₪ David Pescod's Late Edition October 19, 2006
ANDINA MINERALS (V-ADM) $2.08 +0.13
BEAR CREEK MINING (V-BCM) $9.05 +0.03
AXMIN INC (V-AXM) $0.98 -0.01
Just when is this correction/crash going to end we ask mining analyst Andrew Kaip of Haywood Securities today, because frankly we’ve had it with this ugliness that’s gone on far too long!
Well, first he jokingly responds that probably Halloween would be a good day to see it end, but more realistically he suggests probably closer to Christmas when people get more in the mood and there is enough cocktail parties and other pleasant things to think about, that will get people more in the mood.
He also points out that there are a few things that might be of interest to the market in the short term, such as silver and gold sales into the traditional “Indian” wedding time of year that could make people pay attention in the gold and silver market once again.
As far as his top picks, when we ask him if he could only buy one stock what would it be ... he comes up with Andina Minerals which to him is the story of the day and we are pleased about that in some ways. Kaip tends to go to areas of the world like Turkey (Anatolia did amazingly well — provided again that you sold when you should have or used stop losses) and risky places like the Democratic Republic of Congo (Moto Gold did amazingly well, but once again you had to make sure you were not afraid to sell) and Andina is in that nice safe place called Chile.
His third pick is a stock that has done amazingly well for him and also a handful of other analysts that have followed it and that is Bear Creek Mining (BCM). It is now way past a triple since he first started talking about it, and the only question (by most people) now is just when it is bought out by Silver Wheaton (SLW) that already owns so much of its stock.
His number two pick is Axmin, which is more like one of the typical Kaip tales working in Africa. The suggestion is they are now getting close to 3 million ounces of gold in the central African Republic and it looks like they are going to be developing a project in Mali as well. So for those who aren’t afraid of investing in that area of the world ...
But his number one pick again is Andina and if he could only buy one mining stock today, this would be it. Why? “Explosive resource growth”, he suggests and points to a 40,000 meter drilling program starting shortly that will have six rigs going to work. “There is a chance” Kaip suggests that they “could be looking at 4-5 million ounces of reserves by the end of the first quarter next year”. The total shares outstanding is about 45.8 million right now and fully diluted would rise to 65 million, but would also add almost $18 million to the till. His target at this time is $3.30, but he suggests there is hope in their big drilling program that they could come up with even higher numbers and make the $3.30 target look mild. If you would like copies of the Kaip report on Andina Minerals, just email Sandra at Sandra_wicks@canaccord.com. He was persuasive
enough that we picked up a few shares.
TRUE ENERGY TRUST (T-TUI.UN) $11.64 +0.24
TUSK ENERGY (T-TSK) $3.25 -0.05
At a time when the oil and natural gas markets still look like they’re in turmoil, despite OPEC meetings and not being too far from the start of the winter-weather demand for oil products of all kinds, its still a confusing era…Who better for some hand holding than Alex Squires of Brant Securities, because with his cool-calm demeanor, whether you have seen him on ROB TV or his ever calm voice on the phone...
Squires does admit, though, that there is a lot of turmoil going on in the markets these days, but he does feel rather confident that we have seen the downside on the oil sector. “A big concern for oil” he suggests, “may happen next April when demand for products for the winter ceases and it’s the time before air conditioning needs hit in the summer-time.”
As far as gas, he admits, it is kind of puzzling to him as he notes that you hear from several sources about inventory being almost full and everyone waiting for winter to finally hit. He does point out that in many areas of Eastern Ontario it’s been cooler than normal for this time of year, which might be helpful.
It is not too much longer, though, until the magical date of “November 1st”, when winter seems to officially start-at least for gas purposes. Squires also points to the three big months for natural gas, which are November, December and January and just what the winter weather holds for the gas business, will be important.
As far as the last few weeks, he suggests, that the market has gotten really roiled and wonders how much credit you’d give to the Hedge Fund problems that occurred and also points out that because of that turmoil there was probably a couple of bargains to be had!
We had written previously that one of his favorite stories was
True Energy, the large trust with lots of drilling on its hands as well as a payout that works out to be about 15% annualized. True Energy remains his top pick (in the trust sector) and he points out that in that sell-off, which caused “white-knuckles” for so many as it got as low as $8.61, he suggests that some people got bargains at that time! “A gift in fact!!” It might consolidate a bit more, he suggests, but we won’t see anywhere near that price in the future and again it is his top pick!
As far as trying to pick some oil and gas stocks, he goes with Tusk Energy, which is one of his recent favorites-mainly for the big increases in production they should see over this winter as they go to work on their Mega and Gutah project and waits for some GPP discussions to be made by some government agencies that could help increase those production rates very significantly.
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