VANCOUVER, Canada – The yearly June metals bash here gave me several hot ideas, a bunch of re-connectsand a chorus of “stay-the-course” from gold and silver miners in Peru, Colombia and West Africa.
I connected with Ingrid Hibbard of Pelangio Explorations (TSX: V.PX, Stock Forum) after meeting her country manager last week in Accra, Ghana. That morning, I was telling a small audience at the Cambridge Show that aggressive drillers will win the attention of fresh investors this year.
She seemed to concur. “One of the things about Pelangio,” Ms. Hibbard, the prospector’s Toronto-based president, said, “is that our property, our lead project, is brand new. Never drilled. We’re stepping out in 100 meter spacings at Pokukrom East (at Manfo). You just have to step out big in this market to show your stuff.” Pelangio also is drilling at 50-meter spacings for its lower-grade gold targets.
I re-connected with Joseph Grosso of The Grosso Group, a management company in Vancouver that has interests in gold, silver and uranium properties in Argentina and Peru. Mr. Grosso says the election of Peruvian liberal Ollanta Humala as president could bring a balanced government to the mining nation’s legislature.
“His opponent, Keiko Fujimori, will have a lot of seats in government. So we’re going to have Mr. Humala with a minority government, and a smart person on the side,” says Mr. Grosso, a Rome-born émigré to Canada who has tracked seven or eight Peru elections since the late 1960s.The management company he heads has 18 years of experience in Latin America. “I think the sophisticated businesspeople in Latin America see the (Peru) election as an opportunity to expand there.” The Grosso Group’s companies include Golden Arrow (TSX: V.GRG,Stock Forum) and Golden Alliance Resources (TSX: V.GLL, Stock Forum).
I re-connected with Yale Simpson, chairman of Extorre Gold Mines (TSX: T.XG, Stock Forum) and Exeter Resource (TSX: T.XRC, Stock Forum and XRA). Extorre shares are still on fire amid crazy-intense gold grades and potentially rock-bottom mine expenses, as low as a projected $250 (without a silver credit) an ounce, at Cerro Moro in Argentina. “Look, 10 shareholders (Oppenheimer among them) control 45 percent of Extorre,” he says about Extorre, now worth $1.2 billion Canadian.
Mr. Simpson, 63, is modeling the company’s lead project for gold production by early 2013. “From an operating perspective, a mine like this with 133,000 ounces of gold-equivalent a year will make more money than a bunch of South American mines that do 500,000 ounces a year,” he says. Indicated gold-equivalent grade for about 360,000 ounces at Extorre’s Escondida concession is 35 grams per metric ton.
Yale, who casts a sage smile in a Yoda-Star Wars-separated-at-birth kind of way, acknowledges the shares could pull back 15 percent before a looming pre-feasibility study is released by June 30. Still, analysts who have seen the numbers and the lead property at Cerro Moro (Escondida, Zoe and others) are modeling for more than 133,000 ounces – mainly because of those insanely high gold (and silver) grades. Adding in silver credits, some observers say per-ounce costs fall as low as $25 an ounce.
By the way, Mr. Simpson and his team are moving ahead with drilling in the Philippines for another prospector, Rugby Mining (TSX: V.RUG, Stock Forum). That’s only a $30 million market cap. The copper-gold project is called Mabuhay. “Extorre chases high-grade veins and Exeter and Rugby chase porphyrys. We have 120 professionals working with us at three companies, and if anything we own goes to a major (mining company), I can tell you, at least 100 have no desire to work for a biggie,” says Mr. Simpson.
Shifting to Colombia, my old stomping grounds, I ran into a bunch of friendly faces and one new one. Andrea J. Garcia is a corporate energy attorney for Colombia financier Serafino Iacono, whose group of companies include a freshly merged (as of today) Gran Colombia (TSX: T.GCM, Stock Forum) and Medoro Resources (TSX: T.MRS, Stock Forum), along with oil producer Pacific Rubiales (TSX: T.PRE, Stock Forum). Ms. Garcia was dining with Texas asset manager Frank Holmes of U.S. Global Investors.
“This company in Colombia (Gran Colombia) looks like it will be the biggest gold producer for the country,” said Mr. Holmes. The merged entity controls gold mines at Marmato, at Frontino in Segovia and elsewhere.
Among the familiar (and glowing) faces, I spent time with Bob & GloriaCarrington of Colombian Mines (TSX: V.CMJ, Stock Forum), whose shares, albeit a scant amount, I own. Mr. Carrington, a Nevada geologist and long-time Colombia prospector, is not afraid to comment on other projects. Of the red-hot Quinchia area near Marmato, primarily Batero Gold (TSX: V.BAT, Stock Forum) with six or seven rigs running not 20 kms from historic Marmato … and a tiny neighbour, Seafield Resources (TSX: V.SFF, Stock Forum), he says, “Well I love the grades at Miraflores, just amazing, but proving it out because of the nugget effect won’t be easy. They have to be looking at a lot of drilling and a lot of samples.”
Mr. Carrington, 56, did historic sampling at Miraflores in the 1990s for Keystone and came up with what he said were “three-quarter-ounce-gold rock.” That’s about 18 grams per metric ton.
About CMJ, he and Gloria, both presidents, and CEO Nate Tewalt continue to develop the Yarumalito gold prospect in the Middle Cauca Belt, Antioquia, and the gold-copper-zinc prospect, El Dovio. If one can assay mineral prospects based on human body language, well, CMJ might be one of two or three severely undervalued prospectors in the democracy of Colombia. (Another might be Antioquia Gold (TSX: V.AGD, Stock Forum), whose Cisneros project in Antioquia I have visited twice.)
A company called Colombia Crest (TSX: V.CLB, Stock Forum) is working CMJ’s Venecia project in a joint venture. Venecia is right next to my beloved (and heavily owned on my part) Bellhaven Copper & Gold (TSX: V.BHV, Stock Forum) and its La Mina gold-copper prospect in Antioquia.
On the other side of the department of Antioquia (and the other end of the Cambridge House Exhibit Hall), CEO Rick Thibault and VP of Exploration Brad van den Bussche told me Antioquia Gold in the next phase of its extensive drill program, probably by September or October, will “step out” extensively as it moves toward a compliant resource statement.
“I think that’s what will be the thing that finally gets us some attention in North America,” says Mr. Thibault, an Alberta, Canada, engineer by training. Antioquia Gold gets a lot of attention in Antioquia and its regional capital of Medellin, where AGD hiring and training programs, and a few parties, have won applause from local and regional officials and the mining profession.
ACTIONABLE NOTES: I met with Amarillo Gold’s (TSX: V.AGC, Stock Forum) Buddy Doyle at the Vancouver offices on Granville and West Georgia streets. Mr. Doyle, 55, is the only CEO I have met recently who has dirt under his fingernails. (Pictured above – photo Thom Calandra) The Australian geologist forged a name for himself in the segments of diamonds, copper and gold in a long career at Rio Tinto on several continents. Mara Rosa in Brazil, he says, is moving toward production. The shares appear way cheap compared with established near-term gold producers Rio Novo (TSX: T.RN, Stock Forum) and Colossus Minerals in Brazil. “Hey we are looking at 100,000 ounces a year, not a bad little club to be in South America, says Mr. Doyle. “We’re working on keeping operating costs down.” More on this later.
I own some of the companies in this article as noted above. None of these companies at present are represented by the investor outreach firm I work with (see below). My current sked includes a trip next week to see Canaco’s holdings in Ethiopia and Tanzania. Andy Smith’s CanacoResources (TSX: V.CAN, Stock Forum) will spin out 100 percent its Ethiopia gold and copper holdings to existing shareholders as of a record date of June 28.
Thom Steps Out: I am adding professional outreach for natural resources companies to my log. I will continue to write free articles like this one for Stockhouseand its nearly one million users. Here is the press release about my new gambit: Thom & Torrey Hills Capital.
VANCOUVER: If you would like the slide show I played at my Cambridge House presentation, please ping me at thom-dot-calandra-at-stockhouse-dot-com.
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