₪ David Pescod's Late Edition June 22, 2007
SAN GOLD CORP. (V-SGR) $1.04 +0.02
LAKE SHORE GOLD (T-LSG) $1.84 +0.05
SPOT GOLD $653.60 +3.00
It was back on June 14th we did an interview with Alfred Stewart of Canaccord Capital and the guy that helped put together the ultra-successful Cordilleran flow-through Funds as to some of his stock picks. One was Selkirk Metals (SLK)—one that we like and own a lot of, but his other was San Gold Corp.
At the time, he pointed out that San Gold operates the Bissett Mine in Bissett, Manitoba—a mine with a 70 year history of production. A deep underground mine which has been operated by various parties including Harmony Gold and Rea Gold. He noted that Rae Gold went bankrupt in the mid to late 1990’s in part based on cost associated with the mine, but that’s when gold was $300 an ounce.
What we found interesting was Stewart suggesting a comparison between San Gold now and Goldcorp back in the 1990’s. Stewart said, “Back in the early 1990’s, Goldcorp was a struggling gold producer with a deep high cost mine in Red Lake, Ontario with labor problems. They mounted an underground exploration program, they discovered a new high grade zone deep within the mine and over a period of four or five years, it revolutionized Goldcorp into the lowest cost gold producer in Canada and one of the most successful gold exploration stories in recent memory.”
Which brings us back to San Gold today, the junior he is comparing it to. Today, San Gold announces some drilling results that are simply phenomenal—22 feet of 1.4 ounce gold per ton and the market did nothing. That’s probably telling you a few things about the market...First, that the market currently doesn’t care about gold stocks despite the fact that gold prices remain relatively high. And volumes are shrinking telling us that if there’s not a market correction happening, the summer doldrums are here.
As far as the comparison to Goldcorp...is this fair? Is it that hopeful? CEO Dale Ginn of San Gold tells us that after the recent financing San Gold has a lot of paper out...yes, an awful lot, with fully-diluted almost 195 million shares outstanding.
As far as Stewart’s suggestion that they may be on the Red Lake Belt trend, Ginn confirms that the mine currently has the breccia and shear veins. The shear being narrower, but higher grade. As far as resources with the new discoveries, he suggests they are still sitting at 1.6 million ounces, but that does not include any of the recent discoveries of the new high grade zone or its recent drilling successes.
Production he suggests is still 500 tons per day, but they are now turning from exploration to development work and hope to be upping production to 800 tons per day and above 50,000 ounces per year.
One of the big problems with mines these days is finding experienced miners...without them you have nothing. He suggests when they started re-opening the mine two years ago, one of the first things they did was make sure they were training locals for the skilled positions that were needed and many of them are coming from the local First Nations Group.
We suggest that San Gold should be on most people’s screens because they seem to be turning the corner and if people ever do care about gold again, this could become a very interesting story, particularly if exploration success continues.
When we ask Ginn our favorite question of all, what his number one stock pick would be (other than his own) he comes up with Lake Shore Gold. He thinks it’s a double or better as they are in the process of sinking shafts on their project in the Timmins area which he believes has 2 million ounces of resources. He’s seen it and he likes it, he says and he also suggests that he does like gold.
Interesting that Ginn would pick Lake Shore Gold as his stock pick (other than his own) because if you want a very good look at the company, one of the better reports out there is done by Andrew Kaip of Haywood Securities. Andrew is probably better known to some of our readers as the guy that a few months ago (when we were looking for wildcat exploration plays, he suggested Goldcrest Resources (GCL). Then it was $0.28. Better than a triple on their success with drilling in Burkina Faso, but he admits he is only watching Goldcrest from afar.
For a look at his report on Lake Shore Gold, which is one of his favorite stocks, just e-mail Jennifer at Jennifer_
lagdamen@canaccord.com. |
