₪ David Pescod's Late Edition April 16, 2007
CANADIAN ROYALTIES (T-CZZ) $3.85 -0.03
VIRGINIA MINES (V-VGQ) $6.35 +0.50
NICKEL $22.92/lb -0.1361
While nickel prices have been going through the roof recently ... who would have ever thought three years ago that we would have been seeing $22.00 a pound for nickel down the road, but it’s that kind of a commodity market these days.
For those who have been following Canadian Royalties or for those who should be….there is an interesting date coming within the next 30 days, according to company Chairman Glenn Mullan. He tells us today that the bankable feasibility study should be in within that time frame.
Right now, the suggestion is that they probably have about 16 million tons of 1% nickel and they have a rough schedule worked out looking for a construction permit on their project in Raglan—way up in Northern Quebec-sometime this fall and expect construction to start in early 08 to 09 with production hopefully starting in the fourth quarter of 2009. (If they are still around!)
Based on what they’ve got or hope they’ve got, if they could see production of 20 million pounds of nickel of year for the next 10 years, that’s going to throw off some pretty nice cash flow and don’t forget they’ve got some platinum/palladium and copper credits as well.
But, Mullan and a few others that follow this story have a dream ... They have never in all their years of exploration up in the Raglan area, have drilled deep yet, and they have the hopes that their discovery might mimic that or be similar geologically to the Jinchuan project in China. That was a rather modest discovery made in China decades ago, but when they started drilling deep the size of the ore body went up by more than a factor of 10. Jinchuan has now become the world’s fourth largest nickel play.
Mullan suggests that this summer they’ll find out for sure if Raglan south trend has a chance of being like Jinchuan. They are bringing in three drills for this summer’s drilling program that are capable of deep, deep drilling and these three large rigs are expected to be working come July (it is a very short season in Northern Quebec).
Needless to say, if it can find more of the same good stuff deep or for that matter much more of the same stuff deep…..people definitely will care given today’s nickel prices!
As far as a stock pick, Mullan suggests Quebec based company Virginia Mines (which has a big move today) because of the management team as well as the huge chunk of cash in the till and the royalty they receive.
ACCRETE ENERGY (T-GZ) $5.79 -0.11
NATURAL GAS (May Contract) $7.53 -0.271
If you want “blunt”, you’ll get “blunt” from Peter Salamon, the boss at Accrete Energy and as the chart shows you, it like many other mainly gassy stocks, has had an interesting time over the last two years—running up in the times of good natural gas prices up until the winter of 06 and tailing off ever since!
“We are in the disaster business”, Salamon suggests, “in that natural gas prices benefit from stuff like Hurricanes (particularly Hurricanes in the Gulf of Mexico where the big platforms are) - we need heat in the summer (to turn on the air conditioners) and we want blizzards and extreme cold in the winter.”
All of this, of course, is good for natural gas and Salamon points out that we simply haven’t had much of that, at all, in the last year.
That could change, of course, as we go into the summer season and maybe the Hurricanes will go into the Gulf this year instead of veering off to the Atlantic like last year and the summer might be hot and next year it could be cold.
Accrete is a favorite of many analysts, including Josef Schachter, but if you’re a natural gas producer and gas prices have gone down ...you’ve suffered.
Accrete”s chart, though, like that of many other gas producers looks like it has hit a bottom…….we are still going into the spring season when demand hits a low, so for those who might think they’ve missed the bottom — there’s probably another chance coming in the next month or two.
It’s interesting though to see so many commentators expecting gas prices next winter to be lot better then the past!
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