₪ David Pescod's Late Edition September 6, 2006
SILVER
BEAR CREEK MINING (V-BCM) $10.00 +1.00
AXMIN INC. (V-AXM) $ 1.06 +0.02
Sorry about that folks! Yesterday, we had hoped to publish our “Big Plays” issue where we try and come up with what we think are the big, high risk/high reward oil and gas plays for the next six months, but one crucial person—Clive Stockdale, wasn’t around to okay what was ready to go to press. These people with too many holidays!!
Oh well, we hope people found the Capitol Energy story interesting and we suspect that over the next year, we will know a lot more about water floods because of them.
Yesterday it was a time not for oil and gas, but for metals as gold had a great day and silver was leading the way, which gets us to this chart to the left showing silver over the last while. Many of the metals took most juniors (and for that matter some senior miners) for quite a correction back in May, but as you look at this chart on silver, all of a sudden, that’s quite a bull channel that we see setting itself up.
We go to Haywood analyst Andrew Kaip for some picks on silver and he is more than forthcoming. One stock that he’s been mentioning over and over again is Bear Creek Mining. So when we ask for his three favorite silver stocks, why should we expect anything but it to lead his list and yesterday, it had an enormous 91 cent move, up more than 10%. He figures it’s just going to keep going.
As far as other silver picks, Esperanza Silver is on his list as well and he suggests that drill results should be out on their joint venture with Silver Standard in relatively short order.
However, we get around to asking our favorite question, “Andrew, if you could only buy one mining stock today, what would it be?” He doesn’t seem to even offer some hesitation as he had big expectations for Axmin Resources and their Kofi project in Mali. Drilling results out yesterday helped move the stock almost 20% and he is expecting new resource estimates sometime around mid-October.
It’s one of his featured stocks at Haywood for this quarter and he had a $1.75 as a price target and would be disappointed, he suggests, if he doesn’t see that target relatively quickly.
Another story that Kaip has big hopes for is Aquila Resources for their base metal project near Michigan in the good ole USA.
AURELIAN RESOURCES (V-ARU) $28.50 -0.85
CORRIENTE RESOURCES (T-CTQ) $ 5.60 +0.01
After that brutal sell off we’ve had in the junior mining sector starting back in May, and it has been brutal with several juniors selling off 50% and some more so, the question is now that people are back to work and showing that they want to make an extra dollar on the market—the volumes are up significantly on the junior markets, one would be prone to ask what next? In Canaccord’s “Junior Mining Weekly” analyst Graeme Currie and Wendell Zerb make the following points: “Welcome to September” they write, “and in the past three years has marked an investment environment that has seen junior mining equities begin a steady market run-up to the end of the year. In 2003...the run-up posted an overall average 28% increase...In 2004, the run-up over the same timeframe was a 16% gain and in 2005, the increase was 15%. And for the Index... mining was the key driver”. The reasons that our two analysts suggest a potential positive next few months are:
1. Venture volume has improved from the roughly 85 to 100 million per day range through most of the summer to 125 million per day.
2. Merger and acquisition activity among the senior companies served to fuel additional interest on “who may be next”.
3. Merger and acquisition activity encompassing junior mining companies is at a pace that we cannot ever recall seeing and has also fueled speculation for the potential of additional mergers.
4. A new world-class gold discovery appears to have been made by Aurelian Resources. The rapid revaluation of this junior and the immediate positive impact it can have on companies within the same general region enhances speculative interest.
5. The junior mining sector, and for that matter, the entire mining sector remains very well funded.
So this gets us to asking Currie for his three favorite picks and of course one of them has made him look like a genius over the last while and that’s Aurelian Resources, which looks like it could be becoming one of the discoveries of the decade. As a second pick he goes with a silver play that has made Andrew Kaip look so good and that’s Bear Creek Mining.
But we must admit that Currie’s been long this stock for a time as well— through political elections that caused concerns, one or two bad reserve numbers and everything—Bear Creek just keeps going. For a third pick Currie suggests Corriente Resources for their developing project in Ecuador and also the coming spin-off of their gold properties which could make that market give it greater appreciation.
Disclosure: Bear Creek Mining, Axmin Inc., Aurelian Resources and Corriente Resources: Canaccord Capital covers these stocks and has
a Speculative Buy rating on them. (Speculative buy: Stocks bear significantly higher risk that typically cannot be valued by normal fundamental
criteria. Investments in the stock may result in material loss.) Canaccord has recently participated in a financing with Corriente Resources.
DEB’S DITTY:
Most Canadians have faith. You can tell by the way they drive.
If you would like to receive the Late Edition, just e-mail Debbie at debbie_lewis@canaccord.com |
