Estrella Gold Corporation (CSRFF)

[chmcnfunds]

Part of interview of Mickey Fulp, well known mining expert:

"Mickey Fulp: Can Gold Prospectors Cushion Volatility?
The Gold Report | Jun. 22, 2011, 4:00 AM

The Gold Report

Quote:
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MF: That's an interesting thought. Certainly, the junior sector looks downtrodden right now. There is always low liquidity during the summer doldrums. Toronto brokers summer in their cottages on the lake; Vancouver's sharks go to the mountains; Europeans take leave for six weeks; and everybody in New York City is in the Hamptons. The Toronto Venture Index valuation lost 30% since closing above 2,400 on February 28. A post-Prospectors & Developers Association Conference pro selloff started in March, then we had "sell in May and go away." Now we have a couple of months of summer doldrums looming. We generally see a seasonal uptick after everyone comes back to work in the first part of September. That is the time of year when we would expect higher volumes that could lead to higher junior valuations.

TGR: We started this conversation with agricultural intrigue. In the U.S., we've had an amazing amount of flooding, slicing into crop forecasts. As we move through the summer, do you expect more interest in "flight to safety" vehicles like gold for wealth preservation?

MF: Maybe. But here's another argument to that scenario. We are approaching the seasonal low for gold. In most years, precious metals dip in July and August. For me, this is one of the annual opportunities for buying gold. I'll get it for a better price than I will once the wedding, holiday and festival seasons start in the early fall in India and continue into China and the Muslim world. Low season's coming up.

TGR: When you analyze companies, you review share structure, people and flagship projects. As you look at the juniors, are there some downtrodden companies that possess that unique combination of features that merit acquiring during the summer?

MF: I recently moved out of two gold companies because they experienced healthy run-ups and decided to move on to something else. That moved me out of the precious metals sector and more into the prospect-generator model. I cover (deleted material) and Estrella Gold Corp. (TSX.V:EST) and am going to add another prospect generator soon.

(Deleted material)

MF: Prospect generators spend someone else's money to advance projects. That means the company can avoid share dilution and preserve capital. The key is to find good prospects and good partners. It is an especially effective model in unsettled and down times in the market.

TGR: So, it is unsettled times that made you focus on the prospect-generator model?

MF: Not necessarily. I have been in prospect generators for at least two years now. I've just moved out of some pure precious metal plays because they had very good run-ups so I took profits. Part of it is I need to be stimulated. I will move into and out of stocks and pick new things because I like to generate ideas and make speculative money work for me and my subscribers. So, when a company has a two- or three-time run-up and I don't see another double in the next year, then I take that money off the table and move it into another stock. If I pick a stock at $0.25 and it goes to $0.50, that's a two-bagger. The chances of it going to $2 and another two-bagger is a lot less than if I go find another $0.25 company and play it to go to $0.50. It's a matter of the power of two, of doubling your money. So, if you don't think something has potential to double from where it is right now and you already have your double, then take that money off the table and go find another cheaper one.

TGR: In the prospect-generator model, you're talking about spending someone else's money to avoid dilution. But, it ultimately does need some good projects. You have often talked about a missing generation of geologists. In fact, in one of your Musings you talked about the importance of mentors. In a prospect-generator model, how important are the company geologists?

MF: They are of paramount importance. A prospect-generator model works only if the company has a cadre of excellent, field-savvy geologists with particular expertise in an area, a commodity or a deposit type. So, the geologist's skill set is the first and foremost key to making a prospect generator work.

TGR: Tell me about the geologists and management at the three companies you mentioned earlier, Almaden, Estrella and Avrupa.

(Deleted material)

"Estrella Gold is a fairly new company run by geologist-CEO Keith Laskowski who was responsible for Eurasian Minerals Inc.'s (TSX.V:EMX) success in Haiti. He is working in Peru, where the country is becoming more left-leaning in the wake of the election of a former military man. Economic and social policies no doubt will swing left in the country. However, Peru is a great destination for major mineral deposits. And Estrella Gold has the right set of investors behind it, with a low number of shares. It's also a bit beaten up right now because of the political uncertainty. (Material deleted)

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Read more: http://www.businessinsider.com/mickey-fulp-can-gold-prospectors-cushion-volatility-2011-6#ixzz1Q1p8QsBG

CSRFF