₪ Pescod's Late Edition 4/14-4/18/08
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David Pescod's Late Edition April 14, 2008
SUSTAINABLE ENERGY (V-STG) $0.305 -0.005
FIRST SOLAR INC. (US:FSLR) $274.77 +7.03
There are a lot of stocks that have a chart like that of Sustainable Energy because of the market meltdown over the last while, but Sustainable seems to suddenly be attracting an awful lot of interest because of a recent addition to their executive team.
It was announced last Thursday that Gregory Nelson has been added to the board of directors and senior management team of Sustainable Energy and in the world of business where the right executive in the right position could mean everything for a company, this is attracting attention.
Mr. Nelson has 20 years experience in managing technology companies, but the last company he was with—First Solar, just happened to be one of the most successful companies in the alternative energy field. Now take a look at their chart and what it has done over the last year...five-baggers are hard to find lately.
When we talk with Sustainable Energy’s President Michael Carten, he tells us that “yes, Sustainable is not having an exciting quarter” where they are probably going to do a mere three quarters of a million in sales and still lose money and this for a company with too many shares outstanding. But he is also suggesting that the addition of Mr. Nelson is already making a difference because he sees the business in a totally different way. Carten says he is “very excited about what we’ve got” and he was never interested in just taking a ceremonial position on the board. He’s quite active and working at least half-time with the Company.
He suggests, “We have to get the wheels under this thing and get it going and the major attraction seems to be our cost structure.” Our suggestion is that there has to be a reason for Nelson who one suspects has retired rather well, to come back to an institution without seeing something awfully positive. Could it be that he thinks Sustainable’s inverter has one heck of a future?
When we ask Carten a couple of questions such as how come they didn’t win some of the big contracts going out in Spain this year? He responds that “most of the big contracts in Spain over the last year were huge ones and obviously over the scale of what Sustainable could look at and secondly, a lot of deals being done in the more recent vintage all came up with financing problems once the asset-backed mess hit the financial circuits and Spain as well.”
Analysts such as Andy Gustajtis and others have been keen on Sustainable’s inverter for some time and with high oil, gas and other commodity prices, there are more than a few waiting for Sustainable’s first big contract that can prove yes, their inverter has a future ...
PANTERRA RESOURCES (V-PAN) $0.37 +0.23
Over the past year or so, we’ve had different quotes from Andy Gustajtis and Jim Letourneau of the “Big Picture Speculator commenting on Panterra Resources and the potential for shale on their enormous property in Saskatchewan. But in a market where no one cares about anything, the chart shows you Panterra’s stock has slid away.
Of course Panterra hasn’t had a really big budget to work with and we suspect CEO Fred Rumak has had to do the dishes, the drilling, and just about everything single-handedly.
Much of their work though has still been of a science project type nature, but an article in the Calgary Herald this past weekend has created big interest in the market because of recent success in shale plays at the Bighorn in B.C. and the Quebec lowlands that have attracted huge market interest.
One little line in the article where the President and VP of Panterra suggest that the Company’s Saskatchewan assets could hold more than 60 trillion cubic feet of gas, which has definitely caught the markets attention. That’s an absolutely enormous number and whether any of it will be recoverable is down the road, but we wouldn’t be surprised to see a financing very shortly that would give them the chance to do some real work to find out whether their shale is economical...or not.
MARCH RESOURCES (V-MCF) $0.76 +0.02
The photograph to the right shows you how the worst drought in 100 years is affecting Chile and it is definitely affecting their economy as hydroelectric supplies are being cut back dramatically.
Also at the same time, they are having trouble in Chile acquiring natural gas from neighboring states Argentina and Bolivia that need all the gas they have, so if March Resources ever hits on its gas play at Pica-1, people will definitely care.
As an update, the Company today announces that they have spudded the Pica-2 well. One thing about Chile though is that while it’s got a huge and very developed and sophisticated mining industry, its oil and gas industry is almost non-existent. Getting supplies and equipment is a big logistic problem and turns out that the testing on the Pica well hadn’t even started as of Friday, President, Dave Antony tells us. But just about now, that should have finally commenced.
David Pescod's Late Edition April 15, 2008
CONNACHER OIL AND GAS (T-CLL) $3.68 n/c
PETROLIFERA PETROLEUM (T-PDP) $10.26 +0.76
Dick Gusella returns a call to us, and we are always appreciative of the access he affords one, but we hear he is resting a bit for a while in Hawaii. We are not sure whether he is trying out his surfing moves while he is there and we don’t suggest he isn’t, as we have just recently been to Sayulita, Mexico and seen the surfers there.
A whole bunch of svelte bodies, and I am sure Dick would fit right in …. but anyway on to the serious part of Connacher, where Gusella and his team recently did an update with a conference call that can be listened to.
What next though is what we are after and of course he is resting up for an annual meeting coming up shortly on May 13. The two big things Gusella tells us he is looking ahead to, are first that sometime in the next 30 to 90 days they should be finally getting EUB approval to start work on Pod Two, and of course the sooner the better so they can get a lot of work done in the short summer that is afforded the area around Fort McMurray.
This is a government agency of course and it answers to no one other than themselves, and its getting near the end of what had been expected to be the schedule. The second thing the company is looking forward to is results of the core drilling over the past winter, as they get into the number crunching of just how much they have that can be considered resource, reserve or all those other technical terms that are used in the oil and gas business. Needless to say, those numbers over the longer term become important.
It was certainly disappointing to see that while Connacher’s production went ever higher over the last few months because of the market malaise, their stock had fallen off rather significantly.
It’s nice to see now that production at the Great Divide is up to 7000 barrels a day plus, the stock looks like it has put in a bottom and we note that Raymond James has just raised their target on the stock to five dollars from $4.50.
Meanwhile, Gusella does mention that all while production has ramped up nicely lately the increase in production numbers over the next while will be at an ever slower rate.
As for Connacher subsidiary Petrolifera Petroleum, Gusella says that seismic work continues on their much anticipated projects in Peru (no dates yet for drilling) and it now looks like they’ll have three interesting wells lined up in Columbia, as well as ongoing work in Argentina.
VERO ENERGY (T-VRO) $8.02 +0.37
NATURAL GAS $10.34 +0.214
PEGASUS OIL AND GAS (V-POG.A) $1.50 n/c
It looks like the analysts are changing their minds on Doug Bartole and his crew at Vero Energy again as suddenly the market is coping with the prospect that gas prices after being in the dumper the last two years, might be heading to higher levels ... and staying there.
MGI Securities in the last few days has upped their target from $10.00 to $11.25; Tristone from $9.50 to $11.00 and a month ago, GMP had upped their target from $9.50 to $11.00. What the industry and the brokers love about Vero and Bartole is that his Company traditionally always has their F&D costs in the lower quartile in the business, if not the absolute lowest.
When we caught up with Bartole, he is being shown around to the financial institutions in San Francisco and he seems to be getting quite a positive reception. We tried to catch up to Bartole to find out that in market that has been this ugly for the last several months, what could possibly go wrong with natural gas as these days, one tends to look for bad news, expecting there simply won’t be any good news.
Bartole probably answers exactly what you thought...in the short term, what could go wrong would be weather. He tells us there is always the chance we could have a cool summer which would mean little demand for power for air-conditioning and inventory then could build. If you are looking for other concerns, he also points out the increase in gas production in the United States, which seems to be bumping up to, and possibly over, 54 BCF a day. On the other hand, he says, if you are looking for the bullish case, it’s quite simple — that LNG shipments aren’t going to North America anymore.
That’s a good chunk of LNG that despite the current high prices for gas, is still going elsewhere considering gas is going for $13.00 in England and much of Europe and $15.00 in Japan, the Mid-East suppliers would prefer the shorter shipping routes and higher prices in those areas to North America.
When we ask Bartole where he thinks gas could be by next Christmas, he’s not getting carried away, suggesting $10.00 would be his goal which is nicely tasty, although that’s currently where current prices might be.
Being ferried around San Francisco by Scott Koyich, the “PR Guy to the Stars” Koyich suggests that Vero Energy with only 33 million shares outstanding and featuring those low F&D costs, is 80% gas and should receive a slingshot effect in the marketplace over the coming three quarters.
So we ask Bartole our favorite question, “if you could only buy one natural gas stock (other than your own), what would it be?” And we are looking for a double by Christmas…
As far as when it comes to picking stocks which is something we always quiz interviews about, Bartole and his sidekick Koyich suggest there are probably lots of gassy stocks out there that are so beaten up, 50% is probably do-able by Christmas. But we are looking for something that could be a double.
So for his stock pick, Bartole goes with Pegasus Oil and Gas which he suggests is another beaten up gassy stock where he knows the management well and likes the story well enough to be a shareholder himself.
David Pescod's Late Edition April 16, 2008
WAVEFRONT ENERGY (V-WEE) $2.35 +0.03
PANTERRA RESOURCES (V-PAN) $0.295 -0.01
TIREX RESOURCES (V-TXX) $3.00 n/c
He looks like Drew Carey, only the hair is longer and disorganized and the suit a little disheveled and those are not our words to describe Jim Letourneau of the Big Picture Speculator ... that’s his fiancée’s Julia’s words.
The two of them are expected to experience wedded bliss on 08/08/08 and you’ve got to think there is some sort of mythical interpretation to that date, but even for these thoughts are that Letourneau’s speculator has had two interesting calls over the last few months that have created more interest in his newsletter.
The first call was Wavefront Energy and considering his technical knowledge of the oil and gas business, he has spent a long time over the last while trumpeting their technology and how it can enhance recovery in old oil fields. Their stock over the last few months has finally responded in a big way.
In the past few days, Panterra Energy, a company with huge land holdings in Saskatchewan but very little in the lines of production anytime soon, has attracted attention because of a Calgary Herald article. In that article, they mention 60 trillion cubic feet as potential and Letourneau and a few others are suggesting that number is probably more than a little aggressive at this point in the Company’s history , but the stock has definitely responded. Maybe they’ll have some money to play with shortly to find out what they really have.
With two stocks finally having a little joy, we go back to Letourneau looking for another story we should be following and fully expecting some esoteric high-tech oil and gas pick, he instead goes with a mining story. Oh my goodness, all those thousands of mining stories out there and so few ever amount to anything, but he is a big believer having met some of the geologists behind the play and some of the company officials, he is convinced it is one of the more significant mining stories out there and is an admirer of the Company’s President, Bryan Slusarchuk.
If he had to buy only one stock today, he says Tirex Resources would be it. Ironically, we will be having an interview with Tirex Director and Founder Neil Briggs in the next few days and we have to admit that we already own some shares of Tirex...so we hope Jim is right.
If you would like to get some copies of Jim’s work, e-mail
Debbie at debbie_lewis@canaccord.com.
OILEXCO INC. (T-OIL) $14.99 +0.51
CONNACHER OIL & GAS (T-CLL) $3.82 +0.12
CORRIDOR RESOURCES (T-CDH) $7.85 +0.89
ANTRIM ENERGY (T-AEN) $4.69 +0.25
PETROLIFERA PETE. (T-PDP) $10.73 +0.47
Should we start getting a little excited now that it looks like there is life in the oil patch, at least with the stocks these days? Yes folks, there is lots of green on the screen for a change and maybe, just maybe, all those that have suggested because of the banking fiasco in the United States which would drag the American economy into a recession and then hence affect the entire world, may not be correct at all.
Today we have copper flirting with record highs, telling us at least today that the world economy simply needs more copper, which is a sign of a good economy. Also hitting new highs are oil prices and helping that was a frontpage article on the Wall Street Journal yesterday that pointed out that Russian oil production which for years was a vital source of new supplies for world markets, is showing signs of a slump. According to the Wall Street article, “Russian output fell for the first time in a decade in the first three months of this year, according to the IEA.” It also pointed out that “Russian production averaged 10 million barrels a day, a 1% drop from the first quarter of 2007.” In the article there is some suggestion Russian production could drop significantly over the next while, although it is open to debate.
Meanwhile, maybe we should just enjoy the fact that for that are long oil stocks, there is a little more joy out there. If you missed the Wall Street, e-mail Debbie at debbie_lewis@canaccord.com.
David Pescod's Late Edition April 17, 2008
METALLICA RESOURCES (T-MR) $7.05 -.09
GLOBESTAR MINING (T-GMI) $1.85 +.02
CAPSTONE MINING (T-CS) $3.76 -.06
The chart at the left of Metallica Resources shows that big companies are definitely valued better than small companies because of the only news out of Metallica recently...we’ve all noticed and some of us such as ourselves have whined that over the past year or so despite the boom in commodity prices, it has mainly been the big companies in the gold sector such as the Goldcorp’s, Barrick’s and Yamana’s of the world that benefited from higher gold prices and not the Aurizon’s and Lake Shore’s of the world. The same thing is happening in the copper sector.
So now that many observers have noticed that since Metallica has announced its merger with New Gold and Peak Gold has created this interest in Metallica. A merger such as this creates a much bigger company with a market cap of roughly $2 billion and it does give some synergies in that the new company will need less executives and it will give diversity as far as how many mining operations in different countries.
So now we hear all sorts of rumors and gossip of many different miners trying to merge to get the better market capitalizations.
When we were at Joe Martin’s Cambridge House conference last weekend, there was all sorts of gossip. But how would this one work between two copper miners — Globestar Mining, with its mine about to be in production this summer in the Dominican and Capstone Mining, which is currently operating the Cozamin copper/silver/zinc/lead mine in Zacatecas State, Mexico.
To us, this sounds like a great marriage of two miners in two countries that could reduce executive costs and country risk and definitely make for a bigger company. It’s definitely one of only a thousand rumors out these days, some of which might be true and some of which might be rewarding.
PAN ORIENT ENERGY (V-POE) $12.25 –.17
COASTAL ENERGY (V-CEN) $ 4.25 +.20
In the old days, for oil and gas exploration, you went to where you knew there was oil...the mid-East, Alberta, Texas...it was easy! But over time, with nationallyowned companies dominating the mid-East, the Russians being ever less friendly and Chavez kicking people out of Venezuela and the like, suddenly oil and gas exploration companies had a much smaller world to work in, but it has been interesting to see where they’ve gone and what they found.
Suddenly off the west coast of Africa oil and gas exploration is booming and now with huge discoveries being made offshore Brazil (and a significant well offshore Suriname is giving little CGX a boost right) and places of the world that were never thought of before to become obvious targets are being looked at.
One of the success stories of last year was Pan Orient for its plays in Thailand and we suggest people take a good look to a new website just updated for Coastal Energy as the company has just announced that they have their rig that they will be using for offshore Thailand, non-stop for 16 to 20 wells. None of this stuff like in the North Sea where they drill a well and then it’s another year before anything new happens ... there will be non-stop news.
Thailand is a great place to do business. They have to import lots of gas so any onshore finds would be very welcomed and the website gives you just enough information to appeal to your sense of greed.
Give it a good look folks at www.coastalenergy.com
and meanwhile, we are hoping that their success will
be anywhere close to that of Pan Orient last year.
David Pescod's Late Edition April 18, 2008
AN INTERVIEW WITH NEIL BRIGGS
(As of April 14, 2008)
David Pescod: We are here with Neil Briggs, part of the dynamic duo of Don Moore and Neil Briggs. While Neil is President of Rupert Resources, Kermode and Playfair Mining and they have property plays around the world, one very interesting story that Neil has an unofficial role with is that of Tirex Resources, a mining play in Albania that has quite a history and the question is, what does the future look like?
So Neil, could you tell us a little bit about the past history of these mining properties in Albania?
Neil Briggs: There’s been mining in Albania for probably 4000 years. They’ve been mining copper mostly and chrome. Recently however, the country was a communist dictatorship after World War Two, but it all fell apart after the dictatorship ended. The country is now a stable democracy and has been for some 15 years so it’s started to open up again for mineral exploration although most people don’t know much about Albania. Heck, most people don’t even know where it is! In case some of you don’t know, it’s north of Greece and just across the water from Italy.
I heard of opportunities in Albania courtesy of a Calgary man, Jim Kelly who had been pushing me to go to Albania for about eight years. Finally two years ago, I said yes, we would go and have a look so Don and I went and looked and we very much liked what we saw on the properties. We very much were impressed with the government there so we spent some time and effort and after six months we privately acquired mining rights for 400 square kilometers in the main copper mining district in Albania. This area has a lot of different mines – historically copper producers, some of them also contain zinc, but the zinc has never been recovered because it was an economy that was just pushing for copper only. None of their mills have the capabilities of treating zinc, so they left them un-mined.
D.P: Now these small mines that you are talking about, we should point out that most of these are relatively smaller assets, correct?
N.B: A number of them are. A lot of the copper ones are ½ million tons to a million tons. There are some in the 5 million tons plus range and I think there is at least one in my estimation, is probably getting in the 20 million ton range. The ones that contain zinc tend to be larger than the ones that have no zinc. They are geologically a different kind of deposit. They are VMS deposits, similar to the deposits in Noranda, Quebec or Flin Flon, Manitoba. Some of these are very rich and they contain high precious metals both gold and silver, so it’s not just one element, it’s a combination of copper, zinc, gold and silver.
D.P: You talk about some of tailings from these old producers and even they have some amazingly rich rock that was considered throw away in those days or were the mills just that inefficient?
N.B: You find a lot of throw away in some of the dumps outside the mines because they had a lot of zinc in them and the mills really couldn’t treat material with a lot of zinc. When they took it to the mills, it would clog up the copper circuit, and the end result of that was a lot of metal wasn’t recovered and went out in the tailings. Once they found out that was happening, they went to lots of lengths to try to not take that stuff to the mills, so a lot of it would end up either left in the ground as unmined or if they had to mine it, they threw it away at the mine, so for example, I picked up samples of 43% zinc on waste piles at one mine.
D.P: That’s hard to believe that under the communist system, such a valuable resource would be just so totally ignored. Have you figured out why?
N.B: It was centrally directed and there are a couple of reasons. One, the whole thing was centrally directed and was geared to producing copper. The bulk of these deposits in Albania are copper and because the country was shut off from the rest of the world, they were also shut off from knowledge coming in from the rest of the world. These particular types of deposits are different than the other deposits. When you work in Canada in places like Noranda and Flin Flon, you immediately recognize what type of deposit they are, but because they were kept away from this type of information during the dictatorship years in Albania the geologists just didn’t have access to realize what it was. So they didn’t put the effort into these things, they put the effort into finding copper and producing copper and that was their aim. They did however delineate these things – they drilled them, then went underground on them, and they prepared them for mining, figuring that one day they would build a zinc circuit, they would mine these things and recover the zinc and the gold and silver along with the zinc, but the country was going downhill and it just never happened.
D.P: Looking ahead to the future, what you’ve taken over is basically a big chunk of land, mineral-rich with 17 known small deposits on it, many of which are former producing mines with ore being trucked to central facilities, what is it that you are hoping for down the road? I understand that there is one particularly large target you are working on.
N.B: There are a number of targets, but one interesting thing is that there’s never been any modern exploration in the country. The deposits that were found were found by prospecting and then drilling around the area so that the prospects would turn up. For example, Tirex flew the first ever airborne geophysical survey in the whole country. And this is a standard exploration technique in Canada. It’s a thing that picks up these kinds of deposits where they are not outcropping on surface where they are concealed either by dirt or whatever and Tirex has a great number of geophysical targets which have never been tested.
So that is one type of target that Tirex is working on and it’s simply the application of new technology into an old mining area. The other parts are exploring around a number of these deposits where they are zinc-rich and because of that, have had less work and no mining at all. There are two drills currently working on the project with thoughts of even adding a third and they’ll be drilling continuously for the next probably six to 12 months. So there will be an awful lot of information coming out of this story. To date results of only the first hole have been announced. That hole was drilled nearby an old Albanian hole to check the quality of their data. The Albanians reported an intersection of 26 metres of 12% zinc. The Tirex hole, drilled very close to it, confirmed that intersection, but also found more mineralization which wasn’t reported because they had a lack of interest in zinc, so that the total intersection with Tirex was 65 metres of 9% zinc plus gold and silver. Which is really a huge intersection.
D.P: Now there are some targets though, that you have big hopes are bigger than the one and two million tons, correct?
N.B: They absolutely are. The other thing you have to bear in mind in all of these targets is that gold and silver were state secrets and mostly they did not assay for these things or if they did, the results weren’t available. They are still kind of hidden away.
Tirex is finding a good intersection of both gold and silver all through there. They are very large targets and if they are what Tirex thinks they are, are going to be in the 5 to 10 to 20 million ton range and as drilling goes, we will find out.
D.P: Now the company corporately has an interesting history too, in that you have a very aggressive young President and a very interesting Chairman on board.
N.B: Indeed we do. We originally had this company private. We are running four public companies already and that seems like enough for us, so we wanted to get some more people involved in this and the first person we sought out to get involved was the President of Tirex – Bryan Slusarchuk. Now Bryan was a big producing broker with Canaccord and he is the young President that you’ve just alluded to and he wanted to try his hand at something on his own, away from being a broker and he’s very useful with all his brokerage connections, so he is able to access all that. He is in London today meeting with a whole bunch of brokers and banks on Tirex and he’s really run hard with this and bringing in young blood and lots of energy into the whole thing.
D.P: He must have done something right, because wasn’t he the broker to most of your management team over there?
N.B: He was and has been for a number of years! When he wanted to leave the brokerage business we still wanted to be associated with him, so that’s why we asked him if getting involved with Tirex would be something he would consider and we were delighted when he did.
D.P: Now your Chairman is also high profile.
N.B: Yes indeed. Tookie Angus is a lawyer by background. He worked as a mining lawyer for many years.
He’s been involved, since he left working as a lawyer, with a number of companies that you have probably heard of. He was one of the founding directors of First Quantum Minerals, which I’m sure everybody has heard of – went from next to nothing to $100.00. He was a director of Canico which was taken over by CVRD and he was also one of the early directors of Bema Gold, until that was taken over by Kinross Gold. He’s also Chairman of Nevsun Resources. His last real job, if you like, was as mergers and acquisitions managing director for Endeavour Financial and he put together many deals for that group, some of which I’m sure you’ve all heard of. He is sort of semi-retired but he told me he sees Tirex as his chance to go out with a bang!
D.P: We hope you are right there! One last question…we are experiencing not a lot of joy in the mining markets despite the fact that we are seeing record high prices for many commodities such as copper and silver and the like. When do you foresee this market changing and of course the question we always ask, if you could pick a stock for us other than the ones you represent that will be a double over the next year what would it be? So when does the market condition change and your stock pick…
N.B: I see things starting to change already a little bit. At the show in Calgary which we were both just at Dave, the attitude of a lot of investors who were all seemingly kind of beaten up and have lost money over the last few months, but a lot of them will see this now as a buying opportunity and are starting to come back into the market. I think I see a stabilizing over the next month or so and starting to move upwards. I think we are close to the bottom, at least I got that sentiment.
I can give you a cheap stock pick, like a sub-ten cent stock, just to increase my chances that it will double, Dave. It’s Telkwa Gold (V-TKW) and has properties in Nevada, all of them gold properties, but one of them has kind of morphed into a porphyry-copper project that’s called the Iron Cap property. An interesting thing just happened over the last month or so, is new management has come to Telkwa and it’s the people who run MacDonald mines which is DMK and I’m sure that a number of people watched MacDonald Mines last fall go from $0.10 to $1.20-$1.30 range with the same group at the helm. So I think things have come together for Telkwa and they might just do it.
D.P: If a person has any question on Tirex, Bryan Slusarchuk can be contacted at 604-687-7160 .Tirex also has a website at www.tirexresources.com .
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