[Note: All quotations and material in ThomWatch are original, attributed and made firsthand to the author.]
Canada’s capital gates have opened for gold and uranium miners, the largest of them long-established companies with proven properties and property permitting already under way.
“Gold companies can raise money,” R. Edward Flood, a managing director of Haywood Securities, says. “Even for development-stage projects if they are above average in grade or size or location. Base metal companies are having more trouble -- as using current prices doesn't really give you a return that investors would like to see.”
Canadian Mining Journal tallies almost $2 billion Canadian of mining money raised since Jan. 1. (Please seearticle of Journal’s recent money winners.)
The takeaway: 1. Nearly all of the enterprises were linked to equity and equity warrants and not debt. 2. None of the financings “fell into place” because of the luster of a resource that requires three or more years of prodding, pimping and proving itself. 3. Some money went to enterprises looking for financially distressed properties.
“In finance circles, the resource isn’t what it used to be – unless it is massive and in a country that won’t change the rules,” says Avanti Mining’s Craig J. Nelsen, a geologist and mining executive with 30-odd years of experience. “There is a cutoff on resources; more than 5 million ounces (of gold) and you have some chum for the big fish.”
Round up
Two real-time takes on “Bucks at The Gate” come from Great Basin Gold, whose Ferdi Dippenaar just raised $130 million Canadian before warrants, and Osisko Mines’ Sean Roosen, who with partner John Burzynski rounded up $350 million before warrants.
“If you raise just $100 million, the market is going to sneeze at you,” says Roosen, a friendly sort with a cherubic face and two decades of tracking Africa and Quebec properties. (More on Osisko: please click here.)
Big right now is in vogue – as long as your company owns a pit of a project that can deliver low-grade ore, but lots of it, onto massive trucks headed to even more massive processing mills.
Osisko (TSX: T.OSK, Stock Forum) already has a 38-foot mill in assembly at its Quebec Malartic project. Great Basin (TSX: T.GBG, Stock Forum) three months ago purchased a mill for its Nevada mine and is collecting tonnes of ore there.
Both companies vow to bankers and investors that they are two years or fewer from delivering caches of gold to wholesalers.
Of note in our Ticker Trax™corner of the world is this: the largest amounts of raised cash are going to vast companies slimming debt or searching for “mine ideas.”
Kinross Gold (TSX: T.K, Stock Forum) scored $415 million for reducing loans and other debt. Cameco (TSX: T.CCO, Stock Forum) topped the pyramid with $460 million that the uranium producer will use to search for cheaply priced assets.
Haywood’s Flood, based in London, concurs. “There is a large pool of private equity chasing distressed situations,” he tells me. (This holds true for silver in Mexico’s Sierra Madre. Please see Ticker Trax for more.)
For our beloved garage-loft investors looking for “ideas,” the takeaway might be what Dippenaar of Great Basin Gold tells me from South Africa, where the company’s second mine is in development.
Happy story, sad story
That is, once you have raised fresh cash in a troubled market such as the current one, investors “in the deal” acknowledge sotto voce that they are comfortable with the geology of the proposition, with the infrastructure and with the project finance aspects of the new mine. Most fund managers and wealthy investors who support the current round of mine financings make peace even with the most bipolar of un-knowables: a country’s politics.
Yet what gets bankers, investors and executives rattled to the bone is the total inability of anyone to guarantee a happy story and a rewarding finale. For that wink-of-the-eye to transpire, “insiders” need be omniscient, wizardly keen at public relations or just plain lying.
“Now all we have to do is manage news flow,” says Dippenaar at Great Basin. That’s a mouthful.
Big fish seen at Bahamas resort
Bahamas: I was fortunate in Toronto several weeks ago to run into David Skarica, a 31-year-old author whom I first met five years ago at a Vancouver gold show. David extended an invitation to an investment conference to be held in the Bahamas later this month.
Sure, there will be plenty of warm buns served at Caribbean-style breakfasts, along with papaya, coconuts, rum, sand castles and other island resort ingredients. But there will be money in search of homes, too.
David Skarica operates Addicted to Profits, and in one week, the Bahamas traveler and Mike Swanson of Wall Street Window are going to meet in Nassau, Bahamas, for the two-day seminar. I am going speak there and fish . . . not in the sea but among the handful of companies and aficionados expected at the event.
“We are looking to make this meaningful and relaxing, a regular networking event for a small group of folks who appreciate investment strategies and want to enjoy good food and company. Both Mike and I will give presentations and so will several hand-picked mining and exploration companies,” David says. For those who might want to attend this gathering – one we at Ticker Trax hope to replicate for subscribers in the coming 18 months -- please visit www.bahamasinvestmentconference.com.
The session is at Atlantis, the Nassau resort. Come join me in a fishing expedition for Ticker Trax Planetary Prospects.
Attendance is limited to a small group of motivated individuals, and the price of the event is low ($200 not including discounted hotel) and features conch shells, gourmet fare, yacht dinner, day trips and most importantly … ideas. Fishing anyone? See for yourself.Ticker Trax™and ThomWatch™ members are welcome to probe the waters.
Ticker Trax™
Ticker Trax By Thom Calandra subscribers: Just out – an entirely new issue. Plus two fresh updates on Planetary Prospects Great Basin Gold and Avanti Mining (AVT in Canada), which are mentioned. (Please see www.tickertrax.com.)
·Bonus:Please nip into our Ticker Trax™ discussion group – only on Stockhouse.
·For an index of the free ThomWatch, please click here.
·For subscription service Ticker Trax, please visit www.TickerTrax.com. Thank you!
THOM’S STORY:Thom Calandraduring 27 years of road work has helped his audience find value in a quagmire of investment choices. Thom co-founded CBS MarketWatch, MarketWatch.com and FT MarketWatch in Europe. As the voice of Thom Calandra's StockWatch and The Calandra Report, Thom fancied $300-ounce gold before that metal became an investment rage. Thom visited bioscience companies, metals mines and energy companies in a search for reliable sources and fine planetary prospects. Thom's novel PABLO BY NUMBERS was completed in 2008.
HOLDINGS: Thom’s cosmos of holdings is listed for all Stockhouse members on www.Stockhouse.com under the “portfolio setting” for user TCALANDRA. It is public and free to view. He and his family own recently minted gold coins. They own shares of Great Basin Gold.
Ticker Trax™ is published by Stockgroup Media Inc. Ticker Trax is an information service for subscribers and neither Stockhouse nor Thom Calandra is a broker or an investment advisor. None of the information contained therein constitutes a recommendation by Mr. Calandra or Stockhouse/Stockgroup Media that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Ticker Trax does not purport to tell or suggest the investment securities subscribers or readers should buy or sell for themselves. Subscribers and readers of Ticker Trax should conduct their own research and due diligence and obtain professional advice before making any investment decisions. Ticker Trax will not be liable for any loss or damage caused by a reader’s reliance on information obtained in the reports. Subscribers and readers are solely responsible for their own investment decisions. Opinions expressed in Ticker Trax are based on sources believed to be reliable and are written in good faith, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. All information contained in Ticker Trax should be independently verified. The editor and publisher are not responsible for errors or omissions or responsible for keeping information up to date or for correcting any past information. Ticker Traxdoes not receive compensation of any kind from any companies that may be mentioned in the report. Any opinions expressed are subject to change without notice. Owners, employees and writers may hold positions in the securities that are discussed in Ticker Trax. PLEASE DO NOT EMAIL THOM SEEKING PERSONALIZED INVESTMENT ADVICE, WHICH HE CANNOT PROVIDE. Copyright 2009 all rights reserved.