₪ David Pescod's Late Edition May 17, 2007
CRYSTALLEX INTL. (T-KRY) $4.93 +0.14
GABRIEL RESOURCES (T-GBU) $4.04 -0.13
The world currently features two massive gold deposits that have been known about for years that remain undeveloped because of political problems.
Crystallex has its Las Cristinas project in Venezuela and I guess the problem there is self evident. There are some gold bugs that think that Hugo Chavez seems to be grabbing all the assets of oil and gas companies, let alone telecoms, banks and you-name-it, is somehow going to leave the gold business alone. It could happen…
Meanwhile, Gabriel Resources is involved in another enormous project, the Rosia Montana project in Romania is also huge (both these projects have 10 million ounces of gold plus) and once again, the problem is politics.
You would think a massive project in a poor area of Romania that could provided so many jobs, would be okay, but no...there’s lots of politics involved.
In a Dundee Securities report today written by Paul Burchell (that is important reading) they look at the politics and change their market position from market neutral with a $4.80 target to currently, market under-perform/high risk and a twelve month target of $4.00.
They look at the current politics in Romania and these days in Romania, politics is very important… “The cabinet includes several new faces, including Attila Korodi as the Minister of Environment and Sustainable Development.
Korodi, a member of the UDMR, has been critical towards the development of Gabriel’s Rosia Montana project. The new Minister has reportedly stated that the Rosia Montana project is a “priority to investors, but not to Romania”.
“Romanians are next scheduled to go to the polls in 2008. However, we believe that the impeachment of the President and the growing rift between the PD and PNL parties may result in an early election call. An election in the next six months or so could lead to a delay in Gabriel’s permitting efforts as politicians focus on getting re-elected. In addition, the development of Rosia Montana could become an election issue for politicians looking to make a statement.”
OILEXCO INC. (T-OIL) $10.53 +0.26
ITHACA ENERGY (V-IAE) $2.51 +0.01
We take our hats off to Canaccord oil and gas analyst Fred Kozak who is one of the very few analysts who was brave enough way back when, to take a look at Oilexco and follow it all along its recent history.
For his diligences, he and we have been rewarded now with a three-bagger and for that, in an oil and gas market which hasn’t been necessarily rewarding over the last year, we are most grateful.
While Oilexco any hour, any day, should be starting production from its North Sea discovery, we note that in the last day or two Wellington has upped their target from $10.00 to $11.00 and Merrill Lynch has started coverage on the stock with a buy. Kozak suggests that the probable reason for the increase in the stock price is a seven-city North American public relations tour that the company has embarked on that is obviously introducing the company to new investors.
We, on the other hand, are asking ourselves “has the easy money now been made, or not?” Kozak reiterates that it is still one of his top picks and he maintains his $14.00 price target. But is there not more interesting stories out there that could possibly become doubles a little easier than Oilexco?
We are taking some initial profits on Oilexco and shifting some money back to the North Sea and hoping Warren Verbonac, the Octagon oil and gas analyst who has been quite a student of the North Sea, is right with his expectations for Ithaca Energy.
They have plans to drill four locations in the North Sea this year, two of which could be follow ups to their Athena discovery. Plans meanwhile to produce this field through the Talisman/Claymore facility, Verbonac suggests, are currently underway. Some of their exploration plays in the North Sea are the type that if they do hit, you would be greedy in your expectations… We will now start covering Ithaca closely.
Meanwhile, Kozak’s top three picks remain Oilexco, Alberta Clipper Energy (ACN) and Peerless Energy (PRY.A).
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