₪ David Pescod's Late Edition October 15, 2007
CANADIAN ROYALTIES (V-CZZ) $3.55 +0.19
TEMEX RESOURCES (V-TME) $0.65 +0.14
There’s nothing like the excitement of exploration and discovery of new ore zones and you certainly have that kind of excitement these days with two juniors such as Noront Resources (NOT) and VMS Ventures (VMS). Whether they ever develop into mines of course is something else and unfortunately that part of the game for investors is usually the most boring. Doing engineering, building the roads, getting the equipment in, and getting the whole mill operational creates no real excitement and usually in that time of a mine’s development, creates zero interest and not often, much capital appreciation.
And then of course, when it goes into production (if it does make the money people had anticipated) once again, you get some excitement.
Canadian Royalties is going through that point where the former Raglan project now called the Nunavik Nickel project is doing stuff like building roads, putting up ball mills (now in transit to site) and putting together the pieces that become a producing mine down the road.
Chairman Glenn Mullan and frustrated hockey player tells us that they are currently spending about $10 million on an exploration program on their several ore bodies in the Raglan area and a lot of work now is simply getting a mill up and running, hopefully targeted for production in the second quarter of 2010 to become a significant nickel producer in copper, cobalt, platinum and palladium.
It’s not far from the old Falconbridge operations and their operations were some of the most profitable nickel mines in the world.
Canadian Royalties had to do a significant financing of course to pay for some of this which saw significant additional shares floated at $2.75 in a recent financing, which is definitely a little dilutionary, but not everyone seems to mind.
Meanwhile, Norilsk Nickel, the world’s largest nickel mine has just recently concluded a financing where they will now own almost 8% of the mine and take $3.45 a share for the shares they bought. In return, they receive some of the nickel concentrates.
The $10 million they are spending on exploration this year (and they will be spending another $10 million next year trying to increase reserves, particularly at depth) have come up with some interesting results such as their new discovery at Allammaq, where they came up with 25 metres of 2% nickel and 2.2% copper plus an additional 14 metres of 2.9% nickel and 1.3% copper in a second interval.
Good numbers for sure. Mullan confirms that they are now flirting with 100 million shares outstanding, which is a fair chunk of paper, but then they are not too far away from becoming a producing mine with cash flow and the like.
He makes an interesting note of where his shareholders are—almost 10% in management and 20% with institutions in Europe, but incredibly, almost 14% of the shareholders still come from Calgary where they did their original financing way back at $0.15 a share. And he mentions that many of the original shareholders are still there. Some of them were associated with a major hockey association and yes, there is this hockey thing with Glenn Mullan, who we are told is much better skating in financial circles than on the ice.
Which gets us to Mullan picking a stock or two and in the past when we have asked him, he’s come up with very good names. Take for instance Virginia Mines. It did embarrassingly well. So what have you done for us lately Mullan?
This time when queried for a pick and it can never be his own company, he comes up with what he calls a high risk/spec play in Temex Resources which has what he thinks, is the best land surrounding the Noront discovery in the James Bay Lowlands with a sharp operator running the show and he figures some of the best targets to be drilled in the area.
Meanwhile, as far as research reports, Bart Jaworski of Raymond James has updated his take on Canadian Royalties and with an upward revision in commodity prices for nickel, copper and other base metals, he has revised his ???? text missing
REDHAWK RESOURCES (V-RDK) $0.62 +0.10
Redhawk Resources announced new 43-101 compliant mineral resource estimates for its American Eagle copper project and the numbers looks pretty tantalizing. 110 million tons at a graded point, 0.70% copper and 0.014% for molybdenum.
This all works out to about 1.5 billion pounds of copper and with copper these days at roughly about $4.00 a pound, this is a fair chunk of money. It’s also on a very interesting location as their news release today suggests.
As it’s part of a major north west belt of porphyry copper deposits or mines (Ray, Miami/Globe, Superior/Resolution, Johnson Camp) and a major east-northeast belt of porphyry deposits (San Manuel/Kalamazoo, Silver Bell, Lakeshore, Safford, Morenci). As the news release today mentions the property is within site of the former BHP San Manuel copper smelter and mine and within 30 miles of an existing operating copper smelter. And oh yes, best of all this would be in a rather politically safe area, it is after all in Arizona the USA benefiting from a weaker American Dollar and rising copper prices. More important, the report says that this deposit is open on three directions.
Of importance to the market is also some significant management changes over the last while. Bruce Briggs taken over for Christian Ross is President and several new additions to the board as well.
We buy a few.
VMS VENTURES (V-VMS) $1.20 +0.08
INVICTA OIL & GAS (V-IGG) $0.73 -0.05
It looks like Rick Mark is going to get more than his share of frequent travel points over the next little while as the CEO and Chairman of VMS Ventures expects to be at the Cambridge House Mining Conference this weekend in Toronto, followed by Doug Casey’s Show in Denver next weekend and undoubtedly, one of the high points at both shows is going be the cores from VMS’s recent drilling on their Reed Lake Project in Manitoba.
Their recent news excited a flurry of anticipation because their drilling is in mining-friendly Manitoba and Mark suggests that the “Manitoba Advantage” shouldn’t be overlooked. He points out that they are 100 metres off the road to Flin Flon and all the mining facilities there.
He also points out that part of the Manitoba Advantage is that in this northern area, “mining has a very important history and is a big economic benefit to the small towns in the area. There is great relationships between any mining companies up there and any potential new mine that could wealth to the communities in the neighborhood.”
As far as what next for VMS, he is suggesting that “their next bunch of holes, numbers 3, 4, 5 and 6, could come out any day.” They are all sitting in the lab right now and how long it will be for the labs to be finished ... “well, it should be sooner than later,” he suggests.
Meanwhile, drilling should recommence within 10 days he suggests as they are “currently reviewing three bids in for the work to continue” and needless to say, those results will be watched by many as the volume in VMS stock lately has been through the roof.
When we ask Mark for a stock pick, and we remind him that it has to be something he can’t be involved in directly, he comes up with an idea that he’s definitely not associated with…and way out of his field of his supposed expertise...oil and gas in Papau, New Guinea and this company’s stock name is Invicta Oil & Gas.
We remind him that he’s expected to come up with a stock that at least doubles...he says “you should have it on your screen.”
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