₪ David Pescod's Late Edition December 7, 2007
TOURNIGAN GOLD (V-TVC) $1.10 -0.02
Tournigan Gold may be a bit of a misnomer as it’s mainly a uranium stock that had planned to split itself into gold assets and uranium assets, both of which are in the main in Slovakia, a country with two oldstyle Russian reactors that provides much of the power for the country. The Russians have suggested that they may not be counted on for supplies of uranium in the future. Good place to be, don’t you think?
But the chart shows you that things have not been happy of late as uranium prices, which climbed over the last few years have had quite a correction, until recently. Tournigan Gold had previously had to drop reserves.
Analyst of Blackmont Capital writes on December 5th, “The resource audit for the Kuriskova uranium deposit, Slovakia, delineated a resource of 36mmlb U3O8 (5.1mmt @ 0.323%), a 28% decrease from the previous 50mmlb (9mmt @ 0.255%) resource. The tonnage fell 44% but was partially offset by a 26% increase in the overall grade as lower grade tonnage was excluded. The grade of the Main Zone, which would be mined first, fell 15% to 0.421%. Overall, the end result of the audit was in line with our expectations.”
At this time, his valuation and recommendation is, “The release of the audit removes a major risk which, along with recent abysmal tax loss selling, had pummeled the stock. Recently completed drilling should increase the resource further by mid-2008. We believe the value is worth the permitting risks. Maintain Speculative Buy and $5.65/share target.”
Meanwhile, here at Canaccord, uranium analyst Toni Wallis recently did a background report on Tournigan with a $4.80 target. E-mail Debbie at Debbie_lewis@canaccord.com for a copy. We owned some Tournigan at much higher prices (like many others), but instead of tax-loss selling, we’ll go to the 4-for-1 sale and pick up a few more.
LAKE SHORE GOLD (T-LSG) $1.71 -0.11
The chart of Lake Shore Gold shows that it, like many other gold stocks, have had a bump or two in the last while...despite the fact that gold has been flirting with ever new record highs and we should be having fun times, not this ugly stuff that we’ve been going through of late in the resource sector.
But Lake Shore Gold was hit with one little item that worried a few people and that was the resignation of their President and CEO, Brian Booth. That worried more than a few analysts and while many in the sector had a sell off, Lake Shore’s might have been a little worse than most. The suggestion is that Booth was an explorationist and the company needed an operational-type with production experience.
Then on December 5th, they came out with a little more drilling results on their West Timmins Thunder Creek property and 24 grams of gold over an immense seven metres is the kind of stuff that makes you pay attention.
In a research report by Raymond James, Bart Jaworski writes of the potential catalysts for the company: “Potential catalysts include: (a) further exploration results from Thunder Creek and Blakelock over the coming weeks; (b) optimization studies at Timmins West over the next 6-12 months; (c) completion of a new resource estimate at Vogel-Schumacher and a strategic study on the Bell Creek-Vogel-Schumacher complex in 2H08; (d) recommissioning of Bell Creek by late 2008; (e) completion of a Timmins West full feasibility study in early 2009; and (f) potential start-up of Bell Creek mining and potential toll milling at Bell Creek mill in early 2009.”
Needless to say, their acquisition of their Bell Creek mine is important. While Jaworski gives the company a strong buy and gave it a $2.75 target, we notice that MGI Securities increases their target from $3.00 to $3.50 and Canaccord’s Wendell Zerb, has a target of $3.40. For a copy of Wendell Zerb’s report and background look at Lake Shore Gold, e-mail Debbie at Debbie_lewis@canaccord.com.
CGX ENERGY (V-OYL.U) $3.09 +0.52
CONNACHER OIL & GAS (T-CLL) $3.39 -0.01
In markets like this, we find ourselves going from time to time to experienced folks for more than a little handholding ... and who better than Kerry Sully, the ex-boss of Ranchmen’s Resources and for the last few years (amongst other duties) has been running CGX Energy which has been one of the success stories of the past year as their chart shows. After years of waiting, they got a huge chunk of land in the disputed land between Suriname and Guyana and now Kerry tells us that they are basically working on reports they can use to show just how much potential they might have offshore Guyana, according to third hand sources. And needless to say, those reports when they come out in a few weeks to a few months, are going to be important to attract the large scale, joint venture partner they will need with the deep pockets to drill offshore Guyana and the depths we are talking about are going to be way down there.
But we are also going to Sully for some hand-holding as he was a big believer in Connacher way back at $0.50 and so far Connacher (like most stocks these days) isn’t enjoying the current market conditions. “Don’t worry” Sully tells us, “sometime in the next year, I predict we will see a double on the stock.” And he wouldn’t be surprised to see one of the bigger players that wants an entrance into the oil sands, decide that it would be better to pick up a Connacher earlier in its life cycle than waiting until they are on their 4th, 5th or whatever pad, when costs would be much higher.
Which gets us to Connacher and onto Dick Gusella. “Nice markets, hu?” Gusella comments on the markets of late and particularly since his own portfolio is most of his own cooking...large swacks of Petrolifera and Connacher might make one remember the good old days of a few months ago.
As far as updates, he suggests they are starting to circulate steam now and will be starting up one well at a time over the coming while and while they don’t know when they will commence commercial production, they will start over the coming weeks.
Many on “Bullboards” are expecting December 17th to be the big date, but he suggests it’s just plainly over the next while. While the market might not be appreciating some of the successes of Gusella in the last while, the raising of over $800 million, so the company will have all the money they need for whatever happens next, is a bit of a coup in a debt market that has been crippled by the sub-prime mess. No more dilution.
As to full production on the Great Divide, he expects it to be attained by the third quarter of this coming year and the 10,000 barrel a day number he suggests isn’t written in stone as it could always potentially be better than that and also sooner than the third quarter.
Currently, they are hoping to start work on their next Pod—the Algar, sometime in the June to July time frame and they are currently pre-ordering equipment and facilities, hoping that that date becomes real. They have returned the sublimentary request from the EUB just recently and hope that all permits are in hands shortly for a June/July start of construction.
As for Petrolifera which just scored an enormous well in Argentina (too bad the Argentinians changed their rules just like Alberta did) but Gusella points to two wells in Columbia that will be drilled close to mid-year in the Sierra Nevada area, close to where Pacific Stratus has come up with some huge successes and he mentions the targets are big ... in the neighborhood of 1/2 TCF to 2 TCF. It’s always amazing to talk to Dick Gusella, who has been through so much in the oil and gas game. While the last month or so has not been a lot of joy for anyone, he seems already ready for the next test.
To receive the Late Edition and be on our daily circulation simply e-mail Debbie at Debbie_lewis@canaccord.com and give your address, phone number and e-mail and we’ll have you on the list tonight. |
