₪ David Pescod's Late Edition August 17, 2007
GLOBESTAR CORP. (T-GMI) $1.88 +0.10
Yesterday with the TSX down almost 600 points was not a good time to be putting out good news as it kind of gets lost in the malaise, but Globestar certainly put out some intriguing data on an update on the Cerro de Maimon projects in the Dominican Republic.
Highlights of the technical report included: Proven and them and probable reserves have increase by 82% to 6 million tonnes ... mine life has increased to 9 years from 6.7 years, internal rate of return after tax is estimated at 58% up from 26%, and they are looking at 15 month capital payback down from 29 months.
And the metal price assumptions that the technical report was based on a rather conservative at $2.45 per pound of copper, $543 per ounce of gold and $10 per ounce of silver.
The chart shows you that Globestar has suffered as much as many other junior miners these days, although fair better than most.
Meanwhile, results on their Compie Hill Nickel Project should be out soon as well.
OILEXCO INC. (T-OIL) $11.72 +0.34
With oil down yesterday as much as $2.00 a barrel and the Toronto market in freefall, Oilexco got as low as $10.11 which is a fair drop from its previous high of $14.25 but not as bad as we’ve seen amongst some of the junior miners.
Like Globestar, they had some interesting news out as well. The company announced they executed a purchase and sale agreement with CNR, for all of CNR’s interest in the Balmoral Floating Production Vessel; and the Balmoral, Glamis and Stirling Fields which currently produce about 1,800 barrels of oil per, day net to CNR.
Oilexco also gets certain exploration acreage, all in a $50 million package funded out of Oilexco’s bank line of credit.
Fred Kozack who is following the story, suggests that the impact is positive and “puts Oilexco firmly in control of its production for Brenda/Nicol as well as the additional production acquired and other potential new area production.”
Kozack, despite the market turmoil raises his target to $21.00 and next week we will be running an interview we just did with Fred Kozack on why he is a big long term believer in Oilexco.
As far as our crystal ball goes, if anything we will need more and more of this stuff and while some commodities had a correction recently, we wouldn't be surprised to see higher numbers.
And of course oil is still yours for $70 a barrel...these are great prices for commodities. The one good thing is that when it was getting tougher to find decent stories a few months ago, all of the sudden there's some decent stories that are yours for half price.
A list of stories that are potential double is a lot longer assuming better markets and getting through the next few weeks. There's still margin calls out there, and prime mutual fund redemptions, but there is also some bargains.
It doesn’t matter how much grey hair you have or how many crashes you’ve been through, an event like this still needs hand holding...and there’s two writers we always love to hear about, one is Don Coxe out of the Basic Points. The other is Jeff Rubin, currently chief economist at Bank of Commerce, and a guy whose prone to make outrageous statements from time to time but almost always correct.
Almost two decades ago, he suggested that things were out of line with the real-estate market in Toronto and they would crash by 20%. It was outrageous and he was attacked and threatened but he was also right.
Yesterday, he was on BNN and he was asked if anything has changed, and his answer was that “the fundamentals are the same but perception has changed.”
Should a person be buying in the market, he was asked. “Yes, I believe 6 months from now you’d be glad you did.”
CROSSHAIR EXPL. (V-CXX) $1.34 +0.11
Thank you, Thank you to the federal reserve board in the US, they are lowering the discount rate, the interest rate it charges the banks earlier this morning because other wise one could only imagine what today would’ve been like in the markets. But then it’s the Americans that created this sub-prime mess and one wonders if the fed and other financial officials hadn’t been a little more diligent about that problem, the whole world wouldn’t have gone through the recent mess it has.
And while we had expected a correction all along, this is more than that...the resource world venture index is now down by 35% which is a significant “owie.”
The good news of course is its suddenly pretty easy to find some decent stories assuming commodity prices remain high and there's no sign India or China will be needing any less commodities any time soon.
Disclosure: CROSSHAIR EXPLORATIONS/GLOBESTAR MINING: Canaccord Capital covers this stock and has a Speculative Buy rating on it. (Speculative buy: Stocks bear significantly higher risk that typically cannot be valued by normal fundamental criteria. Investments in the stock may result in material loss.) OILEXCO INC: Canaccord Capital covers this stock and has a Buy rating on it. (Buy: The stock is expected to generate risk-adjusted returns of over 10% during the next 12 months.) Canaccord has recently led a financing for Oilexco Inc. GLOBESTAR MINING: Canaccord has recently participated in a financing for Globestar mining.
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