Stockriter, I''''m reposting Kaisers report..FIRST KAISER, NOW GIT IS FEATURED IN WORLD MINING STOCKS MAGAZINE SEPTEMBER ISSUE...... YOU ALSO KNOW THAT GIT IS GOING TO EXPLODE GIVEN THE IDIOTS THAT HAVE SHOWED UPP TO BASH GIT!!!!! LET THE GOOD TIMES ROLL!!!!!!!! SHARE PRICE EXPLOSION COMING!!!
GOOD LUCK TO ALL LONGS AND BELIEVERS, THE REST OF YOU CAN ONLY IMAGINE WHAT I WOULD LOVE TO TELL YOU!!!!BUT WON'T!!!!!!!
ROTFLMAOOAOAOA!!!!!!!
..hope you don't mind, I would hate for would be shareholders to miss this, this is truly a fabulous article. I hope it's ok to post, I certainly would not want to do anything wrong!!!
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Tracker 2007-06: Gitennes set to blossom with TotoRoko and a possible surprise from Urumaquil
Publisher: Kaiser Bottom-Fish Online
Author: Copyright 2007 John A Kaiser
Tracker 2007-06
July 10, 2007
Gitennes Exploration Inc (GIT-T: $0.30)
Gitennes set to blossom with TotoRoko and a possible surprise from Urumaquil
Synopsis: Gitennes Exploration Inc (GIT-T: $0.30) is a stock I recommended as a bottom-fish buy years ago that did extraordinarily well only to whimper into the pennies as the metals bear market asserted itself at the turn of the century. Gitennes is not the Plan A+B+C type of company I have favored during the past 18 months. That would be a junior with an advanced project whose economic viability depends on a long term metal average at least twice the historical average of the past 50 years. Instead, Gitennes belongs to that breed of juniors controlled by a toiling geologist who commands a wealth of knowledge which by at least 10 years exceeds anything the universities will churn out during the next decade. Gitennes is an exploration junior whose success will depend not on having a project whose economic value is determined by whatever metal price emerges as the long term average as China sorts out its role in the grand scheme of things, but whose success will instead depend on the discovery of a new deposit which is economic at metal prices well below current levels. Gitennes belongs to the breed of old-fashioned exploration juniors which I believe will flourish during the next few years as the "pounds in the ground" psychology gives way to a new one of "what can you find that works at the new historical average?". Gitennes is a new top priority buy recommendation in the $0.30-$0.49 range based on the people talent of its head Jerry Blackwell, a modest 50 million fully diluted capitalization which at $0.30 represents an implied project value of only $16 million for its 100% owned projects called Urumaquil and TotoRoko in Peru, gold and copper projects respectively. The company already has $1.5 million working capital, of which $450,000 is earmarked for a first time drilling program on the 100% owned TotoRoko project, with an unspecified amount earmarked to the Urumaqlui project. Another $1.3 million could come through the exercise of $0.30 warrants at the end of August 2007. Overall Gitennes is a rare junior with cash, people and projects in place to deliver substantial rewards to bottom-fishers. There is a structural supply point at $0.30 from existing warrants exercisable at that price until August 31, 2007, but beyond that there is no resistance.
Gitennes has its beginnings exploring for gold in the Northwest Territories
Gitennes Exploration Inc went public on the Alberta Stock Exchange on November 9, 1993 with former Cominco project geologist Jerry Blackwell at the helm. His associates included a bunch of fellow nobodies called Bob Gannicott, Gren Thomas, the late Jordan Ethans, and a few others, all of whom would secure fame and wealth during the next four years through their involvement with Aber Diamond Corp, partner with Rio Tinto in the 1994 discovery of the rich Diavik cluster of diamond pipes that eventually transformed Aber into a multi-billion dollar diamond producer. The initial focus of Gitennes was a joint venture with Karl Rollke's Consolidated Ramrod Corp on the Damoti Lake banded iron formation gold project in the Northwest Territories. I adopted Gitennes as a bottom-fish buy recommendation in the $0.76-$1.00 range on November 28, 1994 in what was the first Bottom-Fish 100 list I published as an independent newsletter writer. Several other newsletter writers including Bob Bishop of the Gold Mining Stock Report and Eric and Dave Coffin of the Hard Rock Analyst also adopted Gitennes. Unfortunately, the squirrelly nature of Damoti Lake turned this high grade gold story into a hard sell, which prompted Blackwell to sell Gitennes' Damoti Lake stake to Ramrod for stock and cash.
The first Peruvian speculation cycle took Gitennes to $9 in 1997
By early 1996 Blackwell had set his sights on northern Peru where he secured several projects including La Virgen, a high sulphidation epithermal prospect conveniently situated between the Yanacocha gold project of Newmont and the emerging Pierina gold discovery of David Lowell's Arequipa that was bought out by Barrick Gold in August 1996 for $1 billion. By then Blackwell's associates had displaced Chuck Fipke as masters of the diamond universe thanks to the Diavik discovery, and they put their new-found stroke to work on behalf of Gitennes and its Peruvian gold aspirations. La Virgen became the focus of a major speculation cycle that climaxed at the $9 level around the time that Bre-X began to fall apart. Gitennes managed to hold up above $4 until late 1997 when gravity began to take its toll. When Gitennes deflowered La Virgen in late 1998 with a resource calculation of only 367,000 ounces at a not so great grade of 0.056 opt gold, the stock was already at $0.60, and from there on it headed into the gutter, eventually trading as low as $0.05 in 2001 at the bottom of the resource sector bear pit.
Converting failed projects into cash to keep the lights on
Tough times required tough measures, and to keep the hopes of Gitennes' shareholders alive, Jerry Blackwell resorted to pimping, first selling La Virgen to Cambior for US $7 million in early 1999, only to have Cambior hand back La Virgen in early 2000 after paying $2 million and spending $2.6 million to boost the resource to 597,000 ounces. In October 2001 Gitennes resold La Virgen to a private Peruvian company for US $1.5 million and a 2% NSR. By September 2003 this private company had put La Virgen into production, and in February 2007 Gitennes managed to sell its 2% NSR for another $1.5 million, the last of which it collected in May 2007. Perhaps in retrospect one can say that the market was too hasty in passing judgment on La Virgen, but as I hope to demonstrate shortly, Blackwell's desperate measures may soon prove to deliver an extraordinary bounty.
Urumalqui: an epithermal gold-silver play abandoned by partner Meridian Gold
Gitennes formed a joint venture with Meridian Gold in late 2002 to explore the Urumalqui gold-silver epithermal vein prospect in northern Peru. Urumalqui was Gitennes' flagship play until July 2004 when it optioned 100% of the Tucumachay project in central Peru from Inmet Mining which had generated the prospect as a grassroots gold play in 1998. By June 2005 Meridian Gold had lost interest in Urumalqui and dropped out because it failed to yield El Penon style high grade bonanza veins, leaving Gitennes with 100% and yet another sullied bride. Gitennes has not drilled Urumalqui since 2004, but it has kept community relations intact and during the past year Jerry Blackwell has conducted some serious geological meditation on the Fruta del Norte gold discovery of Aurelian Resources Inc (ARU-T: $29.62 - to trade on a 1:4 split basis on July 10, 2007) on its Condor project in southeastern Ecuador. When I talked to Blackwell he was quite coy about Urumalqui, refusing to discuss his new interpretation of this epithermal play. So I left it alone, assuming he has a farmout in the works.
Rethinking Urumalqui in the context of Aurelian's Fruta del Norte discovery
But upon re-reading the May 15 news release in which Gitennes intends "to examine the potential of a peculiar, altered and weakly mineralized volcanic conglomerate that occurs along strike of the main vein system", in which Gitennes bemoans the "wedge-shaped body of conglomerate historically regarded as unfavourable, and tested by only one drill hole", and in which Gitennes notes that "the significance of this geological setting in other epithermal camps has prompted our re-examination", it is only too obvious that Blackwell is thinking of Aurelian's blind discovery of a major intermediate sulphidation epithmeral system beneath a pile of overall worthless but slightly smoky conglomerates in an extensional basin setting north of a bunch of lousy gold-silver mineralization that had been the sorry fruit of nearly $20 million in exploration expenditure. If there is any geology supporting Blackwell's coy enthusiasm, he certainly has not made it evident on the company web site. But Blackwell's reputation as a smart geologist is also such that when I observe this sort of coy behavior from somebody with whom I only have a journalistic relationship, meaning I am simultaneously ally and enemy, and from somebody who is afflicted by the toiling geologist's compulsion to toil in solitude until in a position to gloriously prove rightness, then I think it wise to listen to the vibes. It also helps to know that lurking in the background, visualizing the geology, is Jim Foster, who helped put together the Eskay Creek discovery, another example where a convergence of geological processes produced a world class deposit. The beauty of the Urumalqui situation is that this play is utterly irrelevant to the outlook for Gitennes, which for the moment is pinned on a possible farmout of Tucumachay and a new grassroots copper-silver-gold project called TotoRoko. The fact that Urumalqui is permitted to drill, and only in need of a drill rig with a competent crew, is a bonus every bottom-fisher should relish in this age of exploration permit delays.
Tucumachay stalled by terms of Inmet back in right
Gitennes hoped to establish a bulk tonnage gold system on the Tucumachay project, and to that effect it drilled 38 core holes and 28 RC holes representing 5,294 metres that allowed it to vest for 100% in August 2006 by having spent $1.5 million. Unfortunately, although drilling yielded some splashy intersections, a large bulk tonnage gold resource did not take shape. Furthermore, the deal with Inmet turned out to have a structure that was favorable for neither side. Inmet retained a right to back in for 60% by spending 3 times what Gitennes had spent, but only after Gitennes had funded 12,000 metres of drilling. As I argued in my recent analysis of Geologix Explorations Inc (GIX-V: $1.47) a double-edged devil often lies in the details of an agreement. In this case the devil is that there is no time requirement for Gitennes to drill 12,000 metres, and because Gitennes risks forfeiting 60% of a project where the next round of drilling is of a high risk high reward nature, it has no incentive to advance Tucumachay. So the project is in a stalemate out of which Gitennes and Inmet must negotiate an exit beneficial to both sides. Of interest is the fact that Gitennes owns 100% of the 3,800 hectare carbonate hosted zinc-lead-silver Tintima prospect (grades as high as 25% zinc and 234 g/t silver over 1.2 meters) to the northwest of the 2,300 hectare Tucumachay project which also has evidence of high grade zinc-lead-silver mineralization. My guess is that Blackwell will try to negotiate a resolution to the impasse with Inmet over Tucumachay, and, if successful, repackage the Tucumachay-Tintima project as a zinc-lead-silver play it either controls as operator or farms out to a third party.
Gitennes has been the subject of a past bottom-fish cycle
Jerry Blackwell's Gitennes had plenty of supporters during the wild ride of 1994-1997, but since then the junior has been a classic toiling geologist type of bottom-fish. During the initial bottom-fish cycle when I recommended Gitennes in the $0.76-$1.00 range I watched the stock deliver a peak 800% gain at $9.00 only to watch it drop far below the $1.00 buy limit and eventually wallow in the pennies. During that cycle I had a different system in place to make enemies, so I was not in the habit of issuing timely sell recommendations when a stock's valuation was way ahead of the evidence. My rational speculation model was not yet fleshed out, and so Gitennes came and went as winner. By the time I decided to close out the bottom-fish cycle initiated in 1994 Gitennes was trading at $0.33 on February 22, 2005. So I chalked up an overall loss of 67% using the 1994 bottom-fish buy limit price of $1.00. The timing of the decision to give up on Jerry Blackwell and Gitennes proved doubly foolish when a month or so later Gitennes soared to $1.30 on enthusiasm over the new Tucumachay play. The stock did crap out on mediocre results in October 2005, but in this business timing is everything. Perhaps luckily for my subscribers, I'm not as shrewd as the charlatans who repeat the same recommendations until they eventually get it right in the style of a broken clock, so I took a break from Jerry Blackwell and Gitennes. Not so his close supporters who reloaded with a private placement of 2.5 million units at $0.40 in December 2005 and again in August 2006 with 4,250,000 units at $0.25. Yes, averaging down is such a good strategy! When I asked Jerry what sort of players managed to keep the faith he responded that it was sophisticated investors and not so much the very important investors generally assumed as a necessity for moving markets. Nothing quite gladdens a bottom-fisher's heart as much as this sort of information, for it is the faithful who exhibit the greatest faithlessness in the eleventh hour.
Warrant overhang offers a window of liquidity until the end of August
And herein lies the bottom-fishing opportunity, for Gitennes has hanging over its market 4,523,000 warrants exercisable at $0.30 until August 31, 2007. Apart from an Urumalqui related spike in late 2003 and a Tucumachay related spike in mid 2005, Gitennes has spent the last eight years wallowing in a channel below $0.50. No drilling program will be underway before October, so there is no imminent news that could change the fundamental outlook for Gitennes. Furthermore, the company's $1.5 million working capital is insufficient to swing a mountain moving acquisition deal. Given that Gitennes started out in 1993 with just under 16 million shares issued, and 14 years later still has only 41.5 million issued and 52.6 million fully diluted, with founders Jerry Blackwell and Lyle Hepburn managing to hang on to just over 1 million shares each, a minimal overall dilution that required wheeling and dealing with assets in a style that allows puns about virgins and pimping, I do not think a paper based acquisition that dilutes minority shareholders with whom key insiders share the lot is even a conceptual possibility with this management. Having been burned on a few occasions by the arbitrary stupidity of bureaucrats, I queried Jerry about the risk that the TSX might downgrade Gitennes to a TSXV listing, but he managed to dodge that bullet laced with self-incriminating possibilities by responding that he has been in regular contact with the TSX about this issue and has been informed that the TSX is happy with management's strategy of asset renewal and transformation strategies.
TotoRoko: a new grassroots generated flagship play for Gitennes
And that brings me finally to the crux of this Tracker, which is a fairly new grassroots project that Jerry Blackwell does not protest me featuring as the current flagship play of Gitennes. In November 2006 Gitennes announced that it had staked a 1,600 hectare project in southern Peru called TotoRoko. The news release made it sound like Gitennes had picked up an iron-oxide-copper-gold (IOCG) play like one of many others juniors hoped to puff up as the sort of project that appealed to PI institutional super broker Cal Everett. Most people think of Australia's Olympic Dam deposit when IOCG is invoked, with much analogous futility because nothing resembling the Proterozoic aged polymetallic Olympic Deposit has to date been found, while those in the know will think of Chile's Candeleria copper deposit, especially in the context of South America. Jerry Blackwell admits that the IOCG tag is a bit of a misnomer for TotoRoko, as is the reaction of some people who read the April 16, 2007 update as a suggestion that TotoRoko was a skarn style play. Blackwell didn't mind these interpretations, because both are perceived as geological code for the message "call me when you have enough mineralization to justify gross metal value calculations worthy of my attention". The smarter among you might wonder, why would Blackwell want to demote the potential of some new llama pasture?
A different type of exploration strategy: verifying government mapping
Once again, there is an answer for Jerry Blackwell's coyness about TotoRoko. During the pit of the bear market a good portion of southern Peru that straddles a 2,000 km regional deep seated fault associated with many of the major Peruvian and Chilean copper deposits was staked up by major mining companies such as CVRD, Codelco, Bonaventura and Newmont. True to the nature of a toiling geologist, Jerry Blackwell could not resist slinking around the stalls in the fairgrounds in the hope of learning what the big game was all about. Of course, he knew that the big game was all about Jurassic aged volcanics in the vicinity of the "big fault", and being an aficionado of the area play strategy, he couldn't but help focus on the only ground straddling the "big fault" that was still open. It soon became apparent why the ground in question was still open, and the reason was that government mapping had tagged the area as obliterated by a younger granitic intrusive that was widely recognized as barren of mineralization. As a toiling geologist Blackwell had no choice but to chase after crumbs, so he deployed the proverbial elbow grease and commissioned a mapping and prospecting campaign to investigate the worthless granite intruded portion of the key fault. Perhaps not to his surprise at all, it turned out that the government mapping was erroneous. Some lazy geologist in the pay of the government had connected a bunch of dots with a few samples, interpolated the difference as one and the same, and tagged the entire area as worthless granites. The rest of the "big organization" geologists with the majors had trusted their government peers and shunned the "dead ground". But that may have been a big mistake. Not only did Gitennes' basic mapping activity demonstrate that this open ground was prospective, but some of the results from outcrops kicked back mighty interesting copper values, 1% plus to be precise. This was dynamite information for Blackwell.
Waiting for a key concession to lapse
Gitennes initiated its investigation in 2004, but it did not acquire any ground until October 2006, which it announced in November 2006 with some vague mumbo jumbo about IOCG and skarns. The problem was that some other clown who didn't know better had staked a concession in this area years ago in the hope that it might attract area play style action. But because the ground was staked on "worthless granites", it drew no action, and so the owner allowed it to lapse without any work being done on it. Needless to say, Blackwell's team pounced on the newly vacated ground and boosted the TotoRoko land package to 5,000 hectares. Since then Gitennes has released a series of channel results consisting of numbers like 1.5 m of 1.97% copper, 45 g/t silver and 0.663 g/t gold. Sounds like spotty high grade mineralization that might never add up to a mineable deposit!
TotoRoko has the earmarks and footprint of a world class copper porphyry system
What is not evident in the news release and which the OSC might eventually view as selective disclosure, is Blackwell's explanation that the high grade values were taken from scattered outcrops over a strike length of 3,500 meters within a 500 meter wide corridors. Outcrop in this area is apparently very sparse, with just about all bedrock buried under 3-4 meters of densely packed wind-blown colluvial material. Hand-trenching is not an option; a backhoe is needed to penetrate to bedrock. Blackwell himself thinks that the oxide mineralization occurs as a series of up to 100 meter wide bands within the 500 meter width of the system, and hopes that the grade of the bands themselves and the material in between translate into a world class porphyry copper deposit with a silver and gold kicker. While bringing in a backhoe to trench across this trend might reveal plenty, Blackwell thinks the best approach is to conduct deep penetrating IP and magnetic surveys followed by drilling. The budget for the proposed program is US $450,000, with drilling expected to start in late September or early October.
Conclusion: At this stage TotoRoko is largely a conceptual copper porphyry target with an elephant sized footprint that justifies a $2 billion dream target. Given that the implied project value of Gitennes' 100% interest at 50 million fully diluted capitalization is only $15 million at $0.30, this play represents good speculative value. The same IPV applies to Gitennes' other 100% owned projects in Peru. The potential for substantial discovery driven gains and a short window of warrant related liquidity are key reasons I have given this new bottom-fish buy recommendation a top priority status. Furthermore, you have to like a management team which is able to minimize dilution by selling failed projects such as La Virgen instead of just abandoning them. Blackwell's efforts to keep Gitennes alive at minimal dilution has put the company in a position to generate and test a target with potential to reward shareholders with double digit prices.
*JK does not own any of the securities mentioned herein
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