₪ David Pescod's Late Edition November 27, 2006
AURELIAN RESOURCES (V-ARU) $33.55 -3.50
Suddenly it could become a little more interesting to be a
shareholder of say, Aurelian Resources, Corriente Resources
(CTQ), IAMGOLD (IMG), Coastport Capital (CPP), Dynasty
Metals (DMM), Goldmarca (GML) or any one of several other
companies due to the surprise election results this weekend
out of Ecuador.
Billionaire banana grower and serial entrepreneur Alvaro
Noboa who was expected to win, didn’t based on exit poles
and lost to economist Rafael Correa, the American-educated
politician whose ideology is way left of left. He has, in the
past, advocated walking away from the countries debt as well
as world bank obligations and Correa is also a fellow traveler
of neighborhood blowhard, Hugo Chavez of Venezuela.
What happens next could be significant to the country of
13 million people that has half its population in poverty and
successful developments of mining operations you would
think could help alleviate some of that poverty, but things
don’t always go the way they should.
Aurelian Resources is probably the discovery of the year, the
decade and possibly the generation and they are one of several
large projects along with Corriente that makes one wonder
what happens next and that yes, things can be delayed or
ruined by politics.
CORRIDOR RESOURCES (T-CDH) $7.05 +0.11
It’s one of our nominees for “The Big Play of the Day” and
Corridor on Thursday, November 23rd announced spudding
of the McCully F-58. The well will test the known Hiram Brook
zone, but will also go deeper and finally test the Dawson Settlement
zone for the first time. Corridor already has close to 1
Trillion cubic feet of gas in the Hiram Brook and the deep formation
is four times the size...but is it gas charged? That is
the big question.
The interesting thing about the chart to the right is that
while most natural gas companies have been clobbered over
the past year with the plummeting of natural gas prices, Corridor
with its success at McCully, has tripled.
Cash flow is expected with the completion of their pipeline
to the Maritimes & Northeast line in February, which should
make more believers of the play when that cash flow commences,
as this is a story that is not widely followed. Not yet
anyway.
Who believes that there is actually gas in New Brunswick?
That is the question of the day. With an expected 75 days to
drill and test this new and very important well, one should be
looking for interesting news and developments some time in
early February.
SELKIRK METALS (V-SLK) $1.19 +0.09
ANTRIM ENERGY (T-AEN) $3.57 -0.05
Last week Selkirk Metals came out with some pretty
interesting grades on their base metal deposit in B.C. It
was 20 meters of 13% zinc/lead and is the stuff one
dreams of finding. Today, there is yet more news out on
their Ruddock Creek property and the grades are just as
tasty.
Their Ruddock Creek property in B.C. is also in a location
that’s much closer to the facilities than many of the
new exploration projects way off in the woods in Northern
B.C. “We are only roughly 20 kilometers from road,
power and all the supplies we’d need” company president
Gord Keevil tells us and he suggests there is also
lots of experienced mining types as it’s not too far from
the Kamloops area as well as other experienced mining
towns nearby.
Keevil updates us by suggesting that this is an area
that has been drilled before, back in the 1960’s and 70’s,
and thinks that new resource estimates due in the first
quarter of 2007 are going to be interesting. Right about
now, he suspects there’s about three to four million tons
of reserves and this is the kind of rock that while underground,
goes for about $300 U.S. per ton. And while
they might have 3-4 million tons now, he suggests that
they can find 10 million tons with a 10% grade—you are
talking about $3 billion worth of rock. That would attract
market attention!
As far as the good drilling results yesterday, he says
that “over time, there have been dozens of good holes
just like it” and he suggests that while drilling is finished
for the year, at least on this project, there are about another
20 holes awaiting assay.
Again to emphasize their location, he says they are
only 30 kilometers from the North Thompson Highway
and the nearby towns of Clearwater and the like. “It
would be no trouble attracting crews to make the project
go” he says as these days manpower is one of the very
tough to find ingredients to make projects go.
It’s not going to be totally quiet for the company as
they are drilling some additional projects over the next
while, but obviously for this main project, the next big
number will be new reserve numbers in the first quarter
of next year. They hope to be gearing up for the first underground
development sometime next year which would
be a dramatic step forward and as one looks at the chart
of zinc prices these days, you are looking at numbers
that could make dreams come true.
With Australian production expected to wane over
the coming years, just maybe one could expect high
zinc prices for some time.
We ask Keevil the question we always do... “Gord,
if you could only buy one stock other than your own,
or a stock that you wouldn’t have any conflict of interest
with, what would it be? And understanding fully
that you are under pressure here to come up with a
double!
The experienced and well-connected mining man,
for heaven sakes comes up with an oil and gas
stock...Antrim Energy. He suggests that they should be
drilling their next high profile North Sea project some
time around the second quarter of next year. He’s
right about it being an important play should it hit...
Disclosure: Aurelian Resources and Corriente Resources & Dynasty Metals: 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.) IAMGOLD: Canaccord Capital covers this stock and has a Buy rating on it. (Buy:
The stock is expected to generate risk-adjusted returns of over 10% during the next 12 months.) Canaccord has recently participated in financings
for Aurelian Resources, Corriente Resources and Corridor Resources.
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