On this week’s edition of Resource Corp I will be featuring a hot new company that has their hands in pretty much every basket. Strike Gold, a major player in the graphite industry, has recently acquired a game changing project from Canaco Resources.
Canaco + Strike Gold
In addition to the current Satterly Lake property in Ontario, Strike Gold announced yesterday that they will be entering into a joint venture with Canaco Resources. For those of you unfamiliar with Canaco, they are a key player in Tanzania. An updated resource estimate for Canaco is currently in the works, but based on my analysis, it can be estimated easily to the tune of 5 million ounces.
In addition, the Boma property in Tanzania is accessible by paved highway; always an unexpected delight to those familiar with African exploration.
The Boma property has never been drilled or mapped with modern geological technology which means this property has blue sky potential. Multi-million ounce deposits are the norm in the surrounding region, making this property the quintessential property of elephant territory.
The geological landscape of Boma is very similar to the Handeni property, Canaco’s flagship project. Based on preliminary assessments, Boma is expected to hold yields similar to those of Handeni Property.
Property Overview Map
The Boma property is also along the same corridor that currently hosts two active gold mines. Scaling in at nearly 562 square kilometers, the Boma property is massive. This property truly has the potential to be multi-million ounce project. Naturally, with Canaco on board, Strike Gold will have no issues dealing with the authorities in Tanzania, which is always attractive to investors.
I will be following this project very closely as more geological work, specifically airborne surveys and on-the-ground sampling becomes available. I will be updating the blog regularly. I truly believe that this property has the potential to be a multi-million ounce deposit.
Connected by Highway
Joint Venture with Canaco
Large Land Base
Ontario... New Gold Rush?
In addition to this new property, Strike Gold has also made advancements in Ontario, which includes the Satterly Lake Project. There has been much historic drilling on this property which is not yet NI 43101 compliant.
Highlight drill hole to date:
1.37gpt over 117m
There has also been very positive grab samples, Ontario is having a renissance simlar to the gold rush with companies like Augen Gold, Trelawney, and Gold Canyon which I recently featured in an ariticle a few months ago. The property hosts sulfides that are all usually gold bearing;the geological landscape of this project looks similar to springpole lake. The Bircho-Urchi greenstone belts are similar to Red Lake, where Goldcorp has a flagship-mining prokect. The red lake mining project has one of the lowest cash costs coming in at 288 dollars a oz.
The Next Critical Metal?
Strike Gold also hosts two great high grade graphite deposits, for those of you guys thinking WTF is graphite? I have a paragraph below explaining the importance of this metal.
A key reason that I like Strike Gold is in addition to the gold is because the company has 2 world class graphite exploration plays. The demand for graphite is rising at astronomical rates. The need for lightweight and high strength Carbon fibre is creasing as the world moves to more fuel efficient cars/jets for example the new Boeing dream liner is made almost entirely out of carbon fibre. This is supposed to be the replacement for the aging 747. Graphite is also used in nuclear reactors, fuel cells, batteries, solar cells, and most importantly in hockey sticks used by the NHL greats!
With great demand like this, I can see China curbing their exports. This is an highly expected move by China because they also curbed their exports of Rare Earth Metals in the past year. North America is becoming considerably more aware of factors such as these so I believe they will be working hard to secure critical supply of these niche metals.
Recently Graphite prices have hit $3000 dollars/ton. Although they have pulled back recently with this bear market, they have made great moves that can only be matched by the tremendous rise in gold prices. Graphite is clearly in a bull market rally I believe this trend will continue as we become more sophisticated and more aware of the environment.
I will not get into detail about the Graphite deposits at this time but here are the highlights for more information on them check out the Powerpoint Presentation
Now is a great time to buy Strike Gold as there will be a sister company known as Strike Graphite, with a market cap like this it is clear the Graphite assets are being valued at ZERO, so a spin out will get the graphite projects the value they deserve.
Politically stable location (Saskatchewan)
Very high grade vs. peers
One of the only graphite explorer’s on the venture
Fast tracking potential
Spin out will value graphite assets
The Hunt For The Next 10 bagger!
The company trades with a tiny market cap of about 8.4 million, for a company with 4 world class exploration projects I think this is very low. Expect a gradual rise in share price as the company matures, this is a very new company that was recently formed and with more promotion and awareness things are going to change QUICK! This company over higher than 10 bagger potential! It still only has a market cap of 84 million as if it were ten bags! Not often do you get a chance to get in at the ground floor! Now is your chance to grab it by the horns! If you act now you will get a FREE share of Strike Graphite!
In conclusion to this short blog, I rate Strike Gold a screaming buy, the graphite and gold projects hedge each other out very well in my opinion. Graphite is a play on the industrial strength of the economy while gold is a great hedge to have if the economy goes in the gutter again! You can't lose on this one folks.
Edgewater Exploration (EDW-TSXv) has 1.5M ounces of Gold in Spain and trading at a ~$20M enterprise value! That’s $15per ounce of gold for every share. And unlike many juniors that may be struggling to raise capital right now, EDW has close to $12M in the bank and plenty news flow coming.This stock is starting to look DIRT CHEAP.
If you like advanced stage gold assets, deep pockets and experience management, there is nothing to not like about what Edgewater has created for shareholders.
There are two ways to value this company right now:
1)Value Corcoesto (1.5M ounces in Spain) at $10 per ounce enterprise value (a fraction of peer comparables) and you are getting the upside the very exciting exploration Ghana prospect which looks like early days Bibiani (5M+ ounces gold and) or Chirano (5M+ ounces gold) for free.
2)Value the Enchi Ghana exploration project at $15Menterprise value which looks like early days Bibiani (5M+ ounces gold) and early days Chirano (5M+ ounces gold) and you are getting the value of Spain for free. The model of the Ghana project looks so similar to the early days Chirano and Bibiani that Kinross cut a cheque in the last $11M financing at $0.80 to control 12.5% fully diluted interest in the Company. (Yes – stock now trading below $0.50)
Here are a few more details on the projects:
The Corcesto Project in Spain is 100% owned by Edgewater Exploration; it has a NI 43-101 compliant resource of 1.5 million ounces @ 1.74 g/t Au (M&I+I) Further details found here
Studies are currently underway to demonstrate how this project will be mined, it is anticipated the project will be amenable to both open pit and underground methods. Edgewater currently holds a small-scale mining license yet the company has begun the permitting process for a larger scale mining operation as the gold deposit has grown and continues to grow since the last exploitation permit was granted. The Corcesto Project has 7 major veins running through it and with some more drilling I can see Edgewater further increasing the economically viable ounces of gold. Edgewater currently has three drill rigs turning on this project now.
Edgewater has been working on a Preliminary Economic Assessment on the Corcoesto Gold Project.Results from the study are anticipated during Q4, 2011.
Once again this is currently being value at $15 per ounce enterprise value so investors would be getting the Enchi gold project in Ghana for free.
The Enchi Project is just south west of the producing Chirano and Bibiani mines, Ghana West Africa, elephant country. And it is looking like both of those highly profitable deposits in its infancy.
I urge you to review the power point presentation as it contains much more detailed geological review.But below is a map that shows the proximity to the producing mines.
Enchi remains on strike, on the same shear zone, and multiple zones have replicated early days drilling to the highly profitable gold producing Bibiani and Chirano mines. The company currently has three drills turning on the project so exploration news flow should be continuous
Shouldn’t this play be worth the $20M enterprise value in the stock alone right now?
Please contact Ryan King, VP of Corporate Development for further details of the company. He is very approachable, factual and won’t feed you with the typical over-hype you get from most junior mining executives.
Fast Tracking A Excellent Copper Project in Copper Country…
Share Price: $0.50
Shares Outstanding: 55.4 Million
Market Cap: $25 Million
Sullivan Family Trust:16.3%
For the last month since my last article I have been stomaching market volatility and trying to find the most risk adjusted copper junior in the market, in unstable times like today you do not want to be investing in a project with a huge CAPEX because the credit markets are still dry, you want to invest in a company that has a reasonable CAPEX this is the sweet spot with high commodity prices, money can still be raised.
It is obvious that copper is in a tremendous bull market rally, the underlying commodity prices will not faultier so you are somewhat protected from the downside when you buy a copper junior vs gold junior, copper is consumed and gone forever the same cannot be said about gold.
Not often do you get an opportunity to invest in a junior exploration company and see it through to production in the mining industry. I would suspect 1/100 projects actually see it through production from discovery. The biggest project killer is time; time is of a essence in a cyclical mining cycle, usually it takes a company 8-12 years from discovery to production, by the time the project is fully financed and permitted the good times are over and the party is long gone and it is no longer attractive to run the mine. Copper is at 4 dollars a pound today, commodity prices are at all time highs today because in the 90s and the early 2000s there was no exploration for metals, as prices were low, today we spending record amounts on exploration and soon we will replenish our supplies and then again we will see a downturn in metal prices. This is the beauty of the cyclical cycle, it is self correcting. The key points we have to look at, as investors are how do I profit from this cycle? Investing in a HUGE project that is 10-15 years in the development cycle like CUU.V or NDM.TO may not be the best course of action right now, investing in smaller companies with near term potential will get you the same return faster, do not be lured by glitzy drill results or promotions, look at near term potential and reasonable costs.
This Not Another Venture Promo…
I have Identified Excelsior as a company that is fast tracking their production Excelsior mining has gotten a lot of things done in a very short period of time. The low cost Gunnison project is located in Arizona, for those of you that are unaware; Arizona is Copper Country, USA this great copper state produces 60% of the Americas copper or 750,000 metric tons. Excelsior is a very special and unique deposit, it can be mined using ISR methods, these kind of mining projects are MUCH easier to permit, the CAPEX is a fraction of a traditional open pit mine and best of all they cheaper to operate, and lastly they do not produce unsightly pits and they are considered to be better for the environment. I will get into describing ISR in more detail later on in the blog. The management team can raise the big bucks needed to fund this project into production. The project is on track to be mining in 2014 a mere three years away. Excelsior has been listed on the TSX Venture for about 2 years, they have made great strides, I expect this trend to continue. Management is top notch, combined they have over 70 years of copper mining experience
The Key Points On ISR Mining.
ISR mining accounts for nearly all uranium mining in the USA, it also accounts for 20% of global uranium mining. This is not a new fly by night method of mining the principles behind it are very simple.
Essentially lots of injection wells, the injection wells are injected with a solution, the solution goes out and collects all the copper from the porous rocks in a safe and controlled manner, then the solution in recovered by recovery wells. The solution that is now filled with copper oxide is taken to a plant and extracted. Thousands of these wells are drilled all over the property.
You are probably looking at the grades, the average is 0.3%, don’t get fooled by low grades, low grade deposits can be mined efficiently and cost effectively using ISR methods.
Why In-Situ Recovery Mining is VERY attractive:
-Significantly Lower CAPEX, and the operating costs throughout the life of the mine are lower
-ISR Mining is non evasive; no ore is moved, no unsightly open pits are left
-Fewer permits are needed, mines can be in production within 18 months
-Minimal noise, dust and greenhouse gases
-Reclamation cost’s are minimal
Finding a copper deposit that can be mined using In-Situ Recovery methods is like hitting a jackpot; all the stars have to align and when they do it creates a perfect storm. Like I mentioned at the start of this article time is of essence, most companies that are in the stage that Excelsior is in today will not benefit from high metal prices as it will take them 8-10 years before they can be producing, Excelsior plans on doing this exact same feat within 3 years! There are many other factors that can kill a project, but in the end it is a numbers game.
How do you know if a project can be mined using ISR Methods?
-The resource has to be below the water table
-9 of the 14 global ISR copper projects are actually located right in Arizona near the Gunnison project
-The rock has to be highly fractured and the copper should be a copper oxide for best results
The Hunt For the Next Ten bagger
Key Points that will make Excelsior a ten bagger:
-Current Market Cap
-Market Cap VS copper in ground
The operating costs for the Florence project are supposed to be slated at around .69 cents a pound; I believe that the Gunnison project will have costs inline with the Florence deposit. The CAPEX should also be inline with the Florence project; these projects are almost identical the only difference is that Curis Resources has an 18-month head start on Excelsior.
The current market cap is grossly undervalued for a company that has 4.7 billion pounds of copper and a potential to increase that significantly.
The Gunnison project is in Arizona, Arizona is copper country, more importantly its ISR mining country; 9 out of 14 global ISR mining projects are located in Arizona. When it comes to ISR mining, Arizona has the most skilled professionals and it has a competent workforce that understands the specific challenges and needs of the industry. The citizens of Arizona are also supportive of mining; they understand that mining is a critical part of the economy.
The deposit is not located in the middle of no where, it is 2.5hr from Phoenix and 60 miles from Tucson, there are major highways and rail lines that connect to the project. This is project is located in a legendary mining district and the company controls almost 3900 acres in the region. The project is not located on or near any Indian reserve, it is far from the public, there is no scenic areas surrounding it and no one currently lives near it, this is truly the perfect place for a mine.
Short Term Catalysts
-Hydrological and Metallurgical Results due within a month; these results will provide substantial evidence to the market that Gunnison is minable using ISR methods.
-A PEA is due later this year, a PEA will prove to the market that this is a legitimate project and the stock will start its inevitable parabolic rise.
-Jackson Hole Update; Ben the bank pretty much promised a QE3 if things got bad, I see copper stocks benefiting the most from QE3 as they have been lagging, and Dr. Copper is a indicator of the economies over all well being. Expect some sort of QE3 later this month
Excelsior has an indicated resource of 3.21 Billion pounds of copper oxide, and another 1.21 Billion in the inferred category. This is a large project; the expected cost per pound should be under 70 cents a pound. The average for a copper company that is putting a project into production these days is about 1.30, companies like Anvil Mining, Copper Mountain, Mercator Minerals etc, they have all went into production within the last year with a cost per pound average of over 1.20. 150 million pounds at 4.00 would give excelsior 600 million a year, with an average cash cost of .70 cents a pound the total gross profit would be 495 million according to my napkin economics model!
Excelsior currently trades at a measly 0.006 cents per pound this gives the company a market cap somewhere north of 30 million companies such a copper mountain mining trade at 0.14 cents per pound, as Excelsior continues to move up the ladder by proving feasibility and starting construction I see Excelsior reaching higher valuations as the cost per pound will defiantly be lower.
At 50 cents and a market cap of about 25 million, I see no risk investing in this wonderful copper company, I think the company will keep ripping it up proving up more copper and I truly see this producing before 2013. If you want to see what type of potential this company can have when they have their PEA out look at its older brother Curis Resources. I really see Excelsior gaining traction when the PEA is released.
The Grand Summary
The world is increasingly going electric, we are seeing dozens of new electric cars coming into showrooms, we are hearing about smart grids, electric hybrids, an electric car uses on average of 60 kilograms of copper a conventional automobile uses 24 KG. North Americans are tired of being held hostage by political problems in the Middle East and we are generally tired of using fossil fuels that are ruining our planet, and we all have heard by now that China and India have finally decided to join the rest of the civilized world by pluging into the electric grid. Profit from the upcoming electric revolution by buying Excelsior Mining Shares today.
Discourse: This is one of my biggest holdings, I hold this personally and in a fund I manage.
Thank you for reading this week’s edition of Resource Corp!
Has there ever been a more perfect time to invest in uranium? For those that missed the initial uranium rally earlier this year before Fukushima there is a “second chance” Unity Energy is aggressively developing there properties. This 7 million dollar company has the potential to be the next big developer in the Athabasca Basin.
They are also spinning out a key gold asset in northern Saskatchewan. Never has there been a better time to buy uranium stocks and Unity in particular. In the words of their commander in chief “Positive results indicated at Dickens Lake justify this gold asset creating its own market and raising funds for further exploration and to add shareholder value. Unity Energy's roots shall remain grounded in energy through exploration of its significant portfolio of prospective uranium properties in the Athabasca Basin." - Anita Algie President and CEO Unity Energy.
Uranium is going to get hotter than Fukushima
The longer term fundamentals of the sector remain solid and many countries have publically stated their strong continued commitment to nuclear energy.
The uranium spot price looks like it is just about to break out again, the current price is $54 a pound, a far cry from this years high of $75.00, so if you missed round one on the uranium breakout this is the “second chance” we all hope for but never seem to get. The power hungry citizens of China and India don’t care where the energy comes from they just want it, China has 25 nuclear reactors under construction and India is the cutting edge leader in developing Thorium based reactors, With oil once again rocketing Uranium stocks have never looked so cheap.
Recently I have started to notice consolidation in the uranium sector, Bannerman Resources (BAN:TSX) recently has had a offer from a Chinese uranium company to buy them out.
Investors have realized that modern nuclear technology is safe and reliable, the mishaps that happened in Japan are all due to mismanagement and there poor safety record, At a meeting of the G8's Nuclear Safety and Security Group, held in Tokyo in 2008, an IAEA expert warned that a strong earthquake with a magnitude above 7.0 could pose a "serious problem" for Japan's nuclear power stations, In March 2006 the Japanese government opposed a court order to close a nuclear plant in the west part of the country over doubts about its ability to withstand an earthquake. Japan's Nuclear and Industrial Safety Agency believed it was "safe" and that "all safety analyses were appropriately conducted" I believe that Unity Energy will eventually become a household name such as Hathor or Fission with the same or more potential. Are you in it for the Green or the Gold?
Unity has the perfect combination! Uranium and Gold, I believe they both hedge each other out perfectly! Unity recently decided to spin out there Northern Saskatchewan gold project, into a new venture called Patrone Gold. I believe this is a great decision, the company is not getting any value for the gold properties, the recent spin out of Prophecy is a great example of a successful spin out, (NKL:TSX). Everyone knows about the uranium projects, but the golden question is who knows about Unity’s GOLD PROJECT IN LA RONGE GOLD BELT? Unity completed a VTEM survey of the Dickens Lake Project and final results and interpretation are expected in the near term This gold district has produced 600,000 oz in the past, The Dickens Lake Gold Project is getting NO value right now with current valuations,expect the stock to rocket when it starts trading.
Time to pick your favorite lake. Waterbury Lake? McKenzie Lake? Close Lake? Lampin Lake? Thorburn Lake? Hoppy Lake? Kirkpatricks Lake? Dickens Lake?
At least if the uranium mining business collapses Unity shareholders could profit from luxury lakeside condos!
The lake that interests me the most is Thorburn, the property is surrounded by Cameco claims and it is very close to Hathor’s Roughrider Zone. Surrounding companies have drilled with tons of success, uranium has been found in percentages as high as 10% over 9 meters in surrounding areas. Preliminary ore reserve calculations indicate that the project contains approximately 5 million pounds of uranium as a area is defined expect this number to rocket. The Thorburn property is 14.5km south east of the world's largest and highest grade uranium mine,Cameco’s Cigar Lake mine.
Surrounding Drillholes of Interest:
4m at 3.5% U
44.50m at 2.0% U
9.90m at 10% U
10.40m at 7.0% U
As you can see these grades are VERY high clearly there is mineralization running through the property. The geology is very similar to the large uranium deposits that are found in the Athabasca basin. Athabasca Basin 101 So investors unfamiliar to uranium are probably wondering what the hell is the Athabasca Basin? Why should I care about this Basin? Where is it? The Athabasca Basin is in northern Saskatchewan, it is 100,000 km squared. The Athabasca Basin accounts for 30% of the world's uranium production. The area currently hosts reserves upwards of 650 million pounds of uranium. The Athabasca Basin is host to unconformity-associated type Uranium deposits. Mineralization occurs at, above or below the unconformity. This area is largely controlled by AREVA and Cameco, although currently there are 20 or so Juniors drilling and outlining deposits. Unity has key properties in all the right places, they are a area play to Fission and Hathor, they are also conveniently located near Cigar Lake. Cameco as a large scale producer will only buy out the largest deposits, companies like Hathor and Fission need to increase their deposits sizes and land holdings in order to catch the attention of Cameco and AVERA. Infrastructure points of outlining a uranium deposit in the Athabasca Basin
Ample power supply nearby
Easy access to mine site from road
The Athabasca Basin is the hub for all uranium core sample testing
Abundant water supply
A workforce that is highly experienced in developing uranium deposits
Anita’s Running A Tight Ship
When I first got involved with Unity, the key reason that got me interested was the share structure, this company has a tight float with only 21,142,000 shares outstanding and a market cap of around 7 million dollars this thing can move really hard and when there are any indications of serious mineralization this stock can easily go up 10x and still have a market cap lower than Fission and Hathor. Another key point I would like to put out is that 49 North (FNR:TSX) owns 2,490,000 shares or almost 12% of the float. 49 North is a Saskatchewan based resource company, when it comes to knowing the right plays in Saskatchewan I would trust them to know what is best in there own back yard.
Another point I would like to mention is that Unity has never done any dilutive financings, all financings have been higher than the previous financings or the same, the company recently did a PP that just came free trading which shows in the stock because the recent financing was almost 18% of the float.