Dead Man Talking

Crad Kilodney's archives

PDAC 2003 by Crad Kilodney

See also: PDAC 2001, PDAC 2002, and PDAC 2004

Millions and millions of years ago, before there were any people, Mother Nature put many different minerals in the earth’s crust — minerals containing such things as iron, copper, zinc, lead, nickel, cobalt, tin, aluminum, gold, silver, platinum, palladium, uranium, diamonds, emeralds, and lots of things you may never have heard of (especially if you’re right-brained, like my cousin the singer, who failed algebra).

And all those elements and minerals would still be sitting there in the ground if human beings had not taught themselves how to find them, extract them, and turn them into basic materials you take for granted. That’s why I love miners and mining companies. We’d have nothing without them. You wouldn’t be reading this article on your computer. You’d be living in a cave, eating stuff off trees, and wiping your ass with a rock.

But worst of all, there’d be no junior mining stocks to speculate on! And that’s why I’m here every year, at the Prospectors and Developers Association of Canada convention, held at the Metro Toronto Convention Centre. Nearly 200 companies are here to pitch their stocks to investors like me. Some of them will pay off big. And that’s the draw.

 

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     This is a better turnout than I’ve seen in a few years. Noboby gave a spit about mining during the bull market in tech. But now mining is back. And you probably didn’t know this, but more money is raised in Toronto for mining ventures than in any other city in the world. So this is not only a show for the public; there is serious networking going on, too.

 

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     This year I’m joined by my lovely and talented neighbour Olga, who will assist me as photographer when she’s not off somewhere chatting up men. I’ve certainly brought her to the right place, since the ratio of men to women is about fifteen to one.

 

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     Individual prospectors exhibit at the PDAC in the hope of striking a deal with an exploration company. Big discoveries often start with humble prospectors on a shoestring budget with something to prove. Jim Chard (pictured here) and partner Robert Dillman have a gold discovery in eastern Ontario they believe could be valuable. Their email address is Davidson.Dillman@Sympatico.ca.

 

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     Olga knows the people at High River Gold, which has a profitable gold mine in Russia. In fact, she would love to work for a mining company with interests in Russia or former C.I.S. countries because of her Russian fluency and numerous business contacts (contact me if you want to contact her). High River is an extremely ambitious company and one of the more interesting stories in the Canadian mining sector. (Website: www.hrg.ca. Toronto Stock Exchange ticker symbol: HRG.)

 

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     NovaGold has a joint venture in a big gold property in Alaska that has a good chance to become an operating mine. The stock trades fairly heavily and is worth a look. (Website: www.NovaGold.net. Toronto Stock Exchange ticker symbol: NRI.)

 

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     In the gold-mining industry, this company is God. Although I don’t own the stock, I have made easy money (if not big money) selling put options on it. (Website: www.Newmont.com. N.Y. Stock Exchange symbol: NEM.)

 

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     Ashton was one of ten junior mining companies I bought last fall. I mentioned them in last year’s photo essay after they set off a diamond rush in Quebec. I got in at $1.04 and cashed out at $1.34 in March, feeling very smug about it. The other day it more than doubled, from $1.44 to $2.56. This one should be in play as a speculation for quite a while, seeing as how they have a lot of territory to explore and have excellent management and expertise. (Website: www.Ashton.ca. Ticker symbol: ACA, Toronto.)

 

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     Diamondex is a spinoff from Winspear, a stock I made money on a couple of years ago. The President of Winspear, Randy Turner, impressed me so much when I met him, I had to get in on Diamondex, which is another top Canadian diamond explorer. I got in at 65¢ and cashed out at around $1.05. If the chart looks like a good bottom fish in October or November, I’ll jump in again. The website is www.Diamondex.net. Stock symbol is DSP on the TSX Venture Exchange (formerly known as the CDNX).

 

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     Here I am with the very aristocratic Roswitha Derbuch, the President’s wife. I took a small loss on this one, sorry to say. Twin has two diamond projects — one in Quebec and one in the far North — and a gold project in Idaho that may actually become a producer. The company has over 80 million shares outstanding, which is perhaps a bit too much for a good junior mining speculation. (Website: www.TwinMining.com. Listed as TWG on Toronto.)

 

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     Diamonds North, which is a new company, has been seeing a lot of action and has the makings of a good speculation. Their main exploration area is Victoria Island, N.W.T. (Mother Nature likes to put diamond deposits in some of the most inhospitable locations on the planet as a way of separating the truly dedicated from the merely greedy.) Teck Cominco, a major mining company, has bought a 6% stake in Diamonds North, so this one has to be taken seriously. (Website: www.DiamondsNorthResources.com. Listed as DDN on the TSX Venture Exchange.)

 

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     I broke even on Band-Ore. They have a diamond project and a gold project in Ontario. The diamond play is the more important one, especially since it is in a relatively easy location compared to most of the other Canadian diamond projects. This stock might not be on my A-list, but a B-list speculation for sure. The website is www.Band-Ore.com, and the stock trades on Toronto as BAN.

 

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     Majescor is a spin-off from Virginia Gold Mines. Virginia locked up some diamond properties in the big rush last year and spun them off as a separate company. Since I have a lot of respect for Virginia, I got into Majescor. I got out with a small loss but would be ahead now if I’d stayed in. However, when I bottom-fish in October or November, I plan to cash out no later than April. This one will be worth another look later this year. Their website is www.Majescor.com, and their symbol is MAJ on the TSX Venture Exchange. A map of their Quebec exploration properties appears below.

Map 1

 

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     Eira Thomas was at the centre of the big story of this year’s convention. One of Canada’s best diamond geologists, she and her colleagues made a big diamond discovery in the far North early in 2002 and kept quiet about it until they could lock up as much land as possible around the discovery site. Two related companies — Northern Empire and Stornoway — saw their stocks go up like rockets when they broke the news. They intend to merge. Thomas is CEO of Stornoway and President of Navigator, another diamond explorer also working in the far North. Girls, this woman should be your role model. Mining runs in the family, and she has paid her dues out in the field getting her hands dirty just like the boys.

 

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     Bruce McLeod (right) is Vice President of Northern Empire, which I passed up last October when it was around 15¢. Now I’m kicking myself because I would have had more than a ten-bagger. The McLeod family is a well-known mining family. Catherine McLeod-Seltzer is President of Stornoway. If these stocks sell off later in the year, I’m jumping in.

Stornoway: www.StornowayVentures.com. (SWV — TSX Venture.)

Northern Empire: www.NorthernEmpireMinerals.com. (NEM — TSX Venture.)

Navigator: www.NavigatorExploration.com. (NVR — TSX Venture.)

A map of the discovery area appears below.

Map 2

 

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     I lost a bundle on a Mongolian gold play some years back, so I won’t touch anything in Mongolia any more. It was my loss not to get in on Ivanhoe, which is financier Robert Friedland’s latest success. (He is credited with the discovery of the huge Voisey’s Bay nickel deposit in Labrador.) Ivanhoe has a very large copper-gold exploration project in the Gobi desert (famous for its dinosaur fossils). The gold grades are very low, but the copper grades are decent. It’s not my flavor, but you can learn more at www.IvanhoeMines.com. (IVN in Toronto).

The colored pictures in the photo are induced polarization maps. Induced polarization is an exploration technique that measures the ground’s ability to retain an induced electrical charge. Pink and red indicate highest chargeability, trailing off to yellow, green, and blue. Here’s a closer look:

Map 3

 

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     Freewest has one of the best and most diversified portfolios of exploration projects in Canada, yet their stock has gone nowhere this year. I took a small loss the second time around after making a small profit two years ago. Their main project is a gold project called Clarence Stream in New Brunswick. (Website: www.Freewest.com. FWR on the Venture Exchange.)

 

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     Is it possible that Tiomin’s titanium sands project in Kenya is actually going to go ahead after years of Third World bullshit? If so, this stock has come back from the dead. (Website: www.Tiomin.com. Symbol TIO on Toronto.)

 

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     I’d like a nice bag of vermiculite from Uganda to sprinkle on my SARS-infected civet cat, mm-mm!…Okay, sorry, guys, just a little Toronto humor, heh-heh. Your stock is down to 3¢, which is even lower than the last time we met, but I might start getting interested at a penny. (Website: www.TheNewIBI.com. YIB — TSX Venture.)

 

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     Tiberon is developing the, uh, world’s largest, uh, tungsten-flourite mine. It’s in (cough) Vietnam. Nevertheless, they’ve moved from the Venture Exchange to the “Big Board” and the stock is around $2.50, which is more than Air Canada, Stelco, Corel, Saskatchewan Wheat Pool, and Canadian Bank Note, and about the same as Bell Canada International. (Website: www.Tiberon.com. TBR — TSX.)

 

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     Continuing on our tour of the Third World, Southwestern Resources has mucked around in South America for a long time, and their stock was a limp dick. Then they found a gold property in China and the stock went up like a rocket. Exploration results so far have been good, albeit early-stage. The market seems to think this could be a world-class gold desposit. Don’t ask me. China’s not my flavor anyway. (Website: www.SWGold.com. SWG — TSX.)

 

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     Semafo is a Quebec-based mineral explorer that has had diverse properties in Africa for many years. Finally they’ve got an actual gold mine up and running in Guinea. The stock is a bit sleepy, but if you don’t mind sitting on it indefinitely, it could pay off big at some point. (Website: www.Semafo.com. SMF — TSX.)

 

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     We visited Starfield last year, and I showed you a schematic of their Ferguson Lake project, which is either a platinum/palladium play, or base metals, depending on what’s popular this year. I took a small loss on this one in March, and it’s even lower now. Nevertheless, the trading volume is good, so it’s still in play as a speculation. In the lower right corner you can see a tray of drill cores, which I did not even attempt to photograph close-up with my made-for-dummies camera. When an exploration project focuses more closely on selected targets, so-called “diamond” drilling is required. A pipe-like drill bit studded with diamonds on the rim is used to drill into the ground. This allows an intact core in the shape of a cylinder to be removed. It’s typically between one and two inches in diameter. Assays based on such drill cores are far more reliable than assays of the muck that comes out of “rotary” drilling (like the drill in your workshop), or assays of surface samples. Precious metals may or may not be visible to the naked eye. Many thousands of feet of drill core are required to reconstruct a three-dimensional model of the mineral deposit underneath. Almost always, the drilling is done by a specialist contractor. (Website: www.StarfieldRes.com. SRU — TSX Venture.)

 

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     I’m telling Olga how to take this shot, and she’s telling me to shut up because she’s taken more pictures in her life than I have. I made money on Pacific North West Capital two years ago but nothing this time around. This is a platinum/palladium exploration play in northern Ontario. Their property has a lot more palladium than platinum, so when the price of palladium was way up two years ago, this stock was hot. Now palladium is in the dumps. Platinum is up, but that won’t move the stock. Anyway, these things run in cycles, so when palladium goes up again, this stock will, too. Both metals, by the way, are used primarily in catalytic converters in motor vehicles. (Website: www.PFNCapital.com. PFN — TSX.)

 

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     I’ve put this company on my “watch” list for this fall. Rubicon has some good acreage in the gold-rich Red Lake district of Ontario, and the stock is very active. I’m sorry I don’t have a good map to put up for you, but you can check their website, www.RubiconMinerals.com. They trade on the Venture Exchange under the symbol RMX.

Another company on my “watch” list is True North Gems, which, unfortunately, I don’t have a photo of. They’ve discovered emeralds in the Yukon — the first discovery of emeralds in Canada. I think this play will depend as much on money as on geology. If serious money backs these guys up, the stock could be a winner. However, I’d consider this to be a high-risk speculation at this point. (Website: www.TrueNorthGems.com. TGX — TSX Venture.)

 

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     The London Stock Exchange and American Stock Exchange both had booths at the PCAC for the first time. They were hoping to attract new listings from among the perkier companies in Canada’s junior mining sector. Companies can “interlist” on more than one exchange, even in different countries. Stock exchanges are under pressure to attract new listings to make up for the ones they lose or have to delist. Stock exchanges are not government institutions; they are businesses in their own right. So respect your stock exchanges, because without them, you wouldn’t have anything.

 


Those of you who have actually read this entire article are the select few who are sufficiently intelligent to make money in the stock market; everyone else is brain-dead, and let’s not feel sorry for them.

If you want to know what I’m buying this bottom-fishing season, send me an email in November at crad166@yahoo.com.

In the meantime, there are tons of free resources on the web — far too many to list. Here are three you should bookmark if you are at all interested in Canadian mining stocks:

www.tsx.ca
This covers both the Toronto Exchange and the Venture Exchange. The website has been revamped and looks good.
www.NorthernMiner.com:
Canada’s weekly mining newspaper. This site is awesome. Check it out now!
www.GlobeInvestor.com:
My favorite stock research website. Get quotes, charts, and other info on any listed company in North America. This is a very easy website to use — well-suited to the inexperienced.
 

by Crad Kilodney

 

 

All material at Dead Man Talking/ www.cradkilodneyarchives.wordpress.com  is copyright © by Crad Kilodney. All rights reserved.
Crad166@yahoo.com

Crad Kilodney, P.O. Box 72577, 345 Bloor St. East, Unit 7, Toronto, ON, M4W 3S9

Crad’s new writing is now at CradKilodney.wordpress.com

 

 

 

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