₪ David Pescod's Late Edition July 11, 2006
BEAR CREEK MINING (V-BCM) $6.61 +0.20
AXMIN INC. (V-AXM) $0.89 +0.01
VICEROY EXPLORATION (T-VYE) $8.56 +0.06
It was a pretty happy Andrew Kaip of Haywood Securities we touched
base with yesterday and you’ll know from previous issues he just continually
mentions the name Bear Creek Mining. With the news they came
out with yesterday, and boosted the stock to near new highs, one is always
happy when the market is proving one right.
The story is far from over, but from results yesterday, he is one to
continually be optimistic about their Corani project in Peru. Kaip suggests
that they have some significant events coming shortly for Bear
Creek. The first one being the size of the resources estimate should be
available in early August and then information on the metallurgical testing,
should also be ready within the next month and that as well, will be
very important.
The scoping study which should be due in the first half of September
should wrap up a whole bunch of information for whoever might be looking
at this company and he wouldn’t be surprised to see this amount of
information put the company into play.
As far as politics, Kaip comments that “every jurisdiction seems to
have its own issues and he suggests that the recently elected president
of Peru seems to have the President of Chile as a role model and that is
good.” He figures Bear Creek remains cheap at this level and is one of
his top three picks.
Another one and one that is new to his top three is AXMIN. While
many junior miners have seen hits of 50% or even more in the last while,
he suggests AXMIN hasn’t been nailed like so many others because of a
positive pre-feasibility study that was only recently announced. He suggests
AXMIN is probably one of the best juniors currently in Africa and
suggests they probably have roughly a two million ounce resource, one
million of which could be called reserve on their project in the Central
African Republic.
He suggests that recent drilling of more than 20,000 meters should be
able to add to their resources when updates are given and he also points
out the very promising projects the company has in both Mali and Sierra
Leone. He figures they could have a very sizeable production of 200,000
ounces per year on production within two and a half years with cash
costs of probably under $100 a tonne. His target is $1.75.
A third pick and one he has stayed with through recent bumps up
and down is Viceroy Exploration and he suggests that over the next
while, they should have several different catalysts that could create interest
in the stock. He suggests it’s another story that could be put in play
over the next while. His published price is $10.25, but if companies decide
they definitely have to have the resource, that price could look
cheap.
ATNA RESOURCES (T-ATN) $1.40 -0.02
STORNOWAY DIAMOND (T-SWY) $1.20 -0.05
SHEAR MINERALS (V-SRM) $0.45 n/c
There’s a phrase being used by many of the junior mining analyst these
days and that’s “summer doldrums” and yesterday we saw some examples
of that in Technicolor.
A company like AXMIN (AXM) has more than 150 million shares outstanding
yet yesterday it could only do 12,000 shares. A company like
Bear Creek Mining (BCM) comes out with fantastic results yesterday and
yet the market responds as if nothing has happened and it ekes out a mere
30,000 shares when a year ago on this kind of news, you might have expected
a million shares. Or a company that always seems to attract attention
on any given day because of its potential—Kirkland Lake (KGI), does a
mere 10,000 shares yesterday. Is this summer doldrums or what?
Well actually, we ask Doug Hurst what next? Hurst was the former mining
analyst at Sprott Securities and McDermid St. Lawrence and is currently
running International Royalties, a venture firm that takes its capital
and invests in junior mining stocks, hoping it picks the winners and make
shareholders a big chunk of cash.
First of all, Hurst reminds us that spring/summer correction aren’t that
rare and suggests that his work over the last seven years suggests a correction
of 12% to 34% is something that you should expect. However he
does point out that this would be at the top of the correction range as
we’ve seen 35% and more lost in what was a pretty strong bull market before.
“It’s a pretty healthy correction” he suggests and “it looks like it has put
in a bottom. If this is a pattern from the past, I would expect it to continue
sideways for July and then maybe put in a little upward momentum for August
and September.”
When we ask him the crucial question, is there any stories out there you
would buy right now, you can almost picture him shrugging his shoulders.
The best he could do is a couple of stories that International Royalties are
already invested in and suggests that Atna Resources, now that they have
this joint venture with Barrick means sooner or later Pinson will be on production.
Meanwhile, this is a group of smart guys that are good at idea generation
with lots of cash to explore. We should note that they are also starting
to work shortly on three different “exploration projects” at Atna.
About the only other thing he can find of interest in these quiet times is
the diamond plays in the Eastern Arctic which are suddenly coming up with
some interesting results. He suggests it’s a hidden story that is starting to
bubble. The three stories of note he figures a person has to start watching
are Stornoway Diamond, Shear Minerals and Indicator Minerals. |
