Yet another recomendation,visit the site.happy New year!!!!Current Weekly Stock Pick:
Date Posted: 12/30/00 12:00:00 AM.0
Starfield Resources Inc. (CDNX/SRU)
SRU impressed me because of the size of its 100% owned property. It has about 29.2 million metric tons of ore identified based on its drilling operations so far. The ore includes nickel, copper, cobalt, palladium, & platinum. That's from only a portion of SRU's 32,000 hectare (79,072 acre) property in the Ferguson Lake area of the Nunavut Territory in Northern Canada.
The palladium/platinum metal content of that proven resource is about 1.15 million ounces. The metal ratio is about 10 palladium, 1 platinum. I did some calculations on my own -- the end result is very interesting. Here they are:
That ratio results in about 104,500 ounces of platinum & 1,045,000 ounces of palladium. I checked the NY spot prices (Thursday 12/28/2000 as I am writing this). At 2:29 p.m., platinum was bid at $614 per ounce, with an ask price of $624 per ounce. At 9:17 a.m., palladium was bid at $950 per ounce, with an ask price of $970 per ounce.
Using the bid prices, the overall value, before the cost of recovery, smelting, & transportation, would be $992 million of palladium & $64 million of platinum, a total of $1.05 billion. The cost of recovery, smelting, & transportation is a bit less than 60%. If we multiply the $1.05 billion by 40%, we get the net amount of value after all costs -- that comes to $420 million.
Those of you who know me well can expect my next comment -- "You know what I always say -- every $420 million helps."
Incidentally, that doesn't include the copper, nickel, & cobalt content of the ore. Now you can see why I am impressed with what SRU has here.
I interviewed president Glen Indra & was further impressed. SRU invested about $5 million in exploration so far, & is engaged in an aggressive ongoing program. Three years ago, I researched a company active in the platinum metals group, palladium in particular. I decided not to cover that situation, but learned two things about palladium: (1) The demand was greater than the supply; & (2) About 75% of the world's supply comes from Russia.
Today, demand is still greater than supply, & Russia is hinting that it will not be able to deliver as much palladium as it has in the past. That resulted in the recent rise in the price of palladium -- the last time I checked was Monday, 12/4/2000. On that day, the bid spot price of palladium rose from about $827 per troy ounce in the morning to a high of $872 in the early afternoon, closing in NY at $870. As you see from the 12/28/2000 prices, it has kept on going up.
My lectures at international investment seminars prior to about 15 years ago were usually on precious metals & their mining operations. I moved away from that field & have since been concentrating on special & emerging growth situations. One thing I learned, however: From the time a company completes its drilling program to prove sufficient value in its resource to justify mining operations, plus the construction of a mill to process the ore, takes a substantial amount of time until it is in a positive cash flow position from actual operations. That's one reason I am cautious about exploratory situations.
In this case, the following aspects overcame my usual caution:
1. The property is large -- I suspect there may be the possibility of more than 100 million tons of ore proven before exploratory drilling operations are completed.
2. I have been told that the in-ground value of the combination of the minerals assayed in the drill samples so far is about US$120 per ton of ore, & that there are good sized pockets with higher value. At a net value after recovery, smelting, & transportation of 40% of the in-ground value, that comes to $48 per ton. Even at only the present 29.2 million tons, that computes to $1,401,600,000.
3. The drill holes so far have demonstrated a 100% success rate in identifying sulphide mineralization, which relates to the presence of nickel, copper, palladium, platinum, & cobalt.
4. The government is friendly to mining exploration & operations.
5. The supply/demand equation for palladium is favorable for SRU.
6. The palladium content of the ore is high, & palladium is selling at a significantly higher price than platinum.
7. I smell world-class mining potential here.
This situation deserves your personal investigation.
To get a price on this CDNX stock, go to the company's site at www.starfieldres.com -- for prices on this or any other CDNX stock, go to www.cdnx.ca.
Call Jim Andrews @ 800-942-1533 or e-mail: jjdcommunications@home.com
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