Good morning, everyone. We are taping the show at 4:00 today, so kindly submit questions by 3:00.
Thanks and have a great day.
Regards,
George
Agoracom Blog Home
Archive for the ‘A Grandich Company’ Category
Q&A For Today’s Show. Please Submit Questions By 3:00
Posted by
at 10:51 AM on Friday, November 20th, 2009
Alert
Posted by
at 8:15 PM on Thursday, November 19th, 2009
News out of Eritrea of possible UN sanctions may lead to some concerns about companies operating in the country. While this is not “new” news, it’s never-the-less can impact Nevsun Resources in our model portfolio and Sunridge Gold, a client of ours.
At this point in time it appears more of the same political risk that has been present for some time. However, some may not be able to handle the financial and mental anguish that can come from the situation becoming far worse. Therefore I’m going to suggest to those who can’t afford the situation developing into something more than a bump in the road to consider selling and moving on. Because I don’t think this is a universal move at this time, the company will remain in the model portfolio but be a hold until further notice. Please note as I type I personally would likely be a buyer if this news in current form took this stock much below $2.50.
I spoke to Sunridge Gold management this evening. It was their view that if such a resolution actually was voted on,China and or Russia would veto it.China has been active in the country. They said their operations remain normal. Here too those who wish to be safe versus sorry can move aside. We shall address this further as more information becomes available.
I’ll be monitoring this closely and will post again when needed.
New Client Alert
Posted by
at 10:20 AM on Thursday, November 19th, 2009
Many of you are aware I’m a big fan of the Hunter-Dickinson group. From my days as a portfolio and hedgefund manager to now, I’ve been very involved with many of their deals.
Today marks the birth of a new HD “child”, one of several new companies HD has in the pipeline to come public. Heatherdale Resources (HTR-TSX-V $1.01 )has a very promising project in Alaska. There’s great anticipation of significant news flows over the coming months.
Two very key notes of interest are:
- The discovery team that first led Farallon Resources from under a dollar to above $20 is at the helm at HTR.
- HD management has purchased about one-third of the recent IPO at a dollar (I also bought in).
There are 15 million free trading shares that were done at a dollar in the financing. There are about 400,000 shares free trading left over from the company that was merged into HTR. IF history is any indication, speculators who use up to $1.15 (but not over) as an entry point should get several kicks at the can for the foreseeable future.
Please be advised HTR is a client of mine.
Please note! I wouldn’t pay over $1.15 until further notice!!!!
Things
Posted by
at 9:00 AM on Thursday, November 19th, 2009
Timmins To Pour
Posted by
at 11:10 AM on Wednesday, November 18th, 2009
Client Update
Posted by
at 6:25 PM on Wednesday, November 11th, 2009
Formation’s financing news seems to have caused a knee jerk sell-off reaction, I’d guess primarily by retail investors who may not fully understand what Formation has accomplished here – much like the same reaction to Monday’s news announcing the name change and share consolidation.
A little on the consolidation announced Monday. Bottom line, it needed to be done in order for them to move forward on their mine financing. In Formation Metals’ case, a share consolidation is a positive move done to open financing doors and put the company more in line with its mid-tier base metal producer colleagues. It is more attractive to mine financiers to finance a company with 34 million shares out trading closer to $2.00, than one with 240 million shares out trading under 30 cents. I applaud their decision. Their new consolidated share price is expected to start trading on Friday morning, based on seven times the value of Thursday’s closing price. Their symbol remains the same; FCO.TSX
Now the financing news. A few major points I read into this: 1) To start, basically this is a 70:30 debt to equity financing. This is a favorable ratio in today’s market where many financiers appreciate the fact that resource stock prices are depressed and want as many shares as they can get their hands on. 2) they have structured the financing so that after two years, when they expect to be in production and generating cash flow, they can at their election, re-finance their debt under what is expected to be more favorable terms. Management was insightful on this one. The news release, however, is unclear on this point, and does not drive home this critical fact. 3) At the end of the day it looks like they will still be diluted by close to 100%, which at first glance seems excessive. However, this could generate on the order of $275 million dollars that would come with the equity issuance, depending on what the shares and warrants will be priced at, and of course, help facilitate a revenue generating mine. They are not giving them away! Considering that their current market capitalization is around $60 million, to issue 100% additional shares to generate $275 million puts things in better perspective. 4) Lastly, the equity portion of this financing will not be set until the debt portion of the financing is completed, or in other words, until they have successfully raised $115 million for the cause. I would expect that at that point their share price should reflect this accomplishment and fewer shares may need to be issued to raise the remaining $45 million, which I also note, does not have any warrants attached to it.
I wonder what would have happened if they announced instead that a major mining company was going to fund the entire project for 50% of the cobalt mine. I suspect the reaction would have been very positive. Ironically, this is also equivalent to 100% dilution, (giving up 50% of your primary asset) yet in this case you would also give up 50% of all future earnings! This is not the case here, yet the markets obviously expected something better. I’m not sure what else management could have done but they are doing exactly what they said they would do – raise the money to build their mine.
I see than Jenning’s Capital Morning comment today still has a $1.20 target price. That’s an $8.40 target post consolidation. That at least is what one mining analyst is saying. While some near term weakness pre/post consolidation is possible, I think the smart thing to do here is to look at 2010 and beyond knowing one owns the only pure cobalt mine in North America.
Grandich on BNN
Posted by
at 4:41 PM on Thursday, November 5th, 2009
Company Alert
Posted by
at 3:08 PM on Tuesday, November 3rd, 2009
In previous articles I have told you about the leverage that you will get from emerging producers. Gold hit an all time high today of $1089. Timmins Gold is so close to pouring gold you can taste it.
A story that I have written about before is Timmins Gold and its San Francisco mine in Mexico. Timmins Gold is ramping up in hopes of full production before the end of 2009. The company has begun the leach process and now has gold in the leach fluids. The next step will be to extract the gold using the gold plant on site. This is planned for the next few weeks. Next year Timmins Gold can be producing between 80,000 and 100,000 ounces of gold at a cash cost of approximately $400 per ounce. The company has been drilling around the current pit and should also have some exploration results before the end of this year.
Timmins’ expansion plan consists of expanding the current reserve and lifespan of the San Francisco Mine, advance its other exploration projects and to make strategic acquisitions all utilizing future cash flow and not by dilution. The recent deal with Sprott was a watershed event IMHO. I’m of course bias due to my working relationship but I feel with the fundamentals finally firing on all cylinders, gold’s big break-out, and the chart on TMM suggesting a close above $.88 could be a break out for the stock, most speculators need to consider the company ASAP.
Silver Quest Resources – Superb Management and Strong Projects Potential
Posted by
at 10:32 PM on Monday, November 2nd, 2009
I am pleased to have been engaged by Silver Quest Resources. Silver Quest and it’s predecessors have a long history in the mining industry as one of the first junior mining companies to list on the Venture Exchange. Silver Quest is an exploration company filling a niche in British Columbia, Yukon, and Ontario by advancing and developing silver and gold resources. I like this company for three main reasons. The company’s president, Randy Turner, is committed to the success of the company, as proven by his more than 15 years of involvement in various roles. Second and third, I like the two main assets, the Capoose –Silver Trend property and the Davidson Property, both silver and gold properties with vast upside potential located in central BC.
Great Leadership
Mr. Randy Turner, the new President and CEO of Silver Quest, is a skilled and qualified professional geologist with over thirty-eight years of mineral exploration, business and financing experience to draw from. Mr. Turner has spent the majority of his career working for Canadian mineral companies. As president of Winspear Diamonds Inc., Mr. Turner guided the company from the discovery of the Snap Lake diamond deposit in northern Canada through its sale to De Beers Mining for C$305 million.
Prior to his position at Winspear, Mr. Turner was president of Trimin Resources Ltd. where he was involved in the development and sale of the McIlvenna Bay copper/zinc deposit in Saskatchewan. Mr. Turner also spent many years working on property acquisitions and joint ventures for Esso Minerals in Canada and AGIP Mining in the US and Australia. Mr. Turner’s knowledge, contacts and experience in the exploration industry are an invaluable asset to Silver Quest, and one of the reasons, I believe, that this company is truly one to watch as they have great potential knocking at their door.
BC Properties
Silver Quest’s main area of exploration is Central British Columbia, approximately 120 kilometres southwest of Vanderhoof. The company’s three main assets, the Capoose-Silver Trend, the Davidson and the 3T’s properties are all located within this region. Although I won’t go into too much detail at this time on the 3T’s property, it is worth mentioning that the property already has NI 43-101 inferred resources of 2,356,937 ounces of silver and 148,100 ounces of gold. Management has also informed me that 3T’s should be the site of a winter drill program early in 2010 with the goal of expanding the known gold and silver resources.
BC Property location map
Capoose – Silver Trend
The Capoose-Silver Trend property is the Company’s flagship project. Silver Quest has put together a land package totalling over 14,000 ha surrounding a historical mineral resource of 32.66 million ounces of silver and 308,500 ounces of gold. To-date, 112 drill holes have defined three mineralized zones which remain open in all directions and at depth. Also of significant interest is a five kilometre long silver-gold-copper-lead-zinc soil geochemical anomaly with multiple high priority targets that are defined and drill ready, but currently untested. The five kilometre long mineralized trend encompasses the historical resource and trends in a north-easterly direction. At the south end of the Capoose-Silver Trend land holdings there are multiple mineralized showings that need to be further explored; these include the Fawn, Buck and Rut mineral occurrences.
Silver Quest’s recently completed drill program included 1,692 m spread across 13 diamond drill holes. The focus of the program was to test the extensions of the south end of zones one and two, as well as to test the area between the two zones. Silver Quest’s concept is that the current three zones are actually connected creating one large disseminated gold and silver deposit. Last year’s program included drill hole D-08-91 which successfully connected zones one and two at their north ends and yielded 240 m of 45.5 g/t silver and 0.76 g/t gold. Silver Quest has only received assay results from the first hole of this years program, D-09-100, which was drilled at the south end of zone one and appears to expand mineralization to the south. Two areas of significant mineralization were intersected in this hole; an upper zone of 16 m grading 67.9 g/t silver and 0.26 g/t gold, and a lower zone of 30 m grading 23.1 g/t silver and 1.99 g/t gold, with a 9 m higher grade zone within the interval of 61.8 g/t silver and 4.72 g/t gold. These results are extremely encouraging and I look forward to seeing further high-grade results from the remaining twelve drill holes completed this year. I also anticipate an NI 43-101 resource calculation on the Capoose-Silver Trend property by the second quarter of 2010.
Capoose-Silver Trend drill hole location map and estimated zones of mineralization
Davidson Property
Silver Quest holds 100% interest in the Davidson property, located 10 kilometres west of the Capoose-Silver Trend property. The Davidson Property has been optioned to Richfield Ventures, which included Davidson in a larger land package called the” Blackwater Project”. Richfield has completed 15 holes totalling more than 2,450 m this year. The majority of these holes have been collared on Silver Quest’s Davidson property and have confirmed and expanded historical mineralization in three mineral zones. Richfield believes the area may contain a bulk tonnage gold deposit. The best hole to date on the Davidson property was a Silver Quest hole drilled in 2005, DAV-05-02, that assayed 3.4 g/t silver and 1.43 g/t gold over 140.5 m. Richfield has recovered many intersections that have similar values of gold and silver over long intervals including BW 48 which returned 148 m of 5.0 g/t silver and 1.26 g/t gold. Richfield is lead by a group of experienced and knowledgeable individuals. The group is well financed and plans on completing the earn-in option on the Davidson property towards the middle of 2010. It is expected that Silver Quest will retain a 40% interest in this property; a significant amount for the upside potential, but a reasonable amount to be able to fund their portion of further exploration while also being able to advance their flagship project, the Capoose-Silver Trend Project. I look forward to the release of the results from the remaining four drill holes, and hope to see a resource calculation released prior to next summer.
Drill hole location map from Richfield. Davidson property is above the blue line
Additional Properties
In addition to the Company’s BC projects, Silver Quest has a package of early-stage projects located in the booming White Gold Area of the Yukon and the Thunder Bay Region of Ontario, creating an in-depth pipeline of projects for advancement. At the top of the list is the Boulevard project recently optioned from Kiska Metals and Northgate Minerals. A new gold discovery was made last year in the trenches on Boulevard. The discovery trench, TRV0801 returned 7.04 grams per tonne (g/t) gold over 6.0 metres. A second trench, TRBV0802 returned 6.43 g/t gold over 2.0 metres. The Boulevard project has been soil sampled, trenched and drilled over the past three years. Silver Quest completed an auger soil sampling program this year to better define the targets to be drill tested next season.
Bottom line
Silver Quest is a company in all the right geographical locations, building and defining resources with a pipeline of strong exploration properties to deliver upside potential. The quality of Silver Quest’s Projects, and the added value of an experienced management team and board, makes this worthy of consideration for most speculators portfolios.
