₪ David Pescod's Late Edition April 7, 2006
ATNA RESOURCES (T-ATN) $1.90 -0.42
Way back when Atna Resources was in the $0.60 to $0.70
range, Graeme Currie, one of our favorite analysts and employee
here at Canaccord repeatedly said that “Atna was on
his top three list, if not his number one pick”. The chart tells
you that it’s done well. Today, Barrick lets us know that they
seem to like the project as well, which means it’s a good
news/bad news story. They like it so much they have decided
to back into the project, which means that poor little
Atna is left with a 30% interest. All of a sudden, Graeme has
to lower his target to $2.20. More importantly he updates us
all on his take of the play suggesting, “We remain very positive
about the potential for Pinson to be placed into production
in the short-term. However, with a net 30% interest,
Atna’s leverage is materially reduced and thus, we remove
the company from our Top Picks list”. Well, if it ain’t no
longer a top pick, we will be happy with our doubles and triples
and be gone…..For those who want a copy of what he
has written, e-mail Sandra at sandra_wicks@canaccord.com
for his research report.
ASCOT RESOURCES (V-AOT) $0.64 n/c
Doug Hurst used to have a pretty tough job being a
mining analyst—he did that both at Sprott Securities and
McDermid St. Lawrence. Now if anything, he even has a
tougher job in the mining sector at International Royalties.
He’s supposed to find good junior mining stories
and give them some cash in return for some royalties
down the road, if they ever discover something, it might
turn into some really nice cash flow. He had better be
selective.
As a veteran mining analyst, what does he think of
this market? Is he worried about the lofty levels without
a correction? Interesting that we bring this up on a day
like this—with gold way down, oil down and the first sign
of weakness in ages. Well, he is worried as well. The
one thing he points out is to the amount of paper being
pumped into the market. “We are currently issuing almost
a billion dollars in new paper a month and have for
the last five months”, he suggests.
You could have a point where a whole bunch of this paper
is coming back at the market at a time that you have a commodity
correction and you could have a problem, for a while.
As far as the mining sector though, he says, “it’s kind of
hard to get too worried. It takes longer than ever to get
mines built these days and there is a shortage of really good
skilled people to get the built and a shortage of ….”.
“Maybe it is different this time too and that the market
will continue to climb a wall of worry, but he says if you are
a market veteran, you currently have some concerns and
are looking at a healthy wall of worry”.
As far as market picks though, he says it’s getting
tougher to find obvious buys. Two stories of note to him
though, is some of the recent results out of Indicator Minerals
which he mentions he may have conflicts of interest on
this pick because of deals his company has with them. But
as far as something he feels more comfortable with over the
longer-term, he points to Ascot Resources. What’s that, you
ask? - a pizzazzy gold play in Peru? Or how about a copper
project in Mongolia? Not at all! How about a dull/boring
gravel play in Northern B.C. Gravel?!
He says, “Yes we are in a time where many commodities
are in a era of shortage with booming world economies and
gravel is just yet another commodity that we need and is
hard to find”. From the little work we ourselves have done
on this, we notice that there are areas, particularly in California
where there is definitely large shortages of aggregate
and the key determinate in getting the product to market
seems to be shipping.
There are some large operations already being set up to
ship gravel from other sources in British Columbia to the
California market and elsewhere and this is just so interesting,
we did an interview with John Toffan of Ascot Resources.
Toffan is the “Golden Boy” that a few decades
ago, helped in the massive discovery of Stikine/Calpine.
Since then, he seems to have the golden touch with other
endeavors as well as a large player in horse breeding!
He recently sold a half interest in a horse, he couldn’t sell
as a yearling for $4 million. He called it “Came Back” because
the three times it went to sale, no one was interested
in it and it kept coming back to him. Eventually they ran it
and the rest is history.
Should Toffan have as much luck with this project….
Today Toffan tells us that as they are firming up their projects,
one new potential client could make it a lot easier to
develop the company—they are currently waiting on decisions
from the Port of Prince Rupert that could give the
company a quicker start up than previously hoped for.
Former analyst Hurst has a hypothetical target of $1.50
for down the road.
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