Wednesday, March 01, 2006 4:26:40 PM
another read and couple more? i should have shared them before but didn't know if it was okay ? i'm more of a quieter investor
ALLAN BARRY REPORT
ON PRECIOUS AND BASE METAL EXPLORATION
5TH EDITION
February 7/2006
Welcome to the 5th edition of our report on Precious and Base Metals Exploration. In our past four editions we have covered a wide range of subjects, including our view of the last ten years and how it affects us now and into the future. We also discussed our outlook for metals prices on gold, copper and silver. We have described the key fundamentals that we look for when evaluating an exploration company for inclusion in our reports. In our 4th edition we added a new section to our report called “Our Report Card”; in this section we listed all the companies that we have featured in our past reports and how they have performed. As we are publishing these reports the style is evolving; as we find ways to improve our report we include them. Some of these changes have come about from feedback from our readers which we truly appreciate - keep them coming!
In this edition we will give our overview of the main points we follow when looking at the metals mining market in general. Specifically, our main view is that supply and demand are the most important factors when it comes to the price of commodities going forward.
In order to confidently invest in companies in the metals mining business, a comfort level based on understanding the movement of metals prices is a great asset. We don’t try to time the short term spikes and pull backs in prices. We are more interested in understanding the long term trend and we feel that a clear and accurate view is an asset to investing in companies in the metals industry.
We feel that we are in the early stages of a multi-year bull market for commodities in general. We follow the metals exploration business because we feel it is a profitable way to benefit from the powerful economic growth in China and India. Of course, there are other ways to invest in this growth; for example, the commodities futures market is another option. We feel our report is a good resource for investors in metals futures and the companies that produce those metals.
If you are interested in companies in the mining business that explore for new metals deposits, we follow a group of companies that are well positioned for significant future growth. For investors who invest in the commodities futures market (specifically precious and base metals) we feel it is imperative to understand what is happening with the industry that produces those metals.
Our upcoming section will concentrate on supply and demand for metals. Following that, we will specify how we feel an investor can use that information to help increase investment returns. The subsequent section will introduce some new companies we are adding to our list of “Favourite Treasure Hunters”. We will also re-visit some companies that have been featured in previous reports. Our final section is “Our Report Card” in which we have a couple of changes – one of those being that we will use that section to give brief updates and outlooks on all the companies we follow.
Demand
When we discuss demand in this report we are mainly discussing the demand for metals, although we do feel that the driver of demand for metals plays an equally important role in commodities in general.
In our opinion China and India are playing an increasingly important role in the demand for metals. In fact, their increased activities constitute the main driver of demand for metals. We feel where economic growth in China and India goes, so goes the demand for metals. Of course the economies of many other countries play a significant role, but the economies of China and India have been, and will continue to be, where the most aggressive demand is coming from. That demand is overwhelming global supply and this is why metals prices are so powerful.
We continue to follow economic signs on the growth of China and India as clues to future demand. Recently China reported their economic growth for 2005 was 9.9% and this is all the evidence we need to feel comfortable that their growth continues very strongly. For the year ahead it looks like it will continue. Throughout the year we will continue to follow economic reports to get a comfort level as to whether or not they will continue to grow; however we would not be too concerned if the growth slowed by half its current rate. Especially if the supply chain for metals continues in its current direction.
The economic landscape of the world is changing very rapidly. China is now in the top 5 economies in the world and is quickly on its way to number one. We think that not only will China be the largest economy in the world in the next 10 to 15 years; we feel that within 25 years, China’s economy will be much larger than the USA’s.
Supply
The global supply chain of metals was significantly damaged during the time of dismal low metals prices in the 1990’s. The impact will continue for many years into the future. New discoveries take years to be put into production so the industry is unable to easily add supply. Economists have been taught that when prices go up aggressively, new production comes online and feeds that demand; you are then supposed to see a correction in prices.
There are factors that have come into play in the not too distant past that are throwing cold water on that analysis. One of those factors is the need for a highly trained workforce in the industry; the 1990’s are referred to as the lost generation in the mining business. What that means is because of the low metal prices there were fewer and fewer jobs available in the mining business. As the job market worsened, fewer students entered university to study geology. As a result, companies are having a hard time finding highly trained people now that metals prices are much higher.
Not only do mining companies have difficulty finding workers, their difficulties are compounded by the fact that they are also seeing higher prices for the commodities they need to mine metals.
Technology is another major factor in adding new supply to replace mined out deposits. The technological advancement the industry seen in the 1980’s and 1990’s helped companies find a lot of major deposits. In the industry we say that much of the “low hanging fruit” has been picked. In other words, what was easy to find has been found and is being mined and the reserves in those mines are rapidly being depleted.
These three factors of: 1.) a tight market for highly trained workers, 2.) rising costs for commodities needed to mine metals, 3.) the low hanging fruit having been picked; combined give us the confidence to voice our opinion that global supply is weak and not getting stronger for at least the next few years.
The Supply and Demand Story
If we had a soft supply of metals and a weak demand we would not be in a bull market. Conversely, if we had strong demand and strong supply we would also not be in a bull market. What we currently have is soft supply and strong demand and in our opinion neither of those is changing any time soon.
The combination of strong demand and weak supply equals higher prices. Until we see supply increase significantly or demand slow, we maintain our bullish outlook. In our fourth edition we gave our outlook for metals prices going forward and we will mention those calls in the “Our Report Card” section.
The US Dollar a big influence on metals prices
The US Dollar plays a major role in the prices of commodities but we think the dollar is near to changing its costume. Commodities are priced and traded using the US dollar. Generally speaking, when the US dollar is strong, commodities go in the opposite direction. And when the dollar is weak, commodity prices are stronger. This link has been broken in the last year. During the last year the price of several metals has been going up while the US dollar has also been going up. We feel this is a very bullish sign for metals prices; it is now more closely following the supply and demand story we just presented.
Another important development we are following is the interest rates in the USA. We feel the dollar has been propped up in the last year because of 14 consecutive Federal Reserve interest rate increases. Around 8 or 9 months ago, Warren Buffet made a large investment shorting the dollar. That move has gone against him but we feel he was just a little early as value investors can be; ultimately we feel his reasoning was sound.
Comments he has made in the press about runaway deficits and national debt is an indicator of fundamental weakness for the dollar and the main reasons behind his bearish outlook on the dollar. We feel what threw off his timing were the non-stop Federal Reserve interest rate increases. Short term currency traders play interest rate moves and the fed’s moves have been propping up the dollar. We feel that the fed has to stop raising rates in the next couple meetings, and when they stop, the dollar has a lot more downside risk than upside potential. The reason we feel they have to stop is because it usually takes up to a year for a rate hike to start showing up in the economic numbers; they have done 14 in a row without allowing the dust to settle. This aggressive action will test the economy and if there are many more could drive the USA’s economy into a recession.
Fortunately for metals and the global economy in general, an American economic slowdown will no longer have as big an impact on global economic growth because China and India are adding to the global economy in a big way. We don’t feel at this time the USA’s economy is headed toward a big economic slowdown but it will be challenged by all these interest rate increases and deficit and national debt issues. We do feel a weakening of the dollar is close at hand and the dollar will be in for tougher times when the fed stops raising interest rates. A softening dollar will add fuel to the fire of the upward move on metals prices.
SOME OF OUR FAVORITE TREASURE HUNTERS
This section of the report is dedicated to discussing companies that we feel have quality projects that offer significant potential to grow into companies with higher market values.
We are shareholders of all the companies included in this section. We believe strongly in the age-old adage about eating our own cooking. At times we offer our consulting services to companies we own shares in. We are only interested in offering those services to companies we first and foremost want to be shareholders of, as well as being able to provide services that will assist the company in unlocking value to the shareholders.
At the beginning of the discussion of each company we will indicate if we are a consultant to the company; as previously mentioned we are shareholders of all the companies listed below. We also advise readers to look at our disclaimer at the end of this report. The following companies are listed alphabetically.
Abacus Minerals
Abacus has been featured in three previous editions of our report. The main reason they continue to be featured so regularly is because they keep making significant developments that we feel merit updating our readers. We are a shareholder and a consultant to the company. We are also considering increasing our shareholdings in the near future.
As we were writing the fourth edition of our report, the company was reporting outstanding results from the company’s Ajax project. This is a new discovery found under a past producing deposit that upon deeper drilling has uncovered a very impressive new discovery.
The Ajax project adds a very nice surprise to the group of projects in the area. The DM/Audra and Rainbow zones are early stage discoveries that we spoke about in our previous reports on Abacus. The new discovery is under the old Ajax pit that Teck Cominco mined out in the past. Deeper drilling, uncovered very long drill-hole intersections with excellent grades in all the holes. Now the company has three targets that will be seeing aggressive drill programs.
Recently the company announced, and is in the process of completing, a financing for $12 million. These funds will put in place the financing to pay the costs of the mining assets Abacus is buying from Teck Cominco. The financing is being placed with a group of mutual funds. With these shares, and the shares Teck Cominco will be receiving in the deal with Abacus, will leave close to half the stock in the hands of institutional shareholders. Additionally, these funds will allow the company to aggressively drill the three known discoveries on the project.
When this financing is completed Abacus will restart drilling, and will focus on the Ajax discovery. So far there have been 4 holes drilled into the Ajax discovery and the first hole intersected around 358 meters of ½ percent copper per tonne. These kind of thick intersections make an exploration company’s life a lot easier, because you don’t have to do a lot of step-out drilling to quickly have a very large deposit. The next three holes also intersected thick intersections of copper. All of the drill holes are open at depth and leave the deposit open in all directions.
In addition to drilling aggressively on the Ajax discovery, the company will be drilling the Rainbow zone. This discovery has big potential ramifications as well because it is just off the haul road that links the Afton mining assets and the Ajax pit. It would be a natural to have this zone in any future mining plans.
As you can see, Abacus has been very busy these last six months and that is why they have been featured in several editions of this report. 2006 is shaping up to continue this aggressive pace of major accomplishments.
Abacus’s stock symbol is AME and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.amemining.com. Their website contains past news releases and additional information to do your own due diligence.
Atna Resources
This is the second edition we have featured Atna; they were also featured in our fourth edition on January 19, 2006. They have a project that is catching the attention of many investors and technical people that know the area well. We are a shareholder of this company and are looking to increase our position on any pullbacks in the share price, although we don’t think it will see any major pullbacks and has plenty of blue sky ahead.
As we have discussed in past editions of our report, Nevada is one of the most important gold mining regions in the world. Many million ounce deposits have been mined and new ones are still being found that will ensure that Nevada continues to be one of the world’s largest producers of gold. Some of those past deposits have launched several companies into major mining companies. None more so than Barrick Gold which is in the process of taking over Placer Dome that will turn Barrick into the largest gold mining company in the world. Barrick began its corporate life as a tiny little junior that had spectacular success because of the mines they found and brought into production in Nevada. These mines are low cost producers and large so they have long mine lives and are very profitable.
Atna is quickly becoming another company that could be launched into being a much larger company because of their drilling success in Nevada. They have a new discovery that they are developing that is highlighted by very significant intersections of high grade gold. One of those drill holes was around 150 feet of around 1 ounce per ton gold. Similar grades and significant intersections in other drill holes indicate this project has a potential multi-million ounce gold target.
A multi-million ounce gold target in Nevada will catch the attention of every major gold mining company in the world. It has caught our attention and we think the company will have an exciting year ahead. Investors big and small are paying attention and we think Atna is primed to see their market value increase dramatically in 2006.
Atna’s stock symbol is ATN and the shares trade on the Toronto Stock Exchange. Their website is www.atna.com. Their website contains past news releases and additional information to do your own due diligence.
Bear Creek Mining
This is the third time we have featured Bear Creek Mining in our report. As we were writing our fourth edition, a development was taking place but due to deadlines we couldn’t do justice to the story so we will cover it in this edition. We are a shareholder of Bear Creek and are considering increasing our shareholdings in the future.
Last month the company reported that they had been informed by the lab that was doing their metallurgical tests that the lab had made an error. This error caused the lab to miscalculate the recovery rates of the metals in the rock. Upon this announcement, the market reacted quickly and drove the price down around 25% in one day of trading. We feel this was an overreaction and at the end of the day was not nearly that meaningful. One must understand that metallurgical analysis and refinement starts before a deposit goes into production and continues throughout the life of a mine. A mining company is always trying to maximize their recovery rates. So the reaction of this very preliminary metallurgical testing is an exaggerated reaction to something that is not that fundamentally important.
Since that big sell-off the company has regained most of the market value it lost, mainly because investors realized that the deposit hasn’t gone anywhere. The metals in the ground remain in the ground. The company has also continued to release excellent results from their drilling. This drilling is continuing to expand the size of the known discovery. As well, they have also found new zones that are hosting gold.
There are lessons that one can learn from this action and response. First, if you understand fundamentally what the company is doing, you would most likely have not reacted in a panic. Hopefully some of our readers realized it was an overreaction and took advantage of the stock being on sale.
The bottom line is that this company has a very impressive silver project, in a time when quality silver discoveries are not easy to find and when the price of silver is in a bullish trading pattern.
We look forward to watching the drilling continue to increase the size of this discovery, and we are now seeing results from gold targets that are showing encouraging signs. In the long run this kind of silver deposit will be under heavy demand and if it continues to grow it would be a deposit more than one major would like to get their hands on.
Bear Creek’s stock symbol is BCM and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.bearcreekmining.com. On their website you can find past news releases and additional information to do your own due diligence.
International PBX
This is the second time we have featured International PBX, the first being our 4th edition of our report when we gave our opinion about the key projects the company has in Chile. Since that edition there have been a couple of announcements that we would like to comment on. We are a shareholder and consultant to the company and are considering increasing our shareholdings in the near future.
When we introduced the company to our readers we described the three key projects including Copaquire, Tabaco and Tierra De Oro and what we thought of these projects. It is basically the quality of these three projects that attracted us to the company. It is our opinion that based on these projects, the company is undervalued. We felt that we could help the company unlock this value and this is why we joined the team as a consultant.
Since the 4th edition of this report was issued, the company has secured one financing raising $2 million and is now in the final stages of closing another financing of $2 million. This will fill the treasury so the company can plan a large program to drill test all three of these projects.
It is our opinion that any one of these projects could be a company maker on its own and collectively they are a valuable group of projects. It would not be a surprise to see the company spin-off these projects into three separate companies. As a shareholder we would be very happy with this because it would give us shares in three companies and those three projects could be attractive on their own. Obviously it would be advantageous to put some drill holes into all three projects and if good results come from all three it would be a brilliant move to split the company into three.
Now that the company has completed one financing and is doing another to put together funding for exploration costs, we look forward to the next step of using this money to drill the three projects. Plans are in the works to for this upcoming drilling and we think the drilling will be underway shortly… stay tuned. We will keep you updated as events unfold.
International PBX’s stock symbol is PBX and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.internationalpbx.com. Their website contains past news releases and additional information to do your own due diligence.
Redstar Gold Corp.
Redstar has been featured in three of our past editions of this report. The reason they have been featured regularly is because they have had developments that we feel warrant updating our readers. We are a shareholder and consultant to the company and intend to increase our shareholdings in the future.
In the past editions we have discussed Redstar’s exploration project in Red Lake, Ontario. Recently the company has completed a $600,000.00 financing. Some of these funds will be used to do a second phase of drilling on the Red Lake project. Some of the funds from this recent financing will also be used to add high quality projects in Nevada using the geological database developed by Anglo-Ashanti.
Redstar has two projects in Nevada that were acquired based on the Anglo database. The company has also added Jake Margolis to the team. He was formally with Anglo and was very involved in the development of the database. He brings a wealth of knowledge about gold exploration and mining in Nevada and, obviously, a strong understanding of the database. He will help the company by leading the team on drilling and acquisition of new projects. A great number of junior gold companies would like to have quality projects in Nevada. Jake’s past experience gives Redstar a tremendous advantage by being able to develop quality projects in Nevada.
Recently, Redstar announced the joint venturing of two of their projects in Nevada with Strategic Merchant Bancorp. We will be featuring Strategic next in this section of the report and will discuss why we think this is a winning relationship for both companies.
In the near future, Redstar will be getting their follow-up drilling on Red Lake project underway and we look forward to drill results. Stay tuned – it looks like the pace of developments is going to gain speed.
Redstar’s stock symbol is RGC and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.redstargold.com. On their website you can find past news releases and additional information to do your own due diligence.
Strategic Merchant Bancorp.
As we mentioned earlier, Strategic has recently formed a joint venture with one of our Favourite Treasure Hunters, Redstar Gold Corp., on two of Redstar’s projects in Nevada. We have recently become a shareholder and a consultant to the company.
Strategic is going through a new phase in its corporate life and is in the process of turning from a shell with not a lot going on into a Nevada gold exploration company. What it brings to the table is a stock that has less than 12 million shares fully diluted, and the ability to raise funds to drill these projects aggressively.
For Redstar it offers the opportunity of having the projects in Nevada drilled without having to finance the costs. It puts the company in the position of being able to focus its funding efforts on financing the company’s 100% project in Red Lake, Ontario. Strategic gets access to excellent exploration projects in Nevada, with a very competent team of technical people that will be running the drilling programs.
The first joint venture project that was announced is the Dry Gulch project that is located in the Carlin trend where millions of ounces of gold have been produced, with much more gold in the ground for future production. This project was acquired due to a geophysical target that is similar to known gold deposits in close proximity.
The second project is the Pine Nut project that is located in western Nevada. This project has a vein system that can be traced by surface exposures for at least 6,200 feet. In certain parts of this system, values over 1 ounce per ton gold has been found but lower grades are more common. In the past, 36 holes have been drilled on this project – most recently by Anglogold in 2000. It is believed that this past drilling did not thoroughly test the high-grade potential. This argument is reasonable because it has only seen 36 holes drilled into a large system; further drilling will test if this theory makes sense.
In the near term we are looking to Strategic to do a financing for drilling these projects. Following the financing efforts we look forward to seeing these projects aggressively drilled.
Strategic’s stock symbol is SMB and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.strategicmerchantbancorp.com. On their website you can find past news releases and additional information to do your own due diligence.
OUR REPORT CARD
We are not big fans of shameless self-promotion; we feel there is enough of that in the investment world. We are much more interested in allowing our research and results of the companies we feature in our reports to speak for themselves. To make it easier for our readers to analyze our past performance we have added this section entitled "Our Report Card".
We are changing the format of this section; after we indicate the dates of past reports featuring the company and the share price at the time and the current share price, we will follow that with updates since the last time the company was featured, if applicable.
Before going on we would like to remind our readers of something we have all heard before, past performance is not always an accurate indicator of future returns. We are adding this section to make it easier for our readers and ourselves to quickly look at the past and what has transpired.
Good as Gold
* Date of report on price of gold November 01, 2005
* Price of gold on that date $460.60 USD per ounce
* Outlook in that report: bullish
* Call in that report 10-30% upside move
* Current Price of gold $551.60 USD per ounce
The price of gold is at the price we projected it would be when we issued the call in the November edition of our report. Our basic argument was that the low prices seen in the last ten years have slowed the supply of gold being produced annually. For several years now the demand has been very strong led by buying from China and India. We have gone over the 10% rise and are moving toward a 30% rise. In that report we based the 30% rise on a couple “ifs”; we are now comfortable taking those “ifs” out of the equation. We feel that the US Dollar has been propped up for more than a year because of Federal Reserve tightening of interest rates. That tightening cycle is coming to an end, and with the out-of-control US deficit and the dramatic increase in US national debt, we feel that the USD is in for a rough ride. Gold is quoted and traded in US Dollars and if the dollar is dropping, gold is rising against that move. Until we see one of two things happen: either supply picks up or demand slows down, we maintain a bullish outlook. We are now comfortable in making a call for gold to trade between $600.00 and $650.00 by the end of 2006.
A Silver Lining
* Date of report on price of silver November 01, 2005
* Price of silver on that date $7.47 USD per ounce
* Outlook in that report: bullish
* Call in that report 50-100% upside move
* Current Price of silver $9.40 USD per ounce
The price of silver is close to the 50% gain we called for in our November Edition. Our basic argument is in line with what we just mentioned regarding gold. We feel that the fundamentals of supply and demand are even more bullish for silver than gold and felt then that silver would outperform gold on a percentage basis. We maintain our bullish outlook for the price of silver going forward. We are now comfortable making a call for silver to trade between $10.00 and $15.00 by the end of 2006.
A Copper penny for your thoughts
* Date of report on price of copper November 01, 2005
* Price of copper on that date $1.83 USD per pound
* Outlook in that report: bullish
* Call in that report for a move to around $2.10 per pound
* Current Price of copper $2.29 USD per pound
The price of copper has now reached our price projection. The basic argument for our bullish stance is the same as for gold, silver and commodities in general – strong demand from China and India and weak supply equals higher prices. That outlook is still the same and we think that until major supply comes online that the price of copper will continue to trade very strongly. We feel it is reasonable to see a move to the $2.50+ range by the end of 2006.
Past performance of our Favorite Treasure Hunters
Abacus Mining and Exploration
* First featured in Sept.19 2005 edition
* Price on that date $0.25 CDN
* Second feature in Dec.07 2005 edition
* Price on that date $0.36 CDN
* Third feature in Jan.16 2006 edition
* Price on that date $0.75 CDN
* Current price $0.96 CDN
We have presented our current update previously in the report so no need repeating here. We are a shareholder and consultant to the company.
Atna Resources
* Fist featured in Jan.16 2006 Edition
* Price on that date $2.17 CDN
* Current price $2.02
We have presented our current update previously in the report so no need repeating here. We are a shareholder of the company.
Bear Creek Mining
* First featured in Sept.19 2005 edition
* Price on that date $2.96 CDN
* Second feature in Nov.1 2005 edition
* Price on that date $3.20 CDN
* Current price $4.17 CDN
We have presented our current update previously in the report so no need repeating here. We are a shareholder of the company.
Exall Resources
* Featured in Dec.07 2005 edition
* Price on that date $1.34 CDN
* Current price $1.51 CDN
Since we featured the company, they have recently announced that they are starting up their drilling again as of Jan.17, 2006. They also indicated that they expect to have a third drill rig on the property shortly and are currently sourcing 3 more drill rigs. It is apparent that they are pretty serious about aggressively drilling this new discovery. We are very positive about the potential of this drilling and look forward to the upcoming results. We are a shareholder of the company.
International PBX
* Featured in Jan.16 2006 edition
* Price on that date $0.59 CDN
* Current price$0.61 CDN
We have presented our current update previously in the report so no need repeating here. We are a shareholder and consultant to the company.
Mountain Boy Minerals
* Featured in Sept. 19 2005 edition
* Price on that date $0.71 CDN
* Current price $0.64 CDN
Since we featured the company, they released all the drilling results from drilling done late in 2005. Since then, they have had to wait until the next drilling season begins, which is getting close. The stock has been hibernating during the winter with no drilling. We look forward to drilling to further test their new discovery and we think things will pick up for the market value of the company once their drilling is underway. We are a shareholder of the company.
Niblack Mining
* Featured in Dec. 07 2005 edition
* Price on that date $0.345 CDN
* Current price $0.75CDN
Niblack started trading in November 2005 and in its short life has had a very impressive group of developments. Those developments include drilling on the Niblack discovery that returned grades and intersections consistent with past drilling in the 1990’s. Recently they announced a $4 million financing. These funds will be used to aggressively drill this discovery. We are a shareholder and consultant to the company.
Peru Copper
* First featured in Nov.01 2005 edition
* Price on that date $2.00 CDN
* Second feature in Dec. 07 2005 edition
* Price on that date $3.45 CDN
* Current price $3.98 CDN
Peru Copper is currently doing a feasibility study on their massive copper and molybdenum deposit in Peru. They have also engaged a large investment bank to look at strategic opportunities. We are looking forward to developments on both those fronts. The bottom line is we feel that this company has one of the most undervalued copper molybdenum projects in the world. We are a shareholder of the company.
Redstar Goldcorp.
* First featured in Nov.01 2005 edition
* Price on that date $0.12 CDN
* Second feature in Dec. 07 2005 edition
* Price on that date $0.10 CDN
* Current price $0.25 CDN
We have presented our current update previously in the report so no need repeating here. We are a shareholder and consultant to the company.
Skygold Ventures
* First featured in Sept. 19 2005 edition
* Price on that date $0.65 CDN
* Second feature in Nov.01 2005 edition
* Price on that date $0.55 CDN
* Current price $1.33 CDN
Since we last featured the company they have continued to announce excellent drill hole results highlighted by intersections that are strongly suggesting a large tonnage deposit. The company has more drill results pending and a very aggressive amount of drilling on this exciting gold discovery. We are a shareholder of the company.
Wolfden Mining
· First featured in Jan.16 2006 edition
· Price of that date $3.77 CDN
· Current price $3.95 CDN
This company has two key projects that they will be drilling aggressively this year. They have already found two very impressive gold discoveries and one of those is in the Red Lake area of Ontario. We look forward to further drilling to expand the size of these deposits. We feel that as they continue to expand the size of their discoveries, the market value will reflect that and participate in further bullish moves on the price of gold.
Overall Report Card on Metals and Our Favorite Treasure Hunters
Again we would like to add that the numbers and returns are only for comparison purposes. We are not giving investment advice or recommending these stocks for buying or selling, we advise our readers to read the disclaimer at the end of this report.
We think the fairest way to evaluate the past performance of the companies featured in our past reports is to use an equal dollar amount invested in each company on the date they were featured. Again, we advise our readers to remember that past performance is not always an accurate indicator of future returns.
Having said that, the group of companies we have featured has above average performance and we are comfortable having readers compare our results to other newsletter writers and analysts.
We also believe that the performance is a good indicator that our philosophy of picking companies makes sense. We will continue to search out and report companies that have quality projects and people with reasonable to undervalued market values and the potential of their market values increasing.
We are not going to give ourselves a grade until we have published this report for at least a year. We also think that we would give ourselves a lower grade than most of our readers would, simply because our performance is based on less than six months of publishing this report. We believe that the highest marks go to analysts and newsletter writers who are able to have above average returns for several years.
WHAT MAKES THE ALLAN BARRY REPORT UNIQUE
For the last 12 years, the editor of this report has had a career as a consultant to publicly traded junior exploration companies. Services provided to these companies include investor relations, corporate communications, strategic planning, and fund-raising.
As an investor relations consultant to small companies, one has to wear several hats:
* communicating the company’s efforts to the investing community;
* communicating technical aspects of those efforts;
* being involved in raising funds for drilling and exploration;
* being involved in the technical analysis;
* and reporting of what has been found.
These efforts have provided a unique opportunity to learn, from an insider’s perspective, the challenges that junior exploration companies face. Additionally it has opened doors to meeting a very accomplished group of technical people.
Spending this time as a consultant to junior exploration companies has provided a unique perspective that is an asset few analysts or newsletter writers possess.
IN CLOSING
We would like to take this opportunity to thank you for taking the time to read this report. We hope this information proves to be informative and helpful. We ask the reader not to post this report on any website for at least three days after you receive it and that if it is posted to post the entire report without any editing. We invite our readers to pass on our contact information to anybody they feel may be interested in receiving this report or future reports and we would be glad to add them to our email list for future publications.
There is no charge for this publication. In order to be added to our email list we need your name, phone number and email address. You can call us on our toll free number at 1-877-574-4575 or locally at 604-574-4575 or email allanbl@shaw.ca with the above information.
Regards,
Allan Barry Laboucan,
Editor & Writer
Allan Barry Reports
Disclaimer: The information included in this Allan Barry Report on Precious and Base Metal Exploration is for information purposes only. No statement or expression of opinion, or any other matters herein, directly or indirectly, is an offer, solicitation or recommendation to buy or sell any securities mentioned. The information contained in this e-mail is drawn from sources believed to be reliable, but the accuracy and completeness of the information is not guaranteed, nor in providing it does the editor Allan Barry Laboucan or his companies, or affiliated companies, assume any liability. We do not receive or request compensation in any form in order to feature companies mentioned herein. The editor may have equity positions in companies referenced in this newsletter, or plans on taking a position, or offers consulting services to these companies and will notify the reader of these positions or services provided to the company in the section of the report on each individual company. The editor his personal company or affiliated companies, disclaims all responsibility and accepts no liability (including negligence) for the consequences for any person acting, or refraining from acting, on the information provided in this publication.
ALLAN BARRY REPORT
ON PRECIOUS AND BASE METAL EXPLORATION
5TH EDITION
February 7/2006
Welcome to the 5th edition of our report on Precious and Base Metals Exploration. In our past four editions we have covered a wide range of subjects, including our view of the last ten years and how it affects us now and into the future. We also discussed our outlook for metals prices on gold, copper and silver. We have described the key fundamentals that we look for when evaluating an exploration company for inclusion in our reports. In our 4th edition we added a new section to our report called “Our Report Card”; in this section we listed all the companies that we have featured in our past reports and how they have performed. As we are publishing these reports the style is evolving; as we find ways to improve our report we include them. Some of these changes have come about from feedback from our readers which we truly appreciate - keep them coming!
In this edition we will give our overview of the main points we follow when looking at the metals mining market in general. Specifically, our main view is that supply and demand are the most important factors when it comes to the price of commodities going forward.
In order to confidently invest in companies in the metals mining business, a comfort level based on understanding the movement of metals prices is a great asset. We don’t try to time the short term spikes and pull backs in prices. We are more interested in understanding the long term trend and we feel that a clear and accurate view is an asset to investing in companies in the metals industry.
We feel that we are in the early stages of a multi-year bull market for commodities in general. We follow the metals exploration business because we feel it is a profitable way to benefit from the powerful economic growth in China and India. Of course, there are other ways to invest in this growth; for example, the commodities futures market is another option. We feel our report is a good resource for investors in metals futures and the companies that produce those metals.
If you are interested in companies in the mining business that explore for new metals deposits, we follow a group of companies that are well positioned for significant future growth. For investors who invest in the commodities futures market (specifically precious and base metals) we feel it is imperative to understand what is happening with the industry that produces those metals.
Our upcoming section will concentrate on supply and demand for metals. Following that, we will specify how we feel an investor can use that information to help increase investment returns. The subsequent section will introduce some new companies we are adding to our list of “Favourite Treasure Hunters”. We will also re-visit some companies that have been featured in previous reports. Our final section is “Our Report Card” in which we have a couple of changes – one of those being that we will use that section to give brief updates and outlooks on all the companies we follow.
Demand
When we discuss demand in this report we are mainly discussing the demand for metals, although we do feel that the driver of demand for metals plays an equally important role in commodities in general.
In our opinion China and India are playing an increasingly important role in the demand for metals. In fact, their increased activities constitute the main driver of demand for metals. We feel where economic growth in China and India goes, so goes the demand for metals. Of course the economies of many other countries play a significant role, but the economies of China and India have been, and will continue to be, where the most aggressive demand is coming from. That demand is overwhelming global supply and this is why metals prices are so powerful.
We continue to follow economic signs on the growth of China and India as clues to future demand. Recently China reported their economic growth for 2005 was 9.9% and this is all the evidence we need to feel comfortable that their growth continues very strongly. For the year ahead it looks like it will continue. Throughout the year we will continue to follow economic reports to get a comfort level as to whether or not they will continue to grow; however we would not be too concerned if the growth slowed by half its current rate. Especially if the supply chain for metals continues in its current direction.
The economic landscape of the world is changing very rapidly. China is now in the top 5 economies in the world and is quickly on its way to number one. We think that not only will China be the largest economy in the world in the next 10 to 15 years; we feel that within 25 years, China’s economy will be much larger than the USA’s.
Supply
The global supply chain of metals was significantly damaged during the time of dismal low metals prices in the 1990’s. The impact will continue for many years into the future. New discoveries take years to be put into production so the industry is unable to easily add supply. Economists have been taught that when prices go up aggressively, new production comes online and feeds that demand; you are then supposed to see a correction in prices.
There are factors that have come into play in the not too distant past that are throwing cold water on that analysis. One of those factors is the need for a highly trained workforce in the industry; the 1990’s are referred to as the lost generation in the mining business. What that means is because of the low metal prices there were fewer and fewer jobs available in the mining business. As the job market worsened, fewer students entered university to study geology. As a result, companies are having a hard time finding highly trained people now that metals prices are much higher.
Not only do mining companies have difficulty finding workers, their difficulties are compounded by the fact that they are also seeing higher prices for the commodities they need to mine metals.
Technology is another major factor in adding new supply to replace mined out deposits. The technological advancement the industry seen in the 1980’s and 1990’s helped companies find a lot of major deposits. In the industry we say that much of the “low hanging fruit” has been picked. In other words, what was easy to find has been found and is being mined and the reserves in those mines are rapidly being depleted.
These three factors of: 1.) a tight market for highly trained workers, 2.) rising costs for commodities needed to mine metals, 3.) the low hanging fruit having been picked; combined give us the confidence to voice our opinion that global supply is weak and not getting stronger for at least the next few years.
The Supply and Demand Story
If we had a soft supply of metals and a weak demand we would not be in a bull market. Conversely, if we had strong demand and strong supply we would also not be in a bull market. What we currently have is soft supply and strong demand and in our opinion neither of those is changing any time soon.
The combination of strong demand and weak supply equals higher prices. Until we see supply increase significantly or demand slow, we maintain our bullish outlook. In our fourth edition we gave our outlook for metals prices going forward and we will mention those calls in the “Our Report Card” section.
The US Dollar a big influence on metals prices
The US Dollar plays a major role in the prices of commodities but we think the dollar is near to changing its costume. Commodities are priced and traded using the US dollar. Generally speaking, when the US dollar is strong, commodities go in the opposite direction. And when the dollar is weak, commodity prices are stronger. This link has been broken in the last year. During the last year the price of several metals has been going up while the US dollar has also been going up. We feel this is a very bullish sign for metals prices; it is now more closely following the supply and demand story we just presented.
Another important development we are following is the interest rates in the USA. We feel the dollar has been propped up in the last year because of 14 consecutive Federal Reserve interest rate increases. Around 8 or 9 months ago, Warren Buffet made a large investment shorting the dollar. That move has gone against him but we feel he was just a little early as value investors can be; ultimately we feel his reasoning was sound.
Comments he has made in the press about runaway deficits and national debt is an indicator of fundamental weakness for the dollar and the main reasons behind his bearish outlook on the dollar. We feel what threw off his timing were the non-stop Federal Reserve interest rate increases. Short term currency traders play interest rate moves and the fed’s moves have been propping up the dollar. We feel that the fed has to stop raising rates in the next couple meetings, and when they stop, the dollar has a lot more downside risk than upside potential. The reason we feel they have to stop is because it usually takes up to a year for a rate hike to start showing up in the economic numbers; they have done 14 in a row without allowing the dust to settle. This aggressive action will test the economy and if there are many more could drive the USA’s economy into a recession.
Fortunately for metals and the global economy in general, an American economic slowdown will no longer have as big an impact on global economic growth because China and India are adding to the global economy in a big way. We don’t feel at this time the USA’s economy is headed toward a big economic slowdown but it will be challenged by all these interest rate increases and deficit and national debt issues. We do feel a weakening of the dollar is close at hand and the dollar will be in for tougher times when the fed stops raising interest rates. A softening dollar will add fuel to the fire of the upward move on metals prices.
SOME OF OUR FAVORITE TREASURE HUNTERS
This section of the report is dedicated to discussing companies that we feel have quality projects that offer significant potential to grow into companies with higher market values.
We are shareholders of all the companies included in this section. We believe strongly in the age-old adage about eating our own cooking. At times we offer our consulting services to companies we own shares in. We are only interested in offering those services to companies we first and foremost want to be shareholders of, as well as being able to provide services that will assist the company in unlocking value to the shareholders.
At the beginning of the discussion of each company we will indicate if we are a consultant to the company; as previously mentioned we are shareholders of all the companies listed below. We also advise readers to look at our disclaimer at the end of this report. The following companies are listed alphabetically.
Abacus Minerals
Abacus has been featured in three previous editions of our report. The main reason they continue to be featured so regularly is because they keep making significant developments that we feel merit updating our readers. We are a shareholder and a consultant to the company. We are also considering increasing our shareholdings in the near future.
As we were writing the fourth edition of our report, the company was reporting outstanding results from the company’s Ajax project. This is a new discovery found under a past producing deposit that upon deeper drilling has uncovered a very impressive new discovery.
The Ajax project adds a very nice surprise to the group of projects in the area. The DM/Audra and Rainbow zones are early stage discoveries that we spoke about in our previous reports on Abacus. The new discovery is under the old Ajax pit that Teck Cominco mined out in the past. Deeper drilling, uncovered very long drill-hole intersections with excellent grades in all the holes. Now the company has three targets that will be seeing aggressive drill programs.
Recently the company announced, and is in the process of completing, a financing for $12 million. These funds will put in place the financing to pay the costs of the mining assets Abacus is buying from Teck Cominco. The financing is being placed with a group of mutual funds. With these shares, and the shares Teck Cominco will be receiving in the deal with Abacus, will leave close to half the stock in the hands of institutional shareholders. Additionally, these funds will allow the company to aggressively drill the three known discoveries on the project.
When this financing is completed Abacus will restart drilling, and will focus on the Ajax discovery. So far there have been 4 holes drilled into the Ajax discovery and the first hole intersected around 358 meters of ½ percent copper per tonne. These kind of thick intersections make an exploration company’s life a lot easier, because you don’t have to do a lot of step-out drilling to quickly have a very large deposit. The next three holes also intersected thick intersections of copper. All of the drill holes are open at depth and leave the deposit open in all directions.
In addition to drilling aggressively on the Ajax discovery, the company will be drilling the Rainbow zone. This discovery has big potential ramifications as well because it is just off the haul road that links the Afton mining assets and the Ajax pit. It would be a natural to have this zone in any future mining plans.
As you can see, Abacus has been very busy these last six months and that is why they have been featured in several editions of this report. 2006 is shaping up to continue this aggressive pace of major accomplishments.
Abacus’s stock symbol is AME and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.amemining.com. Their website contains past news releases and additional information to do your own due diligence.
Atna Resources
This is the second edition we have featured Atna; they were also featured in our fourth edition on January 19, 2006. They have a project that is catching the attention of many investors and technical people that know the area well. We are a shareholder of this company and are looking to increase our position on any pullbacks in the share price, although we don’t think it will see any major pullbacks and has plenty of blue sky ahead.
As we have discussed in past editions of our report, Nevada is one of the most important gold mining regions in the world. Many million ounce deposits have been mined and new ones are still being found that will ensure that Nevada continues to be one of the world’s largest producers of gold. Some of those past deposits have launched several companies into major mining companies. None more so than Barrick Gold which is in the process of taking over Placer Dome that will turn Barrick into the largest gold mining company in the world. Barrick began its corporate life as a tiny little junior that had spectacular success because of the mines they found and brought into production in Nevada. These mines are low cost producers and large so they have long mine lives and are very profitable.
Atna is quickly becoming another company that could be launched into being a much larger company because of their drilling success in Nevada. They have a new discovery that they are developing that is highlighted by very significant intersections of high grade gold. One of those drill holes was around 150 feet of around 1 ounce per ton gold. Similar grades and significant intersections in other drill holes indicate this project has a potential multi-million ounce gold target.
A multi-million ounce gold target in Nevada will catch the attention of every major gold mining company in the world. It has caught our attention and we think the company will have an exciting year ahead. Investors big and small are paying attention and we think Atna is primed to see their market value increase dramatically in 2006.
Atna’s stock symbol is ATN and the shares trade on the Toronto Stock Exchange. Their website is www.atna.com. Their website contains past news releases and additional information to do your own due diligence.
Bear Creek Mining
This is the third time we have featured Bear Creek Mining in our report. As we were writing our fourth edition, a development was taking place but due to deadlines we couldn’t do justice to the story so we will cover it in this edition. We are a shareholder of Bear Creek and are considering increasing our shareholdings in the future.
Last month the company reported that they had been informed by the lab that was doing their metallurgical tests that the lab had made an error. This error caused the lab to miscalculate the recovery rates of the metals in the rock. Upon this announcement, the market reacted quickly and drove the price down around 25% in one day of trading. We feel this was an overreaction and at the end of the day was not nearly that meaningful. One must understand that metallurgical analysis and refinement starts before a deposit goes into production and continues throughout the life of a mine. A mining company is always trying to maximize their recovery rates. So the reaction of this very preliminary metallurgical testing is an exaggerated reaction to something that is not that fundamentally important.
Since that big sell-off the company has regained most of the market value it lost, mainly because investors realized that the deposit hasn’t gone anywhere. The metals in the ground remain in the ground. The company has also continued to release excellent results from their drilling. This drilling is continuing to expand the size of the known discovery. As well, they have also found new zones that are hosting gold.
There are lessons that one can learn from this action and response. First, if you understand fundamentally what the company is doing, you would most likely have not reacted in a panic. Hopefully some of our readers realized it was an overreaction and took advantage of the stock being on sale.
The bottom line is that this company has a very impressive silver project, in a time when quality silver discoveries are not easy to find and when the price of silver is in a bullish trading pattern.
We look forward to watching the drilling continue to increase the size of this discovery, and we are now seeing results from gold targets that are showing encouraging signs. In the long run this kind of silver deposit will be under heavy demand and if it continues to grow it would be a deposit more than one major would like to get their hands on.
Bear Creek’s stock symbol is BCM and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.bearcreekmining.com. On their website you can find past news releases and additional information to do your own due diligence.
International PBX
This is the second time we have featured International PBX, the first being our 4th edition of our report when we gave our opinion about the key projects the company has in Chile. Since that edition there have been a couple of announcements that we would like to comment on. We are a shareholder and consultant to the company and are considering increasing our shareholdings in the near future.
When we introduced the company to our readers we described the three key projects including Copaquire, Tabaco and Tierra De Oro and what we thought of these projects. It is basically the quality of these three projects that attracted us to the company. It is our opinion that based on these projects, the company is undervalued. We felt that we could help the company unlock this value and this is why we joined the team as a consultant.
Since the 4th edition of this report was issued, the company has secured one financing raising $2 million and is now in the final stages of closing another financing of $2 million. This will fill the treasury so the company can plan a large program to drill test all three of these projects.
It is our opinion that any one of these projects could be a company maker on its own and collectively they are a valuable group of projects. It would not be a surprise to see the company spin-off these projects into three separate companies. As a shareholder we would be very happy with this because it would give us shares in three companies and those three projects could be attractive on their own. Obviously it would be advantageous to put some drill holes into all three projects and if good results come from all three it would be a brilliant move to split the company into three.
Now that the company has completed one financing and is doing another to put together funding for exploration costs, we look forward to the next step of using this money to drill the three projects. Plans are in the works to for this upcoming drilling and we think the drilling will be underway shortly… stay tuned. We will keep you updated as events unfold.
International PBX’s stock symbol is PBX and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.internationalpbx.com. Their website contains past news releases and additional information to do your own due diligence.
Redstar Gold Corp.
Redstar has been featured in three of our past editions of this report. The reason they have been featured regularly is because they have had developments that we feel warrant updating our readers. We are a shareholder and consultant to the company and intend to increase our shareholdings in the future.
In the past editions we have discussed Redstar’s exploration project in Red Lake, Ontario. Recently the company has completed a $600,000.00 financing. Some of these funds will be used to do a second phase of drilling on the Red Lake project. Some of the funds from this recent financing will also be used to add high quality projects in Nevada using the geological database developed by Anglo-Ashanti.
Redstar has two projects in Nevada that were acquired based on the Anglo database. The company has also added Jake Margolis to the team. He was formally with Anglo and was very involved in the development of the database. He brings a wealth of knowledge about gold exploration and mining in Nevada and, obviously, a strong understanding of the database. He will help the company by leading the team on drilling and acquisition of new projects. A great number of junior gold companies would like to have quality projects in Nevada. Jake’s past experience gives Redstar a tremendous advantage by being able to develop quality projects in Nevada.
Recently, Redstar announced the joint venturing of two of their projects in Nevada with Strategic Merchant Bancorp. We will be featuring Strategic next in this section of the report and will discuss why we think this is a winning relationship for both companies.
In the near future, Redstar will be getting their follow-up drilling on Red Lake project underway and we look forward to drill results. Stay tuned – it looks like the pace of developments is going to gain speed.
Redstar’s stock symbol is RGC and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.redstargold.com. On their website you can find past news releases and additional information to do your own due diligence.
Strategic Merchant Bancorp.
As we mentioned earlier, Strategic has recently formed a joint venture with one of our Favourite Treasure Hunters, Redstar Gold Corp., on two of Redstar’s projects in Nevada. We have recently become a shareholder and a consultant to the company.
Strategic is going through a new phase in its corporate life and is in the process of turning from a shell with not a lot going on into a Nevada gold exploration company. What it brings to the table is a stock that has less than 12 million shares fully diluted, and the ability to raise funds to drill these projects aggressively.
For Redstar it offers the opportunity of having the projects in Nevada drilled without having to finance the costs. It puts the company in the position of being able to focus its funding efforts on financing the company’s 100% project in Red Lake, Ontario. Strategic gets access to excellent exploration projects in Nevada, with a very competent team of technical people that will be running the drilling programs.
The first joint venture project that was announced is the Dry Gulch project that is located in the Carlin trend where millions of ounces of gold have been produced, with much more gold in the ground for future production. This project was acquired due to a geophysical target that is similar to known gold deposits in close proximity.
The second project is the Pine Nut project that is located in western Nevada. This project has a vein system that can be traced by surface exposures for at least 6,200 feet. In certain parts of this system, values over 1 ounce per ton gold has been found but lower grades are more common. In the past, 36 holes have been drilled on this project – most recently by Anglogold in 2000. It is believed that this past drilling did not thoroughly test the high-grade potential. This argument is reasonable because it has only seen 36 holes drilled into a large system; further drilling will test if this theory makes sense.
In the near term we are looking to Strategic to do a financing for drilling these projects. Following the financing efforts we look forward to seeing these projects aggressively drilled.
Strategic’s stock symbol is SMB and the shares trade on the Toronto Stock Exchange Venture Market. Their website is www.strategicmerchantbancorp.com. On their website you can find past news releases and additional information to do your own due diligence.
OUR REPORT CARD
We are not big fans of shameless self-promotion; we feel there is enough of that in the investment world. We are much more interested in allowing our research and results of the companies we feature in our reports to speak for themselves. To make it easier for our readers to analyze our past performance we have added this section entitled "Our Report Card".
We are changing the format of this section; after we indicate the dates of past reports featuring the company and the share price at the time and the current share price, we will follow that with updates since the last time the company was featured, if applicable.
Before going on we would like to remind our readers of something we have all heard before, past performance is not always an accurate indicator of future returns. We are adding this section to make it easier for our readers and ourselves to quickly look at the past and what has transpired.
Good as Gold
* Date of report on price of gold November 01, 2005
* Price of gold on that date $460.60 USD per ounce
* Outlook in that report: bullish
* Call in that report 10-30% upside move
* Current Price of gold $551.60 USD per ounce
The price of gold is at the price we projected it would be when we issued the call in the November edition of our report. Our basic argument was that the low prices seen in the last ten years have slowed the supply of gold being produced annually. For several years now the demand has been very strong led by buying from China and India. We have gone over the 10% rise and are moving toward a 30% rise. In that report we based the 30% rise on a couple “ifs”; we are now comfortable taking those “ifs” out of the equation. We feel that the US Dollar has been propped up for more than a year because of Federal Reserve tightening of interest rates. That tightening cycle is coming to an end, and with the out-of-control US deficit and the dramatic increase in US national debt, we feel that the USD is in for a rough ride. Gold is quoted and traded in US Dollars and if the dollar is dropping, gold is rising against that move. Until we see one of two things happen: either supply picks up or demand slows down, we maintain a bullish outlook. We are now comfortable in making a call for gold to trade between $600.00 and $650.00 by the end of 2006.
A Silver Lining
* Date of report on price of silver November 01, 2005
* Price of silver on that date $7.47 USD per ounce
* Outlook in that report: bullish
* Call in that report 50-100% upside move
* Current Price of silver $9.40 USD per ounce
The price of silver is close to the 50% gain we called for in our November Edition. Our basic argument is in line with what we just mentioned regarding gold. We feel that the fundamentals of supply and demand are even more bullish for silver than gold and felt then that silver would outperform gold on a percentage basis. We maintain our bullish outlook for the price of silver going forward. We are now comfortable making a call for silver to trade between $10.00 and $15.00 by the end of 2006.
A Copper penny for your thoughts
* Date of report on price of copper November 01, 2005
* Price of copper on that date $1.83 USD per pound
* Outlook in that report: bullish
* Call in that report for a move to around $2.10 per pound
* Current Price of copper $2.29 USD per pound
The price of copper has now reached our price projection. The basic argument for our bullish stance is the same as for gold, silver and commodities in general – strong demand from China and India and weak supply equals higher prices. That outlook is still the same and we think that until major supply comes online that the price of copper will continue to trade very strongly. We feel it is reasonable to see a move to the $2.50+ range by the end of 2006.
Past performance of our Favorite Treasure Hunters
Abacus Mining and Exploration
* First featured in Sept.19 2005 edition
* Price on that date $0.25 CDN
* Second feature in Dec.07 2005 edition
* Price on that date $0.36 CDN
* Third feature in Jan.16 2006 edition
* Price on that date $0.75 CDN
* Current price $0.96 CDN
We have presented our current update previously in the report so no need repeating here. We are a shareholder and consultant to the company.
Atna Resources
* Fist featured in Jan.16 2006 Edition
* Price on that date $2.17 CDN
* Current price $2.02
We have presented our current update previously in the report so no need repeating here. We are a shareholder of the company.
Bear Creek Mining
* First featured in Sept.19 2005 edition
* Price on that date $2.96 CDN
* Second feature in Nov.1 2005 edition
* Price on that date $3.20 CDN
* Current price $4.17 CDN
We have presented our current update previously in the report so no need repeating here. We are a shareholder of the company.
Exall Resources
* Featured in Dec.07 2005 edition
* Price on that date $1.34 CDN
* Current price $1.51 CDN
Since we featured the company, they have recently announced that they are starting up their drilling again as of Jan.17, 2006. They also indicated that they expect to have a third drill rig on the property shortly and are currently sourcing 3 more drill rigs. It is apparent that they are pretty serious about aggressively drilling this new discovery. We are very positive about the potential of this drilling and look forward to the upcoming results. We are a shareholder of the company.
International PBX
* Featured in Jan.16 2006 edition
* Price on that date $0.59 CDN
* Current price$0.61 CDN
We have presented our current update previously in the report so no need repeating here. We are a shareholder and consultant to the company.
Mountain Boy Minerals
* Featured in Sept. 19 2005 edition
* Price on that date $0.71 CDN
* Current price $0.64 CDN
Since we featured the company, they released all the drilling results from drilling done late in 2005. Since then, they have had to wait until the next drilling season begins, which is getting close. The stock has been hibernating during the winter with no drilling. We look forward to drilling to further test their new discovery and we think things will pick up for the market value of the company once their drilling is underway. We are a shareholder of the company.
Niblack Mining
* Featured in Dec. 07 2005 edition
* Price on that date $0.345 CDN
* Current price $0.75CDN
Niblack started trading in November 2005 and in its short life has had a very impressive group of developments. Those developments include drilling on the Niblack discovery that returned grades and intersections consistent with past drilling in the 1990’s. Recently they announced a $4 million financing. These funds will be used to aggressively drill this discovery. We are a shareholder and consultant to the company.
Peru Copper
* First featured in Nov.01 2005 edition
* Price on that date $2.00 CDN
* Second feature in Dec. 07 2005 edition
* Price on that date $3.45 CDN
* Current price $3.98 CDN
Peru Copper is currently doing a feasibility study on their massive copper and molybdenum deposit in Peru. They have also engaged a large investment bank to look at strategic opportunities. We are looking forward to developments on both those fronts. The bottom line is we feel that this company has one of the most undervalued copper molybdenum projects in the world. We are a shareholder of the company.
Redstar Goldcorp.
* First featured in Nov.01 2005 edition
* Price on that date $0.12 CDN
* Second feature in Dec. 07 2005 edition
* Price on that date $0.10 CDN
* Current price $0.25 CDN
We have presented our current update previously in the report so no need repeating here. We are a shareholder and consultant to the company.
Skygold Ventures
* First featured in Sept. 19 2005 edition
* Price on that date $0.65 CDN
* Second feature in Nov.01 2005 edition
* Price on that date $0.55 CDN
* Current price $1.33 CDN
Since we last featured the company they have continued to announce excellent drill hole results highlighted by intersections that are strongly suggesting a large tonnage deposit. The company has more drill results pending and a very aggressive amount of drilling on this exciting gold discovery. We are a shareholder of the company.
Wolfden Mining
· First featured in Jan.16 2006 edition
· Price of that date $3.77 CDN
· Current price $3.95 CDN
This company has two key projects that they will be drilling aggressively this year. They have already found two very impressive gold discoveries and one of those is in the Red Lake area of Ontario. We look forward to further drilling to expand the size of these deposits. We feel that as they continue to expand the size of their discoveries, the market value will reflect that and participate in further bullish moves on the price of gold.
Overall Report Card on Metals and Our Favorite Treasure Hunters
Again we would like to add that the numbers and returns are only for comparison purposes. We are not giving investment advice or recommending these stocks for buying or selling, we advise our readers to read the disclaimer at the end of this report.
We think the fairest way to evaluate the past performance of the companies featured in our past reports is to use an equal dollar amount invested in each company on the date they were featured. Again, we advise our readers to remember that past performance is not always an accurate indicator of future returns.
Having said that, the group of companies we have featured has above average performance and we are comfortable having readers compare our results to other newsletter writers and analysts.
We also believe that the performance is a good indicator that our philosophy of picking companies makes sense. We will continue to search out and report companies that have quality projects and people with reasonable to undervalued market values and the potential of their market values increasing.
We are not going to give ourselves a grade until we have published this report for at least a year. We also think that we would give ourselves a lower grade than most of our readers would, simply because our performance is based on less than six months of publishing this report. We believe that the highest marks go to analysts and newsletter writers who are able to have above average returns for several years.
WHAT MAKES THE ALLAN BARRY REPORT UNIQUE
For the last 12 years, the editor of this report has had a career as a consultant to publicly traded junior exploration companies. Services provided to these companies include investor relations, corporate communications, strategic planning, and fund-raising.
As an investor relations consultant to small companies, one has to wear several hats:
* communicating the company’s efforts to the investing community;
* communicating technical aspects of those efforts;
* being involved in raising funds for drilling and exploration;
* being involved in the technical analysis;
* and reporting of what has been found.
These efforts have provided a unique opportunity to learn, from an insider’s perspective, the challenges that junior exploration companies face. Additionally it has opened doors to meeting a very accomplished group of technical people.
Spending this time as a consultant to junior exploration companies has provided a unique perspective that is an asset few analysts or newsletter writers possess.
IN CLOSING
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Regards,
Allan Barry Laboucan,
Editor & Writer
Allan Barry Reports
Disclaimer: The information included in this Allan Barry Report on Precious and Base Metal Exploration is for information purposes only. No statement or expression of opinion, or any other matters herein, directly or indirectly, is an offer, solicitation or recommendation to buy or sell any securities mentioned. The information contained in this e-mail is drawn from sources believed to be reliable, but the accuracy and completeness of the information is not guaranteed, nor in providing it does the editor Allan Barry Laboucan or his companies, or affiliated companies, assume any liability. We do not receive or request compensation in any form in order to feature companies mentioned herein. The editor may have equity positions in companies referenced in this newsletter, or plans on taking a position, or offers consulting services to these companies and will notify the reader of these positions or services provided to the company in the section of the report on each individual company. The editor his personal company or affiliated companies, disclaims all responsibility and accepts no liability (including negligence) for the consequences for any person acting, or refraining from acting, on the information provided in this publication.
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