StockBullz.com: Your Daily Stocks Blog - Base Metal Stocks

The Story Behind Canadian Mining Speculation

Mon, 03 Jul 2006 15:11:40 -0400

I just finished reading a tiny little 100 page book by the title of "The Story Behind Canadian Mining Speculation". It was written about 50 years ago by T.H. Mitchell and it should be a must read for any current mining speculator. If you can get your hands on it that is. Try searching for it at your university library because that is where I found this copy. Anyways, here are some great bits of information that I got from the book:

It should be clearly understood by the Canadian investor that the majority of the "penny" stock companies are worthless and always will be worthless. This has been proven time and time again. Yet their stocks have a definite value as a speculative trading medium; in other words, the stocks themselves are not worthless so long as somebody is willing to buy them. Thus, one has to be pessimistic about the possibilities of the companies, yet optimistic about the profit opportunities which their stocks present. And these are the sentiments which guide the professional traders.

Mining Companies At Feasibility Stage

Thu, 29 Jun 2006 14:15:41 -0400

I found an old piece of paper on my desk today that had a list of several mining companies at the feasibility stage. In other words, they are looking at developing their exploration property into a mine. I think I compiled it a couple months ago so things may or may not have changed.

I have not done any research on any of them except for the fact that they are at the feasibility stage:

Gold

GBG.TO http://www.greatbasingold.com/gbg/Home.asp
MGD.V http://www.mandorin.ca/
AXM.V http://www.axmininc.com/DesktopDefault.aspx
VVI.V http://www.valenciaventures.com/
MGM.V http://www.morgainminerals.com/s/Home.asp
BAJ.V http://www.bajamining.com/

Doublestar - Multimillion Dollar News

Mon, 19 Jun 2006 19:09:31 -0400

DSR is a stock I own and follow closely. Now I think something very important is about to happen that has gone completely unnoticed.

This "trigger" that I am talking about is that DSR sold to Northgate a copperproperty called Sustut. This would give DSR more than 11 million in royalties (2 millions cad each year over five years + more than 1 million as the project proceeds, if Northgate decides to put it into production. (Important, Northgate only has the option until december 2006, after that they loose the 0,5 million cad they paid for the option. This deal was done when copper was less than half of the current price...) Current DSR marketcap is about 9 million cad and the stock is extremely quiet.

Northgate paid alot of money for this option and decided that they would put Sustut into production, but then came problems with its main production unit, Kemess north, which had its expansion to Kemess south challenged by the indian community.

For some time until a few days ago it looked like the entire Kemess production unit would be closed down when it ran out of ore at the northern part. A few days ago an agreement that cleared all hurdles was reached! This is the trigger I have been watching carefully for.

Brilliant Market Analysis

Tue, 13 Jun 2006 11:46:03 -0400

By Jack Chan at www.traderscorporation.com

6/11/2006

Thank you for your feedback and comments in regards to my previous commentary, “A golden opportunity?” In reaction, many readers have asked me why is it that after having been a consistent buyer of the gold market for the past five years, now am a seller of gold?

I have a simple answer: opportunity.

History often repeats itself to those who fail to learn from the past.

And history is unfolding, six years after the last lesson. But judging from the opinions of the general consensus, not many are seeing what is unfolding.

More Fear?

Tue, 06 Jun 2006 18:21:12 -0400

I read the following article today and trying to be a contrarian, I think that copper is going much higher very soon. The media always overdoes things to try to scare people. I think articles like this could be a sign of a bottom just like overpositive stories that fuel greed are usually signs of a top.

The fact that a fund manager is admitting he's short the metal could entice other fund managers to go short too.

Then we have a beautiful scenario where copper goes down for a little while then shoots up like never before because of a short squeeze.

So let them short all they want for now because even though the copper price is at historically high prices, the warehouse stocks continue to dwindle. Why? Because there is a real demand for copper and the buyers would rather pay lower prices but they need to buy it now to build pipes, wiring etc.

The price is being driven by hightened demand and static supply.

June 5 (Bloomberg) -- BHP Billiton, the world's biggest mining company, spends 61 cents to produce a pound of copper and sells it for $3.15.

Profile: Lukas Lundin

Sat, 27 May 2006 15:00:24 -0400

Like I've said many times in the past, I love to follow what the rich and successful are doing.

I figure that if they have gotten to be rich, they will continue to increase their wealth by continuing to do what made them money in the past. Now of course, many people go from rags to riches and back to rags within a lifetime but I would think that more of those individuals stay wealthy.

The next person that I will begin to track is Lukas Lundin. Myself being quite new to him, here is the profile he likes companies he's affiliated with to use:

Born in 1958, Lukas Lundin was raised in Stockholm, Sweden and educated at the Ecole Internationale de Genève in Switzerland. In 1981, Mr. Lundin graduated from the New Mexico Institute of Mining and Technology (engineering).

At age 25, Mr. Lundin headed International Petroleum Corporation's extensive and rapidly growing international operations and was based in the Company's technical office in Dubai, U.A.E. for over 12 years. From 1990 to June 1995, Mr. Lundin was President of International Musto Exploration Limited and was responsible for Musto's acquisition of the Bajo de la Alumbrera deposit. Bajo de la Alumbrera was the subject of a $500 million takeover by Rio Algom and North Limited and is now one of the largest gold/copper producers in the world. Mr. Lundin was also responsible for Argentina Gold and the discovery of the multi-million ounce Veladero gold deposit. Veladero was the subject of a $300 million takeover by Homestake in 1999. In addition, Mr. Lundin was a senior Director of Lundin Oil AB and was instrumental in the $480 million takeover of Lundin Oil by Talisman Energy in 2001. Mr. Lundin is currently a Director of a number of publicly traded resource companies.

A world traveler and motorcycle racing enthusiast, Mr. Lundin has twice completed the grueling 10,000 kilometre Dakar race across the Sahara Desert. He has climbed Mount Kilimanjaro, Mont Blanc and the Matterhorn. In the winter, he can be found helicopter skiing in Whistler and in summer, dirt bike racing with his four boys in Baja California.

Great Capstone News

Thu, 25 May 2006 22:18:38 -0400

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - May 25, 2006) - CAPSTONE MINING (TSX:CS - News) is pleased to report the recent progress at its Cozamin copper-silver-zinc mine located in Zacatecas State, Mexico.

Highlights

- Construction is 95% complete with mill and plant testing currently underway.

- Commissioning is planned to begin June 1.

- Total cash on hand will be US$20.0 million after all construction costs are incurred.

- Estimated average annual metal production is 16 million lbs of copper, 700,000 oz of silver and 4 million lbs of zinc at 1,000 tonnes per day.

San Roberto Mine

Four stopes are being developed for mining (2 are complete) and producing ore. These stopes are located on the east and west side of level 8 and central and east side of level 9. On level 9, an additional 30 m of drifting to the east will be completed by the end of May. Development on level 10 has commenced with drifting both east and west on this level. To date, 15,000 tonnes of ore have been stockpiled on surface.

Where's the Market Heading Next?

Mon, 22 May 2006 22:58:14 -0400

This correction we've had for a week or two now has really begun to unveil some nice bargains. Many stocks are down 30-50% from their highs. Like I said, I think we might have a bounce this week but will go lower and/or sideways until around august.

Let me now highlight some other people's opinions:

Clive Manud :

The action on Friday was characteristic of a reversal and it was sector wide with Reversal Days showing up in the charts of the gold stock indices and many gold and silver stocks. The action in the metals themselves was less convincing, with silver looking like it had bottomed, at least for now, but gold itself looks rather ambiguous.

Even before they started to head south in earnest, Precious Metals stocks were seriously underperforming gold and silver, and as soon as the metals broke down, stocks caved in. The flip side of this relationship is that we can expect PM stocks to hit bottom ahead of the metals, and, when the time comes, we should be on the lookout for this as a great buying opportunity. On a trading basis we appear to be at a buy spot now, and some of the stronger stocks may not drop below the current lows. We should remain aware that while the metals are likely to drop to lower levels after a near-term bounce, stocks may not drop below current levels, or if they do, not by much.

Tough Times

Wed, 17 May 2006 17:12:39 -0400

Just like our price run-up in the market was perhaps overdone, it looks like our downturn will also be overdone.

The markets are never rational and I have a feeling we still might drop quite a bit.

The fundamentals of our commodity bull market haven't changed one bit but the emotions have.

People are beginning to panic and they just want to get out of all their resource stock as soon as possible.

It looks like we might have another period something like October 2005 which was a scary time to be holding Oil & Gas stocks in particular.

However, the patient and cool investor who did not panic profited very well if he just stuck with his positions as all the stocks rebounded very well as soon as October was done.

The one positive thing however will be that when this correction is done, there will be substantial gains to be made by buying some great companies at bargain prices.

So make sure you have some cash ready to buy in when the correction finishes. I still don't know when that will be, but I will try to be using charts and following the media. When the media turns unbelievably bearish on the market, gold, commodities etc, that will be the perfect time to get in.

Lightened Up My Positions A Little

Tue, 16 May 2006 12:45:04 -0400

I used this morning's rallies in NUC, CS, SVM to lighten up my positions in those stocks.

It looks to me like we might have further downside for a period of time that I can't predict yet.

But I have more cash right now so when I feel the right time has come, I will be able to get into some beat down stocks at great prices.

Here is a possible scenario for Capstone:

I we could get a crossover and a double bottom, I think that could be the sign of the end of the downtrend. If Capstone bottoms at $1.28, then it's forward P/E would be around 3.1.

The hard thing to judge right now is when the markets will turn around. It's all about psychology and everyone was very bullish for a long time so it could take some time, maybe even a month or two to get everybody thinking the bull run is over.

Looking over the SVM charts, it doesn't look great right now. We're about 25% off the tops so I am sure some people's stop losses will be going off.

Overbought Market?

Fri, 12 May 2006 16:32:31 -0400

Looking at the Venture Exchange's chart for the past 6 months, it really has been a good ride.

I hate calling downturns because they are so hard to call but it seems to me like we might have a little one still for a week or two.

Just looking at the commodities themselves, Gold recently hit around $730, Silver over $15, and Copper over $4.

These are massive gains all around and we all know that everything doesn't go straight up. It goes up for a while then retreats a little, only to move past its previous high.

So there could be an ~10% correction in many markets over the coming week or two.

Of course I can't predict the future but that is just what the charts are showing me. They aren't always right but many times they are.

This doesn't mean to liquidate all your positions and hold cash. It simply means to keep your eyes open to new buying opportunities. Always keep in mind (during a bull market) these two phrases:

1. Buy on the Dips

2. Sell into Strength, Buy into Weakness

Revised Capstone Cash Flow Analysis

Thu, 11 May 2006 13:00:01 -0400

After reviewing my Capstone cash flow analysis from the past weeks, I noticed I made several errors. First I didn't factor in the cost of transporting the product after it is mined and milled which more than doubles the production cost. Then I forgot to apply taxes to the earnings along with a share of profits being sent to their 10% partner.

The bad news of course is that my revised cash flow estimates will be lower than before.

However, since metals prices continue to surge to new heights every week, the impact is not that large.

Capstone is still mighty cheap and I cannot believe it is trading this low. Here are the revised numbers.

Revenue:

16,000,000 lbs copper x $3.9081= $62,529,600

4,000,000 lbs zinc x $1.7131= $6,852,400

700,000 ounces silver x $15.15= $10,605,000

Total Revenue= $79,987,000

Costs:

Buffett's Point of View:

Mon, 08 May 2006 12:31:37 -0400

Warren Buffett used to be the King of Investing. Used to?

Well he hasn't been able to achieve his market beating returns for a while now so that's why I am using that terminology.

Anyways, he has an annual shareholder's meeting that is very popular. It was held over the past weekend. Here are some of his comments:

On the real estate bubble
Buffett: "What we see in our residential brokerage business [HomeServices of America, the nation's second-largest realtor] is a slowdown everyplace, most dramatically in the formerly hottest markets. [Buffett singled out Dade and Broward counties in Florida as an area that has experienced a rise in unsold inventory and a stagnation in price.] The day traders of the Internet moved into trading condos, and that kind a speculation can produce a market that can move in a big way. You can get real discontinuities. We've had a real bubble to some degree. I would be surprised if there aren't some significant downward adjustments, especially in the higher end of the housing market."

Are you ready to buy on the Dips?

Thu, 04 May 2006 11:32:29 -0400

Like I told you after the Calgary Resource Conference about 2 weeks ago, 2 central themes that most writers were expressing were: "take some money off the table" and "buy on the dips".

In hindsight, it would have been pretty smart to take 20-30% of your more speculative positions off the table eh? Hindsight is always 20/20 but nonetheless it's always interesting to look back at what we could have done differently.

Now the next tip was buy on the dips. I am looking at the Silvercorp share price right now and it stands at $17.20. That is about 10% cheaper than the financing that just closed.

Sprott Securities Inc. and GMP Securities L.P. as co-leader managers and co-book runners, together with a syndicate of other dealers including, CIBC World Markets Inc., MGI Securities Inc., Salman Partners Inc. and BMO Nesbitt Burns Inc. (the “Underwriters”) , collectively bought 2,501,250 units from the Company (“Units”)at a price of $19.10 per Unit. Each Unit is comprised of one common share of the Company and one half share purchase warrant. Each whole warrant is exercisable for a period of eighteen months from the closing date at a strike price of $24 per common share.

Capstone Dividend Situation

Tue, 02 May 2006 12:39:13 -0400

I fired off a quick email to Capstone regarding the Dividend record date and I got the following response:

Normally there is a 3 day settlement so you should be ok.

Please call us with any further questions. 604.684.8894.

Thanks
Sarah

So if you buy today you should get the dividend. Do some of your own research on the company and if you like it then you know what to do...