Following is the Sudhir Report.
ACCUMULATE INITIAL POSITION BELOW $0.50 (LTU.v/$0.45)
Suggested Investment Time Frame: 18 months
Associated Risk Level: Medium
Maximum Mental Loss: 30% ($0.32) - 50 day average price
Return Opportunity During Time Frame: 200% ($1.50)
Symbol & Exchange: LTU on the VSE
12 Month High/Low for Common Shares: $0.69/$0.20
50 Day Average Price and Volume: $0.32/31,500
200 Day Average Price and Volume: $0.41/14,600
Issued/Outstanding Shares: 9.9 million
Warrants: 4.5 million at $0.15 till 06/2000
1.0 million at $0.25 till 09/2000
Options: 0.9 million at $0.30 to $0.32
Fully Diluted Shares: 16.3 million
Cash: $200,000 CDN
Contact: Brian Hillhouse, Investors Relations
Phone #: 1-800-668-0071
Web Site: latitudeminerals.com
E-Mail Address: mineral@mineweb.com
IN CHESS, EARLY POSITIONING IS EVERYTHING
Over the last nine months, Latitude Minerals Corp. has taken full advantage of an industry in trouble by positioning itself for a bright future. An unrecognized wealth of technical knowledge and expertise has joined the management team, bringing properties of merit to Latitude. Insider positioning and money has resulted in the option of several intermediate to advanced stage gold properties. The exploration potential of these properties is open ended. The current global resource of the Company, spread over several properties, is 2.1 million ounces of gold of which approximately 975,000 ounces are currently mineable. With approximately 60% ownership, the principals and a team of communicators, is committed to building a company on the sound foundation of assets. As a timely speculator, we have an
opportunity to profit as the story begins to mature and unfold to a wider audience.
Latitude is currently in the acquisition mode and continues to investigate additional opportunities while the market remains affordable. The ability to add new properties, and add value to existing properties, will depend on the ability of Latitude to raise additional funds. So far, the money has been raised by insiders and a
group of individuals from various brokerage houses with a series of "as needed" financings. With a base of prospective assets in place, LTU should now be able to attract a series of third party financings, each at progressively higher levels. This money can than be used to explore the full potential of each property, adding shareholder value with each success.
Over the last few months, management has shown an ability to negotiate, structure, and bring new asset based deals to the company. Management's commitment to adding value is evident with its large ownership of the stock. Latitude is able and ready to promote when the situation warrants.
SETTING THE PIECES ON THE BOARD
The current strength of Latitude lies in the intellectual capital resident in its technical team. The technical management is made up of several former senior executives of Echo Bay Mines. In 1997, Echo Bay ran into financial difficulties, resulting in the resignation of several senior executives. In the process of their resignation, the
geologists were able to take several advanced properties with them under Carden and Bernardi Inc., a Nevada Corporation. This Corporation also has access to an extensive western U.S. property database.
Until October 1997, Mr. Carden was Director of U.S. Exploration for Echo Bay Mines Ltd. and enjoyed a successful career in the mining industry for over 22 years. Dr. John Carden, Ph.D., recently joined Latitude as President and Director. He is responsible for developing existing projects as well as future acquisitions. Mr. Mitch Bernardi was the former chief geologist with Echo Bay and is now the Vice-President of Exploration for Latitude.
Over the last few months, properties controlled by Carden & Bernardi Inc., have been optioned by Latitude. This includes Kilgore, Blue Hill Creek, and Miller Mountain. Along with the properties, Mr. Donald E. Ranta, Ph.D., former Vice-President of Exploration for Echo Bay, joined the Board of Directors of Latitude. Mr. Ranta is the President and founder of Union Hill, a company established to invest in global mining opportunities and the incoming President for the Society for
Mining, Metallurgy and Exploration, the largest professional mining organization in the world. In essence, Latitude has been transformed into the equivalent of a well connected exploration arm of a major producer.
THE PAWNS THAT HELPED TO START THE PLAY
As a start, the technical team has been successful in bringing several intermediate to advanced stage properties into Latitude. Each property is summarized below. Full details can be found at Latitudes web site and in their information package. These properties are the pawns used to attract money and people to the maturing play.
KILGORE, Idaho, U.S.A.
Kilgore is an advanced stage gold deposit with previous work completed by Pegasus, Placer Dome, and Echo Bay. To date, the global gold resource outlined is 700,000 ounces, of which 417,000 ounces are mineable at a grade of .037 opt. The deposit can be mined by open pit with the ore amenable to cyanide heap leach processing.
The agreement requires Latitude to pay US$1 million and spend US$2 million on exploration (minimum US$150,000 during the first year) over a five year period to earn a 49% interest. A further 49% can be purchased for an additional US$1.4 million.
Carden and Bernardi believe that Kilgore has the potential to grow into a one to three million ounce gold deposit through the discovery of new zones. LTU conducted a 4,070 foot reverse circulation drilling programme in 1998. Of the six holes completed, three contained intercepts of anomalous gold mineralization averaging 100 m thick. This is a large, low grade project that is better handled by a joint venture partner. I do not expect much work on this property unless a joint venture partner is found or money is raised.
BLUE HILL and COLD CREEK, Idaho, U.S.A.
Blue Hill Creek has the potential to host an epithermal hot spring gold deposit. Latitude owns 100% of this project which had been previously explored by Meridian Minerals. The current resource of 170,000 ounces of gold is open at depth and in every direction laterally. LTU drilled nine holes in 1998 with some encouraging
results.
This is a low grade deposit open in all directions. The potential of the property lies in finding the higher grade feeder zones. Cold Creek and several other claims with similar geology are being acquired to develop this as district play. LTU may do further drilling in the springtime if money is available. I believe it is in the best interest
of Latitude to find a joint venture partner for this property as a district play.
MILLER MOUNTAIN, Montana, U.S.A.
Miller Mountain (100% LTU) is a large, intrusive-hosted gold system. In 1993, Pegasus estimated a partially open-ended global resource of 900,000 ounces, of which 290,000 ounces is proven. The property contains additional, undrilled, anomalies similar in geology to the main deposit.
The property holds the potential to host a low grade, multi-million ounce gold deposit. This is an attractive property that, most likely, will not be drilled over the next twelve months. State laws have created an unfavourable environment for mining companies. Mining companies have taken the matter to court and a decision in the
favour of the mining companies is expected during the year. Work commitments and payments have been postponed on this prospective property.
POWER PIECES SET TO MOVE
The above properties are prospective but do not represent any short term value to the speculator unless joint venture partners are identified. They do, however, help to provide a bottom to the stock and indicate the direction of the management. If gold moves above US$330, the value of these properties will increase instantly.
In the near term, the potential of Latitude lies in the new Nevada acquisition and potential new acquisitions in Nevada.
On February 3, 1999, LTU entered into an agreement to acquire a 100% interest in the 250,000 ounce Pan Gold Deposit within the Battle Mountain-Eureka Gold Trend. To date, 400 holes have outlined a deposit of approximately 250,000 ounces of gold. The gold mineralization is contained within two pods known as the North and South orebodies. Mineralization is open-ended along strike and at depth in both pods. Furthermore, the gap between the North and South Pan orebodies
has potential to contain a significant amount of additional mineralization.
Hole intercepts within the gap include 180' @ 0.043 opt and 175' @ 0.036 opt, with the latter bottoming in mineralization @ 0.15 opt gold. None of the holes in the gap are included in the ore reserve calculation. The Company is undertaking a scoping study that will enable management to evaluate the mineability and exploration
potential of the deposit. Furthermore, metallurgical work is planned to determine the extent of coarse gold which can be recovered by gravity separation and increase the overall recovery of the deposit.
This property has the potential to develop into a million ounce deposit through the discovery of a feeder zone at depth and the addition of ounces between the two pods. Latitude plans to carry out a drilling program upon regulatory approval.
John Carden knows this area intimately as he discovered, developed and mined the Easy Junior Mine just 10 miles away for Echo Bay. I also suspect that his knowledge of the area will result in additional advance stage property acquisitions. It is for this reason that I believe one should start their due diligence process and
take an early speculative position in LTU.
THE END IS PREDETERMINED BY THE POSITION
The company appears to have positioned itself for success. As speculators, we are interested in profits and thus have to recognize the events that will eventually provide our rewards. Opportunities for adding shareholders value are many and are summarized below.
* Latitude has transformed itself from a minority South Voisey's Bay hopeful to a junior exploration company developing several intermediate to advance stage precious metals projects in the western United States. This new strategic direction, along with a new management team, takes advantage of a depressed market and
gives LTU an opportunity to tell a new story.
* The stock has swung from the $0.30 range to the $0.60 range three times over the last twelve months. This action has most likely cleaned out any overhang caused by the Voisey's Bay rush and moved the stock to stronger hands. This action has also helped management recycle money into the company and position the important players. With the recent property deal, financing, and incentive stock options, I suspect this dilutive yo-yo action is now over; resulting in a share structure conducive to promotion and exploration.
* With a combined 70 years of experience, the technical team brings with it an intimate knowledge of available properties in the United States. I suspect the recent acquisition in Nevada is the first of a series of acquisitions in this state. Additional advance stage property deals over the next few months will help to attract a wider
audience to Latitude.
* Acquisition of new properties, alone, may not bring a higher sustainable stock price. Latitude will have to show that it can realize the value of these properties by either attracting experienced joint venture partners or adding to reserves through further exploration. The first step in this confidence building exercise begins with the attraction of new money to the company. Look for a small financing to non-insiders in the current quarter as a signal of better times, additional properties, and a higher stock price.
* As discussed above, each new property holds the potential to build upon existing reserves, find higher grade mineralized sections, and make new discoveries. The exploration potential of these properties is not yet built into the price of the stock. Expectation of success will result in a higher stock price when exploration begins.
* Latitude is acquiring properties that can be turned into small scale producers. As these properties are advanced, I believe that the LTU management has the ability to attract partners with operational experience and unused production capacity in the area. This has the ability to attract institutional money and a higher stock price.
* Currently, the price of gold is without direction. As long as the dominant economies continue to tread the fine line between inflation and deflation, commodities will remain weak. Gold is a political metal and as long as it is in the interests of the powerful to keep prices low, it will stay low. Only a combination of a strong recovery
from Asia, reduced producer hedging, and short covering can take gold higher. With LTU, we are buffered against a lower gold price with the exploration potential provided by the properties. LTU is also leveraged to the gold price with assets that will become economical at higher prices. In the near term, the performance of the stock will be dependent on management's ability to add value. Management has already shown its ability to add value.
* Currently, LTU has little institutional or analyst coverage. As the valuable intellectual capital within the technical team is recognized, LTU will receive additional analyst attention. This new demand will give us, as early speculators, opportunities to take profits as the potential is realized.
Latitude is committed to rapid growth and creating wealth by developing and maintaining a strong portfolio of high-quality, advanced-stage mineral properties in the Americas. Their strategy is sound and presents speculators with an opportunity to profit. Accumulate half of your position below $0.50 and the other half upon a
successful financing of at least $500,000 in the first quarter. This will give them enough money to continue acquisitions and begin exploration. |
