₪ David Pescod's Late Edition May 19, 2006
ATNA RESOURCES (T-ATN) $1.29 -0.01
SHERWOOD COPPER (V-SWC) $3.10 -0.10
EUROZINC MINING (T-EZM) $2.43 +0.05
Of all the commentators out there on the junior resource and mining
sector and some of the opinions we value the most, is that of the Coffin
Brothers behind the “Hard Rock Analyst”. We have been quoting them and
their letter has been suggesting consistently over the last while, to take
money off the table as some of their stock suggestions levitate. They’ve
been expecting a correction, but when it hit—wow! It hit with a vengeance!
In their issue of May 17th, they write “Did we mention air pockets?”
They also write; “Increasingly we are hearing that people who have been
around the sector for the entire cycle or longer are thinking a summer on
the beach is a good plan. Recharging is needed, and we don’t mean for cell
phones...Selectivity will be the key for the next few months.”
When we caught up with Dave Coffin yesterday, he suggested that he
doesn’t worry as much for the price of gold, although it is correcting like all
other commodities, as he feels that sooner or later, the American dollar
continues to weaken. Having said that he suggests most currencies could
continue to weaken, given global inflation numbers at least as he sees it.
As far as he’s concerned, the market just simply needs a rest, but we
note that this correction has already been incredibly painful, as some
stocks have already seen 50% haircuts. While it could take weeks more for
this correction to end and weeks more for base building to start, he suggested
that already several stocks are probably hitting levels where a person
might be considering stink-bidding or accumulation.
When we ask for his favorites, his first is Sherwood Copper and he mentions
that this had a bit of a “Yukon Chill” because of what’s happened with
Yukon Zinc and other northerly mining stories, but he points out that Sherwood
has already had two feasibilities done on it over the last decade and
while there might be some upside surprises in costs, he figures even if you
use copper at $1.50, the numbers should work out fine.
Another stock that hit new highs because of Cramer’s comments on
MSNBC (funny how he always seems to be pushing things to new highs, but
always when he says buy, not sell) and Coffin points to base metal producer
EuroZinc Mining as being one of the producers that will be seeing
more metal production down the road. The stock has already tumbled—
almost 40%.
A third pick and one that has dropped 50% is Atna Resources. The news
that Barrick was going to back in on production on their Pinson property
took a little leverage away from Atna, but Dave says that even with only 30%
interest in that play, they should receive a decent cash flow from it to attract
some attention. The excitement now goes on some of their exploration projects
and one in particular, which involves a potentially high grade epithermal
project that is at about 8500 feet in the Nevada Mountains. Snow
should be gone shortly and exploration starting and Coffin suggests that
it’s one of those projects that one could have high expectations for in an
area of the world that has been historically generous.
CONFESSIONS OF A STREET ADDICT
James Cramer is the bombastic, some say obnoxious personality
that you see on “Mad Money” on MSNBC and has
been attracting more than a little attention in Canada with his
views on Canadian stocks and his stock picks are frankly,
boring - banks and a couple of resource stocks. From some
of his comments on some individual stocks, you know that in
his pursuit of trying to know something about every stock
out there – he may suffer some in-depth knowledge on any
one.
We notice his thoughts on Connacher Oil and Gas suggesting
that just maybe he doesn’t know much about what’s going
on there. (We also note how interesting that these are
folks that now wait for Cramer to hype a stock on TV and
then short it—expecting it to settle down when he moves on
to his next hype—witness Crystallex). Having said all this, if
you are looking to read a truly interesting book on the market,
his book called “Confessions of a Street Addict” is well
worth your reading.
It’s a great look at what really happens on Wall Street and
also some of the ups and downs he’s had in his career. You
might find it interesting to see how his wife, a former securities
personnel herself, saved him in the past.
This is a book we really do recommend.
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