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This is a long one, with a lot of homework done by Don Kemper at Wistlestop. If this doesn't sound like a quality prospect at a very attractive price, I dunno! NOTE: Two metal recoveries for the price of one. The press release from Oct 10 on the samples illustrated the technology works very well. The insiders are buying and holding. The float is so small, that I had to chase the bid for 3 days, before I could grab some under the asking price, and even then, every time I met the ask, the thing shot up.Its gone up 1.00 this week alone. NO I'm not hyping it....judge for yourself. After my additional digging, I can safely verify Don's just prudence. Please do your own homework,and input would be welcomed. Best of luck to all.
Mike
CONSOLIDATED VISCOUNT RESOURCES LTD Vancouver Stock Exchange (CVR)
CONSOLIDATED VISCOUNT RESOURCES LTD
Leonard J. Harris
President & CEO
Dr. Richard Garnett
VP Exploration
The Marine Building
830-355 Burrand Street
Vancouver, B.C. V6C 2 G8
(604) 488-0133
insider buy-sells
Leonard Harris; 125,000 shares owned last year - now has over 450,000
Richard Garnett; purchase of 90,000 shares on 8/22/96
Consolidated Viscount Resources is a mining company which currently owns
property in Mexico, California, Voisey Bay, and Washington State (Sumas
Mountain) as well as several other locations that I will not go into today.
CVR has about 19 properties total (3 of which are optioned off to
Consolidated Magna for a percentage ownership). Of the 19 properties 4 have
not had any preliminary studies done.
With this in mind, I called Len Harris, President and CEO, at Consolidated
Viscount a couple of days ago to gain some clarity on their company and the
potential for increasing shareholder value. One thing is for sure - this
guy is technical and definitely sounds well informed about his company's
properties and potential. Some of the information Len provided me is as
follows:
1) The Washington State property contains 800,000 tons of proven scandium
(1 1/2 oz per ton) with 5,000,000 tons indicated.
Scandium is an element used in power cells, laser printers etc. and is
valued minimally at 270.00 oz U.S. It does sell at up to $800 per oz at
times depending on the grade of the scandium. Washington State is one of
the only properties in North America to have a proven find of scandium (The
only property of similar size is in the Ukraine). This scandium is valued
at $240,000,000 at $270 per oz (U.S.). That's right, six zeros.
CVR is talking to some companies who are interested in a new application
for scandium. It involves a Soviet technology of creating a stainless steel
like material that is considerably lighter than stainless steel. It is a
scandium/aluminum alloy that is less corrosive, lighter, less susceptible to
metal fatigue, and easier to weld than other aluminum alloys. This
proprietary metallurgical process was used by the Soviets in their MIG
fighters and space stations and was unknown to the west for several years.
A Colorado company, that has been doing the assay tests, has suggested
reevaluating the whole site because they think that the site's estimated
reserve may be seriously underestimated. This same Colorado company' assay
tests on the scandium shows a 58% recovery rate which will significantly
minimize the cost of excavation and production. Costs of production have
been estimated to be very minimal based on samples to date. A large scale
pilot is scheduled to help determine more exactly what the cost of
production will actually be.
I can't tell you what the cost of production will be other than it is real
low. Keep reading into the nickel section to understand why it is much
lower than what I've heard is the typical $50 to 70 (U.S.) per ton cost that
is typical in the industry.
By the way, this site is one hour from Vancouver, has a road into the
property, is near a rail line, and is 1.5 or 2 hours from two deep water
ports - Vancouver and Seattle, respectively.
2) Not only does this Washington state property contain scandium, it also
has a significant amount of nickel. They have 1 million tons of nickel
valued at $65 (U.S.) per ton. This equates to $65,000,000 worth of nickel,
to be exact. Again, that's six zeros.
The nickel is easily separated from the ore which I guess sometimes it is
not which minimizes the cost of extracting the metal. Again, keep in mind
that the actual cost of production are not known other than it too will be
minimal as compared to other sites and ore types.
Now here's the cost of production kicker: due to the geology of the
area,the scandium and nickel will be excavated and processed simultaneously
so that cost of production will be shared by both the metals. Cost of
production is not just for one metal, IT IS FOR BOTH - two metals for the
cost of production of one!!!
3) Teck Corp. of Vancouver, BC has seriously approached CVR about doing a
joint venture on the Washington state property on the scandium and nickel.
As you may recall, Teck Corp. bought 10% of Diamond Fields at $30 before it
ran to $160. They are renowned for always beating the market. Teck will be
visiting the site within the week to talk about doing business together. If
they are interested, watch out - this baby will fly big time - right to the
moon.
REMEMBER, THE TOTAL SHARES OUTSTANDING IS 3.2 MILLION. It won't take hardly
any buying to get their stock price really moving.
Also, Dr. Richard Garnett was a director with Diamond Fields at the time
that Diamond Fields hit the big nicket deposit in Voisey Bay. He was with
them when Tech bought 10% of Diamond Fields. And, now with Dr. Garnett as
VP Exploration with CVR, Tech wants to talk to CVR about scandium and
nickel. Sounds like they've got a potentially profitable network in place.
4) A property located on the California and Nevada border within
California, the Morningstar property, has a considerable amount of gold and
silver per ton on it. Up to .5 oz of gold per ton and considerably more
silver has found in their assay samples. Len said that they have a lot of
tonnage sitting there already waiting to be processed. The value of this
property in gold alone is $5,625,000 (U.S.).
CVR has 25% ownership of this property that cost them $375,000 for 100,000
proven oz. of gold. In the ground, it is valued at $50-70/oz. ($60 average)
or $6,000,000 (six zeros again). This Consolidated Viscount gold asset then
is valued at $5,625,000 ($6,000,000 - 375,000). Notice, that the asset
value assumes that the cost of production is around $325 per oz. CVR
estimates it closer to $200. What's this mean? The property is probably
worth much more than it is actually valued at.
5) PRODUCING GOLD MINE AT THE END OF OCTOBER!!!
A Mexico gold property, the Durango property, will become a producing
property during the month of October for CVR. This property already has a
large mill in place that just needs the switch turned on to produce a net of
about $131,000 (U.S.) per month - that's over $2,000,000 (Canadian) in net
income per year for CVR at their 16% ownership level of the mine. That's
right - six zeros - again.
The exact amount of reserves is presently difficult and/or expensive to
determine due to the type of geology found at the site. The gold is found
in veins that run vertically from the surface downward some 800 feet. These
are called bonanza ore shoots. The only way to estimate the reserve is by
drilling down vertically, hoping that you are tracking the vein, and then
estimating the width to determine vein volume. This is not a very exact
means for determining the reserve size and CVR has decided not to try right
now because they've got several thousand tons of ore already lying around
ready to process and enough tonnage identified in these veins to run for
several years.
What they do know is that they have several of these bonanza ore shoots
that appear to have about 1 oz of gold per ton. In addition, they have
12,000 tons of this ore already sitting by their mill ready to process that
they know has 1 oz of gold per ton in it. The cost of production
(excavation and processing) is estimated to be about $105 per ton which
leaves a margin of $260 per ton (375 - 105). Thus, the already excavated
ore just sitting there, not even including the gold veins themselves, has a
net value of $3,120,000 (U.S.).
In regards to becoming a "producing" company at the Mexican Durango
property, Len said that this fact would open the door for some of the large
institutions to begin trading in CVR. Len said that a European company will
be publishing them in a book shortly in Europe that names them as a North
American producing mining company. Other releases here should create the
same phenomena.
However, CVR is increasing its ownership level in Durango this week to
28.5%. They have the option to increase ownership to 41% and are working to
finalize the execution of that option very soon. This will increase CVR's
revenue to $2,800,000 (U.S.) net per year at the 28.5% ownership level and
$4,000,000 (six zeros again!) at the 41% ownership level. As you read the
following, keep in mind these facts:
- Most established mining companies trade between 10 and 30 times earnings.
- Becoming a fully operational mine will open the company up to fund managers.
The following are current factual numbers concerning this mine that they
already own 16% of (this is increasing to 28.5% this week and probably 41%
very soon):
Worst case scenario:
28.5% will yield the company 2.8 Million/Year (U.S.) or 3.7 Million/Year (CDN)
3.2 million shares are currently available
Current price = 1.85 (U.S.) or 2.50 (CDN)
2.8 Million Annual Revenues/3.2 Million Shares = $.875 EPS (U.S.)
The PE ratio = 2.11 (U.S.)!!!
That's just on this mine!!!!
Better case scenario:
Factoring 41% ownership will net the company $4 Million (U.S.)
At 41% ownership, Earnings per share = $1.25
The PE Ratio = 1.48
There will also be an analyst visiting the site in about 2 weeks. They have
even built a house on the site to accommodate him and others as they perform
their geological and assay analysis to help determine the long term plan for
Durango. The onsite facility will also be invaluable for hosting potential
investors and brokers to further enhance shareholder value.
6) The Voisey Bay property's status is very dynamic and not really
newsworthy presently. As everyone knows, CanAlaska is currently drilling on
their property adjacent to Diamond Fields. Teck, Inco, and Falconbridge have
already approached all the properties located on the peninsula to the right
of Diamond Fields. Unfortunately they could not come to a deal together.
CanAlaska, however, is setting up a winterized camp and rumor has it they
already have a find. If CanAlaska hits, then their will be some huge
opportunity for CVR. At this point, it is merely speculation.
One thing Len did emphasize is that Inco can't allow the peninsula to be
taken over by other majors. In addition, the other majors find that it is
not in their interest to allow Inco to control the entire peninsula. If
something significant happens, there will be a buyout war!
7) His strategy for the CVR stock is that Len wants it priced on its
technical merits, not on hype. Len said he wants consistent pricing of his
stock without the impact of stock hyping, manipulation, etc. If the book
value warrants the price, fine. But, Len doesn't want to create stock
buying hype or hysteria.
8) Press releases, Len claims, will be coming out at the rate of 1 every 10
days. He said that he has sat on things all summer because he didn't like
what was going in the Vancouver market and that summer is a bad time to
attract the attention of investors anyway. Len said he is much more
comfortable now and will begin highlighting the company more. He said they
have a lot of stories to tell about the company. Obviously, they need more
releases to get their story out.
They are also, for the first time ever, going to be hiring a PR firm to
help disseminate their information. They recognize that they are made up of
a lot of technical people. The PR firm will help them communicate more
effectively to their valued shareholders and to the market in general. Len
wasn't very specific about who, but he noted that he thinks it will be a
large New Jersey firm and they will be coming on board in the next few weeks.
In addition, they are working on CVR's website to provide further exposure
to the market and to provide a more effective means to communicate to
potential and actual shareholders.
Their sister company, Guardian Enterprises, already has a web site at
http:\\gud.ca\ in which some of the properties CVR owns in joint partnership
with Guardian are described. Leonard Harris and his staff also own and
manage Guardian Enterprises, respectively.
9) I think we will see a real turnaround within the next few weeks for CVR.
There is only about 12,000 shares between 2.50 and $4.00 so any positive
news that comes out should run it back to a 4 or 5 dollar level. The stock
is without a doubt at bargain prices at its current level and still will be
at the 5 dollar level. Public knowledge about their properties, known
reserves, and strategy will undoubtedly move this stock significantly
upwards. With CVR becoming a producing company this month, most companies
of CVR's type conservatively trade at 10 to 20 times P/E. That would equate
to a stock price of $18.50 to 37.00 (US). However, the book value on the
assets I just reviewed with you per stock is a minimum of $72 net per share!
10) While I have mentioned only 4 of CVR's properties, they actually hold
19 different properties all but 4 with known reserves of one type or
another. Those properties have not been included in any of the
aforementioned financial analysis. The aforementioned numbers are based
entirely on the Washington State property, the Californian Morningstar mine,
and the Mexican Durango mine. They are not exaggerated in nature, they are
conservative.
TO ORDER AN INVESTOR PACKAGE:
CONSOLIDATED VISCOUNT RESOURCES LTD
Leonard J. Harris
President
The Marine Building
830-355 Burrand Street
Vancouver, B.C. V6C 2 G8
(604) 488-0133
1-800-665-9404
(604) 669-5715 (FAX |
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