Monday at PDAC is usually the busiest one and we didn’t find ourselves finishing the day until close to midnight. We had two productive meetings lasting a few hours and therefore didn’t have a lot of time to visit and report on companies during the day. In the meantime, gold has fallen to our pullback target of 1660-1680 this morning and we have been busy evaluating the situation. Subscribers have been kept up to speed on our short-term thinking about the gold market and so far we have been quite accurate. To summarize, we are looking at gold price action in the 1660-1680 range for signs of the next move. Our thinking is that gold should stage a second leg of a Spring rally from somewhere around this level and therefore we want to position ourselves by increasing our long exposure as well as gaining speculative exposure via call options, leveraged ETFs, etc.
Okay, here is a quick report on some companies we visited on Day 2 of PDAC.
Candente Copper — Walter Spagnuolo, IR, and John Foulkes, VP-Corp Dev, reminded us that the company has not been able to drill for 3 years but we are told they are close to having their permits and land agreements concluded. Over the past 3 years they have also conduct a significant amount of feasibility work and so if and when things are back on track they should be able to complete the studies in short order. In addition, they plan to go back and drill the second porphyry that was discovered in 2008. This could be even bigger than the 750 million tonne behemoth to the north but more importantly it appears to contain no arsenic.
Ethos Capital — The plan is to use reverse circulation drills to test a lot of ground in a hurry — one hole a day starting in May. There is little doubt some of these holes will come up with good gold values but the company is only using this phase of drilling for initial target. They will then come back with a core drill to target gold resources in the most prospective areas. Interestingly, these initial soil anomalies are all in the granodiorite (the rock package to the south of Kaminak’s Coffee discovery) but Ethos’ Betty property also has the same rocks as Coffee (a deformed, brecciated gneiss). Peter Tallman, COO, believes Ethos could potentially find the same style (and perhaps quantity) of gold mineralization in its gneiss as Kaminak has at Coffee … and indeed there are already some good gold in soil samples from this area.
Globex Mining — This company has so many projects that it is hard to focus on any two or three but Jack Stoch, President/CEO, did his best to explain why his company’s talc-magnesite deposit, Chibougamau land position, gold recovery process, high grade iron-manganese project and high grade Abitibi gold deposit can each easily justify the share price. We also went over the company’s new strategy of using spin-offs or share dividends to monetize the value of the company’s assets in lieu of the prospect generator or JV model.
Carpathian Gold — The company reps (who shall go nameless) to whom we spoke did not give us a good vibe at all. They continued talking to each other while we patiently waited right in front of them for a couple of minutes and then spent the time being defensive if not outright rude to our questions and concerns. These are not the kind of people you want in a booth at an investment conference. That said, Carpathian’s Rovina Valley project in Romania is the real deal and they are getting close to zero value for it. The rude duo who spoke to us claimed that the brokers will re-rate Carpathian once Gabriel Resources gets its permit to mine the Rosia Montana gold deposit to the north of Carpathian’s project. That’s likely to some extent but Carpathian will also need to pursue its own development and operational strategies in order to prove that the asset has a substantial value (which it indeed does).
Disclaimer: We don’t currently own any of the above companies with the exception of Ethos Capital and Carpathian Gold and we do not receive compensation for our reporting or commentaries from any party. This is not investment advice, which you should seek from a licensed investment professional.