Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Crazy Fools LightHouse -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (1175)	6/16/2006 12:06:11 AM
From: ms.smartest.person	Read Replies (1) \| Respond to of 3198

&#8362 David Pescod's Late Edition June 15, 2006 BEAR CREEK MINING (V-BCM) $5.35 +0.50 PERU COPPER (T-PCR) $5.10 +0.50 SHERWOOD COPPER (V-SWC) $2.85 +0.10 “I always wanted to live an interesting life” Catherine McLeod-Seltzer tells us, and frankly, we can’t think of anyone who could have lived a more interesting life with all that’s happened in commodity markets, resource companies, politics and potential take-overs happening to her all in a short period of time. I certainly hope she has taken a lot of notes for the book she ultimately is going to have to write. Catherine McLeod-Seltzer is the gal that together with legendary mine finder, David Lowell were responsible for the phenomenal success of Arequipa Resources and the discovery of the Pierina deposit. A stock that in virtually no time went from $0.80 to a take out at $30.00 a share by Barrick Gold. That gets ones name in the forefront and in a game where if you are lucky enough ever to be associated with a project that becomes a mine, you are considered lucky. Here she is again, associated with not one more, but potentially two more big projects. We caught up with her today as Bear Creek Mining has more drilling results out on Corani and again, it looks like more of the same. She tells us today that “this just keeps getting bigger” and they still haven’t found the source for much of the good stuff they are discovering. “We did a reserve calculation in March” she reminds us, based on drilling to that point, and had a resource of roughly 250 million ounces of silver. “Since then, there has been extensive additional drilling, much of it better than pre-March results. So when new resources are released later next month, I suspect this could look better than ever.” Meanwhile, the other company she is associated with - Peru Copper, also has significant resources—significant enough that another company, Southern Peru Copper, one of the world’s ten biggest producers of copper, has publicly announced that they are going to make an offer for the company. So far, Peru Copper officials have suggested their offer is simply “frivolous” and are a little bewildered by some of the happenings regarding this affair as she points to a confidentiality agreement Southern Peru Copper has signed and Catherine kind of scratches her head. But the big excitement in Seltzer’s life and for a lot of other mining executives this last while has been the elections in Peru. It started out good with the pro-business candidate Loudes Flores leading in the poles. But in the first three-way race, she lost. All of a sudden, you are facing a run off between Alan Garcia, who had virtually bankrupted the country while President between 1985 and 1990 and ultra-nationalist Ollanta Humala, who is a big believer in Hugo Chavez’s way of doing things, and that certainly wouldn’t be good for mining or the country. McLeod tells us that the right person won and that Garcia is probably aware of the mistakes he made before and the old ideas of the left he trumpeted then are not the same ideas he’s trumpeting now. “He realizes,” she suggests “that Peru has huge resources but needs external capital to develop them and suggests he’s simply trying to find ways to ensure that when additional mines or projects are developed that the surrounding community is able to benefit from it.” She does worry about the politics in South America though and points to nearby Bolivia. She had big concerns there as she uses an analogy between Bolivia and Zimbabwe. The African country used to be considered the “bread basket” of Africa and under very poor administration by Robert Mugabe, has imploded and five years later, is an economic disaster zone. She worries that Bolivia doesn’t have that much to work with and if the wrong policies are bought in, Bolivia could implode within six months or less. Getting to commodity prices, she suggests that the actions by some hedge funds and the likes that have participated in the run up in commodities, scared her and suggested some of the prices that copper saw over the last few months were “beyond outrageous.” (She wonders how beaten up some hedge funds might be!) She started to worry when copper was above $2.00 a pound. She still expects great copper prices though, because she points to two to three years of high copper prices but with no new production coming from anywhere of significance. She reminds us that new mines require huge capital commitments, and environmental guarantees which are simply difficult to accomplish. She points to Ivanhoe’s Oyu Tolgoi copper project in Mongolia as a good example of all the things that can go wrong where a government has changed a royalty scheme before a project has even been built. She suggests that some projects in Africa have even more risk. As to the recent crunch in commodity prices, she reckons that it’s like the crash of 1987. We saw stocks get worked out of the problems of the day as the fundamentals were too good. She suggests fundamentals for copper remain excellent. In the 1990’s, she points out, 12 mega projects were brought into production, but in the last decade or so we’ve only had a fraction of that and many of those had grades significantly less than the projects of the 1990’s. Looking forward we ask her to predict what kind of commodity prices she would expect a year down the road. She suggested anywhere between $1.65 and $2.35 for copper is simply fabulous. In many firms these days when contemplating new projects, you use a price of $0.90 a pound to justify a project getting built. Silver is important to her companies and she would be happy with $8.00 silver and she predicts $675 gold in a years time. We of course can’t let her go without making a prediction of a stock she is not associated with or directly involved with that might make a punter a little bit of dough in a market that has seen some horrendous corrections. She suggests Sherwood Copper for their Minto project in the Yukon. “A good development project and good people” she suggests. (Isn’t her brother one of them?) Disclosures: Bear Creek Mining: Canaccord Capital covers this stock and has a Speculative Buy rating on it. (Speculative buy: Stocks bear significantly higher risk that typically cannot be valued by normal fundamental criteria. Investments in the stock may result in material loss.) Peru Copper: Canaccord Capital covers this stock and has a Hold rating on it. (Hold: The stock is expected to generate risk-adjusted returns of 0-10% during the next 12 months.) If you would like to receive the Late Edition, just e-mail Debbie at debbie_lewis@canaccord.com