There has also been a lot of interest in the Raglan area since Jilin Jien Nickel, a major Chinese company, bid on Canadian Royalties, one of the Raglan area players. Many feel that the bid is undervalued because the project is already permitted and is expected to produce 26 million pounds of nickel and 39 million pounds of copper. Renewed interest in the Raglan area is undoubtedly a positive thing for other nickel exploration plays in the region. Minesite.com posted an article Nov. 9^th about how Canada’s Far North opens up for more investment opportunities from the Far East.

Above all, what the Canadian Royalties deal shows the world is how valuable resources in the Raglan region can be. The junior that I use to be engaged by in the Raglan area is Knight Resources (TSXV:KNP), a company in a joint venture nickel/copper project with Anglo American, one of the largest mining companies in the world.

Knight and Anglo have exploration drilling results with high-grade nickel over width like 36.43 metres of 2.66% nickel and 1.10% copper, and 8.80 metres of 4.73% nickel and 1.16% copper. The market paid no attention to announcements of results like this in late 2008 because it was right in the middle of the world financial storm. Granted a lot was going on at that time, but these are still some excellent results and should no longer be overlooked. Anglo’s $3.5 million summer field program has further invigorated the West Raglan Project when they served up a platter with multiple new drill targets that look good, and that’s in addition to the targets from 2008. With a pipeline of drill-ready targets, the Anglo/Knight technical team is recommending a $5M drill program in 2010.

The Chinese are watching nickel and copper in Northern Québec; if Knight and Anglo are going to the West Raglan area together in 2010, we should expect more interest in this valuable region. You can read more about Knight at www.knightresources.ca.

The only two ground rules I request are:

• BNN makes available past interviews of both of us on the air and our ability to show some of them and their results.
• The moderator be either Kim Parlee or Howard Green.

I await your response.

Peter Grandich

The more I look at metal prices and Bisha, the more I love Nevsun Resources. Given what metal prices have done of late, I think $3 or under is relatively cheap for NSU shares. Great Basin Gold remains quite cheap given the big bump up in gold prices.

Friday’s employment number is almost certainly IMHO the key to what the U.S. stock market does for the balance of the year. Any real indication that unemployment is easing should give the “Don’t Worry, Be Happy” crowd the ammunition to resume it’s march towards DJIA 10,500+. On the other hand (I never like to hedge but it’s the right choice at the moment), a surprise bump up in unemployment should remove whatever hot air remains under the market and lead to a sharper decline. Friday is key!

The floor I spoke of in gold at four digits is now in. Numerous so-called experts, money managers, investors, etc., were either outright bearish, turned bearish or became weak kneed and looked for a correction when gold was around $1,000. They never got a chance to get back in and now the market has gotten away from them. The natural tendency is to try and talk the gold price back so you can justify not chasing to get back in but that has not been a worthy approach for years in gold. The bears have a gigantic problem. Sorry but I won’t lose any sleep over the anti-gold getting their just dessert.

The U.S. Dollar continues to be long on anticipation of a bear market rally but way short on delivering on it. Again, it needs to get above 78 on the U.S. Dollar Index before we change even our short-term outlook.

I still hope to see oil at $85+ in hopes of getting short again. Natural gas is ho-hum.

I continue to like shorting U.S. Treasuries 10 and 30-yr maturities.

Off to Toronto for BNN tomorrow then Montreal Investment Conference.

Good news for NY Jets fans. They can’t lose this Sunday. Wish I could say the same for NY Giants.

Yankees clinch World Series tonight!

U.S. Stock Market – Yesterday’s late day sell-off was the first of its kind in quite awhile. The market has not had a 10%+ correction since the March lows. We’ll need to watch the next couple of days to see if one has finally arrived. Whether it does or not the market continues to “melt-up” and my target of DJIA 10,500-11,000 remains intact.

U.S. Dollar – In 25 years+ in this business, I can’t recall any single market having such an overwhelming number of bears (95% bears in U.S. Dollar Futures) and not see a reversal of some magnitude. There are just so many legitimate bearish factors continuing to pile up against the U.S. Dollar. The only hope for some counter-trend rally to begin would come IMHO if the U.S. Dollar Index could close above 78. Until such time, the path of least resistance remains down.

Gold – Sorry for the bad language but if you’re a bear you have to be poo-pooing in your pants right about now. Despite widespread bearishness not only from the usual wrong suspects, many former bulls became weak kneed or outright bearish and continue to see the market move away from them. Gold has shown tremendous internal strength by actually self-correcting intra-day by selling off only to come roaring back. Today so far has been no exception. We’re in a secular bull market that has been “stealth-like” and despite being a few dollars from it’s all-time nominal high, gold remains hated and/or ignored by most. I LOVE IT!!!!

Oil - Oil indeed broke out above $76 and has $85+ written all over it. If it can get there with the DJIA also hitting my target, both could become shorts so stay tuned.

U.S. Interest Rates – Going much higher over time!

I’ve met with a few companies so far on my trip and here’s a summary of those meetings as of now:

Effective immediately, I’ve resigned my position with ATW Gold. I’ve said over and over again that management is the key for a junior’s ability to be the one in ten that makes it. While I have considerable personal respect for Graham Harris of ATW Gold, I believe his management team has not done the job. While I believe Graham will try hard to right the ship, the bottom line is they lost the confidence of shareholders, myself and the market in general. I think there are too many others who offer better opportunity at this time and one should recognize this and move on.

I had a terrific meeting with the management of Evolving Gold. Yesterday’s drill results IMHO strongly suggest that they have true home-run potential. I no longer think the question is DO they have something but HOW BIG will it end up? Management agreed with me that they have room for improvement on the corporate communication side of things but don’t let that be a knock against them. Remember, they’re the very same management team which has discovered and is developing what 99% of all other management teams can only dream about. I CONTINUE TO BELIEVE ANYTHING UNDER A BUCK IS AN AGGRESSIVE SPECULATIVE BUY.

Met with Hunter-Dickinson management and had great updates on Farallon, Taseko, Northern Dynasty and Continental Minerals. With great bias I must tell you in all my years associated with HD, I never found them as confident in one of their deals as they are with KMK.

I had an in-depth update on Sunridge Gold. They have all the makings of becoming the next Nevsun. Company is on European road show. I’m told to look forward to lots of news flow.

Must Watch! For all those who make fun of people like me and others that speak openly about the U.S. government’s “Working Group”, I strongly suggest you watch this video.

God Bless!

• In Monopoly, you need to have access to the railway, and utilities. Matagami has road, railway, airport, power, an onsite mill, and more infrastructure in place. It’s much easier to win when you can ride the railway without having to pay for building one from scratch.

This picture shows the proximity of infrastructure in the area currently under development in Matagami.

• In Monopoly, when you Pass Go, you collect $200. In Québec, when you spend $1.00 on exploration, you get $0.40 back from the government. This is a huge incentive in a world-class mining district like Matagami.
• Finally, in Monopoly it pays off both short- and long-term to own Park Place because you can collect on what you already have with the option of building more in the future. There have been 10 past producers in the camp, one current producer, and Donner/Xstrata’s new Bracemac-McLeod deposit is coming in as the third largest in the camp. Plus, there is potential for more new discoveries.

Pay close attention to the strategy in this game, and you should see that the Matagami Project is a quality property with low-cost, high-margin deposits in a camp that has proven economic in every metals cycle since opening in 1963.

In June 2010, Xstrata is expected to  finish the accelerated feasibility study. If it’s positive which seems likely since Xstrata skipped the pre-feasibility study to fast-track it, they should be breaking ground in July.

This news of Zijin Mining is very bullish in my biased opinion. We now have two very large competitors with equal interests. It’s fair to say IMHO that Jinchuan, which currently owns a similar position as Zijin, will take full notice of this development. In the end, I believe the bottomline for these two companies is not a paper gain in their shares but eventual ownership of the projects. In Jinchuan’s case, a clock is now potentially ticking that they felt didn’t exist before the news. For Zijin, they now appear to have equal footing.

Let the games begin!

Because there’s no warrants and Zijin almost certainly has no shares to sell higher than $1.07, there’s no likely cap to the share price until the deal closes, which I believe is anticipated to be in short order. I maintain my aggressive speculative buy up to $1.20. There’s no reason to expect an immediate big boost, but I suspect as the perception one of the now two Chinese major shareholder mining companies is in this for more than a passive stock gain, the share price can work its way much higher over time.

Interesting comment on Taseko Mines

From the author’s mouth to God’s ears!

In this industry you see a lot of stories about mining projects and upside potential that may or may not deliver the goods. Well Farallon is a story that has not only delivered but they have delivered virtually on-time and on-budget. Farallon’s President & CEO Dick Whittington is starting to make a name for himself as one of the CEO’s that actually sets target and delivers results despite all the market turmoil over the past two years.

Mr. Whittington has successfully positioned Farallon as an emerging, low-cost, mid-tier mining company. To kick-start construction, Farallon undertook a heavily oversubscribed equity offering in the fall of 2006. Subsequently, in the spring of 2007, Mr. Whittington brought in Rothschilds and Societe General for a $30 million bank loan to finance equipment. Then, in the spring of 2008, when silver prices climbed significantly, Mr. Whittington signed a deal with Silver Wheaton worth $80 million for less than 10% of the G-9 mine’s revenue. Mr. Whittington used these funds to pay off the bank loan and complete construction of the G-9 Mine.  More recently a $30 million term loan with Credit Suisse was signed in the summer of 2009. This deal is a 4-year term loan at a 6.9% fixed interest rate that I believe, is lower than Teck’s recent loan rates.  Through these various transactions, Mr. Whittington has adeptly maneuvered Farallon through the financial machinations of taking an exploration play into an operating mine. For a relatively unknown junior mining company to pull all this off through the worst credit markets since the Depression, IMHO gives a huge vote of confidence in the G-9 mine and the Farallon management team.

All things being considered, Farallon’s management and specifically Mr. Whittington has been instrumental in bringing the G-9 Mine forward through a very difficult timing in the past two years.  There are a few exceptional CEO’s that come to mind in this industry and I believe that very soon the market can fully understand the many accomplishments of Mr. Whittington and start to “back the jockey”, as I did in New Orleans back in 2005, when Mr. Whittington coined the phrase “Mine by ‘09”. It is now 2009 and Farallon has a mine!

Farallon released its 2^nd Quarter Financial Results on August 12, 2009. This was a particularly significant event as it was the first quarter of full commercial production at the G-9 Mine in Guerrero State, Mexico. The results speak for themselves. In their very first quarter Farallon was able to generate positive cash flow from operations of US$5.7 million dollars. For a new mine to generate cash flow in the first quarter of production is a remarkable achievement. As well, the cash costs of US$0.39 per lb of zinc are in the lowest 40% of zinc producers worldwide and show that the G-9 Mine is a high-quality asset.

Further development is in the works at Farallon including ramping the mill up to 2,000 tpd by July 2010, which can increase the production of zinc on an annualized basis to approximately 160 million lbs of zinc. And with improving cash costs, the G-9 Mine can become one of the most competitive zinc mines worldwide. In tandem, Farallon is resuming exploration work on the property. As Mr. Whittington says Farallon did not stop exploration on the property because they exhausted all of the exploration opportunity – quite the opposite. The company simply drilled off sufficient resources to have a critical mass of resources sufficient to build a mine. Over the last year, the focus was to get job #1 done – that of building the G-9 Mine, then turn the exploration taps back on.

As a result, exploration is expected to start again in earnest in October. The target is to increase the tonnage of high-grade resource at the G-9 Mine by 2 million tonnes over the next 12 months and provide for a re-rating on the stock valuation going forward.   A review of Farallon’s exploration news releases prior to shutting down exploration last year is most interesting. Six news releases in six months, each with excellent results – results that many company’s dream of – including the highest grade intersections on the property to date, 5 metres of 31% Zinc and 4% Copper.

The G-9 Mine seems destined to become a significant cash flow producer. As well, with the very real potential for resource expansion and mine-life increases, the Campo Morado property is shaping up to be a world-class mining district. Farallon owns 100% of the Campo Morado property and management has taken an excellent approach to exploring, financing, and developing the G-9 Mine. With this solid record of management this property is well on its way to become one of the leading mining camps globally and with it, Farallon can achieve its goal of being a low-cost, mid-tier mining company.

UPDATE:  The good people at Cambridge House have asked us to take down these videos for now.  It is within their right as content owners of anything produced during the conference.  If and when the company makes their own video of the event available to the public, we’ll be sure to post it here.

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 3^rd or 4^th 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.