<Southwestern Gold>
I'm in this one because I'm in general a resource bull, and this a full Monty play in that regard. They have one of if not the best exploration portfolios in the world, and they have structured the deals with majors to be carried into production for 30% stakes. Majors and others will spend $16 million this year exploring their properties. Exploration season in Peru is underway.
They are astute concession assemblers and got in early in Peru and Chile: Puno: gold with NM, Poracota (gold with Teck), Bamba and Santo Thomas (copper, Southern Peru), Felix (silver, PAAS), West Fissure (zinc, Asarco), Accha (zinc, Pasmico and probably their best project with 9% ($90/t rock)zinc findings. There is also a new project in Argentina looking for PGM's that SWG is spending on. They have another dozen projects most juniors would kill for thrown in just for the hell of it. The Chairman, George Plewes has a couple "championship rings" already having been involved with Seven Seas Petro, (1 to 30 stock), and Voyager O&G (2 to 50). Sounds like a good target for this one to me.
They are also stake holders, with two in particular standing out: Aurora in Canada for PGM's, has had some excellent results, perhaps the best so far in Canada? SWG is a major shareholder with stock and in the money warrants worth US 7 3/4 million (@3.85). And they have a serious diamond exploration deal (Victor Pipe)with Kennecott through their holding in Canabrava.
Sounds like a company that should have a hundred million market cap? With 15.3 million out (Bruce R should like that), it's US 31 million. But SWG has US 6 million cash, and the holdings in ARP and CNB (and a few smaller names)are about US 13 million. So the rest of the portfolio is valued at US 12 million. They are not afraid to buy their stock in the open market as well.
Conclusion: Absurd valuation, given that any one home run in their stable could be worth ten times that. Very comprehensive recent annual report at their web site. |
