|
-- Posted Friday, 5 December 2008 | Digg This Article | Source: GoldSeek.com
With almost every junior mining stock trading at year – or multi-year – lows, it is almost impossible to separate the wheat from the chaff - which ones have made real discoveries, and which are unlikely to survive. It used to be – it’s supposed to be – that companies successfully finding economic ore bodies will trade at a substantial premium to their brethren. But not anymore. In the rush to raise cash or get out of debt, all publicly-traded companies have been indiscriminately trashed. Believe it or not, geologists working for junior mining companies have made some significant mineral discoveries in the last 12-18 months. But junior mining investors haven’t discovered them! These companies’ stocks trade for pennies, if they trade at all. Investors are ignoring discoveries in this market environment, and in fact may be ignoring everything except for how much their portfolios are down. Right now value in the ground means nothing. But that will change, and it almost always changes faster than most investors think – all of a sudden they look at a stock they have been following and it has doubled on them. Nobody really knows when commodity prices will turn, but you have to be positioned – and very, very patient - to experience capital gains with the penny stocks. History is clear. In the junior resource exploration market, companies with value in the ground get to see their stocks run up first. So what are some of the undiscovered discoveries that have been made in the last 12-18 months that investors could be watching? Here is a quick list of five possibilities that warrant attention:
Donner Metals (DON-TSXv; $0.10) won both The Mining Journal International Exploration Award, and Quebec’s Explorer of the Year Award for discovering a high grade zinc deposit called BraceMac-MacLeod, in the Matagami base metal camp. They are joint ventured with metals giant Xstrata, who are operating the Perseverance Mill only 6 km away. Xstrata has quickly moved this deposit into a scoping study. A new geological interpretation caused the Bracemac-MacLeod discovery, which appears to be in the fast track lane for production. But it’s the same old story from investors – yawn. 10 cents. Lumina Copper (LCC-TSXv; $0.40) is developing the Taca Taca copper property in Chile. This mineral occurrence has been known for awhile, but it was just in the last year that the work was done to make it a truly world class deposit. Because it is from the stable of companies run by famed copper explorer Ross Beatty, the stock started to trade over $1 this year – but quickly collapsed to 23 cents as the global copper price fell, despite announcing a new resource of almost 9 billion pounds of copper, 3 million ounces of gold and 330 million pounds of molybdenum. Where’s the love? Beatty’s last 3 copper companies were taken over at $10/share or more. Uracan Resources (URC-TSXv; $0.17) has developed the third largest uranium resource of any junior in Canada, and will be #2 when its new resource estimate comes out in early 2009. It is the most significant uranium discovery in Canada after Hathor Explorations (HAT-TSXv; $2.40). Hathor is getting investor attention, and therefore is not in our list. Uracan is hitting uranium in 90% of their holes over a very very large area. Investors don’t like the low grade (1/3rd of a pound, or 0.012% U3O8), despite the fact that Forsys Metals (FSY-TSX: $5.75) was just bought for $7/share or $580 million and its Valencia uranium deposit has the same grade. Underworld Resources (UW-TSXv; $0.18) recently announced a new gold discovery at its White Gold Property in Canada’s Yukon Territory. Grading 3-5 grams per tonne gold near surface, it could be a large open pit deposit. White Gold has two zones, both are open. One zone is already 450 m wide. Tight share structure gives it a very low market cap. Bell Copper (BCU-TSXv; $0.05) worked hard last year to successfully outline an easy near-surface open-pitable 205 million/lbs copper resource at its La Balsa copper project in Mexico. With infrastructure in place, the bonus of a potential underlying porphyry and multiple additional zones providing expansion potential, you’d think the market would care. Their team of Ph.D.’s is certainly amongst the top copper-porphyry hunters on the planet. Ho-hum. 5 cents, shell value! With over 90% of the junior stocks down between -75% and -90% so far this year, one can only view the scene as a wasteland. Silver stocks are the worst, down -80%, energy -75% and exploration plays -67%. There has been no place to hide with the exception of gold the metal and senior gold stocks to this point. Many investors have even lost their cash positions sitting in some of the money market funds that invested in derivatives and leveraged asset backed securities. The good news is we are likely already off the bottom, looking up. The uranium sector seemed to be the first to firm, notable in that it was the first to suffer a virtual collapse. Senior/mid tier golds have bounced over 50% off their October lows and they continue to see accumulation as money comes off the sidelines. Speculation and interest is still alive and well, albeit more subdued. The junior exploration stocks are actually acting a little better than the energy and silver stocks lately, with a small handful that have not been totally trashed: Aurelian -15% and Gold Eagle +45%, both takeovers this year by Kinross and Goldcorp respectively. The strategy going forward for most experienced investors will be to nimbly recoup losses with a recovery rally in the market, probably already in motion. The more senior stocks are now well on the way with many of the gold stocks having moved up. Many intermediate and junior stocks were so over sold they will see easy gains of several 100% from their bottoms. This market has been the most difficult any of us have ever faced. This is history in the making. But crisis always means opportunity, and investors must do the homework and position in a timely manner to benefit from it.
-- Posted Friday, 5 December 2008 | Digg This Article | Source: GoldSeek.com
Previous Articles
|
