There Is A Lot Of Light Coming Out Of The Tunnel –
Let’s Hope The Portal Remains Open This Year
Canadian Stock Exchanges – E. A. Schiller
January is the time for Super Bowl preparations, the NHL all-star hockey game and for those in the exploration and mining game, conferences that promote companies ready to kick start their 2012 field programs and projects. The ever popular Cambridge show was an arousing success both in attendance and in the setting in the new Convention Centre in Vancouver. The two day show (Jan 22-23) was actually overwhelming providing investors with information on what to expect this coming year from the companies displaying their exploration programs. 11,000 attendees circulated among 500 booths representing 600 companies with investor and company speakers extolling topics on metals and exploration activities. Coinciding with Cambridge was the Mineral Exploration Round Up held down the street at the Westin Bayshore Hotel. The Round Up is more of an industry related conference with exploration and mining contractors and provincial and university mineral resource departments displaying the latest in geological, geophysical and geochemical and related equipment. The five day event had daily presentations on the state of the exploration and mining business. Attendance exceeded 8200 of which 4000 were from out of town. For those who missed these two conferences then you have one more chance to become informed by attending the Prospectors and Developers conference March 4-7 in Toronto, which is the grand daddy of all exploration and mining events of the year.
So what is in store for 2012? In early February precious and base metals prices were strong showing a lot of muscle and pointing to continued strength in companies producing and exploring these metals. For those prone to look at energy issues I am a strong supporter of uranium and in certain case oil and gas companies, even though there is a lot of negativeness to pipeline projects both in the US and Canada. I won’t touch this argument and let the politicians and native groups battle this topic. I am also a potash advocate and some words of interest come later.
I like the Gold Canyon Resources Inc (GCU-TSX-V) project at Springpole Lake, east of Red Lake, in western Ontario. Red Lake is a very famous gold camp in the past and currently and ranks as a mega gold producer. Discovery occurred in the 1930’s and production to date totals about 20 million ounces with the Campbell Mine producing in excess of 13 million ounces. Several advanced exploration programs are in place now insuring that Red Lake will continue to be a prominent gold camp in the future. Gold Canyon has a winter drill program in progress with two drills operating and shortly to be increased to total of six surface drills. The principle target is the Portage Zone now established over a strike length of about 1,100 meters and when combined with the 450 meter long adjacent Main Zone has multi-million ounce potential. To the southeast of the Portage Zone airborne EM geophysical surveys indicate at least another 1,000 meters of gold-bearing mineralization. The up-coming program is designed to extend the size of the deposit along strike and in-fill drilling to improve the confidence level of resource/reserve calculations. The latest hole SP11-106 was drilled on the 0+500 meter section to test the deeper parts of the mid section of the Portage zone and intersected 127.5 meters grading 3.51 grams per tonne Au, (418 feet at 0.102 ounces Au per tonne) including a higher grade zone of 50.0 meters grading 7.73 g/t. Au. An updated 43-101 report is in progress and will incorporate all the latest drill results. In addition, the company has several other projects including an interesting Rare Earth Mineral joint venture with JOGMEC, the Japan Oil, Gas and Metals National Corporation in Malawi. The project is directed to what can be called an ‘ion-adsorption clay type’ similar to those in south China and made famous by the unique and producing REE Bayan Obo deposit. A one million dollar mapping and shallow drilling program is in progress. GCU has been trading in the two to three dollar range the past six months and in early February was trading around $2.70.
The Rare Earth craze was very evident at both the Cambridge and Round-UP shows with something like one and ten companies all exploring for rare earths from Togo to Timbukto. Good luck to all them.
Although I am a uranium fan and optimistic for those exploring the radioactive metal there were few dedicated uranium explorers present at the shows. I have to mention again Fission Energy Corp (FIS-TSX-V) due its wide range of uranium properties, especially the Saskatchewan ones and the efforts forthcoming by the company this year. Following in the steps of Hathor, who got taken out by Rio Tinto late last year thanks to a uranium rich deposit that sits next door to Fission, Fission could be a Hathor ‘look alike’ based on their assemblage of uranium properties, one of which is next door to Hathor’s high grade uranium Roughrider deposit. Of note is their Waterbury Lake winter program to commence shortly with partner Korea Waterbury Uranium LP and a very extensive $9.28 million, four drill, 32,630 meter drill program. In late January the joint venture reported that four infill drill holes have intersected several well-developed and widening intervals of mineralization up to 14 meters in the sandstone above the unconformity and up to 17.5 meters in the basement in the western part of the J Zone. Of the ten holes completed to date seven have intersected anomalous to strongly variable radioactivity at or near the unconformity and in the basement rocks. This kind of uranium mineralization in northern Saskatchewan is typical of all deposits here and is the type locality for “Unconformity hosted structures”. Northern Saskatchewan is elephant country when comes to uranium and there will be several companies active exploring for uranium this year. Fission stock trades in the plus 80 cent range up from the 50 cent last summer.
From Canada we head for New Zealand and look at a couple of Vancouver based companies performing well searching for oil and gas. New Zealand Energy (NZ-TSX-V) has come along nicely since incorporation in August, 2011 and to some degree thanks to Tag Oil Ltd.(TAO-TSX-V) that have both considerable success in finding, developing and producing oil and gas in a part of the world generally neglected by the petroleum boys from Calgary or Houston. Tag made some initial discoveries in early 2010 in the Taranaki Basin with the stock moving from 50 cents to $2.50, then catapulting to $6.50 in 2011 then in early 2012 moved to $7.50 ish and in mid- late January strengthened to $8.40 ish. These discoveries were all conventional types and provided production growth opportunities with some of the lowest oil field operating costs in the industry. For kickers, Tag is now pursuing unconventional multi-billion barrel resources directed to tight oil-rich formations comparable to the Bakken shale prospects in the Williston Basin of north-central USA. Along comes New Zealand Energy with a mix of talented Canadian and Kiwi geologists and you have a potential Tag Oil look alike in the making. The company has made a discovery on their Copper Moki-1 well producing 550 barrels of oil per day with operating netbacks of about $90 US per barrel. More holes to expand this field are in progress. In addition, drilling has commenced on the East Coast Basin directed to unconventional targets where 300 oil seeps and gas seeps are recorded. NZ stock has risen from under a dollar in late November to plus $1.80 range in early February. I have been to New Zealand and it is a very user friendly country with well established and stable political jurisdictions.
Moving from metals and energy I have to mention one of my favourite topics- fertilizers. A sleeper in the sack is Encanto Potash Corp (EPO-TSX-V). The company was successful in creating a working arrangement with the First Nations People in Saskatchewan who own lands covering potential potash deposits. As is well known Saskatchewan is the largest producer of potash in the world and now being explored actively by current producers and future producers like BHP Billiton. Consummating this agreement requiring full acceptance from First Nations’ groups is in the final stages and expected to be completed in late January. Three separate potash targets in addition to a fourth property on Provincial lands are recognized. The Muskowekwan project is the most advanced with a Preliminary Economic Assessment report indicating the favourable development of a solution mine. Encanto stock trades around 26 cents.