Colombia Gold Output Rises
- Premium Exploration: Removing From Our List (PEM)
- Life-sciences capitalist joins General Metals team (GNMT)
TIBURON, California – Colombia's gold output is on a roll. Some 415,000 ounces came from the country’s ground during the three months closing March 31.
The 13 percent rise from first quarter 2009 is based on paid royalties and thus falls far short of the real production from the country. Colombia until about 1940 was Latin America’s biggest gold producer.
Still, the half-million or more ounces of real production fortifies what we have seen this year and last during our seven or eight visits to the country.
The gold tracking comes from Ingeominas, the country’s mining regulator. This is the ministry’s website in Spanish. Raul Madrid, one of the Colombian gold geologists of the 1990s, tells me that from 1995 to 2001, Colombia's production output was just seven metric tonnes. “Most of this was from Tolima Province and from El Bagre in Antioquia,” he says. (Mr. Madrid’s company back then was Conquistador Mines.)
About three-quarters of the current total comes from the provinces/departments of Choco and Antioquia. The mining regulator counts about 40 gold companies and prospectors in the country. The largest is publicly traded Mineras S.A., which produced about 20,000 ounces in this year’s first three months.
Colombians as investors have few choices to purchase gold companies on their own stock exchange. Most Colombians are reluctant to “go online” and purchase shares of Colombia operators listed in Canada, the USA and Australia.
At present, several small to mid-sized companies say they hope to list their shares on Colombia’s exchange. These include Greystar Resources (TSX: T.GSL, Stock Forum) and Medoro Resources (TSX: V.MRS, Stock Forum). Several other companies say they are looking into the process.
Colombia’s gold output looks like it will reach three million ounces in 2012. About 1.5 million ounces in 2009. Just four years ago, the total (tracking royalties) was a half-million ounces. Colombia’s next president will have the gold ball rolling his or her way. The election is Sunday, and three candidates appear to have a shot at forcing a run-off. They include Green Candidate Antanas Mockus and former Defense Minister Juan Manuel Santos. The favorite right now is Mr. Mockus, former mayor of Bogota.
Our Planetary Prospects in Colombia are Bellhaven Copper & Gold (TSX: V.BHV, Stock Forum) and Colombian Mines (TSX: V.CMJ, Stock Forum). Our speculative target is Antioquia Gold (TSX: V.AGD, Stock Forum). We here at home own shares of those three. We also own (and have researched and visited since 2008) Medoro. John Hicks’ Medoro Resources is on track to purchase the historic Frontino Mine in Antioquia for as much as $200 million. Medoro’s annual report is just published and shows that its completed purchase of El Marmato in Antioquia has measured and indicated ounces of 7.5 million ounces and inferred ounces of 2.2 million.
Premium Exploration (TSX: V.PEM, Stock Forum): It is time to pare the roster of Planetary Prospects. We need to make room for prospectors in regions and countries that are benefiting from sharp increases in minerals output. One of our 13 companies needs to be “delisted” if we are to continue to identify companies that can rise 500 percent and more in the span of a year.
This time around, we will excise Premium Exploration (TSX: V.PEM, Stock Forum) from our list. The Idaho and Montana gold (and uranium) prospector performed well for us at the get-go, just weeks after I first visited Friday Petsite in Idaho with CEO and geologist Wilf Struck. The shares roughly tripled to 60 cents or so Canadian. That was in late 2009 and early 2010 (this year).
Now we are in May. After a dilutive financing in November or December (more than $3 million Canadian raised) and the prospect of yet another cheap money-raise, Premium shares are back near 26 cents. Thus: it is time to review a company with more than 90 million shares out there on a fully diluted basis. (See: share structure.)
We consider the scope of Friday Petsite and surrounding concessions vast. The gold project certainly will benefit from Mr. Struck’s work on the property as far back as the late 1970s. Still, Premium Exploration is stuck between mineralized rock and a hard place. The tiny company appears to have loyal investors in the form of an Australia fund that took part in the last financing. But raising cash for a company with much to prove in the way of expensive drilling programs is a tough hoe.
Premium in April said it hoped to raise $7 million Canadian at a price of 30 cents a share – above the current price and attached as usual with warrants. That means more cheap shares for a company already with a lot of paper.
As we understand it, Premium is calling the current drilling a Phase 3 Program. The company has two holes completed and some 9,500 meters of drilling ahead of it.
Chairman Del Steiner recently told me when I asked about the current financing effort, “Dilutive yes. But we have enough gold in the ground and will add more with this (forthcoming) program to tip the scale from no to yes and get us more into a value market from the (stock market) pump and dumpers. The Australians have their whole position and will take more here if necessary.”
On the current drill program, Mr. Steiner, an environmental lawyer, says, “We could do less drilling, drill less footage and go to 60 cents (a share) on good results again and then the sellers will take over and dump us back to 30 cents or 40 cents to start again. Comparables treat us fairly in the middle of similar companies here. The difference is we are only drilling on four percent of our whole system.”
Mr. Struck, CEO, tells me today, “As you know, we started drilling ahead of schedule in Idaho and as we put out in one of our last releases, the drilling is going well and the holes offset last year’s holes and have hit the same geology and mineralization. These holes are designed to expand the gold zone and add ounces to the resource, with assays expected by mid-June or so.”
For background purposes, here is what Wilf Struck told me when we toured the property six or so months ago. “So look here, what we could have at Friday (Petsite) is something eroding down into what you see in Nevada, high-grade feeder systems … and then you come to say a 500,000-ounce resource with average depth of 150 meters. Well, with three times the strike length and twice the depth you easily come to quite a few million ounces, maybe four million. See how that works: three times 150 meters and you get two million ounces and go to 1,000 meters depth and you could envision proving up four million ounces along just a 350-meter stretch of the Friday property.”
Finally, in all fairness, here is a quote from one of the Australia investors who took part in the most recent financing: John Wang, director of hedge fund Ausmon Resources Limited, said, "We invested in Premium to support a planned drilling program aiming to confirm the gold resource in the Orogrande Shear Zone that the management of Premium believes to be potentially large. We look forward to successful results of that program as it progresses."
We here at home own about 60,000 shares – less than $20,000 worth. We did not sell when the stock went to 60 cents. This is in keeping with our Planetary Prospect approach of holding investments for long spans of time, years if necessary. Ticker Trax Planetary Prospects are those that might provide lofty returns in one-year and two-year and three-year spans. Can Premium? I have others that are enticing and waiting on the Colombia/Guyana/Ghana/Mexico/Nevada short-list.
Later this week or early next week, I will sell about half of our shares here at home to make way for something else. As in keeping with Ticker Trax tradition, that sale will not happen until after this report gets to subscribers.
To be entirely clear, any decision has nothing to do with the company’s misunderstanding with Canada regulators regarding the website wording of what turns out to a “historic” resource estimate at its Buffalo Gulch site in Idaho. The website went a little too far in its wording of the gold resource. Del Steiner told me the misunderstanding was “a clerical error” and that the company got “lazy.”
General Metals: The Nevada owner of the Independence Mine in Nevada’s Battle Mountain Mining District just appointed Mike Powell to the board of directors. Mike is a venture capitalist in San Francisco, across the bay from where we live. Mike is a pilot and flew me to the mine in March, where we met with General Metals (OTCBB: GNMT, Stock Forum) director Robert Carrington, the Nevada geologist who also helps to run Colombian Mines (TSX: V.CMJ, Stock Forum).
(Please see photos here of Mike Powell and Bob Carrington at the Independence property. Photos – Thom Calandra.)
Mike is one of the folks who turned around Sofinnova Ventures almost 15 years ago. The fund is now worth about $1 billion and invests in drug developers and vaccine makers. Mike Powell, a doctorate in chemistry, was one of many folks who helped to develop the recently tested AIDS vaccine. He has a ranch in Nevada and likes to deep-sea dive with his family.
I expect Dr. Powell to take a stake in General Metals in an effort to raise cash. The tiny company is worth less than $5 million by today’s stock market price. The just-released minerals estimate of the Independence property shows measured and indicated resources of about 210,000 ounces of gold and 3.9 million ounces of silver. Some 868,000 ounces of gold are estimated in an inferred resource category.
Surrounding the Independence property and the 280-odd acres controlled by General Metals is Newmont Mining’s Phoenix property. The Battle Mountain region is prolific when it comes to gold, copper and some silver. Newmont is building – we saw it with our own eyes – what it says will be the largest open-pit operation it will own in the state of Nevada.
Here is part of our report on the General Metals project: see Stockhouse article. The Ticker Trax library has further password-protected material. We here at home do not own General Metals shares but are considering a purchase.
Planetary Prospects
There are now 12 of them. Premium Exploration is now off the list and we wish good things for the Idaho and Montana prospector. Please visit www.tickertrax.com and search our landing page for details on the start of coverage for individual Planetary Prospects and the entry price.
- Central Fund of Canada (AMEX: CEF, Stock Forum) and (TSX: T.CEF.A, Stock Forum) – Gold and silver repository. Its premiums, being a closed-end fund, are rising. Own this one as a money market proxy for real gold and silver – metal that actually might be delivered to investors if ever they want to cash in their paper stakes. One day, when investors decide they absolutely must own gold and silver, Central Fund shares will see their premium over net asset value double … or more.
- BioCryst Pharmaceuticals (NASDAQ: BCRX, Stock Forum) –Influenza and leukemia drugs. Gout, too. Biomedical appears to be back in vogue as an investment. We here at home are holding these shares – 75,000 and counting – as “The Return of H1N1” influenza virus plays at hemispheres, nations and regions near all of us. There is no risk of a dilutive financing. There is a risk of Type A H1N1 remaining the dominant seasonal flu virus for several years. The company has a new 5.5 percent investor: Joseph L. Harrosh. (Please view this Stockhouse exclusive article.)
- Endeavour Silver (AMEX: EXK, Stock Forum) and (TSX: T.EDR, Stock Forum) – Silver (and gold) in Mexico. I expect Endeavour Silver to purchase a publicly-traded silver (or silver-gold open-pit) company this year. Probably in Mexico … but Endeavour’s principals tell me they will not rule out other parts of North America. First-quarter metrics, including costs, cash flow (a net profit for the three months vs. a year-ago loss), silver and gold output, are improved markedly. Brad Cooke and his team realize they have to show their audience its exploration activities are vibrant enough to hurtle the small Guanajuato and Durango company above five million ounces of silver equivalent per year. Mr. Cooke and his team say they are doing exploration drilling at the San Juanico property in Parral, Chihuahua, among other points. Endeavour also is mapping and sampling at its freshly purchased San Sebastian project in Jalisco. Endeavour Silver’s project outline is on its Internet site: Please see the list.
- Endeavour Financial (TSX: T.EDV, Stock Forum)– No relation to Endeavour Silver. This is Neil Woodyer’s profitable Canada-traded merchant bank that is making a big bet on West Africa. … in the form of Crew Gold (TSX: T.CRU, Stock Forum) and a 43 percent stake and Etruscan Resources (TSX: T.EET, Stock Forum) and a 55 percent stake. The company just logged $213 million of net profit in its most recent quarter. Endeavour Financial does business with natural resources and energy companies. The shares, even with a two-month steady climb, trade at a discount to the value of securities owned by Endeavour Financial. It owns about $500 million of gold investments and other merchant bank investments, giving the company a book value that is about twice the current share price. Almost 90 percent of the bank’s working capital is linked to investments in small to mid-sized gold producers and prospectors. We expect Endeavour Financial or regulatory filings will unveil another out-sized investment in coming weeks. Gold almost surely will be the commodity of choice. West Africa, South Africa, Tanzania and Mauritania are all possibilities.
- Xtra-Gold Resources(OTO: XTGR, Stock Forum)–This West Africa gold prospector might follow in the footsteps of successful Keegan Resources (TSX: T.KGN, Stock Forum) … and Perseus Mining (TSX: T.PRU, Stock Forum) … and Red Back Mining (TSX: T.RBI, Stock Forum). I was at the Kibi in April. I saw granitoid bodies that host what could become one of Africa’s largest new gold deposits at the Apapam concession. Xtra-Gold shares get little attention on the USA over-the-counter bulletin board and deserve a listing on a commodities-comfortable exchange. Let’s hope CEO James Longshore and his team, including new geologist-consultant Robert J. Casaceli, keep moving in the right direction. Fresh drilling will start by June or July. (Pleasesee the Libraryfor coverage stretching back to autumn 2009. Also: Please visitStockhousefor a perspective on the Kinross Gold investment in West Africa’s Red Back Mining.)
- Great Basin Gold (TSX: T.GBG, Stock Forum) – This is Ferdi Dippenaar’s South Africa and Nevada miner. Real gold at Burnstone and Hollister mines … and prospecting at Esmeralda in Nevada. Great Basin just reported its latest quarter. The company says it had “excellent operational performance at Hollister and improved efficiencies at the Esmeralda Mill facility.” Ditto for South Africa’s Burnstone Mine. I have been to all of the company’s working properties. (Please see our password-protected libraryfor coverage.)
- Candente Copper(TSX: DNT, Stock Forum)– Joanne Freeze’s Candente has copper in Peru at Cañariaco. The almost eight-billion-pound copper project is starting to get the attention of manufacturers and bankers. Yet Candente Copper’s shares sell for a value of only a penny a pound for its in-situ copper. Candente Copper, formerly Candente Resource, is among the cheapest propositions (based on ore in the ground) in this list, along with Avanti Mining. The Candente companies’ properties in Peru also include poly-metallic prospects that might some day package into a third separately-traded company. Joanne Freeze last time we spoke said she was headed for China. (Please see libraryfor coverage.)
- Candente Gold (TSX: T.CDG, Stock Forum) – This separate company’s shares were distributed to predecessor Candente Resource’s shareholders in January 2010. We issued a full report on Candente Gold’s Peru prospects in April. Now, we’re examining El Oro, an entire district and artisanal mine workings in Mexico. (Please see password-protected libraryfor coverage.)
- Great Panther Silver (TSX: T.GPR, Stock Forum) – Silver in Mexico. Robert Archer is the CEO. The Panther is on the prowl for assets. GPR’s rising silver grades and low stock valuation compared with other Mexico silver producers make the company’s shares look like a bargain. Quarterly performance at the Canadian company produced a net profit. Great Panther’s silver-equivalent output at Guanajuato and in Mexico’s Durango state is benefiting from improved efficiencies and richer gold harvests. The company’s metals’ production includes byproducts and runs about half that of Guanajuato neighbor Endeavour Silver. As Great Panther mines richer ore in greater quantities, and as the small miner expands its exploration prospects, GPR shares at current silver prices easily will double in the next six months.
- Avanti Mining (TSX: V.AVT, Stock Forum) – Cheap and aspiring molybdenum mine at Kitsault in British Columbia. Getting even cheaper with the sell-off in just about everything speculative this month of May. When Avanti’s Craig J. Nelsen and A J Ali see this through, Kitsault will be producing about 25 million pounds of the stainless-steel additive each year – for 15 years. That is 215 million metric tons of ore grading 0.085 percent of moly. That works for a world where steel-based moly demand is expected to expand six percent or so this year and next. Mr. Nelsen and Mr. Ali raised $17 million Canadian for the company. I just saw in the latest proxy that Mr. Nelsen, Avanti CEO living in Colorado, owns 10 million shares of the company. Canada’s Bob Cross of B2Gold and other miners and prospectors is an Avanti director and owns more than five million shares. Avanti Mining at a market worth of $20 million is the cheapest proposition on this list. Avanti must show it can line up plenty of cash or lending pacts for a project whose total cost probably will run more than $640 million. A J Ali, Avanti CFO, is trying to notch one or two off-take agreements for the mine’s easily reached moly. The takers likely will hail from Asia, where steel mills require a steady and reliable supply of the element molybdenum. I have been to Kitsault. Moly is an additive in all types of stainless steel. (Please see the password-protected libraryfor coverage.)
- Colombian Mines Corp. (TSX: V.CMJ, Stock Forum) – CMJ has one of the thickest property books in Colombia for such a tiny company: some 300,000 hectares. Bob and Gloria Carrington and Nate Tewalt’s company has reported drill results from its Yarumalito project in Colombia. The numbers were mediocre. The company just optioned its Anori gold and copper prospect to Yamana Gold (NYSE: AUY, Stock Forum) and (TSX: T.YRI, Stock Forum). CMJ gets $50,000 from Yamana right from the get-go. CMJ’s Robert Carrington says he and CEO Nate Tewalt of Washington State are considering a joint venture or sale for its Venecia holding in Antioquia. (Please see the password-protected libraryfor coverage.)
- Bellhaven Copper & Gold (TSX: V.BHV, Stock Forum) – Our newest member. Panama and Colombia. We here at home now own 1.4 million shares at a price that is higher than its current price of 22 cents. Honolulu fund manager and doctor of geology Paul Zweng is a large investor and just-named interim CEO. Dr. Zweng’s success rate with epithermal gold deposits and with copper prospects such as Peru’s Antares Minerals (ANM) is among the best I have seen in eight years. Bellhaven now owns the Las Minas concession in Antioquia, close by CMJ’s Venecia property and Sunward’s (TSX: V.SWD, Stock Forum) Titiribi. (Please see the Libraryfor coverage.)
We here at Ticker Trax cannot and will not address queries about any company or prospect/theme that is written as part of Ticker Trax or our Stockhouse reports but is not a Planetary Prospect. We stand firmly behind our Planetary Prospects and back them with our own patient money here at home. With the exception of Central Fund of Canada, which I view as a gold and silver money market for cash purposes, I have not sold and do not sell in and out of our Planetary Prospects. Ticker Trax and Stockhouse audiences receive plenty of notice time, in some cases weeks, when we here at home decide to purchase or sell any security named in these reports.
As for reporting on other companies, ideas are there for all to view and consider. Please do not expect that Ticker Trax will support these subjects with research, on-site visits and so on. Feel free to contact these companies, be they Nevada prospectors, Canada miners or Peru, Colombia and South Africa companies.
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 – especially this one: Core Box Revealed. Companies whose site tours I attend for research purposes pay part or all of my airfare and hotel. Stockhouse and I also pay when necessary. I plan on seeing a Butte, Montana, gold project run by Timberline Resources (TSX: V.TLR, Stock Forum) in one week.
Ticker Trax
Please visit Stockhouse for a selection of our Ticker Trax research and our password-secure Library for subscribers.
(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. Subscribers always come first.)
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. 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, Xtra-Gold Resources, Great Basin Gold, Endeavour Silver, BioCryst Pharmaceuticals, Bellhaven Copper & Gold and each of the other Planetary Prospects researched in this and other 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.
For a Ticker Trax Library starting in November 2008, please see our Stockhouse Password-Secure Archives.
NOTICE: For those who might not be paying Ticker Trax subscribers: Si vous n'êtes pas le destinataire prévu ou un agent responsable de la livraison de ce courriel, tout copie, impression, reproduction ou autre utilisation d'une partie de ce courriel est strictement interdit.(Thom and Stockhouse also produce free reports. Please visit Stockhouse.)
Ticker Trax™ is published by Stockhouse Publishing Ltd. 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 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 Trax does 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 2010 all rights reserved.