Junior Mining Thoughts + 2 of my favs

Peebs · Jun 11, 2007

Hi everyone,

just want to say thank you for keeping this section of therx going with great information regarding the markets. I have learned a lot from the likes of Hitman and Dawoof.

I just wanted to get some opinions on junior PM companies from you guys. I am heavily invested in the Venture exchange TSX.V and I think I have come across a few gems that i would love to share with you and get your opinions.

The first company, which I just went to a shareholders meeting today is TIO.TO (not on the venture but the TSX). Has 2 primary land interests:

1 in Kenya that is ramping up to be a Titanium producer
1 in Peru that is a copper and gold site (more copper than gold)

The Peru site is more near-term to coming into production than the kenyan property. But the valuation numbers I saw today pegs TIO.TO at $0.30/cdn just on Peru alone. They have a very low stripping cost and their capex is low (around 1.04 /lb of Cu). With copper prices over $3, and with the numbers I saw at the meeting today... TIO.TO is a min 0.30/ stock.

Throw in the Kwale project for Titanium in kenya that the Chinese Jinjuan group just invested in and this stock could be a 10 bagger by mid 2008.

Current price 0.175 and 3 mo chart. I would see if it falls back to 14.5-15.5 this week and hop onboard for this one. I am looking to add to my position in the 15s if possible.

The second stock I just got into is DMM.V ... which I do not know much about other than its highly undervalues compared to what analysts and one of the most prestigious assest management firms in Toronto (Sprott) think. Sprott just bought 1 MM shares at 6 bucks on May 31st and are suggesting a double by December.

For some reason, this thing just plummeted today and represents a tremendous buying opportunity IMO. The $6 base that sprott purchased made my investment at $5.92 seems like a bargain last week. DOH... I just wish I would have waited till this week and got it really cheap.

I'd wait to see if this comes down a bit further and then jump in. This is 6-12 mo play imo.

Current price $5.44 and 3 mo chart

8ate · Jun 11, 2007

..

..Fascinating how both of your stocks just broke thru either 200 ma (tio after shown resistance at this level recently); and dmm at 50 ma; should be intersting to see if there is resistance at approx 2.15/sh at 200 ema..>>

Hard to know how to technically rate these junior miners; as fundamental news (rumours.?) can trump everything and send values up/down rapidly..>>

gl

:aktion033

Peebs · Jun 12, 2007

Big news for TIO IMO

China's Chinalco to buy Peru Copper

By Laura Mandaro, MarketWatch
Last Update: 5:44 PM ET Jun 11, 2007

<LABEL class=StoryContent id=StoryContent_Content>SAN FRANCISCO (MarketWatch) -- Peru Copper Inc. said Monday it's agreed to a $792 million acquisition by government-owned mining giant Aluminum Corp. of China in a deal that takes out one of the few remaining independent copper-mining companies.
</LABEL>

Full article here: http://www.marketwatch.com/news/sto...7&dist=SecMostMailed&print=true&dist=printTop

The big message for me is this:

Meanwhile, China has become the world's largest consumer of copper due to its own infrastructure needs and its role as an exporter of products like air conditioners and auto-motor parts. Last year, the country used 4 million metric tons of copper, or about 22% of the world's supply. That's up from 10% a decade ago, according to industry estimates. See more on China and copper.

With the Jinchuan Group of China now holding 20% of TIO with options and warrnats to increase that to 30% I think they are very serious about getting the Peru project ramped up and ready to go IMO.

Predict $0.25 to $0.30 by end of summer

Peebs · Jun 14, 2007

Dmm.v

I hope some of you got in on the nice DIP the past few days. :think2:

<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD colSpan=3>DYNASTY METALS & MINING INC DMM:TSX VENTURE Stock </TD></TR><TR height=10><TD colSpan=3></TD></TR></TBODY></TABLE><TABLE cellSpacing=0 cellPadding=5 width="100%" border=0><TBODY><TR><TD><TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD colSpan=4><TABLE cellSpacing=1 cellPadding=2 width="100%" bgColor=#999999 border=0><TBODY><TR><TD align=middle bgColor=#cccccc>Last Price</TD><TD noWrap align=middle bgColor=#cccccc>Today's Change</TD><TD align=middle bgColor=#eeeeee>Open</TD><TD align=middle bgColor=#eeeeee>Day High</TD><TD align=middle bgColor=#eeeeee>Day Low</TD><TD align=middle bgColor=#eeeeee>52-Week Range</TD><TD align=middle bgColor=#ffffff rowSpan=2> </TD></TR><TR><TD align=middle bgColor=#ffffcc>5.65 </TD><TD noWrap align=middle bgColor=#ffffcc>0.20 (3.67%) </TD><TD align=middle bgColor=#ffffff>5.50</TD><TD align=middle bgColor=#ffffff>5.69</TD><TD align=middle bgColor=#ffffff>5.50</TD><TD align=middle bgColor=#ffffff>3.53 - 8.35 </TD></TR><TR bgColor=#ffffff><TD align=middle colSpan=7><TABLE width="100%"><TBODY><TR><TD align=middle>14 Jun 2007 12:25 PM ET Real-time quote TSX Venture </TD></TR></TBODY></TABLE></TD></TR></TBODY></TABLE></TD></TR></TBODY></TABLE></TD></TR></TBODY></TABLE><TABLE cellSpacing=0 cellPadding=5 width="100%" border=0><TBODY><TR><TD align=middle><TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD align=middle><TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR><TD vAlign=ABSBOTTOM align=middle><MAP name=tab21_details><AREA shape=RECT coords=4,0,68,21 href="javascript:get1DaySubE()"><AREA shape=RECT coords=73,0,136,21 href="javascript:get5DaysSubE()"><AREA shape=RECT coords=142,0,204,21 href="javascript:get1MonthSubE()"><AREA shape=RECT coords=210,0,272,21 href="javascript:get3MonthsSubE()"><AREA shape=RECT coords=279,0,340,21 href="javascript:get6MonthsSubE()"><AREA shape=RECT coords=347,0,407,21 href="javascript:get1YearSubE()"><AREA shape=RECT coords=415,0,476,21 href="javascript:get5YearsSubE()"><AREA shape=RECT coords=483,0,546,21 href="javascript:getCustomizeSubE()"></MAP>

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Brooklynbomber · Jun 20, 2007

couple nice finds peeps

I'm getting ready buy KBX Kimber Resources by the end of the week. They own a gold mine in the Sierra Madre region of Mexico. My broker Jim Puplava is the majority shareholder and sits on the board. Stock is at 1.39 - down nearly 50% from it's November high after Puplava dropped a proxy battle and was able to install one of his people to the board. Guy is super sharp and with his help that company should start improving rapidly. Alot of naked shorting going on by the big boys though, that's the reason I've held off this long, just too cheap now though.

Buying it on my own not through him....only trades 45K a day, be interesting to see what my trade does to the share price.

Brooklynbomber · Jun 20, 2007

btw- anybody who follows Puplava (you should - he runs the financial sense website and is a leader in the PM's) - these are the PM stocks he's buying/bought for his clients:

AUY - Yamana
GC - GoldCorp
AEM - Agnico Eagle
BHP - BHP Billiton - more of a "commodity index fund" as he puts it

mostly mid-tier. He's also high on some juniors for his high-risk portfolio. besides KBX I should probably not say.

[SIZE=-1]
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Peebs · Jun 20, 2007

Thanks..

Very happy with DMM.. anytime you can be up 16% in a week you have a lot to smile about. @ 6.80 / today

I can't stress this enough, DMM IMO and other senior analysts believe this is a tripple bagger just based on the resources they have in the ground. See ARU (Aurilean resources) before it went from 1 dollar to 30.

If you have a large account, ARU is also really undervalued according to the resource analysts. I am not a big player so I am sticking with DMM.

DMM is still a great buy IMO :thumbsup:

Do your own DD, but this is a winner!

Peebs · Jun 20, 2007

thejdog said:
couple nice finds peeps

I'm getting ready buy KBX Kimber Resources by the end of the week. They own a gold mine in the Sierra Madre region of Mexico. My broker Jim Puplava is the majority shareholder and sits on the board. Stock is at 1.39 - down nearly 50% from it's November high after Puplava dropped a proxy battle and was able to install one of his people to the board. Guy is super sharp and with his help that company should start improving rapidly. Alot of naked shorting going on by the big boys though, that's the reason I've held off this long, just too cheap now though.

Buying it on my own not through him....only trades 45K a day, be interesting to see what my trade does to the share price.

Please keep me updated on KBX, I'll have to take a look.

Brooklynbomber · Jun 21, 2007

<blogdateheader> </blogdateheader>  Stock Profile Kimber Resources (amex - Kbx; Tsx - Kbr)

Posted on 06/06/2007 12:14:02 | Link | Post Comment
Here is an undervalued Gold Stock with properties in the historic Sierra Madre Gold Belt in Mexico...

Fundamentals:

Kimber Resources is a development and exploration company in the Chihuahua State of Mexico. Properties are located in the heart of the Sierra Madre Gold Belt a historic gold district.

Kimber’s flagship is the Monterde gold-silver property 260 kilometers southwest of the city of Chihuahua. It is host to the Carmen, Carotare and Veta Minitas deposits. Total resource at Monterde is ~2m M&I gold equivalent ounces (64% gold and 36% silver). At a market cap of C$70m that equates to $35/equivalent oz in the ground – which is reasonable as far as Mexican exploration companies go. Here is a good guide to see how different companies rank by ounces per market cap.

Kimber is in a good neighborhood with exciting mid-tier producers all around including Minefinder’s Dolores Project; Alamos Gold’s Mulatos Project; Gammon Lake’s Ocamppo & Palmarejo ‘s Palermo project.

The share structure is pretty tight with 49,219,920 shares issued and 51,748,620 outstanding on a fully diluted basis. Most options are priced north of $2 and are currently out of the money. Insiders hold 17% if the company.

Ok. Here’s the scoop on Kimber.

There has been a fierce proxy fight going on for control of the future direction of the company. A group of shareholders felt the CEO Robert Longe was not bringing the company along quick enough to BFS and production. The shareholders have so far settled for placing key members on the board but Robert will be replaced before long.

In addition, the company announced poor drilling results at Monterde at the end of 2006 and dropped the bombshell that cut-off grades may cause difficulties when converting resources to reserves.

All of this has served to keep the stock relatively cheap. The company has a good board, no debt and great properties (which should turn out to be economical). Insiders know it and have been buying hand over fist – the latest on-market purchase being $36,000 by newly appointed director Leanne Baker.

Kimber will work through their problems in due course and it is very attractively valued at this level.

Technical Analysis:

Chart 9 - Kimber (weekly) testing strong support @ C$1.50

Kimber had a fantastic run from 2003 to 2004 - a 10-bagger (up over 10x).
As you would expect, those gains take time to digest.

In fact, it took 2 years for the price to marginally exceed its 2004 highs but that ended up being a double top and paved the way for yet more weakness.

C$1.50 has acted as solid support over the last 3 ½ years. And that’s where we join the stock today.

Remember, even though the stock has been correcting for 3+ years, the company has continued exploring and defining up ounces – moving from indicated and inferred resource of under 1 million ounces to over 2m by the end of 2006.

The daily chart (not shown) indicates a double bottom is in place with the necessary technical divergences. KBR is setting up for a low risk/reward trade.

Money Management:

Kimber is a small junior with a market cap of CAD$71m.
Average daily volume is ~45k shares or roughly C$67k/day individual investors should have no problem with liquidity.

Brooklynbomber · Jun 21, 2007

$35 per ounce in the ground - 1,280,000 ounces - pretty godamn reasonable stock price, just a string of bad luck. total contrarian play, love it.

gonna do some in depth on DMM tonight - looks good so far, what's the catch?

myboymagic · Jun 24, 2007

While you're looking at mining stocks, check out NTO. Solid

Brooklynbomber · Jun 27, 2007

[FONT=times new roman, times]WHY THE BIG MONEY GOLD
SHARES STILL LIES AHEAD
- The Casey Files -
[/FONT][FONT=times new roman, times]by David Galland[/FONT][FONT=times new roman, times]
[/FONT][FONT=verdana,arial]Managing Editor, BIG GOLD from Casey Research
June 26, 2007[/FONT]

You’d be correct in suspecting that the easy money in gold shares has already been made. It has. But it would be financial folly of the highest order to assume that it’s too late to make the big money. The big money is still on the table.
The reason has to do with something that’s simple to understand but that not one investor in a thousand has heard about: the exploration cycle.
ABCs of Exploration
In a manufacturing business, an entrepreneur buys raw materials from suppliers and then assembles the materials into cars, shoes, candlesticks or some other final product. But in the extractive industries, such as oil or gold, the first step isn’t to buy raw materials but to find them. And it’s not easy, because nature has hidden them under the earth’s crust, perhaps in a remote or even dangerous corner of the world.
Understanding the timing of the exploration process is critical to understanding why the big gold profits are still ahead, and why it is so important to get positioned in the quality companies today, while there is still time to do so.
The process, greatly abbreviated here, begins when a team of geologists -- perhaps working for a big mining company, but more often than not, for a fleet-footed junior Canadian exploration company -- come up with a geological concept. (“Geological concept,” if you’re not familiar with the term, is geology talk for “educated guess.”)
Gathering up picks and shovels, the team spends days, weeks or even months poking through the brush looking for rocks that would suggest their idea has some merit. If they find anything promising, they’ll collect samples and send them to an assay lab for a mineral analysis.
If the assay lab had nothing else to work on, our geologists might get a report back in days. But in fact, assay labs aren’t nearly as numerous as, say, donut shops. And due to the surge in exploration in recent years (a topic I’ll return to momentarily), there is a large and growing backlog at the world’s few assay labs. So explorers must wait 2 to 4 months or even longer to learn whether their rocks carry traces of a valuable deposit or are just… rocks.
Assuming the assay results are encouraging, the explorers move on to the next phase, trying to verify that an ore deposit is waiting beneath the surface. Of course, they can’t see under the dirt and rock, so they do the next best thing, which is to drill deep holes and dig out samples.
Before you can drill, however, you must get a permit to disturb the ground, a process that, depending on where your property is located, can take two months to a year – or in some ecologically sensitive areas, forever.
Because our hypothetical exploration team is on the ball, we’ll assume they get the permit. Which takes them to the next hurdle: while the shortage of assay labs is acute, the shortage of drills and experienced crews to run them is far, far worse. How much worse? If you want to drill a project in 2007 and don’t already have a drill lined up, the odds of finding one this late in the game are somewhere between slim and none.
Okay, but our team is lucky – or well connected – and so is able to lock up a drill. Now begins the long and expensive process of punching enough holes in the ground to find out what’s really there and to map out the boundaries and orientation of the deposit. The drilling may proceed just a few holes at a time, so that what’s learned from each hole can be used to point where the next ones should be drilled. Of course, at each step, the sample the drill pulls out of the ground must be sent to an assay lab to wait its turn for analysis… and the clock ticks on.
In time, the geologists are able to assemble the assay data into a reliable geological model. Around this time, the focus shifts to verifying that the minerals they’ve found are present in sufficient quantities to warrant the expense of clawing them out of the ground, that expense being influenced by a multitude of factors, not the least of which is how far below surface the deposit is located and in what kinds of rock.
But let’s say it appears to be an economically large deposit – say, a million or more ounces of gold. Now the exploration company has to confirm the metallurgy, a branch of science of great complexity. On ascertaining that you will be able to economically (there’s that word again) separate the shiny yellow stuff from the dirt and rock, you move onto the next square.
Oh, No… NGOs!
Throughout this process, the smarter explorers invest considerable time and energy in softening up the local population and politicians. Get it right, and you might only have to wait a year or two for the environmental and construction permits needed to build your mine. Get it wrong, and you could be looking at delays of a decade or more.
Throughout modern times, getting the locals to accept a mine has been a stiff challenge, whether dealing with citizens who hate the idea of a mine in their backyard or politicians who see the project as an opportunity for nationalistic grandstanding or outright extortion. Today, however, there’s a new army of nay-sayers: dozens of well-funded Non-Governmental Organizations (NGOs), whose officers earn the entirety of their paychecks by trying to stop all mining in all countries.
Make no mistake, these NGOs, some of which are playpens for committed Luddites, are well financed, well organized and increasingly well acquainted with the many ways a proposed mine can be tied up legally or by stirring up the local or national population.
If by this time a mining entrepreneur hasn’t decided to change careers and go into something less challenging, such as trying to build pipelines in Iraq, and he’s able to battle through the NGOs, he still needs to build the mine – which means securing a lot of power and water. And because mine output is not light and easy to ship, all manner of additional infrastructure is needed. One intrepid would-be Yukon miner we’re acquainted with will first have to spend $2 billion to build, among other things, a road and power line more than 60 miles long. The work, scheduled to begin soon, is expected to take until 2012 to complete.
This sort of build-out is difficult enough in a friendly environment, but most of the world’s remaining large mineral deposits are located in places such as the Congo, the high Andes or, literally, Outer Mongolia.
Of course, all of this is voraciously time consuming, and none of it is cheap.
While you may think I’m overtelling the story, I’m actually short-handing the description of the process. The reality is much, much more challenging. It is no wonder, therefore, that only about 1 in 3,000 geological targets ultimately makes it into production. And even for the rare success, years pass between the original geological idea and the first mine shipment.
Okay, Can We Get to the Making-Me-Money Part?
Between the years 1980 and 2000, gold and pretty much all other commodities suffered a grim bear market. Gold dropped from a high of $850 in January 1980 all the way down to $252 in July of 1999, after which it traded pretty much sideways until the current bull market started to emerge in Q102.
At $850 per ounce, crawling over the figurative fields of ground glass to get a gold mine into production was worth the risk and hassle. Decidedly not the case at $252 per ounce.
Not surprisingly, with dark clouds cloaking the mining landscape for 20 years, the mining industry went into hibernation. Drill rigs were left to rust, universities stopped offering programs in economic geology, and former mining promoters reinvented themselves as dot-com impresarios.
Importantly, and understandably, funding for the junior Canadian exploration companies that are now leading the charge into the remote corners of the world to search for new deposits was virtually non-existent.
Exploration’s recent dark age is over now, but it had a profound effect that hasn’t yet played out. And it’s an effect that you can profit from – and profit soon.
In Chart A, Ron Parratt, President of AuEx Ventures and one of the world’s most successful exploration geologists, shows worldwide exploration expenditures between 1990 and the present (the only period for which data is readily available).
As you can see, other than the mid-1990s’ upswing -- caused by a series of fluke discoveries, one of which turned out to be a massive fraud – the default mode for this period was for exploration expenditures to bump along near the bottom of the possible range. (Even in the worst of times, expenditures don’t go to zero, because the major mining companies want to replace what they sell, so that they won’t sell themselves out of business.)

It doesn’t take going through the whole Aristotelian logic thing to figure out that a drastic reduction in exploration spending, meaning fewer geologists out in the field looking for new deposits, will, in time, result in fewer and fewer new deposits being found.
Now here’s where it gets interesting. In Chart B Ron overlays mine production.

Immediately apparent is the long lag between exploration expenditures and new production coming on line. The lag is unsurprising if you recall my explanation of the laborious and slow-moving exploration cycle.
The fact of the matter is that unless you have the luxury of exploring an area contiguous with an existing mine – low-hanging fruit for which the exploration/production cycle could be as quick as 2 to 4 years – the time required to move a good geological idea into production is typically 6 to 10 years.
As you can see in the chart, recent production increases have come from the increased exploration back in the mid-1990s. Importantly, we haven’t yet picked the fruit from the soaring exploration expenditures that kicked off in earnest only in 2003.
Today expenditures have reached historic levels. As in “never before” has so much money been spent poking at rocks. It is inevitable, therefore, that as sure as night follows day, so, too, will a series of major discoveries. And most of those discoveries will be made by micro-cap junior Canadian exploration companies – many of which still trade below $1.00 and boast market capitalizations under $50,000,000. By positioning yourself in the higher-quality and better-managed of these stocks today, you put yourself on the path of extreme profits. How extreme? When I tell you, you are going to like the path.
Back to the Mid-1990s’ Discovery Market
I mentioned the mid-1990s’ discovery market, a raging albeit short-lived bull market in Canadian exploration stocks that literally turned dimes into dollars and even tens of dollars. The table below gives a quick sampling of returns investors actually made in the better companies.

<table class="MsoNormalTable" style="" border="1" cellpadding="0" cellspacing="1"> <tbody><tr style=""> <td style="padding: 2.25pt; background: rgb(153, 204, 0) none repeat scroll 0% 50%; width: 112.5pt; -moz-background-clip: -moz-initial; -moz-background-origin: -moz-initial; -moz-background-inline-policy: -moz-initial;" valign="bottom" width="150"> Companies from the
Mid-1990s’ Bull Market
</td> <td style="padding: 2.25pt; background: rgb(153, 204, 0) none repeat scroll 0% 50%; width: 68.25pt; -moz-background-clip: -moz-initial; -moz-background-origin: -moz-initial; -moz-background-inline-policy: -moz-initial;" valign="bottom" width="91"> Pre-Bull Market
</td> <td style="padding: 2.25pt; background: rgb(153, 204, 0) none repeat scroll 0% 50%; width: 65.25pt; -moz-background-clip: -moz-initial; -moz-background-origin: -moz-initial; -moz-background-inline-policy: -moz-initial;" valign="bottom" width="87"> Date of High
</td> <td style="padding: 2.25pt; background: rgb(153, 204, 0) none repeat scroll 0% 50%; width: 63.75pt; -moz-background-clip: -moz-initial; -moz-background-origin: -moz-initial; -moz-background-inline-policy: -moz-initial;" valign="bottom" width="85"> Price at High
</td> <td style="padding: 2.25pt; background: rgb(153, 204, 0) none repeat scroll 0% 50%; width: 63.75pt; -moz-background-clip: -moz-initial; -moz-background-origin: -moz-initial; -moz-background-inline-policy: -moz-initial;" valign="bottom" width="85"> Pct. Gain
</td> </tr> <tr style=""> <td style="padding: 2.25pt; width: 112.5pt;" valign="bottom" width="150"> JUNIORS
</td> <td style="padding: 2.25pt; width: 68.25pt;" valign="bottom" width="91">
</td> <td style="padding: 2.25pt; width: 65.25pt;" valign="bottom" width="87">
</td> <td style="padding: 2.25pt; width: 63.75pt;" valign="bottom" width="85">
</td> <td style="padding: 2.25pt; width: 63.75pt;" valign="bottom" width="85">
</td> </tr> <tr style=""> <td style="padding: 2.25pt; width: 112.5pt;" valign="bottom" width="150"> Cartaway
</td> <td style="padding: 2.25pt; width: 68.25pt;" valign="bottom" width="91">

$0.10

</td> <td style="padding: 2.25pt; width: 65.25pt;" valign="bottom" width="87">

May-96