₪ David Pescod's Late Edition June 29, 2007
“OUR TEN FAVORITE JUNIOR STORIES”
1a. CONNACHER OIL & GAS (T-CLL) $3.66 -0.01
1b. PETROLIFERA PETROLEUM (T-PDP) $17.04 -0.15
When Petrolifera Petroleum made its debut, it was one of the success stories of 2005/2006 as its discoveries in Argentina fast-tracked from zero production to over 10,000 barrels a day in almost no time and the stock was a ten-bagger. Since then, Petrolifera has corrected a bit as shortage of rigs created a bit of a delay in their project work, but they still hope to be at 20,000 barrels a day by year-end—which sounds aggressive. Connacher Oil & Gas owns 26% of Petrolifera.
But if you want excitement, those analysts reports that are talking about $25 and $30 for Petrolifera, just ask, what happens to the stock if they hit in Peru? Could they duplicate their success in Argentina, in Peru?
And again, ask those analysts what kind of targets they have, should Peru be successful. Again, Connacher owns 26% of Petrolifera. In the meantime, Connacher will finally have production up and going later this year on the Great Divide Project.
Meanwhile, we notice several analysts with a $6.00 target on Connacher, but we prefer Andy Gustajtis’s more aggressive take of $8.00 a year from today, but should Petrolifera hit in Peru...
2. CGX ENERGY (V-OYL.U) $1.22 +0.02
It’s been a long, long wait – seven long years in fact – since the border dispute between Suriname and Guyana erupted and we are only a few months away (well make that possibly as late as the end of August) to find out which way it goes.
Tiny CGX Energy might have as many as 11 significant targets of 100 million barrels plus - some of which could be mega targets approaching the billion barrel zone offshore Guyana to explore, once this border dispute is decided. One has to admit that some of their best targets are in the disputed zone, but considering what they’re finding offshore Venezuela (so close by) and what they’re finding offshore Brazil and this summer may find offshore Suriname ... this looks like it is going to be a very exciting place to be exploring. Lots of stocks out though and not too much money in the bank and joint ventures to do…still…
3. CORRIDOR RESOURCES (T-CDH) $11.40 +0.18
Who would have believed there was natural gas in New Brunswick, but thank goodness D&D oil and gas guy Andy Gustajtis has not only got a good eye for finding some improbable stories, but is also a good salesman.
Natural gas in New Brunswick has so far been a fivebagger over the past two years, but this remains Andy Gustajtis’s number one story because of the potential for their Shale play being fraced and tested over the coming weeks and their deep, deep Dawson Settlement play which will be tested the last quarter of this year.
If these two plays work ... you ain’t seen nothing yet on the Corridor Resources story.
4. ITHACA ENERGY (V-IAE) $3.14 +0.04
For those looking for the next Oilexco (OIL) (and the Oilexco story has been awfully successful—close to a five-bagger and thank you very much Fred Kozak) one has to be looking at Ithaca Energy. It’s a rarity. So far it’s two for two in the North Sea and with two small projects coming on stream in 2008 and 2009, it gives you a base case for cash flow and valuations.
It depends on which analyst you talk to—it has an asset value of somewhere between $5.00 and $6.00, but over the next year, they will have many significant projects drilled in the North Sea and if some of them come in, you are looking at the next Oilexco.
5. PACIFIC RIM MINING (T-PMU) $1.16 +0.04
Graeme Currie has been one of the more successful stock pickers over the years and he certainly had some huge winners, such as Aurelian Resources (ARU). If he has now decided to focus now on Pacific Rim Mining, maybe we should as well.
Gold has been in the backwash the last six months, looking almost boring compared to uranium, moly and other commodities ... heck, lead has been the top performer so far this year! But I suspect gold might have its day again.
For must-reading, contact Jennifer at Jennifer_lagdamen@canaccord.com for Graeme’s report. His target is $2.25.
6. SELKIRK METALS (V-SLK) $1.07 n/c
They’ve already started drilling on their Ruddock Creek property in BC. The combination of drifting underground plus continued drilling from surface, should continue to build reserves and one should be looking forward to very interesting numbers later this summer.
In the meantime, this development isn’t that far away from the Trail smelter which needs feed. A top pick of Alfred Stewart of the super-successful Cordilleran Flow-Through Funds, who has targeted this story for $2.50 later this year and $5.00 next year.
7. ANDINA MINERALS (V-ADM) $3.06 +0.06
With gold having held in, while gold stocks have sold off, we figure that maybe gold might be the place to be. Everyone’s been chasing nickel, potash, uranium, you-name-it, and gold stocks have had quite a hit. So we are looking for bargains.
One of the co-founders of Canaccord years ago and a big player in its success was Doug Varley, a good friend of ours, and he loves Lake Shore Gold (LSG). On the other hand, there’s a whole bunch of people who love Andina Minerals. We go to Andrew Kaip, the high profile Haywood mining analyst who has written on both stocks to pick the winner. Well, if he could only buy one, which would it be? He likes them both, but if he could only buy one, it would be Andina. We own both.
For reports by Kaip on both of these stories and also Steven Butler’s report on ADM, just e-mail Jennifer at Jennifer_lagdamen@canaccord.com.
8a. MARCH RESOURCES (V-MCF) $0.61 n/c
If you liked the performance of Anglo Minerals (ALM) a pick by Scott Koyich, the super-star IR guy, you might want to know what his two favorite stories are right now. One of them is March Resources, which sometime this fall (September/October/November) will be drilling a gas play in Chile in the middle of the Atacama Desert.
Natural gas is in very short supply in certain areas of South America, particularly Chile. Dependent upon Argentina for gas, these days Argentina itself is short of gas and from time to time is cutting off supplies to Chile.
This is a huge target with a potential bale-out zone of shale and if it hits, it will probably be a very big one. Management currently enjoying huge success at STP.
8b. UCORE URANIUM (V-UCU) $1.13 +0.01
Koyich’s other pick is Ucore Uranium, which like many other uranium stocks is suffering a bit of a sell-off after a huge run earlier. Also experiencing dilution ... where there used to be only a handful of uranium stocks, now there are (by some estimates) as many as 600, most of which don’t have much to show for it.
Koyich tells us that Ucore will be shortly drilling a project in Alaska that was a former producer decades ago when people last cared about uranium and he suggests that they should be able to deliver some interesting drilling results.
9. PACIFIC ENERGY RES. (T-PFE) $2.85 -0.04
The chart shows that this story had been going nicely the last couple of months based on work starting on their offshore California operations hoping to up production significantly, plus some time in August, we will find out how their high profile/high risk/high reward gas play in Wyoming develops.
But now, all of a sudden, they are buying $400 million worth of producing assets in Alaska and the story is a little bit more confusing...but then we have Andy Gustajtis and Warren Verbonac of Orion Securities both saying this is a story you want to own...so we do.
10. TOURNIGAN GOLD (V-TVC) $3.92 -0.03
The team of Graeme Currie and Toni Wallis has had a lot of fun in the uranium sector which has had such an enormous run over the last year or so ... only to see some very significant corrections in the last few weeks. We’ve also seen the sector go from a handful of stocks to over 600, so we suspect from here on in, one is going to have to be a stock picker in the sector.
When we talked to Toni, she suggests there are three stocks a person should be watching, U308 Corp (UWE), in Guyana where Cogima did some excellent work decades ago and initial drilling results have been quite good. Forsys Metals (FSY), which after seeing highs of $10.20 is yours today for $6.71. But if she could only buy one she would probably be looking at Tournigan Gold with its assets in Slovakia and sometime early fall is going to split into two companies—one gold and one uranium.
For information on these three stories, e-mail Jennifer at Jennifer_lagdamen@canaccord.com.
While these may be our favorite plays, they all involve risk, which should go without being stated that although they may be our favorite stories, there’s always risks from falling commodity prices to country risk to market risk to youname-it. When you are playing the speculative game, for every Oilexco, there’s something that ... well, isn’t an Oilexco.
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