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VANCOUVER, Canada – I had a chance at making a bunch of money on Adrian Fleming’s Underworld Resources about 20 months ago.
I turned the stock idea down because I knew nothing about Yukon. No need to go into the $139 million Kinross Gold (TSX: T.K, Stock Forum) (NYSE: KGC) purchase of Underworld – “for a share price that guaranteed no one lost money on our stock,” says Mr. Fleming.
This time, I might heed the winds of chance breezing through far western Canada. Mr. Fleming at age 62 is saddling up, riding the big river Yukon again. This time he hopes his optioned claims from prospectors Shawn Ryan and Cathy Wood once again transform placer gold into Klondike millions.
If Adrian Fleming is correct, his Underworld team’s formula for soil-testing will bubble potent chemistry into what already looks like a $6.5 million Canada IPO for Smash Minerals. (That’s eight million shares at 80 cents each with no warrants.)
I know a truckload of geologists who have 35 years of experience under their belt, as Mr. Fleming has. Maybe it’s that Aussie grin and the way we North Americans saddle up to down-under wit. Still, Adrian fits my Ticker Trax20 percent rule: just one in five of the geos who cross my path will tell me what could go wrong – before I even ask. I’ll take those 20 percent as thought leaders in a Yukon heartbeat.
“This is a very big piece of Canada, a lot of moose pasture,” he says. “It will take us two full field seasons to do the work. You know I will have to come back to the market for more money. There is a lot of luck in the game.”
Smash Minerals is starting with intensive soil geochemistry on a vast swath of Yukon claims generated first by Mr. Ryan and his wife, Ms. Wood. Trenching and sampling is what put Underworld and its Golden Saddle property and KaminakResources (TSX: V.KAM, Stock Forum) / ATAC (TSX: V.ATC, Stock Forum) and their Coffee property on the Yukon claim map. As in, claim to prospecting fame.
Mr. Fleming is relying on some of his Underworld talent. He says, when asked about the dozens of Yukon wanna-be’s out there since the Ryan/Wood White River placer and soil discoveries of 2004: “Well, most of these companies are here because they are staking an address. This is why we know we need to be as quick as possible with the drilling.”
He says he will spend $4 million on drilling that starts in August. Adrian Fleming adds, “The work we have done so far, even though it is broad-spaced samplings, is comparable to those two discoveries at Coffee and Golden Saddle. But that does not mean we are going to find anything.”
The Smash IPO will trade in Canada as soon as next week using the ticker symbol SSH. Mr. Fleming says the Wolverton Securities and NCP Northland Capital Partners new issue is twice-oversubscribed. After the initial offering, insiders will own about a third of 17 million shares outstanding.
If the stock goes to $1.20 in free trading, that’s just $20 million for what could be a hunk of Klondike gold. “Are we going to see some smoke here or not,” Adrian told me from Vancouver, where he spends part of his time when he is not in New Zealand with his wife. Or in Yukon.
SCORECARD: We are notching most of the news-flow forecasts we flagged this past weekend, in a Stockhouse delivered free article. Sandspring Resources (TSX: V.SSP, Stock Forum), for one, reported a 32 percent increase in its indicated and measured gold and copper resource at Toroparu in British Guyana.
The gain in the project’s resource shows how rising gold and copper prices and consistent drilling that “extends” mineralization can increase a project that fully intends to become a mine. A lowered economic grade “cutoff” to 0.24 grams equivalent-gold contributed to Sandspring’s fresh resource of 3.51 million oz. gold and 330 million pounds copper (4.35 million ounces gold-equivalent).
“We saw organic growth from 32 extra holes drilled, so extra tonnage,” says Sandspring’s president, Abraham Drost. On the lowered cutoff: “The higher price used renders more material economic. We have consistently applied a two-year trailing average. At this time, the two-year trailing gold and copper prices are higher than last September's update.”
I expect that theme, lowered cutoffs yielding greater resource estimates, to continue with prospectors that truly intend to become mines, in SSP’s case an open-pit one. I hope to visit Sandspring’s Toroparu for a second time this spring or summer. I do not own the shares.
Our Ticker Trax paying subscribers also are seeing purchases and holds of one year to two years pay off significantly. The rising equity prices are accompanied with corporate affirmations of increased output, profits and exploration extensions. Leading the hit parade are fresh financial and exploration results from primary silver producers Endeavour Silver (NYSE: EXK, Stock Forum) and (TSX: T.EDR, Stock Forum) and Great Panther Silver (AMEX: GPL, Stock Forum) and ( TSX: T.GPR, Stock Forum) in Mexico.
Endeavour made $7 million of net profit for its year; Great Panther made $5 million. Both mine at Guanajuato and in Durango. I have seen Guanajuato and own both stocks, although in decreasing quantity as they have multiplied in value.
Endeavour Silver just produced two educational videos about gold. Thank you to silver historian and Endeavour executive Hugh Clarke up there in Vancouver. See: Everything You Want To Know About Silver.
Next silver screamer? As reported, I expect Gold Standard Ventures (TSX: V.GV, Stock Forum) in Nevada to reveal more about its silver potential near the Railroad Gold Project that is drawing interest from large miners. I do not own the shares. I have seen Railroad.
Another likely screamer, given its freshly reported profit of $4.4 million this week, is Revett Minerals (TSX: T.RVM, Stock Forum). The drivers here: John Shanahan, another one of those Aussies, and his team are milking the copper and silver at the Troy Mine in Montana for all it is worth. Revett’s Rock Creek project, mired in decades of legal challenges, is nearing light of day. I have seen both. Mr. Shanahan tells me Revett will be listed on the AMEX in the next month or so. I own the stock and will be purchasing more.
Great Panther’s Robert Archer first pointed me to Revett about 17 months ago. Great Panther’s 10-fold equity rise in two years accelerated when its shares last month listed on the NYSE’s AMEX.
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