John Kaiser had a mixture of good and bad news for investors who attended the recent Cambridge House CanVest 2015 conference in Vancouver.
The California-based Kaiser Research Online publisher said the junior mining sector continues to be stuck in what he called “the mother of all bear markets.”
“There is going to be no rising tide that will lift all boats.”
In that type of climate, he said the market will focus on a much smaller group than it has done in the past. It will be looking for individual success stories that may be tied to themes such as process innovation, fiat currency debasement, security of supply, and new uses for specific metals.
InZinc Mining Ltd. (
TSX: V.IZN,
Stock Forum) is among his top picks. The stock traded Wednesday at 11.5 cents, leaving a market cap of $8.3 million, based on 72.2 million shares outstanding. The 52-week range is 23 cents and 5 cents.
InZinc is a Canadian metals explorer with a 100% interest in the advanced-stage West Desert zinc-iron-copper project in Utah. The project is well positioned near roads, railways and power in Utah, Kaiser said.
According to an April, 2014 independent Preliminary Economic Assessment (PEA), West Desert has potential for low-cost, mid-tier production through conventional underground mining and processing. The PEA also indicates that West Desert can produce 108 million pounds of zinc, one million tonnes of iron (magnetite) concentrate and 10 million pounds of copper annually over a 15 year mine life.
With an initial CAPEX of $247 million, the PEA also contemplates a 5,000 tonne-per-day underground operation, ramping up to 6,500 tonnes per day by the third year of operations.
Kaiser said the current trading levels reflect some scepticism about the zinc bull market, and the veteran analyst believes the stock could “bumble along” for a while yet. “But investors in InZinc have exposure to tremendous upside,’’ he said.
Three more Kaiser stock picks:
Verde Potash PLC (
TSX: T.NPK,
Stock Forum). Trading at 41 cents, Verde Potash has a market cap of $15.4 million, based on 37.6 million shares outstanding. The 52-week range is $1.03 and 35.5 cents.
Verde Potash is a Brazil-focused agri-tech company promoting sustainable and profitable agriculture through the development of its Cerrado Verde Project, which is located in the heart of Brazil’s Cerrado agricultural belt.
The company has said it intends to produce ThermoPotash, a multi-nutrient fertilizer that the company said is ideally suited to Brazilian soils. It also aims to be a producer of potassium chloride, which is also used to make fertilizer.
“Verde Potash has figured out a way to produce an attractive potash product,’’ Kaiser said.
Peregrine Diamonds Ltd. (
TSX: T.PGD,
Stock Forum). Trading at 25 cents, Peregrine has a market cap of $72.1 million based on 282.7 million shares outstanding. The 52-week range is 46.5 cents and 13.5 cents.
The company said 71 kimberlites have been discovered at Peregrine’s wholly-owned Chidliak project, which is located 120 kilometres from Iqaluit, the capital of Nunavut. Kimberlites are carrot-like geological structures that sometimes contain diamonds in economic quantities.
A key asset being utilized in Peregrine’s search for a new Canadian diamond district is a proprietary database acquired from BHP Billiton that contains data from approximately 38,000 kimberlite indicator minerals covering an area of Canada approximately three million square kilometres.
“Peregrine is one of my favourite diamond picks,’’ said Kaiser.
Tsodilo Resources Ltd. (
TSX: V.TSD,
Stock Forum) trades at $1.04, leaving a market cap of $33.7 million, based on 32.4 million shares outstanding. The 52-week range is $1.53 and 71 cents.
The company’s main exploration focus is on the southern portion of the Angola/Congo craton in northwest Botswana, which can also be described as an extension of the Central African copper belt. Tsodilo is also engaged in exploration for gold and diamonds.
“The stock could creep up to $1.50 or $2 in the next six months,’’ Kaiser said.