Reports such as these will start coming out this year. In my opinion, Ashton stock will not be under $1.00 for much longer. By mid March, Ashton will have a support level at prices over $1.00. There still is opportunity to buy the stock at prices below $.90 as impatient holders may be dumping....regards.............Frank
SPECULATIVE BUY Ashton Mining of Canada (ACA : TSE : $0.89 : Issued
37.1M)
Graeme Currie (604) 643-7405 graeme_currie@canaccord.com
HIGHLIGHTS
* Update on Ashton's exploration activities, the primary target being
K252 in Alberta
* Exploration is also planned throughout the company's holdings
* Ashton remains a SPECULATIVE BUY
Recommendation: SPECULATIVE BUY
52-week range: $1.50-0.51
Shares O/S: basic 37.1M
f.d. 40.1M
Major shareholders: Rio Tinto, 65.9%
Working capital: $6.5M (CCC est.)
Weekly trading vol.: 169,000 Shares
Long-term debt Nil
Market capitalization: $33.1M
Asset Statistics
Key prospects: Buffalo Hills, AB; NWT, & Nunavut and Quebec
2001 budget (CCC est.): Gross $2.5M
Geographic location: Canada
Sector: Junior Mining
Website address: www.ashton.ca
Update on Ashton's exploration Activities, the primary target being
K252 in Alberta
We recently picked up coverage of Ashton as one of four active, junior
diamond exploration companies that we rated as a SPECULATIVE BUY in
our December report entitled Diamonds: Rules of Engagement. This
junior was originally formed to act as the Canadian exploration and
development arm of Ashton Mining (Australia) in 1993. Over the past
eight years Ashton has focused its efforts primarily in Alberta, the
NWT/Nunavut, and in Ontario and Quebec. The company has raised
approximately $55 million over this timeframe and has typically
managed gross expenditures per annum averaging in excess of $6.5
million (averaging net $4.5 million), resulting in the discovery of 49
kimberlite bodies of which 34 have been defined as diamondiferous.
This company typically can operate with some flexibility in that it
holds as a core asset its own processing facilities in North
Vancouver, BC which allow for more rapid turnaround on both surface
and drill core samples. Although Ashton has seen fundamental success
in its exploration, so far success has eluded this high quality junior.
We had previously eluded that, with the year 2000 exploration
discovery of the K252 pipe in Alberta, the potential for an economic
discovery had, in our view, been materially improved. K252 is located
in the Buffalo Head Hills of north-central Alberta. Although
exploration by Ashton and others in this region has resulted in
numerous kimberlite discoveries, prior to 2000, in our view, results
had not outlined a target of potential economic merit. The discovery
of K252 changed our view regarding this point. Prior to 2000, Ashton
45%) with partners Alberta Energy (AEC : TSE, 45%) and Pure Gold (PUG :
TSE, 10%) had identified numerous pipes and had extracted from 1.0
tonnes up to 479.0 tonnes by bulk sample from six pipes. The best
results had averaged 17.0 carats per hundred tonnes from a 44.87 tonne
sample from target K14. K252 differed from the previous targets in
that its geophysical profile was not represented by an obvious, strong
magnetic target. The profile was that of a very weak mag signature
which when evaluated with additional geophysical tools was elevated to
drill status. The target size has yet to be outlined though overall
size is unlikely to be greater than 300 metres across. Drill results
released late in 2000 confirmed this target as diamondiferous and the
small 1.28 tonnes of material processed returned, by far, the best
overall results for any target within this region to date. The sample
yielded 0.85 carats resulting in a grade content (extrapolated) of 66
carats per hundred tonnes. Within the sample the largest stone was
0.36 carats in size. If this stone were removed, the average grade
would be just shy of 40 carats per hundred tonnes - still far better
than any previous results.
For 2001 the partners, with Ashton as operator, have initiated this
year's program. For K252 there are two initial objectives, those being
the completion of a mini-bulk sample of up to 20 tonnes of material
and further delineation drilling to outline the size of the pipe. The
mini-bulk sample will employ an RC rig with drilling of up to 5-6
holes with a focus on extracting both brecciated kimberlite and
volcaniclastic kimberlite. The company indicated that it hoped to have
this drilling completed by March and that there would be a high level
of emphasis at the lab on immediately processing the material. We
would anticipate results well prior to the end of Q2/01 - clearly this
would represent fast turnaround time, one of the benefits of operating
your own lab. Delineation drilling (of roughly five holes) should be
completed over the same timeframe. The target lies at roughly 70
metres below surface and in general there has been little to no
outcrop of any target outlined by Ashton to date. Ashton is also
re-evaluating all geophysical data as they expect to be able to
outline additional targets, similar in signature to K252, that were
previously not primary drill prospects for the partners.
Exploration is also Planned Throughout the company's Holdings
Ashton is also planning further exploration elsewhere. The Perseus
target, a low-angle dyke, outlined by four drill holes last year is
located in Nunavut and is in joint venture with Pure Gold (12.7%). The
company is planning further surface sampling and geophysics to further
define additional targets as well as further drilling on Perseus
itself. Initial samples from this dyke yielded 55 macrodiamonds from
211 kilograms of material. Ashton is also planning to follow up on
initial exploration success in Quebec on the Otish Mountain
properties, held in joint venture with SOQUEM (50/50). Ground
magnetics have defined several prospects and for 2001 additional
geophysics, drilling, and sampling is proposed.
Ashton remains a SPECULATIVE BUY
We continue to view this junior as one that offers good exploration
leverage for diamonds. The company combines a good portfolio of
properties with strong management and a well-funded, aggressive, 2001
exploration program. Corporately, with the acquisition of Ashton
Mining (Australia) by RTZ, they also gained majority control of Ashton
Mining of Canada. As RTZ already has an active exploration arm in
Canada there is clearly a conflict and to some degree a duplication.
We understand that a strategic review of this holding is underway.
There are a number of options as to what RTZ may do with this control
position. Clearly, it is unlikely that the status quo will be
maintained indefinitely. Although the future of this control position
is relevant, it should not overshadow, in our view, the exploration
merits of K252.
The information contained in this report is drawn from sources
believed to be reliable, but the accuracy and completeness of the
information is not guaranteed, nor in providing it does Canaccord
Capital Corporation ("Canaccord Capital") assume any liability. This
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resident and located in Alberta, British Columbia, Manitoba, Ontario,
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