We’ll be updating this and all subsequent Mining News Review posts on a more-or-less daily basis. We will add to this review chronologically with the most recent updates appearing at the bottom. If there appears to be a significant news release that we have not discussed, please feel free to bring it to our attention in the comments section (subscribers only please) and we’ll make an effort to add it to the discussion if warranted.
Supatcha Resources (OTCBB: SAEI)
Supatcha Analyzing Recent Market Activity – December 6, 2010
Wow, on volume of over 35 million shares Supatcha went from $0.20 to $0.69 back to as low as $0.14 in just 5 trading days!
No doubt it would have been nice to ride this roller coaster to the top, but let’s not forget that there are just as many currently puking their guts out on this trade. Remember, pigs get slaughtered. [Zurbo]
Crowflight Minerals (TSX: CML)
Crowflight Closes Private Placement, Completes Board Re-Structuring and Announces Management Changes – December 6, 2010
It is looking increasingly likely that Crowflight will declare bankruptcy.
Three years ago Crowflight was projecting $50-$75 million in annual operating cash flow from its Bucko Nickel Mine at $10/lb Nickel. Now the company trades at a market capitalization of under $50 million and mining operations have been suspended. A sober reminder that mining is a tough business and that the economics of a project almost always look better on paper. [Zurbo]
Goldgroup Mining (TSX: GGA; Pink Sheets: GGAZF)
Goldgroup Hits 332.86 g/t Au over 5.5 m Including 2,424.89 g/t Au over 0.75 m in New Drilling at San José de Gracia – December 7, 2010
No doubt these are head-turning results but the question is the spottiness of the high grade gold in the breccia vein structures — have they perhaps located an ore shoot with continuous bonanza grades amounting to significant tonnage? Even with this question unanswered, the share price did not react as strongly as I would have thought. My guess is there is uncertainty about the ability to follow through with more of the same type of results. Of course it probably also doesn’t help that a slew of newsletter writers didn’t immediately pump the news to their flocks as they sometimes tend to do. In any case, the big price driver for Goldgroup in my opinion would be to advance one or more of the projects to the brink of development as a potential 100,000/oz. per year mine. They do appear to have several good chances of doing that even if much work still remains. Furthermore, since the shares haven’t leveraged the recent rise in gold as much as some other companies (they were trading near this level in May), there could be some price follow through in the near term even if not due to more bonanza drill results like this one. [Silverax]
Victoria Gold (TSX: VIT; Pink Sheets: VITFF)
Victoria Gold Provides Update on Cove Upper Zone Resource Estimate – December 9, 2010
An extremely disappointing update from Victoria. In late November we updated subscribers on the situation as follows:
There was a transcribing error related to the grade of 4 of the 15 historical holes used to calculate the upper zone resource at Cove. Some analysts were confused at why Victoria couldn’t just plug the correct data into the resource model since they have the correct historical data (remember, it was just a transcribing error), but we can understand that this might not be so simple if after adjusting for the errors it turns out that grades are much less consistent throughout the upper zone and due to limited drill data such things as the cut-off grade would have to be revisited. Remember, this is a very recent development (less than 2 days old), so if nothing else Victoria’s fast response with a press release and CC is impressive if not a bit premature (they were unable to answer several questions to our satisfaction).
Okay, so back to the potential impact. Let’s assume the transcribing error involved moving a decimal place in those 4 of 15 holes. That might reduce the resource by 30%, or about 100,000 ounces. Worst case scenario Victoria is unable to report the resource at all, but even then we think the 30 cent drop is way overdone. After all we’re talking about an inferred resource that would have to be more closely drilled in the long run anyways if it were to be incorporated into a mine plan. That doesn’t mean we’re on the verge of buying, but we’re much more interested here than we were at $1.50 (in fact, we were selling out our remaining position at that level, see: http://www.metalaugmentor.com/eforum/?p=5155). No hard time lines were given, but expected to take less than months to resolve this issue.
It is unfortunate that Victoria has taken such a beating, but these things happen. In fact, we recently uncovered an arguably more substantial error in a technical report released by a company in the mining sector. The consulting company that prepared their technical report acknowledged the error and sent a revised report to the company. We’re not experts and we occasionally spot errors like this. You have to give credit to Victoria for being as open as possible about the mistake. But on the other hand we’d like to see Victoria be more open about sharing historical drill data. Perhaps if they would have been more open about this in the first place something like this wouldn’t have happened, or at least the general public would have had the potential to question the resource figures. Instead the error ends up being spotted by a 3rd party conducting due diligence on Victoria’s assets.
It’s currently unclear what effect if any this will have on Newmont’s back-in right for 51% of the project.
Needless to say we’re happy with our call to take full profits in early November 2010 around the C$1.40 level.
Disclaimer: We own shares in several of the companies mentioned in this analysis (Metal Augmentor subscribers know which ones), but no compensation has been received from any of the companies mentioned. This is not investment advice; should you seek investment advice we recommend you discuss the company with a licensed investment advisor or broker.
PC Gold news:
PC Gold completes $10-million bought-deal offering
2010-12-07 09:58 ET – News Release
Mr. Kevin Keough reports
PC GOLD CLOSES $10 MILLION BOUGHT-DEAL OFFERING
PC Gold Inc. has closed its bought-deal offering previously announced in Stockwatch on Nov. 11, 2010. The company sold 11,117,280 flow-through common shares at a price of 90 cents per flow-through share for gross proceeds of $10,005,552, which included 1,450,080 flow-through shares sold pursuant to the full exercise of the underwriters’ option.
The offering was underwritten by a syndicate of underwriters led by Mackie Research Capital Corp., and including Canaccord Genuity Corp. and Stonecap Securities Inc.
The proceeds received by the company from the sale of the flow-through shares will be used by the company to incur qualifying expenditures with respect to the continuing exploration of its mineral properties.
I guess this does not qualify as newsworthy, or warrant input, on a recently recommended company:
PC Gold completes $10-million bought-deal offering
2010-12-07 09:58 ET – News Release
Mr. Kevin Keough reports
PC GOLD CLOSES $10 MILLION BOUGHT-DEAL OFFERING
PC Gold Inc. has closed its bought-deal offering previously announced in Stockwatch on Nov. 11, 2010. The company sold 11,117,280 flow-through common shares at a price of 90 cents per flow-through share for gross proceeds of $10,005,552, which included 1,450,080 flow-through shares sold pursuant to the full exercise of the underwriters’ option.
@GL
Not really because it was previously announced on November 11, 2010.
Dec. 7, 2010 (Filing Services Canada) — ERIN VENTURES INC. (EV – TSX Venture), announces the following update regarding Erin’s Piskanja boron project in Serbia: Acquisition, compilation and reinterpretation of the entire historical exploration data base of the Piskanja boron deposit is currently underway by Erin’s geological team … When analysis of the historical data is complete, Erin intends to proceed with the next phase of drilling on the Piskanja deposit, with the goal of establishing a NI43-101 compliant resource … As part of its overall development strategy at Piskanja, Erin’s management recently hosted a due diligence site visit with the management of a company who is a significant participant in the boron market. These discussions are exploring the possibility of developing a long-term strategic alliance regarding the exploitation of the Piskanja deposit. Erin’s management anticipates meetings with additional potential strategic partners, in an attempt to secure the most advantageous alliance possible.
(I think EV would have been a better serbian play to make pump and dump than REO, since here the best case scenario is more open, but I’m not Byron King)
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Dec. 7, 2010 (Marketwire) — Golden Goliath is pleased to announce that it has signed a letter of Intent and reached mutually acceptable terms for an option and joint venture agreement with a Mexican subsidiary of Agnico-Eagle Mines, for the exploration and development of the Company’s Las Bolas and Los Hilos properties. The final agreement is expected to be signed in the next month.
Under the terms of the option agreement, Agnico’s Mexican subsidiary has the right to earn a 51% interest in the Las Bolas and Los Hilos properties by spending $5,000,000 on the properties over a period of 5 years. The first year’s work commitment is a firm commitment of $500,000 with expenditure requirements increasing each year thereafter. Upon exercising its option, Agnico will have the right to earn an additional 20% interest by completing a feasibility study or by spending an additional $10,000,000 over another period of 5 years.
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Dec. 1, 2010 (Marketwire) — MAG Silver Announces Juanicipio Resource Estimation and Exploration Update
Indicated Resources: 5.20 Million Tonnes containing 110.8 million ounces of silver, 321,300 ounces of gold
Inferred Resources: 7.72 Million Tonnes containing 93.3 million ounces of silver, 387,200 ounces of gold
“We are pleased, but not surprised, to have added over 2 million tonnes and more than 27 million ounces of silver and 111 thousand ounces of gold to our Indicated Resources,” said Dan MacInnis, MAG’s President and CEO. “The 77% increase in Indicated tonnes shows a much larger high grade mineral inventory for the Prefeasibility Study anticipated by the end of the year, when compared to the 2009 Scoping Study. The increase was largely achieved by infill drilling that elevated over 2 million tonnes from the Inferred category to Indicated. Inferred tonnes stayed basically the same thanks to drilling outside the previous resource area that replaced the elevated tonnes with 2 million new tonnes. Using mining rate estimates from our 2009 Scoping Study, these increases add over 3 years to our estimated mine life. We are also pleased to have an Inferred Resource on our original discovery, the Juanicipio Vein, and look forward to seeing what the new exceptionally high-grade intercept in hole 18R may add to resources there over time.”
(Dan McInnis also thought: “Let’s hope this increases will help our Metal Augmentor base case value so that we can win the favourite M.A. silver developer award”, but only subscribers will know the result!)
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Nov. 30, 2010 (Canada NewsWire Group) — Kootenay Receives Drill Assays as High as 262.4 Grams Per Tonne Silver & 1.1 % Lead/Zinc over 13.5 meters; Including 819 g/t Silver & 2.57% Lead/Zinc over 3 m at Promontorio.
(I have chosen to simply exit my speculation here, since it rewarded me nicely in such a short time period, but I now find less cheap primary silver explorers where to redeploy profits, Golden Goliath being one of them maybe?)
@zurbo I was hoping for your input on the closing of the financing. But, never mind.
@GL
Not much significance either way, they are spending money on exploration and so they need money and raised it when it was offered to them. Who knows what the markets will be like in 6 months so I have no problem with a company raising money that it anticipates needing in the next 1-2 years. I also think it is foolish for management to think, soon the shares will be higher so I will wait to raise money until then. Countless companies have been burned for such hubris.
@silverax
OK, I thought this service recently purchased shares in this company and was wanting to know what’s up. Countless companies have been burned by such hubris?
I guess I’ll have to find out more through some additional research.
You misunderstand GL. We originally bought the company in the spring, we are now buying a bit more after a very substantial pullback. This buy has nothing to do with them raising money or not, so there is nothing “up” other than what we have already stated. Raising money is a natural consequence of the exploration business. As for hubris, it is a characteristic of those companies who think they are so good at timing that they can wait until the treasury is almost empty before going to the market to beg for more money, not companies like PC Gold who seem to recognize that getting easy money for risky exploration is the exception, not the rule. The companies that are going to get burned are those that fail to always have enough money on hand to weather the rough spots, which can often last years in the exploration business. I’m afraid the last few years of easy money has spoiled rotten some of the brats but don’t worry they will have their come-uppance, and then our dour attitude about such things will be vindicated. Until then, we are perfectly willing to look like fools.
Avanti mining Inc. (AVT.V) is one step closer to restarting production from its Kisault molybdenum in B.C. They announced on Nov 29 that they have received a Section 11 order from the Environmental Assessment office. Kitsault is one of the top five primary Molybdenum development assets worldwide. It is a high-grade resource with existing infrastructure consisting of an electricity grid and ocean and road access. It is permitted, but will need an amendment for tailings disposal and the resultant environmental assessment. An ongoing reclamation plan is already in place. Avanti will be able to benefit from the extensive historical geologic, production and other data compiled by others during Kitsault’s prior two periods of production. It has extensive historical drilling results but does not as yet have NI43-101 compliant resources. Has MA considered this stock as a primary Mo exposure vehicle?
@thefroggydude
At some point here in the future we’ll be writing a report on the small universe of Molybdenum Producers and Developers. This would probably include General Moly (AMEX: GMO), Thompson Creek Metals (NYSE: TC), Creston Moly (TSX-V: CMS), Moly Mines (TSX: MOL), Mosquito Consolidated (TSX-V: MSQ), as well as perhaps a few of Freeport’s (NYSE: FCX) Molybdenum mines. I’ll add Avanti Mining to the list as well. Thanks for pointing this out.
Mercator acquiring Creston
shareholders of Creston will receive 0.15 of a common share of Mercator and $0.08 in cash, in respect of each common share of Creston. This represents an implied premium of 43% and 40% based on each company’s closing price and 20-day volume weighted average share price, respectively, as at April 8, 2011 (the last full day of trading for Creston prior to announcement). The proposed transaction values Creston at approximately C$195 million.
http://www.crestonmoly.com/s/NewsReleases.asp?DateRange=2010/01/01…2011/12/31
If the transaction closes early July, then 2.5% return or 10.8% annualized. The spread seems a little wide, especially considering this looks a very safe deal. I had thought Capstone would be the acquirer, but these folks all know each other so maybe a counter offer from them isn’t likely.