BUTTE, Montana – Professional prospectors almost always question when a company goes grass roots.
It is a bit like going native. In a rising market for natural resources, prospecting companies often stake untested ground. Or finagle a transaction to control it.
In a hot country, like Colombia for gold and copper, small companies often take hold of land at the drop of a hat. They do it in exchange for money or option rights or partnerships. What investors must decipher is the legitimacy of a property grab.
Is the land entering the fold of a public junior because the company knows something about the property that few in the business know? Unlikely.
Is the property entering a public portfolio because the company is part of a grass-roots grab? One that might attract fresh investors?
The months of May and now, June, are delivering more of these “grabs” to our Ticker Trax in-box than we can track. Some of them look worthy. Others look like area-code garbage.
“More grass roots ground -- the story of Colombia,” a Toronto CEO and active South America financier tells me. “Someone is bound to hit with a lot of hard work. But it would be nice to see some of these companies drilling instead of building large unexplored land packages only.”
Now, we here could catalogue a half-dozen companies going “native” in their pursuit of virgin soil … or historic soil last explored 50 years ago. One or two of them are even featured research companies of our Ticker Trax service.
One of those is Antioquia Gold (TSX: V.AGD, Stock Forum), a speculative choice of our service. This is a company with a thankless stock. The main project in Colombia I have seen twice. Cisneros in the Department of Antioquia is the reason why we are following the tiny Calgary-linked company.
So what is a speculative investor to do about Antioquia Gold’s “hopper” this week? The company (in a law-inspired transaction) will probe grass-roots ground, 30,000 hectares at six locations, via a subsidiary.
“We are an exploration company and, as such, need properties to explore … a stream of opportunities in the hopper,” Brad Van Den Bussche, exploration chief and geologist, told me when I asked simply, “Why?”
In a new law, mining companies in our beloved Colombia were liable for fees on certain concessions. Thus, a Barrick subsidiary (ABX and T.ABX) is dealing 31,983 hectares of ground to an Antioquia Gold subsidiary. The details of the vetting are not what concern me. (You can read them here.)
It is the idea of it that has my antennae rattling. We at Ticker Trax have identified Antioquia Gold as an extremely speculative purchase, and we here at home own 30,000-odd shares (or about $6,000 worth), because of the exploration drilling taking place at Cisneros. This is a project literally with gold dust everywhere, artisanal mines everywhere and crisscrossing veins everywhere.
Antioquia Gold is about a quarter of the way through its current Cisneros drill program and thus far has seen its results so under-whelm investors that its shares are near historic lows. Is this some kind of prospecting insurance policy for Antioquia Gold?
Mr. Van Den Bussche, whom I have met on one of my two Cisneros tours, tells me, “We carefully evaluated a large number of properties and acquired control of the ones referred to in the latest news release because we feel they have significant potential, fit the geological model of what we want in our portfolio and warrant further exploration to take them to the next level some by Antioquia and others by partnerships. While we are fully dedicated to advancing our flagship Cisneros property, we feel it prudent to have other quality opportunities in Colombia as well.”
Speaking of area codes, one thing that Antioquia does in its current press release about this transaction is list just about every meaningful and meaningless neighborhood project in the vicinity of the six projects. Titiribi – worthy for sure. Marmato – worthy. Others? No comment.
As for our own methodology, what we look for – in personal visits to grass-roots properties – are veins and outcrops, porphyries and pits, trenches and channels and surface mappings and artisanal mines that can DEMONSTRATE beyond the shadow of an area-code doubt an odds-on chance at economic success in long-proven gold and copper districts.
The demo part is the most difficult in this exercise. Often, field geologists will calculate or guess at what look like potent grades for the projects. In most cases, the sampling or the calculations or both are too thin on the ground. Too hasty. Too spotty.
Questions to ask:
- Why would a Barrick or an AngloGold or a Newmont (TSX: T.NMC, Stock Forum) and (NYSE: NEM, Stock Forum) or (fill in the blank) let the thing go in the first place?
- How much REAL TIME have field geologists spent using geophysical assays, using excavators to sample channels, using GPS to plot potential trends?
- Who knows more about the property – and is still alive – than any other single person in the entire world? Where is that person? Does that person have an interest in promoting the property?
- Are “historic” maps and minerals data available for the district or the region or the property itself?
- Why is the prospector grabbing the property now? When the property was likely available for a lot less money when NO ONE cared about Colombia? Or wherever. Is their a legal reason for the transaction? Or some other compelling entry point that makes the grab wise, economic and logical?
- Finally, the intangible, as longtime geologist and mining executive R. Edward Flood always asks me when I visit a property. “Do your feet get hot when you walk the thing?” Mr. Flood, formerly of Haywood Securities in London, says.
To be sure, the Antioquia Gold transaction involved less than $300,000. To Brad’s credit. Company geologists have visited some of the properties and conducted surface mapping and sampling.
What interested me most about the press release this week had nothing to do with the subsidiary actions of Antioquia Gold. Instead, it was this and came at the very bottom: The 10,000 meter drill program announced on March 17, 2010 and updated on April 28, 2010 is roughly 25 percent complete and the results of the first set of drill holes will be publicized once the sample analysis are received from the assay laboratory and interpreted.
Now that, in my book anyway, should have been the first paragraph of it all.
Our Ticker Trax™Planetary Prospects in Colombia are Bellhaven Copper & Gold (TSX: V.BHV, Stock Forum) and Colombian Mines (TSX: V.CMJ, Stock Forum). We also have a speculative target discussed in this article. We here at home own shares of those three. We also own (and have researched and visited since 2008) Medoro Resources (TSX: V.MRS, Stock Forum). John Hicks’ Medoro Resources is on track to purchase the historic Frontino Mine in Antioquia for as much as $200 million. The company now operates the lower mine at El Marmato in Antioquia and states measured and indicated ounces of 7.5 million ounces and inferred ounces of 2.2 million.
Please see our Ticker Trax library for coverage of Bellhaven and Colombian Mines. I am in Butte, Montana, today visiting Timberline Resources (TSX: V.TLR, Stock Forum). The company’s shares Thursday for the first time are also available in Canada under the ticker V.TBR.
Please see our Ticker Trax™ password-protected library for more about a Colombia speculative notion.
Ticker Trax™
Please see Stockhouse for a selection of our Ticker Trax research and our password-protected library for subscribers. Thom Calandra owns shares of each of the 12 Planetary Prospects in Ticker Trax. Please see our Ticker Traxpassword-protected library for coverage of copper in Peru, gold in Peru, gold and copper in Colombia, gold in Ghana and silver and gold in Mexico.
(All photos by Thom Calandra. Thom and his family own shares of each of the 12 Planetary Prospects. Thom’s personal holdings are available for all to see on Stockhouse, the Canada publishing company. Subscribers are informed well in advance of any shift in research regarding Planetary Prospects and any purchase or sales decisions.)
Ticker Trax™Please see tickertrax.com to learn more about this wealth service and its Planetary Prospects. For an index of free Thom Calandra articles, please click here. For an entire explanation of our strategies, research methods and disclosure procedures regarding all aspects of Ticker Trax and our Stockhouse reports, please visit our readily available Stockhouse articles. Please see this one in particular: Core Box Revealed. Thom Calandra’s on-site tours of properties are paid in part by the hosting companies and in part by Stockhouse and Thom Calandra. For the password-protected Ticker Traxlibrary, please see: www.tickertrax.com/Login.aspx.
HOLDINGS: Thom’s holdings are listed for Stockhouse members at 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 and silver coins and shares of about 30 public and two private companies. As with each of the Planetary Prospects, Thom Calandra owns Colombian Mines, Bellhaven Copper & Gold and the other Planetary Prospects researched in Ticker Trax reports.
THOM CALANDRA of Ticker Trax helps his audience find value in a quagmire of investment choices. Thom co-founded CBS MarketWatch and MarketWatch.com. As the voice of Thom Calandra's StockWatch and The Calandra Report, Thom pegged $300-ounce gold as a long-term hold in 1999 and in 2000. He has been covering life-sciences and natural resources since 1988.
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Ticker Trax™ and Thom Calandra’s reports from the field are distributed by Stockhouse Publishing Ltd.Ticker Trax is an information service for subscribers and neither Stockhouse nor Thom Calandra is a broker or an investment adviser. None of the information contained therein constitutes a recommendation by Mr. Calandra or Stockhouse that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Ticker Trax and Stockhouse do not purport to tell or suggest the investment securities that subscribers or readers must buy or sell for themselves. Subscribers and readers of Ticker Trax and Thom Calandra’s freely available Stockhouse articles are asked to conduct their own research and due diligence and obtain professional advice before making any investment decisions. Ticker Trax will not be liable for any losses or other damages caused by a reader’s reliance on information obtained in these 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 representations or warranties, expressed or implied, are made as to the accuracy or completeness of those opinions. All information contained in Ticker Traxshould 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 Trax and Thom Calandra do not receive compensation from any companies that are mentioned in these reports. Companies hosting research tours sometimes pay for travel expenses. 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 and in Stockhouse articles and will disclose when such ownership occurs. PLEASE DO NOT E-MAIL OR CALL THOM CALANDRA SEEKING PERSONALIZED INVESTMENT ADVICE, WHICH HE CANNOT PROVIDE. Copyright 2010 all rights reserved.