Thom Calandra of Ticker Trax has been following natural resources since 1991 and shares his thoughts on the current metals market trends. He is the co-founder of CBS MarketWatch and is well known among geologists, prospectors and merchant bankers.
[Editor’s note: This article was originally published by Metals News and the interviewer was Dr. Allen Alper.]
According to the accelerated thinking of Thom Calandra, the hot topic on everyone’s lips these days seems to be rare and heavy earth elements. “I’ve written about Canada Lithium, Western Lithium and a few other companies,” he explained. “I also have great respect for Don Bubar and what he’s doing at Avalon Rare Metals. Still, you know, I’m mostly involved with gold, silver and life sciences; and not rare and heavy earth elements.”
“Cycles such as rare earth mania spill over into other areas at some point,” he says, speaking in animated fashion, arms waving and fists pumping. “I think the rare earths craze bodes well for titanium, molybdenum, perhaps some of the nickel-related elements that go into stainless steel, like chromium.”
This is the reason why Thom Calandra – TC to his friends and subscribers -- is so excited about Mexico silver. “My excitement has a great deal to do with the way the Mexico minerals regulators allow silver mining to occur,” he said. “There are some beautiful grades going on in places like Durango State and Guanajuato. I’m mostly talking about Great Panther Resources (TSX: T.GPR, Stock Forum) and Endeavour Silver (TSX: T.EDR, Stock Forum). I cannot help but wonder what will happen down the road with these two companies when silver’s price goes warp speed serious. There are also a few others that I’m looking at right now – Candente’s new El Oro in Mexico for instance.”
In addition to Mexico, Calandra is also thrilled about what’s going on in Ghana. “I just got back from Ghana a few days ago,” he said. “I love it there. It’s the second time I’ve been there. The people are great, and they are very hardworking and fair-minded. There are some great mineral-related stories going on there. The Minerals Commission is proactive and potent – and light years ahead of Tanzania and other Africa hopefuls.”
One story that has captivated Calandra’s attention revolves around the Ghana company X-tra Gold Resources (OTO: XTGR, Stock Forum). “It’s a small company,” he explained. “And it’s run by a 44-year-old rastaman leprechaun who is developing a resource on the Kibi Gold Belt. They’re doing a lot of good things for the metals industry right now in Ghana. Keegan Resources (AMEX: KGN, Stock Forum), a company in the Esaase District there, is doing just as well if not better than X-tra. I have great respect for Dan McCoy at Keegan; what a fine geologist. Doctorate from Alaska. Plus, hey, he loves the Grateful Dead, so how is that?”
Another company that has been on Calandra’s radar screen is Pelangio (TSX: V.PX, Stock Forum) in Ghana. Headed by Ingrid Hibbard, the company has a concession that is located right next to the historic Obuasi Mine in the Ashanti Belt. “I believe they are about to drill,” he said. “I haven’t visited the property yet, and I’d like to get to know the managers and geologists a little better before I make a trip out there. But it’s definitely a story that I am looking at.”
Elsewhere in Africa, Thom is looking at Etruscan Resources in Burkina Faso, just above Ghana. “The connection there is Endeavour Financial (TSX: T.EDV, Stock Forum), the merchant bank that just took a large stake. Could become a terrific turnaround event for Etruscan, which had its back against the wall of banks who had given up on the gold producer.”
Thom is also taken with a company called Avanti Mining (TSX: V.AVT, Stock Forum). “Avanti is a molybdenum company,” he explained. “It is one of our 11 Ticker Trax Planetary Prospects. So like all 11, I own shares once my subscribers have had time to purchase them first. I went up to the Kitsault Mine in B.C. to visit ‘em about three or four weeks ago. (August 2009) It was exciting to see, and I think that moly is going to be something akin to titanium. It’s actually a market that’s going to start trading as a contract on the London Metals Exchange in February.”
There are two main reasons why Calandra foresees leapfrog valuations in the Avanti venture (AVT). First, Avanti shares are relatively cheap; and second, Avanti will revive the moly mine. You can’t ask for two better reasons than that.
“Well, the third,” says Thom, “is that even if moly is trading well below $20 a pound, and you double the total outstanding number of shares and halve the estimate of what Craig Nelsen and his partner, AJ Ali, think the mine is worth, Avant still should be worth a dollar – not 18 cents. I just need to see more day-to-day success hits for Avanti up there.”
Other notable companies and mining properties on TC’s “watch” list include British Guyana’s ETK/Sandspring Resources (yet to start trading under the capital pool corporation shell SSP.P) … and the Australian company Cluff Gold (TSX: T.CFG, Stock Forum). “I’m going to be looking at a couple more properties in Burkina Faso for gold, too,” he added. “In Ghana, Clough was everywhere it seemed.”
Quebec, Canada, also tops Calandra’s list of areas for mining projects. “Quebec is a kick-bum territory; probably one of the top five places in the world to mine because you get most or all of your exploration costs back.” He’s especially impressed with the company, Osisko Mining (TSX: T.OSK, Stock Forum).
“They’re top notch,” he said about Quebec-based Osisko. “They’ve done everything they said they could do. If you are a student or somebody who wants to become a miner, a prospector or a geologist, I would use Osisko as a case study of how to develop a property. They’ve outperformed all of their internal goals.”
When asked about gold properties and companies in the United States, Calandra was optimistic. “There’s the Otis Gold (TSX: V.OOO, Stock Forum) project in Idaho, and Premium Exploration (TSX: V.PEM, Stock Forum) in Idaho and Montana. There is the Great Basin gold mine at Hollister in Nevada. I think that the Hollister mine and the Esmeralda property have great potential, and I think GBG will be meeting goals of 300,000 or 400,000 ounces a year of gold very soon.”
Overall, Calandra is gonzo about the metals industry as a whole. “I’ve been very excited about certain resources since 2000 or 2001,” he said. “Now my specialties, more or less, are silver in Mexico, gold in South Africa and Nevada, and molybdenum. I am also following companies in Ghana, West Africa, in British Columbia and in China (Inter-Citic Minerals).”
Calandra believes in natural resources and is willing to stake claims to companies for extended periods of time. “I’d have to say that I’ve probably been following natural resources since 1991,” he said. It looks as though he’ll be following the market for many more years to come.
“I love the miners and the prospectors and most of the IR folks, too. The brokers in Canada especially know their companies better than a hand of blackjack. These folks are dedicated to the notion that no one need be anything less than resiliently proud of natural resources, David Kearnes and Dan Stuart at Canaccord, for example, easily scoop the industry for news, insight and value.”
Canada, Australia and Mexico in particular are ripe for multiple returns the next three years. “I even like most of the promoters in the biz – Vance Loeber, for instance. A lot of fun for sure and he and his colleagues know their numbers like nobody’s business. The geologists are usually no-nonsense folks with a vision. I just try to drink one cerveza,” says Thom, “for each three they inhale.”
Disclosure: Thom Calandra owns shares of AVT, EXK, GPR, EDV, XTGR, DNT, ICI and PEM.