a better exchange listing will no doubt increase value per share. So, I guess I'm being greedy...I want astounding operational results and audited financials to back it up!
Financials - I sure hope they are filed by the end of next week. I wouldn't bet the farm on it though. As much as I like Tara Gold (and have done extremely well from my .33 average), I'm still very skeptical when it comes to the filings.
As Bobwins stated in his conversation with Rich on 12/4 (msg #8265 on the VM ZipCodeChangers board), Rich stated that the financials were promised to him that day but the auditors needed to do "some translation". Now, almost 2 months later, he's still saying "2 more weeks". What kind of translation takes over 2 months???
It was this way with AMRS as well. This is the sole reason why I didn't enter into the private placement for Tara Minerals. I'll probably regret it one day, but it seemed too risky for me.
Again, I'm not down on Tara at all and think it's even still undervalued, but the lack of financials still bothers me some. I hope it's just temporary. With audited financials, I have no doubt that we'd see considerable upside from here.
TAM.v and NOX.v - Thanks Bobwins!
I can't tell you how much I appreciate your time in checking out these three for me (esp. NOX and PRZ since you also follow TAM)
Although it's not surprising news for Tamerlane, I was under the impression that there may be some mining by the end of 2007. Thanks for the clarification. I think mid/late 2008 sounds a bit more likely anyway since they have so much work to do before they can secure a permit. Did they mention when the feasibility report would be coming out? The hope by posters on SH is to see a feasibility report proving the economics of the operation by Q1. Then, hopefully the permit will be secured by the 2nd half of the year (or at least by the end of 2007). If so, TAM.v could still be a good buy. I really won't feel entirely comfortable until I see both the feasibility and the permit though.
As for NOX, I'm glad that they had a good presentation. I actually bought shares at .26 CDN, so am very happy already with the increase. I did happen to see the Jay Taylor article. Actually, one of our fellow posters, Guy, shared the link to the article:
http://www.niogold.com/jtaylor.pdf
I also liked the fact that NOX is not only in close proximity to so many past producing mines, but it's property is adjoined to Osisko Exploration (OSK.v), Northern Star Mining (NSM.v), and Wesdome’s (WDO.to) properties, and has many of the same geographic characteristics.
It's obviously highly speculative, but there is potential for some quick shallow open pit mining, as well as good potential for deeper drilling.
As for Prize (PRZ), I'm not so keen on them, but had received a tip or two to put them on my watch list. It didn't sound like you were too impressed with their presentation. Historically, this Co. has a pretty poor track record. But, new management and some good assay results gives it some potential. But, it sounds like there are other near term producers that may be more worthy of a look (Crowflight, for one).
Thanks again for sharing your thoughts at the Conference! I hope you had a great time!
Bobwins - Vancouver Investment Conference
Oh, wow, that place is going to be hopping! I can't believe that there are that many companies in attendance. You're head will be spinning!
I know you are focusing mainly on near term producers, so will probably spend more time with stocks such as LBE, CMM, ROK, ADA, etc. (which I happen to own as well), but I'd be interested in hearing a little more about two plays that seem to have good assays, existing infrastructure, and great potential verses share price:
TAM.v - I'd love to get an update on the feasibility study and the permitting. I think you may own some TAM shares as well, so it definitely might be worth checking out. This could either be a HUGE sleeper or dead in the water depending on how the touchy permitting with the NWT goes.
NOX.v - This happens to be one of my favorites, although not a near term producer. It's actually my Pick One Lotto (POL2007) pick, and there is some opportunity to do some open pit mining this year. In the area they're located (Val-d’Or and Malartic Gold Mining Camps), there have been very positive results by NOX and neighbors lately, and the gold has been found at previously unexplored deep levels.
I also have a few others on my watch list that seem to have great potential and good assays. I don't have any pointed questions for these, but you might want to put them on your "B" list if you get the time...
Prize Mining (PRZ.v)
Alma Resources (ALV.v)
Consolidated Spire Ventures (CZS.v)
Grenville Gold (GVG.v)
Christopher James Gold Corp (CJG)
Have a great time!
NOX.v - Thanks for the additional info, Guy. That's a good read!
I think NOX has some great potential, although any early stage drillers can be highly speculative to say the least. But NOX has properties in a proven gold intensive area, and both NOX and it's neighbors are having very positive drill assays. That coupled with the fact there there is existing infrastructure in place and the fact that there is an opportunity for low cost open pit mining made it a sound investment for me. Also, compared to all the Companies with adjacent properties, NOX's share price seemed extremely undervalued.
It's currently trading at about .31 USD (.35 CDN), so it's gone up 10% today (and in 34% the past week, though much of that was before the contest started :(
TG WORLD ENERGY (TGE.V)
I held this Co. last year and bought in just south of 80 cents. They are elephant hunting in the Tenere block in Niger and were incredibly lucky to have partnered with CNPCIT (China National Petroleum Corp). If I remember correctly, they won a legal battle that allowed them to be carried for most of the project. Of course, they have a minority interest so don't really call any of the shots. But the first test well in Niger is getting close to depth and results should be pending.
That plus their Alaska properties are both high risk/high reward plays. If they find oil in Niger, this could fly. I imagine the same can be said of their Alaska drilling. I wouldn't necessarily call this a table pounder since it is so highly speculative. But, it might be a good play to throw some gambling money into. The reward could be great!
NOX.v (NioGold) is my pick.
I’m going to try something a little different for the single pick contest. I’m going to pick a speculative Canadian gold/mining play with tons of potential, but most likely no significant production planned for 2007. I’m doing this for a few reasons:
1. I expect gold to continue to be a hot commodity in 2007
2. I like NioGold’s prospects, the fact that there is infrastructure in place, and that they own 3 existing former mines known to produce large quantities of gold.
3. Rumor has it that a major newsletter writer is going to initiate coverage in Q1. I might get the opportunity to lock in my profits simply on a momentum play.
NioGold Mining
NOX.v, NOXGF.pk
Shares O/S: 34 mil
Fully Diluted: 43m
Share Price on 01/03/07: .27 CDN
NioGold currently owns a 55-square km land position in the prolific Vad-d’Or and Malartic camps in Quebec where up to 170m ounces of gold have been produced over the years (over a 260 km range). This is one of the largest land holdings of any exploration junior in the Abitibit area. These gold deposits are known to extend to great depth, the bottom of which none have yet been reached. NOX’s property is right in between Osisko Exploration (OSK.v), Northern Star Mining (NSM.v), and Wesdome’s (WDO.to) properties, and has many of the same geographic characteristics. Map: http://www.niogold.com/en/location/
Initially, NioGold is concentrating in the Marban block of claims where there have already been 3 previous gold mines (producing a total of 592k ounces of gold in the past). But, production from these mines has only been done at shallow levels (<500m). So, the potential is great that there is plenty of gold at greater depths (more easily accessed with new technology).
So far, NioGold has released assay results for two holes on the Marban Block. The results were good. The first returned gold values averaging 6.62 grams per tonne over 26.4 meters including a higher grade core of 7.53 g/t over 7 meters and 10.77 g/t gold over 4 meters. The second zone returned gold values averaging 1.3 g/t gold over 43 meters or 2.10 g/t gold over 16 meters including 6.87 g/t Au over 2 meters.
Further assay results are pending from their 15000 meter drill program (with 27 remaining holes in labs)
NioGold also owns the Camflo West Block of claims which is located in an area that produced 8.9 million ounces of gold. Drilling has begun here as well, and prospects are good.
Rumor has it that a very big newsletter writer is onto NOX and we may see some momentum in Q1 of 2007.
The great part about NioGold is that because there were existing mines in the area (and still many around NioGold’s property) that the infrastructure is already in place, and there are milling facilities close by that “could” handle NioGold’s ore.
Paramount had a nice NR this AM, announcing results on 5 more trenches:
Paramount Gold Reports on Five More Trenches in the San Antonio - Carmen Zone with Assays up to 887 Grams Silver at the San Miguel Project, Mexico
Tuesday January 2, 5:00 am ET
CHIHUAHUA, Mexico--(BUSINESS WIRE)--Paramount Gold Mining Corp. (OTC:PGDP - News; Frankfurt:P6G - News; WKN:A0HGKQ) is pleased to release the results of a trenching program in the central part of its San Miguel concession block near Temoris, Chihuahua, Mexico. The five trenches reported are located in the San Antonio - Carmen zone which is adjoining and to the north of the San Luis zone where Paramount reported drill results that included 35.5 g/t gold across 4.0 meters (see news release dated August 1 2006).
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Trenches nine through thirteen span approximately 175 meters along strike on the San Antonio - Carmen zone. Trench ZSA-09 starts approximately 50 meters north from trench ZSA-08 (88.4 meters averaging 50.2 g/t silver, including 1.0 meters of 1,300 g/t silver). Trench ZSA-10 is approximately 90 meters north of ZSA-09. Trenches ZSA-11 and ZSA-13 continue across strike to the west of ZSA-10 with approximately 50 meters between them. Trench ZSA-12 is approximately 70 meters north of ZSA-10.
Paramount's Manager of Exploration in Mexico, Bill Reed, commented: "The trenching results at San Antonio compare very well with earlier trenches in the San Luis, San Jose and La Union zones. These recently completed trenches in the San Antonio - Carmen zone have exposed a series of sub-parallel en echelon veins that extend 175 meters to the north of those previously reported trenching results with a width of more than 200 meters. This confirms our prior observation that this mineralized system is strengthening to the north. We will continue drilling this zone immediately after the start of the New Year."
The highlights of the trenching include:
ZSA-09 - 61.9 meters averaging 79.0 g/t Ag, including 2.1 meters of 625 g/t Ag with 1.24% lead, and 1.0 meters of 887 g/t Ag with 5.59% lead.
ZSA-10 - 36.5 meters averaging 56.3 g/t Ag, including 17.5 meters of 87 g/t Ag.
ZSA-12 - 30.0 meters averaging 87.7 g/t Ag, including 3.0 meters of 422 g/t Ag, and 7.0 meters of 195 g/t Ag with 1.6% zinc.
ZSA-13 - 1.0 meters 62.0 g/t Ag and 0.79% lead.
The trenches are excavated to a depth of 2-3 meters and extend from west to east across the quartz veins and stockwork quartz veins that host silver and gold mineralization in the Guazapares mining district. The trenches were cut through thin overburden to better define drill targets and spaced approximately 50 to 75 meters apart. The geology of the trenches is mapped in detail and continuous rock chip samples of no more than one meter in length are collected from the trench walls.
Drill holes have been completed on the San Antonio zone based on the trench assays listed below and the drill will continue to move north along the mineralized zone as defined by the trenches.
Recent Paramount Gold Highlights
12/20/06 Appoints new senior mining executive
12/14/06 Extends Zone 800 meters
12/11/06 Strengthens team with addition of COO and independent
director
12/06/06 Commissions independent NI-43101 Technical Report to
establish first Gold/Silver resource at San Miguel, Mexico
11/08/06 Strike zone extended 500 meters with Polymetallic intersects
10/13/06 Announces Above-Market $1 Million Financing at $2.60 Per
Share
10/12/06 Drills 6.7 g/t Gold Equivalent over 17.6 Meters and 4.8 g/t
Gold Equivalent over 16.4 Meters at San Miguel
10/10/06 Acquires an 80% Interest in over 6,000 Hectares Surrounding
San Miguel Project in Mexico
9/27/06 Outlines a High Potential Gold-Silver Target at Santos, Peru
9/21/06 Drills silver intersects of 354 g/t (11.4 ozs) over 6.6
meters and 263 g/t (8.5ozs) over 19.7 meters at San Miguel.
9/19/06 Trench Results at San Miguel, Mexico, Extend Silver/Gold
Zone another 175 Meters
9/14/06 Drills 874 g/t (28 ozs) silver over 5.2 meters and 553 g/t
(17.8 ozs) over 6.5 meters at the San Jose zone, San Miguel
8/10/06 Hits gold in 4 of 5 drill holes at Linda property in Peru.
8/2/06 First drill results at San Miguel Project in Mexico include
bonanza gold grade of 35.5 g/t gold over 4 meters
6/29/06 Recruits key geologists from Barrick Gold.
6/28/06 Identifies 5 High Priority Properties in Argentina and Chile
5/17/06 Creates the Andean Gold Alliance with Tech Cominco Limited
covering 21 properties in Chile, Peru and Argentina.
5/12/06 Closes $1,000,000 financing @ $4.25 with participation by
Teck Cominco Limited for 117,500 shares.
5/03/06 Acquires 100,000 Hectares in Sierra Madre Gold-Silver Belt,
Between the Guazapares and El Sauzal Mining District,
Mexico
2/22/06 Channels 11.3 g/t gold across 25.8 meters at the San Luis
zone, San Miguel project in Mexico.
About San Miguel
San Miguel is currently comprised of 16 concessions covering an estimated 6 kms strike of silver and gold mineralization. It is located in Chihuahua, Mexico and lies in the Guazapares mining district, part of the gold-silver belt of the Sierra Madre Occidental. Paramount signed an agreement in August 2005 with Amermin S.A. de CV, a subsidiary of Tara Gold Resources, to acquire a 70% interest in the San Miguel project.
TAM.v and other speculative favorites -
I like Tamerlane (TAM) and on paper it seems that they've got a great opportunity to excel with their Pine Point property. Their costs should be extremely low compared to other miners simply because the majority of the infrastructure is already there. Cominco, the previous owner, had already placed this property in production, but gave it up due to low zinc/lead prices at the time (as well as water problems and transportation costs). Since then, zinc/lead prices have gone through the roof, new technology allows TAM to build a freeze ring (to stop flooding), and they have a hydro plant and railway. They aren't National Instrument 43-101 compliant yet, but have over 20 years of solid drilling data from Cominco and are working on a feasibility study to be released very soon.
That said, there are a few risks. One, they have to secure a permit to proceed. From what I read, Cominco really left a bad lasting impression with the natives. It's going to take some real dilligence and persuasion by TAM to get permitted (proving a more environmentally friendly way to mine Pine Point). And, of course, the longer this may draw out, the chances of a financing increase (although mgmt still believes that they can get some kind of debt financing). But, with a tie to CMM.V management, they sure know how to dilute and throw stock options around. I would say that TAM is still fairly speculative, but if all the pieces fall into place, I think they could become profitable very quickly.
A few others I like on the speculative or more of long term producers (and I'll try to go into some detail later) are:
NOX.v - Niogold - I bought this one at .21CDN so it's jumped up a bit the last few days ago. NOX a lot of land straddling from NSM's midway property to OSK's property in Ontario. Their lands contained several former mines which is great because there is already an infrastructure in place. There are also two milling facilities close by that could handle Niogold's ore (gold).
This is still highly speculative though and probably NOT a near term producer. They just released good results on their latest two drill holes:
"The mineralized zone returned gold values averaging 3.62 grams per tonne (g/t) gold over 26.4 metres including a higher grade core of 7.53 g/t gold over 7.0 metres or 10.77 g/t gold over 4.0 metres.
Hole MB-06-001 cut a second thick sulphide mineralized zone between 461.8 to 511.1 metres downhole (49.3 metres core length) along the down-dip extent of the Marban Mine Sequence. This second zone returned gold values averaging 1.30 g/t gold over 43.0 metres or 2.10 g/t gold over 16.0 metres including 6.87 g/t Au over 2.0 metres.
Hole MB-06-002, drilled from the same location as hole MB-06-001 and to a depth of 149.6 metres confirmed the near surface gold mineralization cut by hole MB-06-001 returning 5.83 g/t gold over 3.2 metres or 8.02 g/t gold over 2.2 metres."
A few others I am watching and in early stages of development/drilling:
GVG.V - Grenville Gold
NCV.V - New Cantech Ventures
ALV.V - Alma Resources
I'm playing these more of a swing trade since they are nowhere near production. They do seem interesting, and I'll try to post my thoughts when I get a moment. For now, it's time to go play with the kids!