FOOD FOR THOUGHT!!!!!
Junior miners aim to strike it rich in cyberspace Investors stake claims: Little-known resource firms lead TSE trade
Keith Damsell Financial Post
A high-tech gold rush hit the Toronto Stock Exchange yesterday. Speculation that a handful of mining juniors may profit from Internet ventures pushed stocks to new highs
on heavy volume.
Seven of the top 10 traders were little-known mining
and exploration companies, five of which have recently
abandoned prospecting and geology in favour of cyberspace.
"The Internet sector is very hot right now," said Stan Bharti, chief executive and chairman of William
Resources Inc. (WIM/TSE).
Despite gold's recent surge above $300 (US) an ounce, it's "very difficult" for Toronto-based William to finance the restart of dormant mines, Mr. Bharti said. In January, William began searching for an acquisition in the Internet or high-tech sector.
There was no news yesterday but that didn't stop investors from driving the price up 7½ to 30½ on volume of 28.7 million shares, making the former gold producer the TSE's top trader.
Among the companies joining William in the top 10 were Vengold Inc., a Toronto junior that's transformed itself into an Internet investor. The stock (VEN/TSE) touched a new 52-week high of $3.27, up 58½ on volume of 20.7 million shares. Sikaman Gold Resources Ltd. (SKG/TSE), a new online retailer, rose 29½ to 74½ on volume of 10.7 million shares, the stock's highest close in seven years.
Even companies that have yet to leap on the high-tech bandwagon saw substantial gains. Diamond junior Redaurum Ltd. of Toronto has spent much of the past two years struggling to raise money to complete its restructuring. The stock (RRK/TSE) rose 13½ to 18½ on volume of 14 million shares.
"There hasn't been any news," said Maria Musso, Redaurum
spokeswoman. "This is not a day trader thing. Something is up."
A poor exploration market and a shift of speculative dollars into high tech are making resource juniors a choice vehicle, analysts say.
Despite a recovery in commodity prices, the junior market still suffers from post-Bre X jitters and universal pessimism.
"People just laugh at exploration stocks," said Donald Rankin, treasurer of Toronto-based Aurado Exploration Ltd. Aurado (AEO/ TSE), up 4½ to 41½, is one of more than 100 estimated juniors considering a high-tech future.
Amid growing fear that North America's senior markets are in correction mode, the "risk shift bubble" and its flow of dollars has switched to speculative Internet plays, said John Kaiser, publisher of California-based Kaiser Bottom-Fishing Report. For high-tech start-ups, ailing juniors offer a cheap public listing, liquidity and a
broad shareholder base, he said.
Former mining investors may enjoy high tech's lofty multiples but analysts fear the worst. A decline in exploration investment means fewer discoveries, said Bob Bishop, publisher of The Gold Mining Stock Report of Lafayette, Calif. "There's a lack of product in the
pipeline. If economic growth stays on track ... it's going to be a very unusual market."
VERY UNUSUAL |
