Value Microcaps Junior Energy

[Ed Ajootian]

Tri-Valley Corp. (TIV) -- This company has undergone a remarkable transformation over the past few years, and currently has some great plays going. There's been a 100% turnover in management over the last 2 years, no longer is there a former stockbroker at the helm.

They have 3 great plays going, a heavy oil development play (their Claflin project in California), a SAGD project in California, and a very large amount of acreage up in Alaska that is prospective for precious metals. With Clafin they are expecting the project to cost $10M to drill out and are expecting peak cash flow to be about $9M/year at $90 WTI. The SAGD project has huge potential but they have a lot of legal and logistical issues to get through before getting that project off the ground so I'm not really giving that much weight right now.

The PM acreage in Alaska is particularly intriguing. One of their claims ("Shorty Creek") is just south of International Tower Hill's (THM on Amex, ITH.V) Livengood project, which has discovered over 10M ozs. of gold equivalent so far. With that much gold having been discovered there, its almost inconceivable that THM would not build a mine there at some point (THM is doing a prefeasibility study for a mine as we speak). The market for THM stock seems to agree, having accorded THM a market cap > $700M. Once there is a producing mine that close to TIV's acreage, that dramatically reduces the amount of resources that would need to be disocvered on their acreage in order to have identified an economic resource.

TIV is currently shopping their Alaskan mineral acreage to mid-size PM exploration companies for a JV. Given the closeness Shorty Creek to Livengood, it seems likely that TIV will be successful with this. I believe if they can get a JV with a mid-size or larger PM exploration company, the TIV stock price could get a big kick in the pants.

For those looking for more info on the company, they did a great presentation at IPAA in April. The webcast of that is linked on their website and the slides can be seen at http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=7856441-5743-20057&type=sect&dcn=0001157523-11-001977

I bought a bunch of stock in their latest equity raise plus have since added a lot from open market purchases.