Intro
Sunridge Gold announced a blockbuster deal with global copper producer Antofagasta Minerals S.A. that IMHO can change the landscape of the mining industry in Eritrea. The strategic alliance should enable Sunridge to aggressively explore the 585 square kilometer property that obviously Antofagasta believes has enormous potential. The agreement also allows Sunridge to continue developing the 4 known deposits that they already have in Eritrea.
More importantly though, a major global mining producer entering Eritrea for the first time is a major stamp of approval on both Sunridge and the country, and should help position Eritrea as the next mining hot spot in the world.
In working towards this deal, Antofagasta conducted extensive due diligence studies. This work included an in-depth study of the technical merits and geology, and also the geopolitical situation in Eritrea. Antofagasta management visited Eritrea and met with all levels of government. Their geologists did an extensive investigation into the geology by visiting the field and reviewing all technical data available on the project. They share Sunridge’s belief that the project could potentially host several large base metal and gold deposits, perhaps even larger than Sunridge’s Emba Derho deposit.
Sunridge will now have approximately $10 million in the treasury and further commitments from Antofagasta to fund an additional $10 million over the next 5 years.
Watch for news on this in the near future.
In my discussions with Sunridge management, they tell me that a news release outlining plans to drill on the Development Areas which they retain 100% should be forthcoming. This should include plans on the Debarwa deposit, which hosts extremely high copper grades and Sunridge geos feel can greatly be expanded.
Once the final agreement with Antofagasta is signed, exploration work should focus on 2 fronts:
1 – Drilling the new high priority targets on the Exploration Areas under the agreement, and
2 – Drilling on the Development Areas owned 100% by Sunridge.
Antofagasta
Antofagasta plc is listed on the London Stock Exchange and is a constituent of the FTSE-100 index. Its Chilean mining operations, which comprise Los Pelambres, El Tesoro and Michilla, are expected to produce approximately 447,000 tonnes of copper in concentrate and cathode and 7,200 tonnes of molybdenum in concentrate in 2009. It is currently carrying out a Brownfield expansion at Los Pelambres and developing the greenfield Esperanza project in Chile, which, when operational, are expected to increase total Group copper production to nearly 700,000 tonnes per year from 2011. Antofagasta also has exploration or feasibility programs in Chile, Pakistan, Zambia and Mexico. At 30 June 2009, Antofagasta plc had net cash of US$1.8 billion and it currently has a market capitalization of US$11.3 billion.
The Agreement
By funding US$10 million of exploration work over a 5-year period, Antofagasta can earn a 60% interest in a portion of the Sunridge’s Asmama project known as the Exploration Areas. They will have a right to complete a feasibility study on any project in the exploration areas to earn another 15%. Antofagasta will also purchase common shares of Sunridge in a non-brokered private placement for proceeds of US$5 million.
Antofagasta will become Sunridge’s largest shareholder owning an approximate 18% interest in Sunridge. Sunridge will retain 100% ownership of the 4 deposits discovered to date on the property.
Exploration Area
The deal will allow Sunridge to aggressively drill the numerous high priority drill targets located on the Asmara Project. This area appears to host some of the best potential in the world for VMS gold-base metals targets.
These high priority drill targets have been identified over the past several years through geological mapping and sampling as well as various geophysical methods. The targets typically have strong gravity anomalies, strong EM anomalies, strong soil geochemical anomalies, and to top it off they have gossanous rock poking out at surface. These are the same methods used by Sunridge in the discovery of their large Emba Derho copper-zinc-gold deposit, as well as Nevsun’s Bisha Project.
The new targets of particular interest are Dario Paulus, Kodadu, Adi Rassi, Adi Musa and Adi Lamza and we can watch for these names in the upcoming months as Sunridge begins an their drill program.
Development Areas
Sunridge has had great success with its’ drill programs over the last 5 years and has already defined 4 deposits on the Asmara Project, including the large Emba Derho deposit where a recent Preliminary Economic Assessment (Scoping) Study showed it to have a NPV of over US$200 million. Sunridge will retain 100% ownership of the deposits in the Development Areas. These four deposits contain “indicated 43-101” resources totaling:
- 1.28 billion pounds. of copper,
- 2.5 billion pounds of zinc,
- 955,000 ounces of gold, and
- 31.2 million ounces of silver
The four deposits defined by Sunridge in the Development Area to date are described below:
Emba Derho
- NI 43-101 “Indicated” resource – Approx 62.5 m/tonnes containing 990 m lbs Cu, 1.9 billion lbs Zn, 580,000 ozs Au & 20.8 m/ozs Ag.
- Positive Independent Preliminary Economic Assessment (Scoping) Study completed June 4, 2009 by Wardrop Engineering Inc shows:
- Pre-tax NPV 0f US$203.9 million with 10% discount
- Base case IRR of 21.6% with 4 year payback
- Potential large open pit mine.
- Emba Derho deposit remains open to northwest, northeast, and to depth.
Debarwa
- Supergene copper zone with 1.3 m/tonnes of 5.36% copper, 1.54 g/t gold and 33.87 silver, containing 158 million pounds of copper in the Indicated category.
- Total Indicated NI43-101 resource – 4.47 million tonnes.
- The deep primary zone at Debarwa, which is open at depth, has an average grade of 2.53% copper with 3.23 % zinc in the Indicated category using a 1% copper cut-off and contains an additional 39 million pounds of copper and 49.8 million pounds of zinc.
- Open in several directions for expansion.
Adi Nefas
- High-grade VMS deposit.
- NI43-101 indicated resource of 2.7 million tones with 8.38% zinc, 2.85 g/t gold and 99.36 g/t silver, containing 504 million pounds of zinc, 250,000 ounces of gold and 9 million ounces of silver.
- Close proximity (6 km) to the large Emba Derho VMS deposit.
Gupo Gold
Drilling has outlined an inferred gold resource estimate of 1,965,000 tonnes at a grade of 2.99 grams per tonne gold totaling 189,000 ounces of gold.
Nevsun
The news of this agreement is also a tremendous boost for Nevsun Resources (Is in our model portfolio). Nevsun has been going it alone in building their Bisha Mine located in western Eritrea and the fact that a major mining company has entered the country after conducting a full due diligence give credence to what both Sunridge and Nevsun management have been saying about working in the country.
Nevsun also announced in July that they have secured the debt financing necessary to build the mine and production is expected 3rd or 4th quarter 2010. Several scenarios can be played out going forward – all good for Nevsun and Sunridge shareholders.
The Bottom Line
While both Sunridge and Nevsun have run up of late, they still appear to have lots of corporate development in front of them. In the case of Nevsun, I believe this news bolsters those of us who claim it’s a worthy takeover target. This can only help Sunridge if and when this proves correct.
Tags: Nevsun Resources
Squawk Box at 6:15 am this morning had two guests on talking about gold’s rise. Clearly the CNBC folks were trying to talk it down and the one guest whose name I forgot (possibly not worth remembering) agreed that it made no sense for gold to be rising when it is clearly a play on inflation and we are still seeing deflation. They then turned to the other guest whose first name was Subodh (worth remembering) who surprised them i think by taking the opposite view. Believed gold was worth buying and would rise given the large worldwide deficits taking place. He believed that given this scenerio, gold was a worthy diversifier.
Thanks Peter on this early morning update. Given this news are you given any consideration to raising the buy price of NSU and taking it off of HOLD in your model portfolio?
Sunridge is looking good and like you said the run is over but further development in the works. What about your other picks like KMK and NAK? I see that you bought KMK at 1.03 and it had its run up to 1.30 and NAK is pulling back. What are your comments?
US $$$ – it only gets more and more interesting. I am beginning to think that Peter has ESP. UN now calls for move away from dollar. Excerpt and link to entire article below:
In a radical report, the UN Conference on Trade and Development (UNCTAD) has said the system of currencies and capital rules which binds the world economy is not working properly, and was largely responsible for the financial and economic crises.
It added that the present system, under which the dollar acts as the world’s reserve currency , should be subject to a wholesale reconsideration.
http://www.telegraph.co.uk/finance/currency/6152204/UN-wants-new-global-currency-to-replace-dollar.html
Dear Susan
As a token of appreciation for your auction bid and your constant desire to make this blog a better place, I’m going to answer you. While I think NSU can be taken over up to twice its current price, we had enough time to accumulate it at my lower buy levels so it’s simply a good hold.
Susan, remember what I’ve said about what you can expect from most in the media and the financial service industry when it comes to gold. I’m delighted they remain bearish. It’s when they become very bullish you and I will have to start planning an exit strategy. Until then, enjoy the ride.
And don’t get all caught up on whether gold is above or below $1,000. Never have been fundamentals been more bullish longer term.
Does everyone realize exactly how precise Peter has been on so many markets? You can look back a whole year by going to his sidebar tags. Just look at gold http://grandich.agoracom.com/category/gold/
Gartman, Nadler and crew would give their left arm for a similar track record.
Peter, you’re too modest. But I know the humbling you’ve gone through and understand fully. God Bless you sir.
My read on gpr chart dead on…broke out…
Chris Who cares? You want a medal? Will you post when your trades don’t work – I doubt it. Get your own blog and have all 2 of your fans can go there.
Ed stuff it where the sun don’t shine…looser
Ed seems to me I’ve brought a bit more to this board than your constant griping…maybe you should stop the griping and add something constructive to the board for a change,
charts on gold/silver
http://www.321gold.com/editorials/vermeulen/vermeulen090809.html
Tomorrow is 09/09/09, to numerologists it signals major reversals. on 9/9/81, there was a reversal in T-bills and gold. Could this be a big reversal day for corrections or reversals , like in Uranium or other markets ?
NAK/NDM information:
See the following. My understanding limited as it is, is that Mr. Hallbauer is an insider.
Filing Date Transaction Date Insider Name Ownership Type Securities Nature of transaction # or value acquired or disposed of Unit Price
Sep 01/09 Aug 28/09 Hallbauer, Russell Edward Direct Ownership Common Shares 10 – Acquisition in the public market 2,500 $7.320
Sep 01/09 Aug 28/09 Hallbauer, Russell Edward Direct Ownership Common Shares 10 – Acquisition in the public market 2,500 $7.250
Sep 01/09 Aug 28/09 Hallbauer, Russell Edward Direct Ownership Common Shares 10 – Acquisition in the public market 2,500 $7.220
Sep 01/09 Aug 28/09 Hallbauer, Russell Edward Direct Ownership Common Shares 10 – Acquisition in the public market 7,500 $7.210
Jun 19/09 Jun 10/09 Magee, Sean Direct Ownership Common Shares 10 – Disposition in the public market -6,066 $9.410
Chris,
Couldn’t find any news on GPR other than a stock options offer to insiders. I’m already out – my highball limit order of 1.24 got filled (a very nice 100% profit, thanks for the tip). Unless they break the trade, I have to decide whether to buy back in. Just wondering if you know some reason for today’s pop. Thanks.
PS: ever notice the smaller the dog, the more it barks?
I was thinking it was mor like an old dog …run outta tricks and too slow to learn anymore.
Two things..silver up large…all silver stocks…anither one edr I bought…….also bob majority and jay taylor both ment. it lately……it was right there as I ment abit back and I entered on the first break…this was more than I expected so sold most but staying in the play….if gold tests 1030 it should pull silver up more…maybe 18 bucks….but then i may get out for a run back down….don’t think gold will go much more than maybe a break of the prev high and then retrench for a bigger run in the fall…anyhow not sure if I’m right but that’s the way i’m playing it unless something changes……I’m thinking tko[tbg] taesko might pop the 3….glad Peter ment. fco..I asked a couple times about that one… I believe it’s time is comming and only watching so far.
sorry typed that fast….should say..all silver stocks up
Klaus btw…now that flu stocks are selling off from the downgrades…I’m staying away although there has been some good trading action….looking for them to settle down and maybe re look later…I’m amazed nvax went my 8 buck target in a clean swoop. I never got it all as it caught me off guard and sold a bit too early. I did take an early position in the generic flu stock…gnbt….it looks to be under accumulation the way it;s trading…but def. a laggard and under performer in comparison. It’s a tougher call so entered only with an initial 5 k for now…the analyst target is a whopping 6 bucks on this so if the momo traders get in that would be a heck of a run….anyhow I’m looking at 1.10 initially IF it does anything.
Also with eght…. reinforcing my position on the dips….it’s been taken over a buck a couple times on volume and pulled back down. Volume always dipping to foll the masses I believe. This may…may get pulled back to .80….anyhow it breached the bottom of the triangle on the weekly chart that it broke down from on the last run….so that makes that breach high the target to overcome…then onwards to 1.30 and then 1.50……anyhow I suspect this co. could come out with some further great partnerships….so it’s one to keep an eye on…it is currently a pure play on voip.I already hold as ment.
remember what I’ve said about what you can expect from most in the media and the financial service industry when it comes to gold. I’m delighted they remain bearish
(PG)
Peter,
You’re correct once again
http://www.marketwatch.com/story/why-are-the-gold-skeptics-skeptical-2009-09-08
HI Peter, can you please comment on what is going on with both ATW and TMM–seems they are going down instead of up. I thought they were both producers and with gold breaking 1000.00 — I do not know anymore, seems I just keep picking stocks that go down instead of up. No Luck.
thank you
Insider selling is high in both ATW and TMM.
Susan, do you or ANYONE know how to get data on how many shares have sold at certain prices over a period of time, maybe a bar chart. If I remember correctly, I though I heard someone, maybe Susan, state some stats of certain stocks. Am I right to assume that this provides an indication of support levels for stocks?
jim…enter your symbol…not sure if this is what you wanted..
http://finance.yahoo.com/q/hp?s=EGHT
gold art.
http://www.marketoracle.co.uk/Article13257.html
Anna
I’m also in TMM. It seems unfathomable that this stock trades lower when gold is rising, and they’re going into production. I’m up on the stock so I’ll wait and see. Just hope I’m not the pig that gets slaughtered.
Klaus
Bailed out of HNU, and learned an expensive lesson. Hoping to recoup in CGL.UN. Any thoughts???
“Run on the bank of the gold cartel” The following is an excerpt from this interesting article that states the author’s belief that there are issues involving the physical delivery of gold that will drive the price up. Excerpt below with link to entire article to follow….very interesting times.
“The answer is simple. The gold supply has been artificially inflated at a rate similar to that of fiat money by supplementing mine supply and central bank dishoarding with a blizzard of paper IOU gold. In this way the gold price is suppressed. The Gold Cartel hasn’t cared about the damage inflicted on the mining industry, because why bother to mine gold when you can create paper substitutes?
But every time in history when this has been done there eventually has been a “bank run” when it was revealed that the gold in the vaults had been encumbered or sold many times over.
This is what is beginning to happen right now. The market is entering a very different phase. As the run on the Bank of the Gold Cartel gathers pace, the price moves are going to shock even the most bullish. The usual shenanigans of the cartel to turn the market down by selling a blizzard of paper future gold promises will be impotent against a marauding crowd of investors hungry for real gold.”
http://news.goldseek.com/GATA/1252392300.php
Jim, unfortunately I don’t – insider transactions are harder for me to find with the Canadian stocks
poss. igniter on gnbt…presenting at rodman and renfrew thurs….could get an upgrade…who knows
Susan et all[ except eddy]
Canadian insider site…enter symbol right top
http://www.canadianinsider.com/coReport/allTransactions.php?ticker=tko
Chris, I was aware of that link, but I guess what I am looking for is data on the intraday moves that shows how many shares being bought at each price…so, the buying of 200,000 shares at 4.00 is more meaningful than the buying of 10,000 shares at $3.95.
For your gassie people, there was a headline on Bloomberg to the effect that Tenaris chief says power companies will switch to gas from coal. I did not, however, catch the link.
anna,
Take heart, their time will come. The Canadian dollar is currently up more than gold today, so a lot of Canadian gold stocks are flat or down. Just like Friday’s story, the US listing for NAK is outperforming the TSX listing.
TMM is still in a solid uptrend, just hasn’t broken out yet. I’m comfortable holding it right now. ATW appears to be in a basing period. In fact, just to help you out, I bought some today. OK, I really bought it because I’m buying every gold stock that hasn’t yet caught the fever. Hang in there, I think you’ll do fine.
Brent,
Join the club on HNU – these things are short-term trading instruments unless you catch a very strong trend. Regarding CGL.UN, anything gold related should do well the next few weeks, methinks. But it’s a little stretched, so don’t be surprised if we get a pullback the next few days.
Jim…the only thing I can think of is your charts….mine shows vol. for all pricing withing the chart time frame…ie 5 min chart shows vol. for the price say if it opened at 5 cents and traveled to 10 cents within that 5 min interval…but total. vol for that period and not a breakdown for every change in price within that period. 1 min is the best I get.Your interpretation may be a bit off though. One could interpret that type of buying many diff. ways….Vol. is diff. to interpret espec. if the stock is be distributed.It can get down to who bought that 200k at 4 and who bought the 10k at 3.95……other wards retail or inst. Anyhow no place that archives such vol. but if you chart….you can pull volume withing the intraday intervals. i like to watch volumes increase over the avg. daily….up and over and then dragged back down…then the stock goes to sleep and then boom another big up day…then I know somethings up……..
Klaus, an update please as to what you are buying? Who knows we may all push your purchases even higher. Thanks for sharing.
Thank you everyone, I will just keep waiting, seems that is all I can do right now. Hope there is an update from Peter on both soon.
Keeping in mind to each his own, I strongly commend Peter for his boldness to bring two names to the forefront on horrible performance regarding gold. Dennis Gartman and Jon Nadler are a gold bugs enemy. They go out of their way to be sarcastic and bearish not just on gold but to anyone who dare suggest it to be anything more than a relic.Bill Murphy and a few others have been brave like Peter to pint this out. To suggest these two have any credibility when it comes to gold would be like saying CNBC is fair and balance
I’ve been a Grandich Letter subscriber for over 20 years and I can count on one hand the times Peter singled any of his fellow newsletter writers out in a bad light. I know for him to do so it’s not only justifiable but he does so for his readers best interests -not his own
You may want to consider other types of investments Anna. No offense but you always seem lost in any of your investments and seem to have little or no juniors experience. I would also note that TMM is only a dime below its 52 week high so I don’t know how that’s hurting you
Barrack removes its gold hedges – my humble opinion but this is big and telling….they see much higher long term gold prices. See link below…..came across after the market close today.
Let’s hope gold prices take a hit so we can all buy some more for the long trip up….up and away….hopefully….well at least if Peter says so!
http://news.moneycentral.msn.com/printarticle.aspx?feed=MW&date=20090908&id=10372575
Susan,
I think being in tune with the overall market and the sector are more important than picking individual stocks. Of course, if you just have one or 2, you risk winding up with the ones that won’t play with the others.
I know this must seem insane, but I bought over 30 TSX and Venture PM stocks today. It’s just my style – shotgun. I already owned HL, NAK, SLW, XPL, VGZ, GSS, KGC, HGC, TMM, UXG, DPM, TLR, XRA, NSU, RIC, NGD, and a few others. Took some profits already on some of them. Hoping to buy back on pullbacks.
Here’s my thinking: When a sector starts a big move, it usually starts with the big/mid caps, then works its way down the food chain. Many of the big & mid caps have broken out, so if I don’t happen to own them, I place limit orders to buy at retrace points. Meantime, I accumulate low-priced microcaps. The microcaps will move last, but they could have spectacular percentage moves when they do. I just spread it out because I don’t know which ones will die.
For those concerned about TMM here is an interview by Al Kerolin with
Bruce Bragagnolo, CEO/Director of Timmins Gold Corp :
http://www.kereport.com/dailyshow/daily-sep0809-seg1.html
Robert C.
Susan, here what Jim Sinclair had to say about the Barrick removing its gold hedges
————
I stood in Barrick’s head office with the then President Oliphant and another top executive. I had gone to Barrick to make them a cash offer for Kabanga Nickel.
Oliphant asked me what I thought about their hedge program. I told him at $305 Barrick was in trouble and at $354.90 he was in trouble.
Since then Mr. Oilphant has resigned as president of Barrick.
The other executive, still with the company, knows I am telling the absolute truth. I could have saved Barrick all these billions, but that is life.
http://jsmineset.com/
Klaus, info out today from Ed Steer of Casey Reports where he appears to agree on your stance with regard to the juniors:
“As expected, precious metals shares took off right at the open… but began to fall in lock-step with gold and silver when their respective prices plummeted. Not that I’m overly suspicious or anything, but for the most part, it was the large cap shares that got it in the neck. A lot of the little juniors had huge increases yesterday… and managed to hold most of their gains.”
Chris, Ed Steer of Casey Research had the following to say this morning about Barrack:
“The big gold story came out in the early evening yesterday. It was a Reuters piece bearing the headline “Barrick to sell $3 billion in stock to buy back hedges”. So, the Darth Vader of gold companies finally hit the panic button… urged along, no doubt, by their bullion bank, JPMorgan. I can’t say enough bad things about this particular gold company. Some of the people who are [or who have been] on their board of directors would make your skin crawl. But if you, dear reader, decide to do a Google search of the history of Barrick Gold… well… it’s more than ugly. Barrick led the gold industry into the forward selling arena way back when, and cost their shareholders [and their entire industry] unknown billions… and they’re still on the hook for billions if you read the second last paragraph closely. However, not to be overlooked in all this, is the fact that Barrick is finally “getting of Dodge”… and if they’re running for exits… that should speak volumes about the future price of gold and silver. “
A little off the gold story, but another article that illustrates the direction of capital resources into China vs. US or Western Europe….
http://online.wsj.com/article/SB125241046691592179.html?mod=dist_smartbrief