Typically in a NI 43-101 technical report, the author will re-assay the drill core to verify the integrity of the assay results. This is to help spot Bre-X style frauds where somebody may be ‘salting’ a crushed sample with gold.
Here’s the crazy thing:
Here’s how I see junior mining.
The promotional game
Almost all junior mining companies are promotional to some degree. All of the explorers have pretty much zero cash flow and are dependent on raising capital to fund their operations and the insider’s salaries. Most juniors are usually some mixture of a pyramid scheme and a genuine business. Here are some of the things they do: Continue reading
Russell Cranswick, Resource Capital’s nominee to the board of directors, has resigned (press release). In my opinion, it is highly likely that Resource Capital will liquidate its position. The Selwyn project is likely uneconomic due to the increased cost of mining (this has gone up a lot in the past several years… look at the cash costs of gold producers for example) and the fall in lead and zinc prices.
*Disclosure: Still long. I probably should have just cut my losses earlier and sold… it’s just that I have an aversion to selling near the yearly lows and selling into a depressed market. I will be trying to sell.
Noront has updated its feasibility study. “At current metal prices (August 31, 2012), the DCF indicates an after tax NPV(8%) of $233 million and an IRR of 18%.” If you use the 3-year trailing average for metals prices, the NPV rises to $543M. Noront’s current market cap is around $86M, so this stock could be undervalued.
Mines are a depleting resource. Usually you mine the most economic ore first. This causes the economics of the mine to get worse and worse as the mine ages. Yukon Nevada owns the Jerritt Canyon project which is on its last legs. Not surprisingly, its economics have gotten worse and worse.
Some value investors see value in Yukon Nevada (see VIC writeup). I disagree. The mine has negative cash flow and therefore is not making money. It will probably lose even more money in the future and it should be closed. That’s the reason why it was recently closed. Continue reading
So right now I am going through the miners in the Labrador trough area:
(I am obsessed with Altius Minerals ok? See somebody else’s writeup on VIC.) Continue reading
I guess I learn something new every day. Even the senior miners will pay money to shill companies to promote their stock. A site called The Gold Report has a list of the companies that they cover on their front page (scroll down if you don’t see it). There are some big names on there like Goldcorp and Nova Gold.
Disclosure: I own a lot of companies that ‘sponsor’ The Gold Report. Northfield Capital owns Goldcorp, Premier Gold, Queenston, etc. Altius owns Alderon and Millrock. I own Pinetree as well (they own a few hundred stocks; chances are, many of them sponsor The Gold Report). Sigh…
