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GOLD HAS BEEN A BIT OF A
BUMMER LATELY BUT BASE METALS AT MCFAULDS LAKE ONTARIO IS WORTH A HARD LOOK
The correction in the price of
gold in late March from plus $1,000.00 to minus $900.00 per ounce came as a
shock to many gold bugs who thought it was off and running to astronomically
higher levels. In one day in late March it dropped $33.70 to $887.80, but
recovered slightly too around $900.00 plus or minus a few bucks in early April.
Stock prices of low to high cap gold stocks adjusted accordingly but some
investors on margin or non-believers bailed out thinking the world had come to
an end. The strength of the US dollar and other financial events affected, in
part the price of the gold but what is forthcoming for the metal in the days to
come is not an easy predictable task. The collapse of Bear Sterns and write
downs of $36.3 billion by Swiss banker UBS and slightly smaller amounts by
Merrill Lynch, Citigroup and Morgan Stanley inflicted mucho uncertainties into
the stock market. Our market had its casualties but our Canadian banks after
reaching price lows early in 2007 rebounded in tantrum to modest increases. The
Royal Bank rose from $44.30 in mid March to $48.00 in early April. Will they
survive? Let’s hope so.
But let’s talk about something
I know best, the junior resource business. A project in north west Manitoba that
caught my eye involved Copper Reef Mining Corporation (CZCC-CNQ)* and their Mink
Narrows project. In hole MN-08-46 they intersected 32.5 feet of massive
sulphides that assayed 3.64% copper. Hole MN-08-45 drilled on the same section
cut 12.6 feet of 1.66% copper. Assays from a nearby previous hole assayed 3.08%
copper, 0.13% zinc and 11.19 g/t silver over 27 feet. Assays for zinc and silver
from 08-45 and 08-46 are pending. On April 3 the company announced a boomer of a
hole in MN-08-60 that intersected 127 feet of near massive sulphides in three
separate zones over a core length of 353.3 feet between 451.3 and 804.6 feet.
Assays are pending.
What is important with these
initial results is that Mink Narrows is located 40 kms southeast of Flin Flon,
famous for its massive sulphide deposits mined by Hudson Bay Mining and Smelting
starting in 1920’s. I worked for HBMS after graduating in 1957 and was
involved in the search for similar type of deposits east of Flin Flon at Snow
Lake. These deposits are classic volcanic genetic massive sulphide bodies that
HBMS mined and fed to their smelter at Flin Flon. In 2004 the underground mines
and concentrators at Flin Flon and Snow Lake and smelter at Flin Flon of HBMS
were acquired to Hudbay Minerals Inc (HBM-TSX).
Copper Reef stock reacted with a
modest rise from an initial opening in February 22, 2008 of 20 cents to 30 cents
in early April. From a geological standpoint there is a lot of smoke with these
drill holes and where there is smoke there is fire. In addition, the company has
a varied selection of properties in northeast Saskatchewan-northwest Manitoba
extending eastward from the provincial boundary to Snow Lake where HBMS had
several operating mines, some of which are now being mined by Hudbay. At 30
cents CZCC offers a lot of upside to a company well positioned in one of Canada’s
famous copper-zinc camps with a smelter at its door step.
Another base metal play worth
mentioning is in northern Ontario, in the James Bay Lowlands about 170 kms west
of the Victor diamond mine of De Beers scheduled to commence production this
year. McFauld’s Lake has attracted a group of companies centered around the
lake and exploring two kinds of deposits - 1) copper, nickel, chromite and PGE
in ultramafic igneous rocks and 2) copper and zinc - bearing massive sulphides
in volcanic rocks comparable to the Flin Flon deposits described above. The
activities at McFaulds Lake started in 2002 by De Beers chasing magnetic
anomalies believed to be kimberlite pipes and diamonds. Voisey’s Bay in
Labrador was found by Diamond Fields in 1990’s looking for diamonds but found
a major nickel and copper deposit now in production. With De Beers not
interested in base metals they farmed out this discovery to Spider Resources and
KWG Resources who in turn made additional discoveries of base metal bearing
massive sulphides.
But what triggered the area in
terms outstanding potential was Noront Resources (NOT-TSX-V) discovery in the
summer-fall of 2007 of their Eagle One prospect that in hole NOT-07-05
intersected 117.4 meters of 2.2% Cu, 4.1% Ni, and 9.64 g/t PGE. Follow up
drilling continues to test an adjoining target- Eagle Two, where significant
copper-nickel and chromite mineralization has been intersected. Noront has a
large land position with airborne and ground geophysical surveys under way on
recently acquired claims and drill programs on Eagle Two. As a result of all
this a major staking rush took place and continues to take place making McFauld’s
Lake the hot spot in Canada.
Noront rose from 50 cents in late
August 07 to over 7 dollars later in 2007, and then settled down to its current
$5.30 range. Companies to follow with well placed land positions are Spider
Resources (SPQ-TSX-V), KWG Resources (KWG-TSX-V), Freewest Resources Canada Inc
(FWR-TSX-V), Fancamp Exploration (FNC-TSX-V) Temex Resources Corp (TME-TSX-V)
MacDonald Mines Exploration Ltd (BMK-TSX-V), BOLD Ventures (BOL-TSX-V) Mill City
Gold Corp (MC-TSX-V) and East-West Resources Corp (EWR-TSX-V), Probe Mines Ltd (PRB-TSX-V)
and Mantis Mineral Corp (MINE-CNQ)*. Although the project area is rather
inaccessible transportation wise, if a biggie is found here or a number of
modest sized deposits discovered access will be made come hell or high water. So
take your pick as all companies are doing airborne and ground geophysical
surveys, finding anomalies and drilling.
Changing commodities from gold to
oil I came across a Fort McMurray, Alberta tar sands project worthy of
reporting. Alberta Oilsands Inc (AOS-TSX-V) is a junior oil sands development
company focused in the Athabasca oil sand region of northeast Alberta. The
company owns 3.5 townships of primary oilsands lands and has a strategic pooling
of contiguous oil sands acreage with Connacher Oil and Gas.
Results of 34 core holes drilled
over the 2007-08 winter season at its Clearwater and Hangingstone East/Halfway
Creek properties gave positive preliminary results indicating gross pay range of
15 to 50 meters, weighted mostly to the high end of the range. Core analysis
(bitumen or oil content) is pending. Based on a report by Ryder Scott Company
Canada the company has an assigned contingent resource base of 216 million
barrels up 7.5% from previous contingent resource estimates. AOS trades in the
60 cents range and based on the recent favorable drill results and land position
offers considerable up side in value.
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* The CNQ is an innovated new
Canadian stock exchange for trading equity securities of emerging companies
based in Toronto. CNQ’s unique market model matches enhanced disclosure and
streamlined issuer regulation with leading edge technology and comprehensive
regulatory oversight to meet the needs and characteristics of emerging
companies, their investors and investment dealers.
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