₪ David Pescod's Late Edition November 23, 2007
ANDINA MINERALS (V-ADM) $5.20 +0.05
Hark! What was that? Oh yes, it’s not yet illegal for junior mining stocks to go up, although over the last few weeks one must think there’s been some big changes out there, but Andina Minerals, led by Carl Hansen and his crew which came up with some big increases in reserve numbers just a few weeks ago, yesterday, adds some positive metallurgical numbers as well.
Canaccord’s Steve Butler has upped his target to $9.00 which is on the high side of the analysts following it, but he writes, “Andina released positive metallurgical results for the Volcan project exceeding our expectations (average column recovery of 67% versus our assumption of 65%). The confirmation of economic heap metallurgical recoveries is a major catalyst for re-rating Andina’s valuation to a much higher level and accelerates our view of the company as a very attractive M&A target.”
Flirting with 5 million ounces of gold and showing that the metallurgical does work has been a big step forward and of course now that the expectation for many of us is that Hansen’s next step is to sell the company. The only question is, to who, at what price and how soon?
When we caught up the Carl Hansen yesterday, he was finally out of hospital and coping with having a broken leg. That will show you! Trying to do hockey moves when everyone knows you are a figure skater!...
The pressure is probably on Hansen to now sell the company, but he tells us they currently have five rigs turning and a sixth rig on the way, meaning they expect to have lots of drilling results out by Christmas and hope to add even further to reserve numbers. (He also thinks he’s got more titanium in his leg now because of the injury than most titanium mines.) For a copy of the Andina report, e-mail Debbie at Debbie_lewis@canaccord.com.
MERRILL LYNCH (US:MER) $53.54 +1.73
The chart to the left shows you what the stock of Merrill Lynch one of the world’s biggest stockbrokers has done recently. They’ve been stuck in the middle of this sub-prime/asset-backed mess and like many brokers their stock has paid for it as they themselves are suffering for some of their own advice.
What makes one wonder though, is about how they treat some of their management team as when they make a mistake there, they aren’t just fired...they seem to be fired and then rewarded with huge settlement bonuses. How about Stan O’Neil, receiving a settlement of almost $160 million because he got the firm into such a mess. It makes no sense and of course, many investors and speculators have been shook up big time by the asset-backed mess which has affected everything from oil and gas stocks to mining stocks to you name it.
You need a little bit of humor to stomach all of this and the most humor is got by going to brasschecktv.com for one of the funniest explanations of what this mess is all about. It’s mustlistening to...it’s funny, funny, funny.
OILEXCO INC. (T-OIL) $14.90 +0.86
PETRO RUBIALES (V-PEG) $1.25 -0.02
COASTAL ENERGY (V-CEN) $3.25 +0.25
HERITAGE OIL (T-HOC) $55.45 +0.87
“You’ve got to strike while the iron is hot” Fred Kozak answers us to the question, “have you given up on the Western Canadian Basin?” We ask that when we notice all of a sudden his favorite stocks are based in places like Thailand, the North Sea and South America. With natural gas prices in the toilet, higher Alberta royalty rates and a higher Canadian dollar, obviously the Prairie’s is suddenly not the place to be.
Kozak who is used to getting his information from companies by just walking across the street, or for intensive research, meeting some oil and gas guys in a bar, all of a sudden he is on a plane...a lot. Just returning from an extended visit to South America and a conference in Miami, now he is about to get on a plane (yet again) off to London and back down to South America and Argentina in particular. (How tough could this be for a good looking single guy?)
When you are following stocks in far off places, you are spending a lot of time on airplanes, airports and the like. But he says, “that’s where the opportunities are right now.” All this is in reaction to our very simple question of “if you could only buy one stock today, what would it be?”
Of late, it has usually been something like Oilexco, but now with his international flare, he’s suggesting a basket approach because with the international exposure comes international risk.
To answer which one stock would he own (that could double), his basket currently still contains Oilexco, particularly after its recent hit because of ugly markets. BPZ Resources (US:BZP) for its plays offshore Peru and it’s varied assets in South America. And a new one on his top list is Coastal Energy. A producer within the next six months, located in the Gulf of Siam, he suggests that Coastal doesn’t have some of the problems that Oilexco and the other North Sea producers have. The Sea is relatively calm, there’s no concerns about cold or violent seas and they have two significant offshore oil fields. There are also no problems with rigs as they have a rig under a two year contract.
There is one other name that he feels has to be watched closely and that’s Heritage Oil (HOC). True to the flavor of international exposure, they are drilling wells in Uganda that up until recently, have had absolutely enormous success, but they need that to build production facilities and pipelines that are needed in the area. The next hole, he says, will be very important.
This smells like the type of story that could be another Niko if the next well is successful. Many of these stories that Fred is currently covering are new and for anyone who wants updates on Petro Rubiales, Oilexco or his latest story, Coastal Energy, just e-mail Debbie at debbie_lewis@canaccord.com.
STERLING RESOURCES (V-SLG) $2.65 +0.05
ANTRIM ENERGY (T-AEN) $4.95 +0.11
Yesterday we featured three pages of work done by Josef Schachter from Maison Placements. We loved it because it showed some of his favorite big high risk/high reward drilling plays from around the world, the companies involved, when they should spud, what chance of success he would give them and most importantly, what kind of upside the juniors might have should they hit.
It’s quite a piece of work and Schachter tells us that he hopes to have it in future monthly work and I suspect it’s a piece of work that people are going to key on down the road. For anyone following stocks such as Oilexco (OIL), Sterling Resources (SLG), International Frontier Resources (IFR), and Bow Valley (BVX) as well as one of Schachter’s own favorites—Gran Tierra (GTRE), it’s must-reading.
But any two analysts following the same story might have ideas of when realistically, drilling results would be expected, or to the size of the reward and needless to say, what the reward would be in the markets should they hit.
Today, we spend some time with Ken Croft, who does the IR work with Sterling Resources to get some updates on numbers and just when they can get rigs on certain dates and Croft himself is in an interesting position. He is a former oil and gas analyst with companies such as National Bank and in the unique position where he can do exactly what he wants. And these days, what he wants to do is spend half his time on the golf course (and we are told that his golf game needs lots of work) and half his time working still in the oil and gas patch keeping investors up to snuff on what next with Sterling.
What we found most interesting from Croft was his take on the general markets and if he had to buy one stock today other than his own, he suggests that Antrim Energy has been way oversold because of ownership of some small assets in Argentina and the change in royalties there. He notes that as they get ever closer to production in the North Sea, Antrim is a stock that he thinks should have higher prices and he gives a $7 to $9 range. In case he’s right, we buy a few! For Josef Schachter’s latest monthly, just e-mail Debbie at debbie_lewis@canaccord.com.
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