₪ David Pescod's Late Edition May 14, 2007
S&P/TSX GOLD INDEX:
ANDINA MINERALS (V-ADM) $3.10 -0.10
LAKE SHORE GOLD (T-LSG) $1.80 -0.10
“Plan for an extended golfing season” Haywood mining analyst Andrew Kaip tells us and the comment is made about our reference that we’ve made more than a few times regarding the traditional sell off of mining stocks come springtime.
While uranium stocks, zinc stocks, heck—even lead stocks have been soaring of recent, Kaip brings us back to reality by pointing out that the gold stocks have not had a lot of joy recently at all.
This Gold Index chart shows you that over the last five months, the gold index is down significantly, so there has been a correction in this sector. How long could it last? We ask Kaip and he suggests, “Well, play the golf and then come back sometime in July or August” is his bet as he goes out on a marketing tour for Haywood.
As far as his favorite three stories, they remain his three favorite stories, the only difference is that suddenly they are cheaper and the charts on these stocks show the correction has hit the junior guys as well.
Andina Minerals remains one of his favorite stocks (and it’s also a favorite here at Canaccord where we sport a $6.00 target) and Bear Creek Mining is another one of his favorites that is currently down significantly as well. Very shortly they should have metallurgical studies and pre-feasibility numbers released and he expects both should be positive events.
A third favorite of his, Lake Shore Gold, which was recently up to $2.50 he suggests, is now down as well, echoing what’s happened in the gold sector and he sports a $3.25 target for this.
GAMMON LAKE RES. (T-GAM) $14.75 -0.95
Ouch! After being a bit of a spectacular story, Gammon Lake Resources has been hit with some bad news and also hit with that four-letter word...sell!
The company reported Q1-07 production of 67,844 ounces of gold at a cash operating cost of US$575 per ounce gold according to Canaccord analyst Wendell Zerb. His expectations were for about 75,000 ounces of production at cash cost below 270 ounces/gold. Yes, that's a huge miss and Zerb suggests “sell” and his target is down to $14.65, which after today’s activity, isn’t far away...
OILEXCO INC. (T-OIL) $9.52 -0.33
ALBERTA CLIPPER (T-ACN) $4.10 n/c
PEERLESS ENERGY (T-PRY.A) $3.42 -0.18
“It was a great annual general meeting” analyst Fred Kozak says of Oilexco’s annual meeting last week and suggested that the top item is that production is finally just days away...if not hours. He also suggested they gave a really good round-up of the timelines of the company over the last while, including the reasons for delays. And who could blame anyone for horrendous weather featuring 40-foot waves in the North Sea plus a diver’s strike.
Fred suggests, that yes they are six months behind from the original timeline of two years ago and possibly four months behind on more recent targets, but the big event he suggests is now just a short period away.
He says that the meeting was packed—even people standing at the back. He also suggested there were also people from the “Bullboards” there. But enough about that.
Back to Fred and what his top three stories look like now—and yes, Oilexco is still at the top of his list with a $14.00 target. In the next few months, production is starting and another exploration well is to be drilled at Huntington. Also, the Ocean Guardian is expected to arrive in mid-to-late May and first drill a well on the Ptarmigan prospect and then move to the Shelley discovery for delineation.
As a number two pick, he goes with Alberta Clipper which is working around Sylvan Lake and as a number three pick, he goes with Peerless Energy, working in southeastern Saskatchewan with a five-year inventory of more than 125 drilling locations.
Of interest, we note, is that it’s right near Crescent Point and wonder if that isn’t a potentially obvious buyer of the company down the road?
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