Brian, my apologies for not getting back to you sooner. The
following is a brief on my overall due diligence to do with the
Coleville properties. Please keep in mind that it is a personal D.D.
and the information has come from a large number of sources. Too
many to list. Therefore I have short formed and included opinions.
This D.D. is not intended to solicit people in any way. It is their
decision to buy, hold or sell in the end.
First of all, we grade on a scale of 1 - 10 on each category. There
are a total of 15 categories. A low score does not necessarily mean
do not buy. It depends on risk tolerance and other factors whether
a person sells or buys. I generally look for a score of 100 + before
I buy.
The catefories: Capital, Management,Product,Financials,Share
Dilution(capitalization),Junior Gold comparisons,Political climate,
Industry net working, promotion,Share prices,J.V.Partners,Futures,
Time considerations, Land/property,Legals (ie;permits etc.),& Vision.
1. Capital - Cash position, availability of generating cash, private
placements, current cash flow etc.
Coleville showed little to no annual cash flow. Potential looked good
for cash flow from the Venuezuala project that was yet unproven.
Since D.D. estimated cash flow from the Pemon is approx. 5.2 Million
in U.S. dollars. The overall decision is this category was that Coleville
needed a joint venture partner with deep pockets to develop the
Sumatra find. Expectations; would not be hard to find a partner if
rumours of Barrick sized find were true. Rating - 3 Upgraded rating
to a 7 based off of the agreement with Antares recently.
2. Management - Head office location, access for info for investors,
dd packages, experience, background checks with exchanges etc.
Who are the geologists? What credibility to they have? Insider
trading reports for directors. Last AGM - how did the meeting go?
Any new directors or lynching's.
Coleville basically has no head office, no official office. Not unnormal
for a junior. Consider Coleville a "deal maker" not a blue chip or up
and coming mining company at this point. In other words they look for
property to flip for a profit. AND THATS ALL. This time they appear
to have landed a large potential type property in Indo. Result - harder
to flip and still have happy shareholders. Time needed to do a proper
deal. May 31, 1996 shows 5 new directors and two leaving. Warning flag to buy not sell. Also news 3 insiders(directors) will be
buying at market value prices. This never happens if the company
property/cash flow/futures are weak. They usually take options
instead due to risk. Excitement in the air. Very healthy rumours.
Scored - 7.0 All directors checked out clean. Industry sources state
usual for a junior company. Reputations good.
3. Financials - Pulled financials from the A.S.E. for the quarter
ending Mar 31/96. Showed company with a deficit of $416,289.
This too I have found to be normal for an aggressive junior. Not
great but not really serious at this stage. Do they have potential to
turn this around in a hurry? What properties are they presently
working on? What are the projections? if any. Without indo, or Ven
this would be rated a 0.0 However the potential to turn the financials
around is very good. Therefore rating is a 3.0 overall. Antares has
17 million in their account, more than enough to work the property
for 1997. My understanding is they are totally responsible for all
costs this year on the Sumatra property. The split starts in 1998.
4. Product - Junior Gold company presently exploring and producing
gold and/or diamonds. Confirmed by independent reports and
geologist to the A.S.E.'s satisfaction. Rated 6.0 Upgraded in '97
to a 7.0....further note IMHO the fallout from Bre-x will last only until
the next proven large find.
5. Capitalization - The single most significant factor in my book next
to reserve potential. Started with approx. 14,000,000 shares
outstanding and since raised to approx. 17,5000,000 shares. Very
low when compared to other Juniors. Definite plus. In additions they
picked up if memory serves correct approx. 2,000,000 shares of
Antares in the J.V. deal. Present share price considered below
market value base mostly off of Ven (Pemon) diamond find and
trenching results in Sumatra. Rating 7.5 I personally would not
like to see this stock diluted too much more until both properties
are up and running properly. Also What is the float? etc.
6. Junior Gold Comparisons - Other juniors in Indo and other area's.
What is the overall market condition for junior golds? How fast do
they spike on core news? Is their any price movement on trenching?
What is reasonable for reserve in the area? Coleville original rating
was a 7.0 Indo (Bre-x) area looked good for reserve. Market was
good even in the wake of Cartaway and Timbuktu. People still like
junior golds because of the short time frame for results, if you have a
find. Obviously down graded from the 7.0 to a 3.5 due to recent
events. I expect this will last the summer, however should Coleville
and Antares get the large reserve estimates Barrick suggested
(rumour is 12 million) then look for this to change in a hurry. Do
people quit gambling when they lose at the Casino.....No, they still
keep going back.
7. Political Climate - Indonesia I still consider a good place to invest.
You cannot ever stop a FRAUD. Indo not at fault.. Many juniors and
majors have been mining there for a hundred years. It is crazy to think that Indonesia does not have gold or that others will not find any. Bre-x is now past tense. Why paint an entire country and
hundreds of companies black because of one company. I still rate
their C.O.W. system and overall potential for gold very high. I gave
it a 7.5 and still believe it to be 7.5....
8. Industry net-working: Very important category. Who do you know
in the mining sector. What is reasonable for a working profitable mine. Who is Coleville? Management? This category proved to be
the most reliable for me. I am fortunate to have people in the industry; geologists, mining executives, analysts, brokers and other
investors with connections. Coleville came out very high here. It
seemed they were well known in the mining circles. Yes, they have
not had a large find to date. But. It seemed both of their present
finds have very good potential from my sources. Sumatra was the
key. Barrick seems to have a report out, from independent geologists
which state approx. 12 Million in potential. Why would Barrick with
alot to lose spend any time on this property? Why would they ask
for an extension of 120 days? Why did they leave? We now know
it was because of their attempt at Bre-x. I for one find it hard to
believe that both Antares, Barrick, Watts Griffis McOuat and Strathcona during their respective due diligence did not turn up
something negative. All state that it has serious potential. Lets also
keep in mind Coleville has never had the money to do their own
trenching, assay's in any great number. Therefore they could not
of possibly tampered with the results. I find this part very credible.
I personally believe you will see an operational heap leach open pit
mine on this property. Soon......
9. Promotion - Who, what, where & how. The general rule of thumb
is too much promo not enough product.....In this case there has been
no promo. No packages have been sent out yet. The only real
hype and promo was on the street with rumours. Jim Cromwell/Gerry
have a difficult job due to the long delays. They cannot speed up
the business process. We however need to be patient.
Rating a 4.0
10. Share prices - Year high / year low. Volumes before and after
news releases. Coleville has had its false start. Not likely to happen
again. It will now respond only to solid news and rightfully so. It
has dropped on all news releases IMHO because it got ahead of
itself. I for one have no problem with todays price because I am
looking forward into Sept. before I will make any moves. I know of
large type investors who have held stock 3 - 5 years only to make a
very handsome profit. I personally move on 12 mos. to 12 mos. on
most of my picks.
Rating overall a 5.0....The market does not like a false start. However the upside side is we can go nowhere but up from here.
11.Partners - Antares is a good respected company. 17 M in the
bank. They are a mining company. One rung up the ladder higher
than Coleville. If this property proves out - Antares will move up more. 45% split is excellent for both. Potential for future deals on
the other 29,000 hectares is still there. Strathcona an excellent
choice in light of the Bre-x situation. Both engineering firms have
excellent reputations. Overall rating a 9.0
12. Time considerations - At first it was believed that a deal was
to be with Barrick. The stock ran and was expected to remain
high based off the deal and their report. However that was not to
be therefore the time frames were pushed back 4 - 6 months. I
can update this as of the 13May97 - Antares is believed to be
starting their drilling program this week. This has yet to be confirmed.
Lets hope its true. This means results definitely by June 15/97
Rating now a 7.5 Still should take to Aug/Sept to get total reserve.
13. Land/property - Ownership/title's and the rest. Very important.
The title is now tied up by Coleville and Antares. Payments have
been made and are up to date. Rating a 7.0 Indo still owns the
land and leases it to the company. Companies must abide by rules
or forfeit the land. Unable to rate any higher due to this as it can
create difficulties. Still have a lot of confidence in Indo.
14. Permits - Presently have approval on a C.O.W. (7th generation)
and have therefore been issued a SIPP which entitles them to drill
to 500m and explore. No rush for C.O.W. at this stage. Approval
in place. Rated a 7.0
15. Futures - or Vision - Where is Coleville headed? Do they
have other properties to be explored in Indo? What about Ven and
the Pemon find. Will I sell all my position or parts at stages?
Overall I think Coleville has excellent potential to move up the ladder.
The Pemon find will provide necessary cash flow and may turn out
to be a real gem (no pun intended). Sumatra is a good gold find. Only Core sample at this stage will confirm that. Other properties are
available to Coleville in Indonesia. I like the future. Rating a 6.5
When I started into Coleville I liked the fact they had no head office,
came walking out of a jungle and not a blue suit with glossy literature.
This made them real in my book. I worry most over hype and promo.
They do not know how to promo in a "smooth" way. They have all
to a man said it straight. Therefore many have left because they
have not liked what they have heard. Well I say too bad for them.
People should not judge a book by its cover. History has shown
hard work(this stock),faith and patience will pay off. I believe we
will be rewarded for that here.
I hope I have not bored everyone. If I have I apologize. Please
remember that these are only my opinions and the facts that I have
collected. They may or may not be accurate at this stage. I say
them only to help those looking for information - not - to induce them
to buy sell or hold. Happy investing.
John S.
P.S. Hi Abbey. |
