Pescod mention...GLOBESTAR MINING (T-GMI) $1.60 +0.05
Today industry biggie, Rio Tinto predicts that commodity
prices could rise significantly later this year. In a press release
today, the suggestion is made that if the U.S. economy
recovers along with strong demand for China, a
bounce could happen in commodities that people just don’t
see. And when it comes, it could shock people according to
Mr. Tulpule, who is with Rio Tinto.
Meanwhile, there are also other tidbits out there today
with Credit Suisse suggesting we could see a spike in copper
prices coming shortly. Once again, it’s demand in
China, energy problems in big producing Chile, and a whole
bunch of big projects everywhere that were expected to
supply the world with plenty of copper facing huge capital
increases and many of them simply being delayed.
Which gets us to Wendell Zerb, Canaccord’s mining analyst.
When we talked with him yesterday, he said, “when we
get to the mining sector, everything sucks!” There is no
talk about LME inventory or breccia discoveries, so I am
assuming this is just a new technical term he has come up
with!
But we’ll go on to something different and that’s the
phases of the mining cycle for a mining discovery. It’s usually
well-known to most junior mining speculators, but most
still tend to focus on one thing and that’s the discovery.
Ah! The excitement, the pizzazz, the potential of
little ABC Mining Company that may have just found
something huge that could change your lifestyle.
While odds are long, maybe one in a thousand or
these days with so many new mining companies out
there—maybe one in 5000, that you can have that
little junior, it’s the rest of the cycle that is forgotten
by many speculators. Particularly after that one in a
thousand has discovered something, the years that
is spent actually doing the engineering, the environmental
studies and the money raising to actually
build a mine, that takes time and it is usually boring.
And that folks, is when these junior stories that are
hoping to become bigger, become boring and
cheaper.
And then along comes another phase of the mining
cycle that most speculators avoid and that is
when a mine is finally about to produce something
few junior stories ever do...cash flow. And that’s
when you see mining stories start to attract another
type of animal...not the speculator, but the investor.
During this time of course, there are all sorts of
problems and delays that could happen, but when
you finally do have production and cash flow, the
investor can be there in a big way, particularly in a
commodity market that could possibly get even better.
Given that we are in one heck of a market correction,
it is amazing to see that we can still see some
commodities such as copper screaming to new
highs as power concerns again, cripple Chile and
demand elsewhere remains strong.
It’s probably a time to be revisiting Globestar’s
Cerro de Maimon mine, which will be coming on
stream this summer, don’t you think? So far, no talk
like so many projects of cost over-runs, yes, there’s
been a little of delay here and there, but it still looks
like everything is on stream and while we must remember
that this is a rather modest project, the
number of copper mines coming on stream over the
next few years is going to be very few and copper
prices could become very rewarding.
We wonder how much time is left before one of
Wendell Zerb’s favorite stories (Globestar) which he
has a target of $2.75—just when it might be hitting
new highs...finally!
Today we average down.