₪ David Pescod's Late Edition November 7, 2007
TUSK ENERGY (T-TSK) $1.44 -0.10
STEALTH VENTURES (V-SLV) $0.75 +0.01
LATIN AMERICAN MINERALS (V-LAT) $0.40 -0.01
It’s a strange part of playing the markets, but also essential to your tax planning because folks, you don’t want to give the Federal Government any more money than they deserve...and how much they deserve of course, is open to debate. But after ten and 11 months of working like a dog to try and make money in the markets—it’s tax planning time! Or better put, it’s time to take a look at your losers and decide whether you would be better off taking a tax loss now, with the opportunity of getting back in again in 30 days or longer, or simply sitting with your story.
It’s been a volatile ride over the last couple of months in the markets and particularly this summer has delivered lots of junior stories that are suddenly losers, some of them big losers.
Tusk Energy is currently one of the top three picks of Josef Schachter and a long time ago was also one of the favorites of Canaccord’s Clive Stockdale, but the chart shows you what this natural gassy stock has done over the last while ... and it hasn’t been impressive. With the Royalties and high costs in the Canadian natural gas sector, do you really want it? Or should you take your tax loss now and look at it for next winter hoping for a smaller inventory and chance for gas prices to pop.
Stealth Ventures is also a natural gassy story and it’s currently one of the top picks of Andy Gustajtis. But so what. What would possibly make it run in a market that we are currently in for natural gas?
Goldcrest Resources was also one of the top picks of Carl Hansen who runs Andina Minerals (ADM) and they continue to come up with interesting results in Burkina Faso, but so what.
Latin American Minerals was one of the top picks of Kevin MacLean who runs the Sentry Select Fund. They’ve had some ups and downs in Argentina and currently the stock is, shall we say, at the lower end of the scale.
Needless to say, all this tax loss selling has affected some of these stocks and for some, may be providing buying opportunities, but then at this time of year it may well be a time to be flexible.
Certainly all are stories of merit.
GOLDCREST RESOURCES (V-GCL) $0.365 -0.015
ANDINA MINERALS (V-ADM) $4.57 -0.12
SUNRIDGE GOLD (V-SGC) $1.85 n/c
The chart on Goldcrest Resources shows you (at least for a while) that it captured the markets attention way back in June when it first started announcing results on its Gaoua copper/gold project in Burkina Faso in West Africa. It was the start of a 30-hole drilling program that commenced in early April and President Kevin Bullock tells us today that the 12,500 metre drilling program which is a big one, is just finishing shortly.
Results way back then featured 106 metres (which is a huge intercept) of 0.66% copper and 0.49 g/t gold. In that same announcement, Bullock had suggested “this is a large system that had only received limited drilling over the past decades.”
When we caught up with him today, you can understand that he’s a little upset that the market isn’t showing its sense of appreciation for the story, but the company currently has about 33 cents a share cash in the bank so the market isn’t showing any appreciation at all for the copper/gold/porphyry project.
They are in this play with corporate biggie Freeport McMoran who has about a 51% interest and sometime early next year, will have to suggest if they staying in on the project.
A big question for those watching the mining play would be asking at a time like this is, just how big is it? Bullock says it’s easy to do a back-of-the-envelope-type situation, knowing you’ve got a 700 metre long strike length on one part of the project and 1.8 km long on the Gaoua that’s still open to the north and south and you can come up with some pretty interesting numbers. The reason he can’t guess at reserves at this point he suggests, is that you can always end up having drill into a string of pearls and just get lucky. You need more infill drilling to come up reserve numbers that would make anybody in the mining industry happy. But he does point out that some also have troubles examining the grade and wondering how excited to be? He compares it to Andina Minerals, with its large Volcan project high up in the Chilean Andes and suggests that their grade in Burkina Faso compares very favorably to what Andina has been discovering.
Also, they have come up with some new discoveries on their project such as the Mount Biri which only had three holes in it, but with holes 800 metres apart, looks like it also could have some size to it.
While drilling may stop shortly, next year they should start drilling early to help put some numbers to their reserves and it will also be interesting to see if Freeport McMoran decides to stay in the project. So far Freeport is quite happy with Kevin Bullock and his team running the project which is quite unusual and so far, they are happy just to have them pay their bills and be along for the ride.
Obviously Bullock is under pressure from shareholders to do a better telling of his story, but it is a fickle market out there these days.
Getting to our favorite questions, what other stories is he following and if he could only buy one stock today, what would it be? And of course picks for us means that he has to come up with a double or else he owes us a bottle of hooch!
First of all regarding Andina because many of the people at Goldcrest are close to Carl Hansen and his team at Andina, with Vice President Robert Whittall being on the board of Andina, Bullock suggests that he would expect a take-over on Andina sometime shortly between $6 and $7.00. They are getting close, if not at 5 million ounces of gold now for their project high in the Andes and he just feels that once you hit that magical 5 million ounces, he would be surprised not to see a take-over. If they wait he suggests, they will just continue drilling hopefully proving up more ounces and get a better price.
However, if he was only allowed to buy one stock today, he goes with Sunridge Gold for their Asmara Project in Eritrea.
Eritrea, we ask? Isn’t that the place having all those civil wars and all that? Yes, Bullock mentions, but “you can’t chose where your ore body is.” He points out that Lundin Mining (LUN) already has a 20% interest in the play and if new reserves coming out shortly is pleasantly surprising, he wouldn't be surprised to see Lundin make an offer for the company should the numbers be there. Sunridge, like many other miners is selling at a much lower price than it was a while ago.
MEDITERRANEAN RES. (V-MNR) $0.38 -0.02
“Are you looking for something cheap?” Haywood mining analyst Andrew Kaip asks us? Cheap? ... Us? .... Is the Pope Catholic? ... Of course we would love something cheap!
“Mediterranean is a company you should be looking at then” Andrew says, as the 35 cent-er is a story he finds of interest with people running the company being well thought of and the Corak property in Turkey, while still in an early stage, does have an existing resource that is approaching 3/4 of a million ounces of gold, yet currently has a market cap of a mere $25 million. “Those are pretty cheap ounces in the ground” Kaip suggests.
One of the stories that we’ve been in because of Andrew Kaip is Andina Minerals, which has had quite an interesting ride over the last while, although it has corrected like so many others in the last few days. Kaip again points out that with the increase in gold prices, that could imply a significant increase in asset value for Andina. Kaip suggests he might have to raise his target on Andina to $7.00 a share.
What’s coming soon for Andina is important to their project and that is the recovery rate. Just how much of the gold they can get out of their ore body and Kaip suggests the market would like to see something between 60% and 65% and points out that Refugio in the area, is currently recovering about 65% to 66%. That news is expected shortly and will be important.
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