₪ David Pescod's Late Edition April 13, 2007
GEOLOGIX EXPL. (V-GIX) $2.55 +0.53
BRILLIANT MINING (V-BMC) $2.40 +0.11
CANGOLD LIMITED (V-CLD) $0.19 +0.03
It was just a few days ago that we interviewed Bruce McLeod of the “Royal McLeod” family (father Don, sister Catherine of Arequipa fame plus Bear Creek Mining, Pacific Rim Mining and others, while Bruce is on the board or running eight different junior mining companies) and he had a couple of stock picks that have already been worth listening too!
Today, Geologix (a company that he used to be on the board of) announces additional positive drilling results (low-grade — huge intersects) and the stock reacts smartly!
I guess we should pay attention to his top pick of Brilliant Mining. We contact President, Mike Sieb, and he gives the suggestion that next week could be quite interesting as they finish their drilling program of around 40 to 45 holes and there should be results coming about resource estimates.
He also confirmed that there is a big change coming in cash flow for Brilliant, because the nickel hedge comes off in July. Currently, their nickel production is hedged at a measly $5.60 a pound while nickel is currently going for $22.00. That’s $16.00 a pound more for the nickel that they produce and I suspect that is going to make a difference for the stock.
We worry of course about the froth in the market and Sieb suggests that he doesn’t expect nickel prices to weaken in the short term. He points to the problems with laterite mines around the world and suggest with the demand high and not a lot of production coming on-stream, prices could stay high for a while.
But, as far as stock prices a lot of very green projects might be getting over priced and he suggests that people should look at those companies that are gearing up production or could have growth in production instead.
When we get to the serious business of what stocks would he pick, his wild and crazy side seems to come to the fore.
What stocks does he pick? An emerging nickel you think? No, not even close! For one of his stock picks he goes with Sutcliffe Resources (V-SR) both for their gold properties and the people behind it. Needless to say, Russia is a very scary place to operate in.
His second pick is Cangold, small and cheap, that he says that you should see some interesting developments over the next while as the very successful management team of Great Panther Resources (GPR) will be getting behind it to put a few new projects in it. The price is right and just in case Sieb’s right we pick up a few. Of course, we are counting on Sieb to be correct here!
Much is being made of the point that much of the world’s oil reserves are being run by national oil and gas companies that tend to not be that efficient and more so to the point that are being pilfered by the national governments for income—in the case of Venezuela, much of that income is going to stores to subsidize food and also to maintain un realistically low oil prices at the pump.
Today The Associated Press reports, “President Hugo Chavez said Thursday that soldiers will accompany government officials when they take over oil projects in the Orinoco River basin next month.” The suggestion is that, “Chavez has decreed that Petroleos de Venezuela SA, or PDVSA, will take a minimum 60 percent stake in four heavy-oil projects in the Orinoco River region and invited the six private companies operating there to stay on as minority partners.” “The projects _ run by BP PLC, Exxon Mobil Corp., Chevron Corp., ConocoPhillips, France’s Total SA and Norway's Statoil ASA.” The article also points to, “Negotiations over the takeover have yet to yield an agreement and are expected to be difficult as the companies seek a deal that takes into account more than $17 billion in investments and loans related to the projects.”
This is probably not good for those oil and gas companies involved, but in the long run—using the suggestion that this is probably bullish for oil prices down the road, as theoretically efficient operator or at least those that have reasons to be efficient are replaced by Chavez and government companies that wouldn’t have a clue as to how to run an efficient oil operation.
If you would like to receive the Late Edition, email Debbie at debbie_lewis@canaccord.com |
