₪ David Pescod's Late Edition February 6, 2008
GLOBESTAR MINING (T-GMI) $1.46 -0.03
HUDBAY MINERALS (T-HBM) $18.52 +0.02
It was a bit of a shock to find out that Bill Fisher, the CEO and Director of Globestar Mining has resigned his position from Globestar effective immediately to pursue other interests. He is actually quite a busy guy as he’s also Chairman of Aurelian Resources, the folks that found that huge 13 million ounce gold deposit in Ecuador. There is also another junior that he is involved with as well, so he is a busy guy.
Meanwhile, it looks like Globestar continues to develop their Cerro de Maimon mine in the Dominican Republic.
Thomas Weisel and Partners writes on Friday, February 1st, “Globestar has built a strong operating team that can continue to carry both the mine and nickel/copper exploration programs forward at its current pace. Chief Operating Officer Jean-Pierre Chauvin, a Mining Engineer, continues to lead construction of the Cerro de Maimon mine which is on track for production in mid-2008…”
“Fiscal discipline comes from Dave Massola, CFO, with a long history of mining finance with De Beers Canada Inc. and 20 years with BHP-Billiton. In the Dominican Republic, top operating and exploration teams are led by Jose Antonio Ruiz, Mine Manager with over 23 years experience including 16 years at Pueblo Viejo.” and Julio Espaillat, Exploration Manager and a highly regarded geologist with the Dominican Republic and spent 12 years with Falconbridge Dominicana (Falcondo).”
They end with the conclusion “Although we are disappointed to see Mr. Fisher go, the in-house team is more than capable of bringing the mine into production and exploration projects going at their aggressive pace. The stock continues to offer excellent value, investors exposure to a fully financed copper-gold mine, strong exploration potential and a rapidly growing nickel project. Our overweight rating and $3.00 target are unchanged.”
Meanwhile, taking over the position left by Fisher is Larry Ciccarelli, who was one of the original developers of Globestar Mining and through his participation at Carr Securities, has interests of up to 14% in the project. While chatting with him he is bemoaning more than a bit the recent market setbacks that have hit the mining industry and for down the road, he remains quite bullish.
When we ask him (considering his role as being in the securities business) what stocks he would suggest a person be looking at? He seems to like some of the one-mine mining stocks that have been so clobbered.
Names such as Sherwood Copper and Hudbay Minerals come to mind with Hudbay having so much cash on its sheets, it’s his number one pick. Capstone Mining (CS) and Roca Mines (V-ROK) are also on his list.
Meanwhile, Canaccord’s Wendell Zerb is also a big fan of Globestar Mining which should be producing mid this year and should have a very nice cash flow stream when that is accomplished and he has a $2.75 target for the story and if right, that means that is a lot of traveling left for this stock when the markets (hopefully soon) get back to normal times.
If you would like a copy of Wendell’s report, just e-mail Debbie at debbie_lewis@canaccord.com.
TRUE ENERGY TRUST (T-TUI.UN) $2.97 +0.01
TUSK ENERGY (T-TSK) $1.52 -0.03
A few days ago, the National Post on the front page of its business section asked the question, “if after two years of nothing but bad news for the natural gas industry, have we now hit the good times?”
It has been absolutely brutal as gas prices which peaked two years ago, have been steadily getting worse, the Canadian dollar has been soaring—hitting every companies bottom line, costs for everything from rigs to manpower to services have gone through the roof and land prices became exorbitant. Now all of a sudden, courtesy of Stelmach’s royalty increases, land is suddenly available for a fraction of the price. With the service industry suddenly gone quiet, suddenly you can get rigs at 30%, 40% or even 50% lower than a year ago, and more importantly, they are available when you want them Services have become more reasonable as well. The Canadian dollar for a change is going the right way (at least from their point of view) and most interestingly, at a time that American drillers are going quiet a bit, inventory levels in the U.S. are not exorbitant, courtesy of some cold snaps in Western Canada and areas of the mid-west in the U.S.
Should one get hopeful? Well, the chart of several companies show just how absolutely battered and bruised they’ve been over the last while and while some Trust companies might have their own problems, straight natural gas companies might finally be putting in a bottom. The one problem of course, is still the increased royalty rates which click in next year...unless of course there is a little more reason discovered by the Stelmach government.
Interesting to find out how very few Albertans realize that the vast bulk of royalty revenue for the Province comes from conventional natural gas and it’s in everyone's interest that that industry does well so everyone benefits.
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