₪ David Pescod's Late Edition December 19, 2006
GOLD (February Delivery) $625.40 +7.50
ANDINA MINERALS (V-ADM) $2.70 +0.10
It’s that time of year that a person gets contemplative and
tries to figure out what for next year. We’ve had more than
our share of ups and downs in the mining sector this past
year and looking ahead, how much should one worry about
copper, with supply building and moly—does one worry that
one old mine being brought on stream could absolutely destroy
moly prices?
On the other hand, does nickel ever stop going up? And
how about uranium? Anyway, it was a good time to see Canaccord
come out today with the Junior Mining Weekly end
of the year look at the sector and here are some of their
comments: “It’s the time of year again when we pull out our
list, check it twice and try to decide if the markets into the
first quarter of 2007 are going to be naughty or nice? So
here goes…”
“Base metal prices—at or near record highs with no immediate
signs that this will change. Precious metals at near
20-year highs with no immediate signs this too will change.
Uranium at $72/lb and rising—this has certainly been the
metal of 2007. The U.S. Dollar continues to slide lower, generally
a positive for the metals. With the TSX and Dow trading
at new all-time highs, that’s usually helpful for the junior
board. And while the junior Venture Index is nowhere near
record highs, it’s closer now than it was a while ago.”
They also point to very strong volume on the junior
boards and also that capital is readily available and merger
and acquisition activity remains strong. They also point to
the one important thing about new discoveries which always
attracts people to the sector and points out the huge success
of Aurelian Resources (ARU).
As far as naughty news...First there are political concerns
which have created problems around countries such as Ecuador,
Nicaragua and Bolivia . They pointed out the shortfall
of drilling rigs and/or drillers in some regions, the fact that
assay labs are bogged down with huge backlogs. Capital
costs for projects continue to climb (and in some cases dramatically)
and that labor talent is hard to find.
One of our own thoughts looking forward as to what sector
to be looking at, it just might be precious metals. For
many people who go to mining conferences and the like, or
subscribe to many newsletters, you’ve met more than a few
newsletter writers who have prognosticated for years that
we are just on the verge of the American dollar falling out of
bed and gold flying...
Well, gold has moved over the last few years, but percentage wise, it’s barely kept up with other metals.
More and more though, the fundamentals look like we might be closer to the day that we may actually be on the
verge of the American dollar getting clobbered and gold having its day in the sun.
We wonder if this coming year, isn’t the year that gold flirts with $1000. One gold we have been mentioning is
Haywood analyst Andrew Kaip’s pick of Andina Minerals, in the middle of a major exploration program of $10 million
with experienced mining people and hoping to move an inferred 2 million ounces of gold to much higher levels.
GLOBESTAR MINING (V-GMI) $1.30 +0.05
We’ve mentioned GlobeStar Mining in a column here
from time to time mainly because more than a few mining
people have suggested it as a stock pick. Today
Wendell Zerb of Canaccord Capital, also decides it’s
time to pick it as stock pick and he calls it a “speculative
buy” with a target of $1.75.
He writes, “GlobeStar is currently in the predevelopment
stage of a 6.5-year open-pit operation at
the Cerro de Maimon project in the Dominican Republic
(DR) that could initially produce about 31 million pounds
of payable copper per year plus byproduct credits at C1
cash costs of US$0.58/lb/”. (Now that’s cheap!)
He continues, “The company also controls a significant
land position in the DR within some of the more
prospective geological environments in the country,
including the largest land position in the Falcondo
nickel belt.”
“The company is fully-funded to move the Cerra de
Maimon deposit into production. Current timeframe is
22-24 months...Drilling is ongoing on GlobeStar’s Falcondo
nickel concessions located south of Xstrata’s
Falcondo nickel smelter. Globestar controls close to 44
kilometers of the 90 kilometer belt.”
Zerb writes, “We believe Globestar has the potential
to outline in excess of 10 million tonnes of nickel saprolite
grading about 1.6% nickel (350 million pounds
nickel).
He gives it a net asset value of roughly $1.75 per
share. |
