₪ David Pescod's Late Edition May 15, 2007
SERENGETI RESOURCES (V-SIR) $3.29 +1.08
PACIFIC RIM MINING (T-PMU) $1.03 n/c
METALLICA RESOURCES (T-MR) $5.19 -0.26
AURELIAN RESOURCES (T-ARU) $31.51 -0.75
For the last couple of months, Serengeti Resources has been one of the top picks of Canaccord mining analyst Graeme Currie and he’s been sticking with it while results just seem to be taking forever to come out.
Today their results are out and Currie is rewarded for his faith as the company reports five holes targeting around the initial discovery hole at Kwanika, Hole K-06-09.
The results show the follow-up drilling tested on 50 metres step-outs to the north, south, west and east as well as a 100-metre step-out hole to the east and showed that four of the five holes were reported as bottoming in mineralization. Hole K-07-14 had 462 metres of 0.61% copper and 0.38 g/t gold and included 41 metres that ran 0.91% copper and 0.77 g/t gold.
Currie writes in a brief report today, “Given the extended depth potential outlined by additional drilling, we believe it is appropriate to increase our tonnage benchmark to 200 million tonnes.
Assuming this tonnage target, at the copper equivalent grade of 1.04% and valuing the net attributable copper at C$2.7 cents/lb., a new target level of $122.0 million could be argued.” Based on this, he raised his target to $3.75.
When we chat with Graeme today and ask him why he had such faith in this play based on only one hole, he suggested that “ this looks like a copper porphyry and with the size of the geophysics, it looked like it could be a sizable system.”
The results today (the 460 metres) confirms a very sizable porphyry system and the grades by B.C. standards, stand up significantly.
As far as his three favorite stories these days, he actually sticks by four stories that he’s been associated with now for quite a while. Serengeti remains on the list as does Metallica Resources and you can tell by the chart, he’s done well by this story.
The two other stories we find of interest because Aurelian Resources can’t be doubted for its enormous gold assets in Ecuador and the question is, just when does the politics in Ecuador settle out and Aurelian achieve its former, much higher price and potentially being a takeover candidate. His current price target for Aurelian is $45.50.
His other play is one we find quite interesting —- Catherine McLeod-Seltzer’s Pacific Rim Mining. McLeod has had enormous successes with companies like Arequipa and Bear Creek Mining (BCM), but for some reason, Pacific Rim has been coming up with good results, but not getting market attention ... or at least not yet.
NATURAL GAS
Over the last few months, we’ve been both wondering and tantalized by the prospects for natural gas, which has been so beaten up compared to prices of over a year ago.
Now all of a sudden, those that usually seem to be ahead of the herd, are getting much more enthusiastic about natural gas.
Bobby Lamond today e-mails us, “Gas is going up due to steady US drilling, low US storage, low Canadian drilling, low Canadian storage, high oil prices, hurricanes and hot weather coming up. A perfect storm!”
Meanwhile, Andy Gustajtis is pointing to a big change in Canadian inventory where in the last year, natural gas sitting in Canada’s inventory, is almost 250 BCF less than a year ago. He suggests the Americans are assuming they will get so much Canadian production and may be disappointed down the road.
“There’s a real gas story brewing” he suggests and “nobody seems to be aware of it, or at least no one cares about it at this point.”
When we ask him for some gas stocks that he might pick up on wagering that gas could do better than expected, he suggests Bill Matheson’s Result Energy (RTE) at around $0.60, should be a good deal.
And he also still is a believer that Stealth Ventures (SLV), one of the gassy stocks (one of many, many gassy stocks that have been clobbered) over the next two years could develop into quite a natural gas story. They have both the coal bed methane story in Nova Scotia which seems to be taking forever to get results, but more significantly, their shared projects in Alberta.
LIONORE MINING (T-LIM) $26.92 +3.22
We had done an interview with Kevin MacLean, who runs the Sentry Select Precious Metals Growth Fund, which has returned 41% a year over the last three years and one of the better of the gold funds and who also runs the Precious Metals and Mines Trust Fund, which is new to the market and in six months, is up almost 41%. Huge returns!
In Vegas, he was doing presentations for many of the Canaccord brokers and he is quite bullish on gold and nickel and he was urging those who had positions in companies such as Rio Narcea (RNG) and LionOre, to hang in there as he suggested better offers were coming.
Today he’s proven right...again. We hope to be interviewing Kevin shortly (well, actually we have already interviewed him) but because he is currently marketing yet another Fund, we can’t print anything.
He is a big believer that you are going to see a lot more takeovers in the gold sector.
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