First and Last Word on Metals and Mining

We’ll be updating this and all subsequent Mining News Review posts on a more-or-less daily basis. We will add to this review chronologically with the most recent updates appearing at the bottom. If there appears to be a significant news release that we have not discussed, please feel free to bring it to our attention in the comments section (subscribers only please) and we’ll make an effort to add it to the discussion if warranted.

International Minerals Corp. (TSX: IMZ)
International Minerals Signs Agreements with Chinese Company for Financing and Construction of Rio Blanco and Gaby Gold Projects in Ecuador
– November 15, 2010

We wrote briefly about International Minerals a few weeks ago in our Mining News Review. Although fundamentally undervalued, its growth profile relies on higher risk development projects, primarily located in Ecuador. No doubt this financing agreement is a step in the right direction, but by no means does it guarantee the smooth and successful development of the Rio Blanco and Gaby projects. If you want to speculate on gold producers in Ecuador, we believe that for the time being there is a better opportunity and its name will be familiar to subscribers. [Zurbo]

Imperial Metals (TSX: III; Pink Sheets: IPMLF)
Imperial Report Results of the Red Chris Feasibility Study Update
– November 16, 2010

This feasibility update demonstrates that mines aren’t born in a day given that it represents only a minor change to operating parameters originally envisioned in 2005. Moreover, the mind-boggling deeper drilling results apparently are having no impact on the mine plan at this point despite such results being among the best gold-copper grades ever drilled anywhere. Then there is the question of the Northwest Transmission Line and when it will be built — mine development is dependent on it, which explains in part the apparent lack of hurry by Imperial. Based on the feasibility study, the company does not appear to be particularly undervalued although if the deeper mineralization is incorporated in a future mine plan, the shares would likely deserve a re-rating. Those interested in a position now should find out how the deeper mineralization fits into the puzzle because that is where most of the upside resides. [Silverax]

Fronteer Gold (AMEX/TSX: FRG)
Fronteer Intersects 12.30 g/t Gold Over 50.4 Metres at Long Canyon Gold Project, Nevada – November 15, 2010

Although located in a corner of the currently-defined deposit, these holes should make it clear to all doubters that Long Canyon will be a gold mine. Now that Fronteer has consolidated 100% ownership by acquiring the joint venture interest of partner Au-Ex Ventures, it will be full steam ahead toward development. We wouldn’t be too surprised if this turns into a bigger fish (Barrick?) eating a big fish (Fronteer) eating a little fish (Au-Ex). We are thinking about finally taking a position on a significant pullback. [Silverax]

New Gold (AMEX/TSX: NGD)
Collegiate Appeals Court Rules in Favour of New Gold in Relation to Cerro San Pedro Environmental Impact Statement – November 15, 2010

This is not the final say but things are again going in New Gold’s favor on the legal front at Cerro San Pedro. Our suspicion remains that future legal developments could have a negative, if temporary, impact on the share price and our preference would be for the company to simply sell the mine. On the other hand, ongoing development at New Afton and potential progress at the El Morro joint venture with Goldcorp are more than enough to offset future problems at Cerro San Pedro. All in all, New Gold remains one of the more solid mid-tier gold producers that trades at a decent valuation. And they have long-dated warrants to boot. [Silverax]

Medusa Mining (ASX/LSE: MML; TSX: MLL)
Medusa Mining Limited: New Co-O Plant to Increase Production Capacity – November 16, 2010

The share price has done very well since we featured the company about a month ago in a comparative analysis in which we assumed a 25 year mine life but no expansion in production. With this latest news that Medusa plans to double production, the company’s valuation will obviously look even better. Indeed, using the same scenario “B” assumptions as in that analysis and factoring in for the doubling of production, Medusa’s target valuation rises to about $9 per share, which represents decent relative value in this market. [Silverax]

Uranium One (TSX: UUU; Pink Sheets: SXRZF)
Uranium One Announces Record Sales of 1.7 Million Pounds and Lower Cash Costs – November 15, 2010

Buried in the earnings release is a note that may not seem very material to Uranium One but is of relevance to a number of small uranium developers with ISR (in situ recovery) uranium recovery projects in the U.S. Namely, Uranium One announced that its Moore Ranch ISR project in Wyoming has been approved by the U.S. Nuclear Regulatory Commission. This is the first such approval in about 13 years and brings hope to a number of uranium developers in states such as Wyoming, Utah, New Mexico and Texas that projects meeting environmental and regulatory guidelines can in fact be successfully navigated through the opaque red tape. Uranium One itself appears to be an interesting uranium producer that is potentially undervalued but exposure to Kazakhstan and a complex ongoing transaction require some careful analysis before jumping on board. The pro forma capitalization of the company after the transaction will be about 1 billion shares and net debt of approx. $150 million. At the moment the company is struggling to make a profit even with its low cost of operations, but a rising uranium price combined with increasing production (10.5 million lbs in 2010, growing to 15-20 million lbs over the next 5-10 years) are expected to greatly improve the bottom line. [Silverax]

Talison Lithium (TSX: TLH; Pink Sheets: TLTHF)
Talison Lithium Reports Financial Results for the 2011 First Quarter Ended September 30, 2010 – November 15, 2010

This past quarter the company produced roughly 12,000 tonnes of lithium carbonate equivalent (LCE), and aims to eventually grow production to a quarterly rate of about 15,500 tonnes LCE. Currently Talison is generating about $5M EBITDA per quarter, or about $3M per quarter in net earnings. With over 100 million shares fully diluted (all stock options are in-the-money), that works out to P/E of about 45. Considering the modest growth profile, at first pass we don’t see how this valuation is justified without attributing significant value to the company’s other early-stage projects. [Zurbo]

Robex Resources (CDNX: RBX; Pink Sheets: RSRBF)
Nampala, Awarding of Contract for Feasibility Study – November 15, 2010

Robex has quite a few projects in Mali including the Nampalo gold project that bears some similarities to Orezone’s (TSX: ORE; AMEX: OZN) Bombore project in nearby Burkina Faso. Both deposits have significant gold contained in soft saprolite rocks starting at surface as well as depth and lateral extension potential. Of course Bombore is much larger than Nampalo but the latter still has the possibility of becoming a significant deposit in its own right (perhaps ~1 million ounces) and its attractiveness is aided by the likelihood of low capital development and low cost operation. Both Bombore and Nampalo bear watching and although Robex is very cheap, it still has some way to go and we prefer to watch developments for now before considering a position in the stock. [Silverax]

Southern Andes Energy (TSX-V: SUR; Pink Sheets: SHRNF)
Southern Andes Energy Inc.’s New Uranium Discovery at Accocucho Sur, Peru – November 15, 2010

Along with Macusani Yellowcake (TSX-V: YEL; Pink Sheets: MCYWF) and Vena Resources (TSX-V: VEM; Pink Sheets: VNARF), Southern Andes controls the Macusani Plateau of Peru where several moderate-sized uranium deposits have been defined, surely to be followed by at least several more. The trench results at Accocucho indicate the presence of significant exploration upside on Southern Andes’ concessions and these targets appear to be drill-worthy on initial examination. Southern Andes also has interesting silver-lead-zinc deposits in southern Peru that the company intends to spin off soon. But it is the Macusani Plateau that has us most interested as potentially an important emerging uranium district in the world. BHP (NYSE/ASX: BHP; LSE: BLT) is already partnered with Vena in the Macusani so we know that the majors have an interest. Interestingly, the combined market cap of Southern Andes, Macusani and Vena is under $100 million, which seems like a decent deal to us. [Silverax]

Uranium Resources (NASDAQ: URRE)
Uranium Resources’ NRC License Upheld as United States Supreme Court Denies Petition – November 15, 2010

Here we have another in-situ recovery (ISR) uranium mining license being granted in the United States — Uranium One (TSX: UUU; Pink Sheets: SXRZF) recently announced that its Moore Ranch ISR project in Wyoming has been approved. While the overall trend is exciting for uranium developers in the US, we can’t get too excited about the timeline involved for Uranium Resources (feasibility studies not expected to be completed until the end of 2011). Given that it has the potential to eventually produce 3 million pounds per year this is one to watch longer term, but having run up above $2.00 from $0.50 this August, it is probably fair to say this one has gotten a bit ahead of itself. [Zurbo]

Ventana Gold (TSX: VEN; Pink Sheets: VENGF)
Ventana Acknowledges Unsolicited Bid
– November 17, 2010

It’s no surprise that Eike Batista’s EBX fund has made a bid for Ventana, but the $1.5 billion price on offer is quite amazing. After all, the recently reported pre-tax net present value (NPV) of Ventana’s La Bodega project is “only” $804 million at $1,000/oz gold and a 5% discount rate. That compares with a nearly $2.3 billion pre-tax NPV for Greystar’s adjacent Angostura project (using the same gold price and discount rate assumptions). Amazingly, Greystar is trading at a market capitalization of about $530 million, well below where we sold it in late 2009! Considering that the development of La Bodega is likely to involve Angostura, the valuation disconnect is stark. That isn’t to say Greystar isn’t without its share of hurdles. For example, a public hearing on the Angostura project is scheduled to be held on November 21, 2010, the outcome of which will go a long way in determining the fate of the project. If all goes well, this one has plenty of room to run. If not, the share price will probably take a beating, but we can’t imagine Ventana would be left unaffected unless EBX’s bid has already been accepted. [Zurbo]

U.S. Gold Corp (AMEX/TSX: UXG)
El Gallo District Resource Estimate Update
– November 18, 2010

We’re talking about a $700 million company that has now defined an 88 million silver-equivalent ounce resource on its flagship project. We think that’s a bit rich whether or not you have the charismatic McEwen as your Chairman and CEO. [Zurbo]

Denison Mines (AMEX: DNN; TSX: DML)
Denison Mines Announces C$65,450,000 Private Placement
– November 18, 2010

Good timing on the placement. Denison’s market capitalization is now approaching the $1 billion mark, perhaps large enough to entertain a buyout of someone like Hathor Exploration (TSX-V: HAT). We’re only half serious, and the timing is probably a bit off, but a deal of this sort down the road a bit wouldn’t surprise us. [Zurbo]

Esperanza Resources (TSX-V: EPZ: Pink Sheets: ESPZF)
Silver Standard Resources
Esperanza Rejects Silver Standard Proposal on San Luis Property
– November 18, 2010

Our valuation model shows that San Luis is worth about $250 million at current metal prices, which at a minimum would make Esperanza’s 20% carried to production interest worth $50 million. From this perspective Silver Standard’s $20 million + 1.5% NSR offer grossly undervalues Esperanza’s interest. However, at 30% lower metal prices (i.e. $950/oz gold and $19/oz silver) the project is worth about $135 million, or just $27 million for Esperanza’s share. Therefore we think this was more or less a fair offer using the more typical long term metal price assumptions, but at the same time we’re not at all surprised it was rejected especially considering Esperanza is carried to production. [Zurbo]

Metalex Ventures (TSX-V: MTX)
More Than 800 Commercial-Sized Diamonds Recovered from a 15m Drill Intercept from the T1 Kimerlite
– November 19, 2010

This news caused Metalex to roughly double on strong volume, but we are left unimpressed,  if only for lack of disclosure. For example, the news does not give us any information on the number of carats recovered and no description about the size of the pipe. Based on the number of holes drilled it seems like we could be looking at something large enough to be of interest, but we can’t find any information and the company’s website was of no help at all.

Given the stocks spiky trading action, there might be a trade worth considering if it sells off back to around C$0.50, but until the company does a better job at disclosing information this simply isn’t something that we’ll be able to approach from a fundamental angle. [Zurbo]

Disclaimer:  We own shares in several of the companies mentioned in this analysis (Metal Augmentor subscribers know which ones), but no compensation has been received from any of the companies mentioned. This is not investment advice; should you seek investment advice we recommend you discuss the company with a licensed investment advisor or broker.

About Zurbo

David likes to eat. He has looked at more technical reports than just about any sane person. He can train Excel spreadsheets to bring his slippers and play fetch.
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27 Responses to Mining News Review: Week of November 15thComment RSS Feed

  1. Don Hansen

    What the heck is going on with PC Gold? The share price is about 30%, there was a halt in trading for a day, but the drill results recently looked very good to me. Were they really bad and I just didn’t get it? What is your take on the situation?
    Don Hansen

  2. Don Hansen

    I should have said share price is down about 30% re PC Gold.

  3. Giuseppe

    Ventana Gold is on fire today (+33% right now), on the news that “Ventana Announces Additional Drill Results-New Footwall Area of La Bodega Zone Intersects 12 Metres of 16.78 Grams Per Tonne Gold and La Baja Developing Into Meaningful Extension of La Mascota”.

    The market is also rewarding the neighbours, Greystar (+16%) and Galways (+18%), on no news.
    The former has published no news recently, the latter reported on november 2th about gold intercept highlights in 2 drill holes of relevance: 19.5 meters grading 11.0 grams per tonne gold (g/t Au) and 5.0 meters grading 26.0 g/t Au. “Both holes were drilled in the Pie de Gallo Zone, with each containing three significant intervals of gold mineralization. Moreover, all significant intervals are contained within 125 meters of surface”. I kept Galway Resources in the radar since Silverax mentioned it the first time and I quite like it. Maybe last news from VEN are slightly better than GWY’s ones, but the relative market cap of the first is 16 times higher than the second…

    For those who read here and are not subscribers still I wanted to say that Metal Augmentor called for a great take profit mode just a day before the max in PM prices!!! consider about subscribing to this great service!

  4. gerininamo

    I think the ticker for Southern Andes is SUR, not SAE.

  5. @Don Hansen
    Actually these were better than most other results given that many of the wedge holes hit the vein and more than one came back with a high grade interval. But the market doesn’t seem to simply want progress, it wants to be impressed. With widespread drilling in a narrow vein system like this, it will take significant work to advance the project and eventually achieve the company’s goal, which is a defined resource that be potentially put in production. What they have so far are veins with decent continuity but containing gold in irregular, very high grade shoots that tend to be quite narrow with a few exceptions. In retrospect this is one where we should have taken profits even if the stock still seemed really cheap given that companies with projects like this tend to suffer steep pullbacks between periods of market excitement. There is nothing wrong with the story per se, we are now in one such pullback.

  6. Peter

    Thanks for this guys,

    I would be surprised to see a takeover of Hathor at this stage, as Denison and its partners have quite a few projects on the shelves themselves. In the Athabasca Basin the adage is: he who controls the mills, controls the mines.
    Which is not to say that Hathor’s discovery is not the real deal.

    I was wondering what your thoughts are on Kaminak, now that they released the final set of holes from the 2010 progam and came up with some new discoveries.
    The stock could get a beating from the C$ 1.50-1.70 placement shares that becomes free trading very soon. And of course there is the news vacuum until startup of next year’s drill program (in spring 2011).

    But the Coffee project has shown a lot of mineralization and promise. We could well look at a multi million ounce project after next years drill program. So I think the downside the upcoming months will be somewhat limited.

    But to date, only the Latte zone has shown consistency and thick intersections. The other discoveries are sometimes spotty with pinch and swell characteristics. More, closer spaced drill holes are needed here to increase the confidence factor for back of the envelope calculations.

    All the best,


  7. Giuseppe

    Nov. 19, 2010 (Marketwire) — Aurcana Corporation Announces $85 Million in Equity/Debt Financings

    Aurcana Corporation (TSX V:AUN) is pleased (Giuseppe’s note: pleased???? Sunel should be pleased, not Aurcana) to announce that it has entered into an agreement with Sunel Securities Inc., … in connection with a private placement of equity units at a purchase price of $0.31 per Unit for minimum gross proceeds of CDN$50,000,000 and maximum gross proceeds of CDN$60,000,000. Each Unit will consist of one common share of the Company and one half of one common share purchase warrant. Each whole warrant will permit the holder to purchase a further common share of the Company for a period of 36 months from the closing of the Offering at a purchase price of $0.41 per Warrant.

    The Company plans to use the net proceeds from the Offering to fund capital expenditures on its Shafter project in Texas, for general corporate purposes and the buy-back of the silver purchase agreement with a wholly-owned subsidiary of Silver Wheaton Corp. for US$25,000,000 plus the outstanding silver balance owing, which will release Aurcana from all future obligations under the Agreement. (Giuseppe’s note: you are diluting manyfold at huge discount also to buy back NOW the silver hedge??? isn’t it silly?)

    In addition to the Offering, the Company is also pleased (Giuseppe’s note: pleased??????? I believe SAM and SRLP should be pleased, not Aurcana)) to announce that it has entered into a term sheet with Sprott Asset Management LP for and on behalf of certain of the Sprott funds (“SAM”) for a US$12,500,000 senior secured note offering (the “Note Offering”). In addition, the Company has entered into a term sheet with Sprott Resource Lending Partnership (“SRLP”) for a US$12,500,000, senior secured debt financing (the “Debt Financing”). … In consideration for the Note Offering and the Debt Financing, the Company will issue to each of SAM and SRLP 6 million share purchase warrants (12 million warrants in the aggregate) exercisable into common shares of the Company for a period of 24 months from the date of the closing of the initial tranche of the Debt Financing at an exercise price of CDN$0.50 per share, together with a non-refundable bonus payment of $625,000 ($1,250,000 in the aggregate) … Pursuant to the Note Offering, Aurcana will deliver the cash equivalent of a total of 830,000 ounces to SAM priced at the prior day 4 pm Bloomberg composite closing value of silver (ticker: SILV), over the term of the Notes. Pursuant to the Debt Financing, Aurcana will deliver the cash equivalent of 830,000 ounces to SRLP priced at the prior day 4 pm Bloomberg composite closing value of silver (ticker: SILV), over the term of the Debt Financing multiplied by the lesser of (a) the prior day closing spot rate; or (b) US$19.00 per ounce. Plus if the prior day’s closing spot price is greater than US$23.00, SRLP will also receive 50% of the amount over US$23.00 multiplied by the number of ounces. Aurcana has guaranteed a minimum rate of return of 5% per annum on both the Note Offering and the Debt Financing.
    (Giuseppe’s note: so you pay 25 M $ to get out of a silver hedge and then make a debt financing of 25 M $ to be repaid in silver??? are you sure it is a great idea?)

    - – - – -

    Aurcana is maybe pleased to know that the market has rewarded its shares with a -20%, less 10 cents per share at 0.37 cad.
    In my opinion it is probably going to lose more, since the new 200 M shares are being offered at 0.31 + 100 M warrants at an exercise price of 0.41 cad.

    Here is an antology from SH of shareholders’ comments I agree with

    Bulgar: If anyone can get in on this placement and there are 200,000,000 shares up for grabs how can the current share price be over 31 cents? Any current holder should be selling at even 31 cents and buying back through the placement at 31 cents and getting half a free warrant.

    Thecook100: “Thanks Aurcana management. Were losing about 30% of our value on open this morning. cudos to management. Great job. well done. You guys keep on collecting your paychecks and let the shareholders suffer. Simple arrogance. period.
    Who wins = Sprott and Management of AUN.
    Who loses= Loyal long time shareholders.
    once again good job Aurcana
    don’t sell to these crooks. might as well hold now. bunch of clowns

    firefly33: “… Management should be ashamed of itself”

    fdstactics: “…the bottom line is can we do anything about it? how do we get this management kicked out?…”

    honestabe2: “… 5 words? Hope for a hostile takeover … Anyways, you do realize why this financing is taking place at this moment at these outrageous terms, right? Because management is GREEDY and primarily have only their OWN best interest in mind and not the lowly shareholder … But the absurdity of the terms is who in hell would issue warrants that are already more than 10% deep in the money when the units are priced 33% below market unless they are simply greedy bastards? I would not be surprised to see management, insiders, and all of their buddies participating in this country club financing deal. Karma has a way of sweet revenge. I certainly hope a surprise takeover does take place and it goes through and the entire board and management gets canned.”

    - – - – -

    I am a AUN shareholder and I feel betrayed. I do not know if I would be better to simply exit (at a small gain actually) or wait for an hostile takeover.

  8. GL

    Oro Mining drills five m of 31.62 g/t Au at El Compas

    2010-11-23 09:34 ET – News Release

    Analysis please lads.

    I’ll be calling Freeman Smith (at ORO) this morning to ask about ORO Mining’s anemic website. The last time I talked with him he was working on it. Time to rock (no pun honest) this puppy?

  9. GL

    @GL Note:

    Oro Gold now has a new, much improved website:

  10. @Giuseppe
    This was not an attractive deal for current shareholders, that is for certain, and the terms may be indicative of the doubts the market has about Shafter. A lot of things will have to go right with this one so I am not surprised they bought out the Silver Wheaton deal to give themselves a bit more room. While it does not help on the cash flow or liquidity side of things, they should have better accounting treatment. We cannot say to sell or not but we are not buying now and will not buy in the future without some more studies and depth of understanding about Shafter as well as this deal.

  11. @GL
    The results at El Compas are incremental, mostly infill so not changing much about the understanding of the project other than showing that the shoots at both El Compas and El Orito veins are quite wide and good grade in the small central core. We are now quite possibly looking at 100,000 oz. gold equivalent at shallow depth for the two core zones combined though the overall tonnage remains quite small overall. May be worth the while now to start looking into possible small scale mining — 100,000 oz. may not seem much but good grades, close to surface and wide structures could indicate potentially profitable operations at current metal prices. Certainly the potential is also there for more discovery although it probably involves looking deeper. A positive for both El Compas and Taunus is that they have decent grades and appear amenable to bulk mining and thus the ounces, even though they may be modest, should arguably be more valuable than some other gold deposits. Certainly a good batch of upcoming assays from Taunus along with a resource update that approaches 1 million ounces (company’s target for this stage) along with a proposal to evaluate a 30,000 – 50,000 oz. annual gold production could finally start giving the Oro shares some traction. With respect to Cimarron, this is quite low grade but appears to have more substantial tonnage; it seems comparable to some other oxide gold deposits in Mexico that have recently been placed into production, so there could be some value there as well. We plan to continue holding these shares for now and would maybe consider adding on any pullbacks under 40 cents if we didn’t already have a sizable position built up.

    Doesn’t look new as it hasn’t integrated the Oro Silver stuff and looks like what I remember seeing before. Perhaps they had to take down the new site temporarily to fix some bugs?

  12. Giuseppe


    The only reason to hold at 0.38 cad, with a huge PP at 0.31 + half warrant at 0.41 cad, in my opinion was the chance of a prompt hostile take-over, but I argue from your comment that many doubts exist about Shafter and this is a remote possibility. So I exited yesterday my small position, that actually I bought immediately after your first base case valuation for the company (when AUN still was trading at 0.24 cad).
    I think that maybe those who buy in the private placement at 0.31 and get the warrants could make a nice speculation, but, as a betrayed shareholder, I won’t join that.
    I wish there were more cheap silver producers, our favourites begin to be fairly valued, Aurcana actually was more of a silver developer, that factor explained the apparent discount. I wait for the next silver producers update to see if any new opportunities emerge.

  13. @Peter
    Agreed that buyout talk of Hathor is premature and probably wouldn’t be Denison at this point. On the other hand, Hathor is quickly reaching critical mass and a decent resource estimate, based on revised modeling of the Roughrider deposit, could make it the number one or number two independently-owned uranium deposit with economic potential at current uranium prices. Our target on Hathor is $4-$5 and we will probably sell most of our position should we hit that range, which is not necessarily predicated on buyout offer.

    Kaminak is finding gold all over the place but as you state it tends to be spotty and complex so they will need quite a bit of work, probably more than another seasons worth, before we can have a good feel for mine potential. I stand by my prior guess that Latte remains the only zone at this stage capable of supporting a substantial resource estimate in the short term and it is likely to be well under 1 million ounces based on drilling up to this point. Moreover, overall grade at Latte could be sub-economic given topography and other challenges, at least using the conservative gold prices to be found in independent scoping work. Still, there is likely to be good value remaining here if one is patient and buys on pullback, perhaps at each 50 cent interval lower. It could be interesting to start such a program at say $2.50 should the price drop to that level, maybe as the PP shares come free trading? It bears noting that Brent Cook seems to have lost some enthusiasm (no doubt helped by the run up in the share price since summer). Nonetheless, potential for discovery of multiple ore grade zones does remain excellent here — what I am looking for is less of the broad, low grade Latte intercepts and more of the stuff they discovered in portions of Supremo and Double Double zones (like 17 grams over 15 meters and 6 grams over 35 meters). That’s the good stuff without which (and even with it) Latte doesn’t appear all that promising. There don’t appear to be many ideas (crazy or otherwise) yet as to what might be responsible for the higher grades so it is not possible to assess full potential, suggesting perhaps that it is time to utilize additional exploration gizmos to augment soil chemistry. The structural layout of the deposit certainly does seem interesting, hinting as it does that criss-cross intersects of roughly N-S and E-W parallel trends could play an important role in ore control.

  14. kjm

    GBN making its move now. First pour must be imminent. Notice the increased volume since Sept1.
    The ceo is well known geologist Ron Netolitzky…..he has been a constant inside buyer, owns over 10% of the shares now. Sprott has about 11%

  15. GL

    Thanks Tom, your analysis on ORO is much appreciated.

  16. @kjm
    He is a great geologist, but not a miner. In general I would think a small producer (sub-100K oz/year) taking advantage of high gold prices, and probably with hopes of little more than breaking even at this price level, is arguably fairly valued at $100 million market cap.

    “Preliminary open pit design estimates the extraction of 162,000 tonnes of the potential mineable portion of the Measured and Indicated Resources, at an estimated grade of 4.07 g/t gold, and an overall strip-ratio of 7.33:1. Preliminary underground mine design is in progress.”

    This is peanuts and you can find miners that have bigger, profitable production that are trading for less than Golden Band, Take Gold-Ore or a number of others — I’m not saying their shares will perform better but if you gauge stocks by fundamental value then comparative analysis is a valid and sometimes compelling point.

  17. kjm


    Thanks for the comments Tom. Maybe I’m biased because its one of only two gold mines in my home province but I will watch it closely. Since your previous comments awhile back, I kept my position modest. It will be interesting to see how there cost of production works out.

  18. I didn’t mean to suggest there is anything wrong with the company, it seems to be pretty solidly run and you don’t need to be “biased” to own it, but at this juncture it is not a company we view as having widespread compelling appeal. Since you are in the same province, arguably it is a company that you can keep better track of and eyes on so owning it seems to make sense.

  19. Dave

    silverax :
    This was not an attractive deal for current shareholders, that is for certain, ….. We cannot say to sell or not but we are not buying now and will not buy in the future without some more studies and depth of understanding about Shafter as well as this deal.

    AUN – see this
    7min Al K interview for the CEOs explanation re hope to be mid-tier and better multiple with 2nd largest silver mine by 2012, price has risen, doubled, since PP. Is it worth revisiting or too much execution risk? Al was very happy and is a shareholder.

  20. @Dave
    We’ve had plenty to say about Aurcana in the past, just search for “Shafter” in our search box. It is really quite incredible the the share price has doubled since the financing. Now we’re looking at about 450M shares on a fully diluted basis, which equates to a current FD market cap of over $300 million. At the current silver price and assuming everything moves forward smoothly at Shafter (e.g. cash costs remain in line with expectations) then $0.70 is right around fair value according to our model. But those are some big ifs. Not something that interests me personally at these levels.

  21. Giuseppe

    silverax : Robex has quite a few projects in Mali including the Nampalo gold project that bears some similarities to Orezone’s (TSX: ORE; AMEX: OZN) Bombore project in nearby Burkina Faso. Both deposits have significant gold contained in soft saprolite rocks starting at surface as well as depth and lateral extension potential. Of course Bombore is much larger than Nampalo but the latter still has the possibility of becoming a significant deposit in its own right (perhaps ~1 million ounces) and its attractiveness is aided by the likelihood of low capital development and low cost operation. Both Bombore and Nampalo bear watching and although Robex is very cheap, it still has some way to go and we prefer to watch developments for now before considering a position in the stock.

    I see today RBX announced the opening of a PP at 0.13 cad per unit, with every unit carrying an half warrant convertible at 0.18 for the next 2 years, while the last share price was 0.185 cad!
    Does anybody knows how is it possible to join such a PP? how much money is it required? I sold my small position in the company with a small profit, and understood what did you mean when saying “it still has some way to go”. Didn’t you say that you were going to feature the companies’ financings on MA? Do you think that it can be easy for a not canadian citizen to join a PP? I never did and many times I was astonished by the gift that many PP represented to the subscribers. I also started to think that the most shareholder friendly juniors are those who do not apply such big discounts + warrants gift and thought about favouring those juniors in my portfolio, but I only found Amarillo Gold as being the perfect “benchmark” of PP behaviour.
    In such a very hot market for gold juniors, did RBX really need to make such a gift to the new shareholders to obtain 3 M $? With how much a discount does the canadian law allow a junior to print new shares? 30% (+ warrants at an exercise price of just 100%) seems unacceptable to me.

  22. joey

    no expert here; but, depending upon how many takers they’ve lined up, these co.’s will sometimes take on non cdn unit subscribers – the cdn requ’t haqs to do with security laws, as the u.s. is pickier about requirements for public issues. I have a u.s. resident friend whom I know to have participated in a couple of venture listed pp’s.

    you must be ‘accreditted’ – that is, prepared to say that your income is $200,000+ or assets $1mill+ .

    Again, depending on subscriber interest, you might be able to get $5k or $10k worth.

    if you’re interested, Giuseppe, I urge you to act ASAP. email or skype this guy

    Andre Gagne
    Investor relations
    President and CEO
    Skype: andregagne1

    Tell him where you live and how many units you want and that you’re accreditted and ask if they can accommodate you?

    If you need more info (again, no expert here), ask dave/tom for my email address and email me privately.

  23. joey

    I should add, as you probably know, that there will be a 4 month restriction from trading these pp shares.

  24. Giuseppe


    thanks Joey, please email me at XXXXXXXXXXXXXXXXX [Ed. Note: We can help subscribers exchange email in privacy] so that I can know your e-address without nagging the masters. I am not “accredited” at the time being (but if I keep making +100% yearly with a little help from MA I could become soon or later :-) ) nonetheless I would like to invest 5k $ in RBX units at such an hard discount, so I’ll try to hear the contact you gave me.

  25. joey


    Giuseppe, now that you’ve declared on a public site that you’re not ‘accredited’, I feel certain that the thieves will pass you by and not break into your house to steal your silver rounds, you poor boy.

    On the subject of pp’s – and that special category, the ‘bought deal’ financing, I came upon this blog post a few weeks ago, which I found interesting:

  26. @Giuseppe
    You typically do a trailing average on the share price when declaring the price in advance and for small companies with a significant financing there is usually a discount of up to 25%. Keep in mind this isn’t flow-through. As for our own private placement/financing feature, it is fortuitous once again that you should ask about it because we are about to “pre-launch” that aspect of our service. It will have two parts for now — one a calendar-type deal that shows when company PPs take place and come free trading so we can trade or speculate around these dates — for example Macusani has its placement coming free on March 5 and with recent weakness we might pray for the shares to get back down into the 60′s or even lower, perhaps it might be good for a stink bid (of course they might conveniently release some nice results just in time). The other portions will be the situations where we ourselves are looking to take part in a placement and basically here we are going to follow the company very closely until the corporate goal has been achieved or busted (basically we are not going to flip these companies but instead hold them through resolution of the project plan which could take 2-3 years or more). We are going to have a list of subscribers who are interested in hearing about these placements that we are looking to participate in and we will be updating that list with our DD, property visits and whatever else monitoring we do to assess the progress in achieving the specific company plan. We have identified the first company we are planning to try this with — more in a formal post shortly.

    This being a public post, I’ve taken the initiative to X-out private information. Better that you nag us.

    That’s excellent, I learned a thing or two from that explanation! Obviously Energold’s deal turned out well. I’ve known about but haven’t read this site recently so thanks for the reminder! His post on toilet paper was brilliant, wish I’d seen it before — heck, I was just talking TP with zurbo earlier tonight (the gist was that in the “old days” they didn’t have such dire need for “wiping utensils” because people consumed fewer processed foods and ate less in general).

  27. joey

    What happens when 4 billion people wipe their ass?
    I too liked this story.
    Re: “heck, I was just talking TP with zurbo earlier tonight…”
    Here’s my synchronicity story: just before Xmas a friend of mine asked me to take on the managing/trading of the sorry collection in her 2 stock portfolios, which included Fibrek. Not yet having clued into the fact that the pulp and paper sector was rising from the dung heap, I asked her to please recall whatever had induced her to ‘buy that shit’. Well, I don’t think I lived through another cycle of the moon before I happened upon Kuppy’s article . Boyoboy, Mercer Int’l and Fibrek – doing their bit for sanitation.

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