Stealth Mining Corporation [SAL.C]
Website: stealthmining.com
E-mail: info@stealthmining.com
** NOTE NEW WEBSITE
BACKGROUND
The Insider Report initially reported on Stealth Mining on its first day of trading as an IPO when it opened at $0.56. On June 5th we issued a Speculator's Special and the stock has hit a high of $0.87 and closed at $0.80 on Friday.
In our last report we focused on the market involvement of a number of groups and stated that we expected good liquidity in the stock due to this involvement. It has had two days of trading above 500,000 shares per day and consistently trades 100,000 - 150,000 shares per day.
In this follow-up report, we are expanding on the fundamentals of Stealth and its property, the Pine Gold - Copper Property.
VALUATION OF CURRENT RESERVES AND POTENTIAL RESERVES
Currently, the Pine property holds 40 million tons of gold at 0.57 g/t and copper at 0.15%. Below are some basic calculations and reserve projections. We will expand on the relevance of these calculations at the bottom of this report.
-----------------------------------
* 40 Million tonnes 0.57 g/tonne and 0.15% cu
I. 40 Million tonnes at 0.57 g/tonne
= 22,800,000 grams
* 1 gram = 0.0321543 troy ozs
* 22,800,000 gr = 733.118 troy ozs
=======
II. 40 Million tonnes * 0.15% cu
* 40 million tonnes at 0.15% cu
= 60,000 metric tonnes
= 59,000 English tonnes
* 1 tonne = 1.968 lbs or 116,112,000 lbs
* Valuation
- 116,112,000 lbs at $1.15 US
= $133,528,800
============
- Gold value is $350 US a troy ounce
= 381,511 troy ozs (gold equivalent)
=======
III. TOTAL TROY OZS
1. 733,118
2. 381,511
_________
1,114,629
=========
Rounded 1,100,000 troy ozs
=========
IV. Financial Summary
(000's)
__________ __________ __________
Reserve Valuation $385,000 $385,000 $385,000
Costs 220,000 275,000 330,000
($200 oz) ($250 oz) ($300 oz)
__________ __________ __________
Net $165,000 $110,000 $55,000
========== ========== ==========
Shares o/s* 10,000 10,000 10,000
Per Share US$ $16 $11 $6
========== ========== ==========
CDN$ $22 $15 $8
========== ========== ==========
60% $13 $9 $5
========== ========== ==========
* fully diluted
NOTES
- Reserve valuation based on 1,100,000 troy ozs at $350 US per troy oz.
- Costs to extract vary based on factors such as geography, mill capacity and interest rates.
Royal Oak Mines Inc.'s new mill at Kemess is slated to begin commercial production in Q2 1998
with production costs estimated at US $189/oz. Stealth Mining Corporation's Pine Property is
located 8 km north of Kemess.
- Stealth Mining Corporation has a 60% interest in the Pine Property with an option to acquire
the remaining 40%.
**RESERVE PROJECTIONS - NOTE - THESE PROJECTIONS SHOW THE POTENTIAL VALUE OF SAL SHARES IF THEY CAN EXPAND THEIR RESERVES BY 100% (80 tons) OR BY 200% (120 tons)
TONNES (MILLIONS)
___________________________________________
40 80 120
Gold * .57 g/tonne
- grams of gold 733,118 1,466,236 2,199,354
- Rounded * I 700,000 1,400,000 2,200,000
========== ========== ==========
Copper * .15%
- Metric tonnes 60,000 120,000 180,000
- lbs 116,112,000 232,224,000 348,336,000
- Val. at $1.15/US lb. $133,528,800 $267,057,600 $400,586,400
=========== ============ ============
-Gold equivalent based on $350 US per troy oz.
Troy ozs 381,511 763,022 1,144,533
Rounded * II 400,000 760,000 1,100,000
============ ============ ============
TOTAL TROY OZS I * II
Gold 700,000 1,400,000 2,200,000
Copper (gold equiv.) 400,000 760,000 1,100,000
__________ __________ __________
Total Troy ozs 1,100,000 2,160,000 3,300,000
========== ========== ==========
FINANCIAL SUMMARY
TONNES (MILLIONS)
___________________________________________
40 80 120
(000'S)
___________________________________________
* COSTS TO EXTRACT * $200 US PER TROY OZ
Reserve Valuation
(ozs x $350 US) $385,000 $756,000 $1,155,000
COSTS 220,000 432,000 660,000
__________ __________ __________
$165,000 $324,000 $495,000
========== ========== ==========
SHARES O/S 10,000 10,000 10,000
========== ========== ==========
PER SHARE US$ 16 32 50
========== ========== ==========
CDN$ 22 45 70
========== ========== ==========
60% 13 27 43
========== ========== ==========
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SUMMARY OF CALCULATIONS
While many juniors certainly do not trade at their reserve value until they can prove it up economically, it is important to understand the potential of the Pine property as it relates to Stealth. The calculations show that with the drill identified initial geological reserve of 40 million tons, the reserve value per share is between $5 - $13 (depending upon the costs of extraction). Note: Royal Oak's mill is extracting at a cost of $189 per ounce. If Stealth can do work to increase their reserves by 100%, the value per share would be $27. And if they can triple the known proven reserves, the value per share of ore in the ground would be worth $43 per share.
We feel that Stealth has a very reasonable chance of doubling their reserves as they progress in work on the property and could potentially prove up 200% more reserves over time.
CURRENT VALUE
With the Canadian junior mining market in a freefall unseen in years it is clear that many stocks currently do not trade at values they would have traded at just 4 months ago. Stealth has the potential to trade at reasonable levels because they have a property which holds good potential and also have a good management team who is very aware of the importance of marketing and communications to increase shareholder value.
As liquidity and market awareness will be the key for junior investors and speculators over the next 6 months, we feel Stealth will offer both. We will continue to cover Stealth in the future as an excellent, low priced junior exploration stock.
Also, the company now has a full presence on the WWW at stealthmining.com. The web site is fantastic and should be a model for other juniors as it contains an abundance of information. Specifically, it includes all the information from their IPO prospectus which is dry, but important reading for any potential serious investment in the company. As well, any investors interested in the future of this company should sign up on their 'Get more Info' page as the company will be sending out all future news releases by e-mail to people who have entered their e-mail address on the website.
Insider Group
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