Interview with Charlie Spiring, Chairman & CEO of Wellington West Capital Inc.

A Short Conversation With Charlie Spiring, Chairman & CEO of Wellington West Capital Inc.



Bio: As founder and CEO of Wellington West Capital Inc., Charlie has ably demonstrated his leadership skills and business expertise in the areas of investments and capital market development. Prior to forming the Firm in 1993, Charlie was a Senior Vice President and Director of Midland Walwyn Capital Inc., Canada's largest independently-owned retail investment firm at the time. During his 13-year tenure with Midland, Charlie consistently ranked as that firm's leading investment advisor of the nearly 1,000 financial advisors employed nation-wide.

Charlie has always played a very active role in the Manitoba business community. Wellington West Capital was chosen by the Government of Manitoba as one of the lead underwriters for the Manitoba Hydro Bond issue, placing more than $200 million in the offering. Since its inception and under Charlie's leadership, Wellington has completed corporate finance issues well in excess of $3 billion. Charlie has also been recognized for his achievements nationally and has been selected as one of Canada's 'Top 40 under 40'. Under Charlie's leadership, Wellington West was chosen as one of the Financial Post's Top 50 Best-Managed Companies for 6 consecutive years. In 2004, the Firm was honoured with the Manitoba Business Award for Outstanding Medium Business as well as being named a finalist for Outstanding Manitoba Ambassador.

Q: Mr. Spiring, in the face of the recent run up in the price of gold, what are your current views of gold and gold stocks in general and conversely what are your views on the US dollar?





A: I believe there is more upside for gold bullion, it is very likely that the gold stocks are better value than gold itself. I like Yamana Gold (YRI:TSX, AUY:NYSE) at $15.02 and Kinross (K:TSX) at $18.68.

Q: With the Canadian dollar hitting new multi year highs yesterday, do you think the surge in the value of our currency (in the last 90 days) is a tad overdone?

A: Absolutely, it is likely going a bit higher but I see it under par next year.

Q: With oil hitting $93/barrel and natural gas languishing in the $6-7/mcf range (and Premier Stelmach’s newly announced royalty regime), are you of the opinion that natural gas prices are poised to move up or oil prices are poised to move down?

A: Oil has momentum to get to $100 soon. Gas is still forming a base to build on. In the longer term, the outlook for gas is bullish.

Q: If possible can you please highlight one sector among Canadian stocks (eg. it can be financials, energy stocks, technology, consumer staples, etc.) that you believe to be overbought and due for a correction and one sector that you believe to be oversold and due for a bounce and why?

A: I am bullish on the agriculture sector and I am cautious on anything to do with manufacturing, still.

Q: Lastly, can you please highlight 1 stock that you think offers the best value moving forward and your reasons for liking it?



A: Chartwell Seniors Housing REIT (CSH.UN) at $12.20 is close to its low and has a reasonably good chance on being a takeover target. It has a yield of 8.7% and has previously been up around $17.00 this year.

Thank You Mr. Spiring!

If you like this post, please take a moment to Stumble or Digg it using the appropriate links at the bottom of this post! You can also post a link to it on relevant forums/bullboards.

Market Wrap with Neil Jacoby of Aurion Capital and Keith Summers of Stonegate Private Counsel

In anticipation of tomorrow’s FOMC policy statement, Toronto’s TSX Composite dropped 115.27 points to 14,312.08, the Canadian dollar fell 0.04 of a cent to 104.92 cents (U.S.), the December crude contract on the NYME lost $3.15 to $90.38 and December gold finished down $4.80 at $787.80.

When asked about the current climate in the markets:

“My general response is that the secular forces that are creating a weak US dollar and strong oil and gold prices are still in place. However, as you know market movements are never a straight line. As a result, we wouldn’t be surprised if there is a counter trend move in these markets. They all appear to be either stretched on the upside (oil, gold and Canadian dollar) or downside (US dollar, natural gas, financials). Timing is always tricky with counter trend moves.”
- Neil Jacoby (CFA), President & Managing Partner of Aurion Capital Management (Oct. 30, 2007)

Additionally, I also happend to have a short conversation with Keith Summers of Stongate Private Counsel today and our exchange is posted below.

Bio: Based in Toronto, Keith Summers is the Chief Investment Officer of Stonegate Private Counsel LP. With 18 years of investment management experience, he is responsible for the management of all portfolios, as well as regulatory and compliance matters.Prior to joining Stonegate, Keith was a portfolio manager with a large North American wealth management company. Previously, he managed both U.S. equity and global balanced portfolios for a U.S. reinsurance company, as well as Canadian fixed-income portfolio for a specialty insurance company in Ontario.
Recognized as an industry expert, Keith appears regularly on television as a market commentator and has contributed articles to the highly respected industry publication, CFA Magazine.

Q: Mr. Summers, in the face of the recent run up in the price of gold, what are your current views of gold and gold stocks in general and conversely what are your views on the US dollar?

A: Generally speaking, we avoid commenting on specific market sectors. I’d recommend overweighting gold if I expected further significant depreciation of the US dollar, or lots of inflation. I don’t expect either of these.

Q: With the Canadian dollar hitting new multi year highs yesterday, do you think the surge in the value of our currency (in the last 90 days) is a tad overdone?

A: Momentum exists. It doesn’t last, but it exists. The Canadian dollar story is less compelling when compared against the GBP or the EUR.

Q: With oil hitting $93/barrel and natural gas languishing in the $6-7/mcf range (and Premier Stelmach’s newly announced royalty regime), are you of the opinion that natural gas prices are poised to move up or oil prices are poised to move down?

A: I didn’t expect oil to break $90. The royalty regime won’t affect oil prices, though it will affect the future profitability of the oil patch. The factors affecting gas prices are different than the factors affecting oil prices. “Historic” relationships between the two prices are just that – historic. There is no guaranteed arbitrage play here.

Q: If possible can you please highlight one sector among Canadian stocks (eg. it can be financials, energy stocks, technology, consumer staples, etc.) that you believe to be overbought and due for a correction and one sector that you believe to be oversold and due for a bounce and why?

A: I don’t know that there is a specific sector that is either overbought or oversold. My concern with the TSX is that it has become too resource-intensive. There is more value, opportunity and less risk offshore.

Q: Lastly, can you please highlight 1 stock that you think offers the best value moving forward and your reasons for liking it?

A: I’m actually going to recommend a mutual fund, the United Emerging Markets Pool (full disclosure – United Financial is our parent company). These emerging markets are experiencing tremendous growth right now and (contrary to popular opinion) are not overly dependent on exports to the US markets. I often call this the “mission to Mars” portfolio. Imagine that you’re on a mission to Mars. You’ll be gone 3 years and won’t get any mail, so you won’t get any statements showing the high short-term volatility of emerging markets, however when you get back…you’ll be pleasantly surprised with the returns earned.

Thank You Mr. Jacoby and Mr. Summers!

Buy, Sell or Hold - Powertech Uranium Corp. (PWE:TSXV)

Research Capital Analyst Brian Mok Initiates Coverage on Powertech Uranium Corporation (PWE:TSXV)

On October 23/07 Research capital analyst, Brian Mok initiated coverage on Powertech Uranium Corporation (PWE:TSXV) with a $3.00 target price, and a BUY recommendation.

Key Highlights

1. Powertech’s projects and properties are located in a safe jurisdiction in the western United States. The company has focussed and targeted it efforts on properties that are amenable to in-situ recovery (ISR) mining methods. The benefits of in-situ recovery mining include having low capital costs for mine development, being environmentally friendly, not having waste rock or tailings ponds, being profitable even for lower grade uranium deposits and utilizing a small labour force.

2. It’s most advanced projects (Centennial and Dewey-Burdock in Colorado
and South Dakota, respectively) are targeted to be producing 1,000,000 pounds of Uranium each – Centennial in mid 2010 followed by Dewey-Burdock in mid 2011. The 2 projects have a historical uranium resource totalling more than 17 million pounds of U3O8.

3. “The management team has substantial experience will all facets of uranium mining in the United States, including uranium exploration, mine development, and ISR plant operation, as well as mine and wellfield reclamation after mining operations have ceased.” The management team is led by CEO Richard Clement, who “was employed by Uranium Resources, Inc., formed in 1977 which became a Canadian public company in 1988 specializing in the ISR development of uranium deposits. Mr. Clement served as a director and Senior Vice President - Exploration of Uranium Resources from 1983 to 1996 and subsequently as President of Uranium Resource's New Mexico subsidiary, Hydro Resources Inc. until 1999 where he oversaw the securing of all necessary mining permits for ISR development of Hydro Resource's uranium deposit (excerpted from Powertech Uranium's website).

Risks

1. Permitting Risk

The company has to prepare and file applications for the required permits and licenses for its projects in accordance with applicable state and federal laws and regulations. Mok writes "We believe that Powertech has been, and will continue to be diligent in its preparation of the applications for the required permits and licenses for its projects; however, the regulatory review period could take longer than expected."

2. Capital Cost Risk

Till date, Powertech has not released any economic studies for its Centennial and Dewey-Burdock projects. In arriving at his target price, analyst Brian Mok writes "we have estimated the capital and operating costs based on our discussions with company management, as well as cost estimates from Powertech's peers. There is a risk that our cost estimates could differ from the actual capital and operating costs. Should these cost be significantly greater than estimates, it could have a negative impact on the economics of its projects, and ultimately adversely affect the future financial position of the company."

3. Commodity Price Risk

While the spot price of Uranium may have bottomed at $75/lb in the short term, "should the price of U3O8 decline significantly prior to Powertech's initial production start-up, the company could choose to delay start-up, or cancel further development, and be required to writedown reserves and resources to reflect the weaker price environment."


If you like this post, please take a moment to Stumble or Digg it using the appropriate links at the bottom of this post! You can also post a link to it on relevant forums/bullboards.

Glenn Catchpole of Uranerz Energy (URZ:AMEX, URZ:TSX) - An Interview

An Interview with Mr. Glenn Catchpole - President & Chief Executive Officer of Uranerz Energy (URZ:AMEX, URZ:TSX)

With both Ux Consulting and TradeTech boosting their spot price indicators for uranium this week by US$3 to US$78 per pound, the freefall in the short term spot price of uranium might have finally turned a corner. After peaking at $136/lb in June 2007, the spot price had plummeted to $75/lb until last week, when it rose (by $3/lb) for the first time in 17 weeks according to Ux Consulting. In response to the price increase, RBC Dominion Securities analyst, Adam Schatzker wrote “With a spot price increase of $3/lb and relatively robust volumes, we believe we are seeing real renewed interest in the market. Buyers over the past two weeks have been of mixed types (e.g. utilities, speculators, traders) and we are hearing rumours that a utility is looking for first core material on the spot or term market. We believe utilities will continue to reenter the market as their 2008 spot requirements materialize. With this increased level of demand we expect the spot price will continue to trend upward. Given our forecast for a balanced market, we think that spot prices will rise with demand,” in a note released on October 17th.

If the spot of uranium really has turned for the better, maybe we should focus our attention on some leveraged way to play it. This brings me to Uranerz Energy (URZ:AMEX, URZ: TSX). Uranerz has uranium properties in Saskatchewan (Canada), Mongolia and Wyoming (U.S.A.). It’s most advanced projects are the Hank and Nichols Ranch projects, in the central Powder River Basin of Wyoming. Wyoming's Powder River Basin is presently the largest uranium producing area in the United States. Conventional mining for uranium in the Powder River Basin of Wyoming was conducted from 1955 to 1985. Commercial scale ISR mining commenced with Wyoming Mineral's Irigaray mine in the late 1970s. ISR mining has been ongoing since 1987, with production coming from Power Resources Inc.'s Highland and Bill Smith mines in the Southern Basin and from Areva's Christensen Ranch mine in the Pumpkin Buttes district. Power Resources Inc., a wholly owned subsidiary of Cameco Corporation, is currently operating at the Bill Smith and Highland mines. Areva's Christensen Ranch mine is presently on stand-by.

On August 31/07 Uranerz filed a NI 43-101 Technical Report on Nichols Ranch Property.

The company has 43,673,187 fully diluted shares outstanding, as of September 30, 2007 and between Mr. Catchpole (President and CEO), Mr. Hartman (Senior Vice President & Chief Operating Officer) and Mr. Brown (Senior Vice-President of Exploration), the company has a total of 45 years professional experience in Wyoming in in-situ recovery (ISR) exploration and mining. Did I mention that Uranerz Energy is aiming to be in production by 2010 at an initial rate of 750,000 pounds per year rate?

To read more about Uranerz’s management: http://www.uranerz.com/s/Management.asp

The following is a short interview I did with Mr. Glenn Catchpole, M.S., P.Eng. – President & Chief Executive Officer of Uranerz Energy on October 18, 2007 -

Q: Now that the price of Uranium has gone from $135/lb to $78/lb, what are your thoughts and outlook on it?

A: We are not experts on uranium spot price forecasting, but from what we have read on the topic, we remain optimistic that given the quality of our uranium properties in Wyoming, our production costs will allow us to have a respectable positive cash flow even using the most gloomiest of projections by the experts. I just finished presenting a paper at the Nuclear Energy Institute International Fuel Seminar in New Orleans and one market expert forecasted that we saw the bottom of the spot price at $75/lb. Another positive factor is that the long-term price has stayed at $95/lb.

Q: Tell me a little bit about the status of your main (Hank and Nichols) projects? (Are you expecting any drill results to come out soon etc?)

A: As previously announced we have commenced the preparation of the environmental permit applications on Nichols Ranch & Hank and plan to submit those applications before the end of the year. Drilling continues on Nichols Ranch and on certain of our other Powder River Basin properties. An announcement on the results of the recent drilling is expected in the near term. We remain very pleased with the results we are seeing on these two properties.

Q: Since I haven’t seen or heard too much about Uranerz compared to some other Uranium juniors, is the company planning to a promotional tour, or host analyst visits to garner more attention from the brokerage community?

A: You are right, and I frequently get asked the same question despite the fact that we have been frequently attending investor shows, and Dennis Higgs and Lloyd Jacobs have spend a lot of time in the past few months visiting investor types in New York, Boston, San Francisco and elsewhere. We think part of the problem is that until recently we were only listed on the Amex and the Frankfurt exchange. Now that we have recently listed on TSX, we believe that this will increase our exposure in the Canadian markets, where there are many sophisticated commodities investors. In early November, we will go to Toronto to participate in the Company’s new listing ceremony at the opening of the TSX, and while we are in Toronto, we will spend the remainder of our time introducing ourselves to the Canadian investment community, visiting fund managers, institutions, etc.

Q: What does Uranerz's treasury look like - are you going to have to go to the markets to finance the Hank and Nichols projects?

A: Currently we stand at about $13 mm plus. We are considering various financing options to fund our continuing activities in Wyoming and elsewhere, including our Cap-Ex requirements for Nichols R. and Hank. We cannot comment further on possible sources of funding at this point, but we are confident in our ability to secure the financing required to fund all of the Company’s continuing activities going forward.

Q: Are there any upcoming catalysts or major events for Uranerz in the coming weeks or months?

A: As you can probably appreciate, as a public company, we can not answer this question other than as previously publicly disclosed. I would, however, refer you to our recent press release of September 19, 2007, in which the Company announced the execution of a definitive agreement to acquire further property interests in the Powder River Basin, WY. We believe this acquisition is a highly significant event for the Company.

Q: Lastly, do you think Uranerz Energy is undervalued - if so, why?

A: Of course. We believe we are undervalued because of our confidence in the property position that we have in Wyoming. However, we appreciate the fact that investors may not think we are undervalued since our evaluation of these properties is ongoing, and we do not yet have the current data to provide the disclosure that substantiates our optimism.

Thank you Mr. Catchpole and Mr. Jacobs!

If you like this post, please take a moment to Stumble or Digg it using the appropriate links at the bottom of this post! You can also post a link to it on relevant forums/bullboards.

Ken Cunningham of Miranda Gold - An Interview

Interview with Mr. Kenneth D. Cunningham – President & Chief Executive Officer of Miranda Gold (MAD:TSXV)





Mr. Cunningham brings over thirty years of experience from diversified mineral exploration and mining geology through to executive management. Eighteen of these years have been focused in Nevada. Recently, Mr. Cunningham has been Vice President of Nevada North Resources (U.S.A.) Inc. where he acquired eight new properties and successfully negotiated leases with major mining companies including Newmont, Placer Dome, Newcrest and Barrick. Previously, he has been Exploration Manager with Uranerz U.S.A. Inc. During his tenure with Uranerz Mr. Cunningham led the exploration and acquisition effort that resulted in two Nevada discoveries; a four-million ounce discovery in the Battle Mountain trend and a one-plus-million ounce discovery in the northern Carlin trend. He was also instrumental in establishing, and subsequently managing, Uranez' Mongolian gold exploration program. Mr. Cunningham has also been Vice President of Tenneco Minerals Company and a Resident Manager with Echo Bay Mining Company.

Q: Mr. Cunningham, with gold remaining steady above the $700/oz price what are your thoughts on gold and gold stocks moving forward?

A: I certainly believe that gold prices will continue to move upward although I also expect there will be corrections along the way. I have not seen the US investor jumping on the gold band wagon but if this happens we should see new highs. Financial problems that face the US economy would lead one to expect higher gold prices.However, I have learned not to predict gold prices. When I was with Tenneco Minerals we would have to set an annual average gold price for budgetary purposes. I can tell you that we were never close with the number we picked and as a result we were never on budget. Miranda is well positioned to take advantage of higher gold prices but can survive any down turns as well. We realize that exploration is high risk and discoveries do not happen over night. With a treasury of over $12 Million and a permanent staff of 3 veteran discovery oriented geologists we are prepared to succeed in any market.

Q: I was wondering if you could please summarize in a few sentences, your views on the effects that rapid capital cost escalations and the rising Canadian Dollar are having on earnings and profits of gold producing companies.

A: The US has always enjoyed cheap energy and with the worldwide demand for oil this era is coming to an end. Rising costs of energy effect many of the cost centers associated with mining and I expect to see these costs continue to rise. In order to maintain a steady profit margin, gold price will need to keep pace with these rising costs. We have recently seen both Barrick and Newmont build power plants in Nevada to help offset rising energy costs. It always pays to be a low cost producer, regardless of the commodity or the commodity price. Metals prices are cyclical and you always want to protect the downside. At Miranda we focus our exploration in the major gold trends of Nevada, specifically the Cortez Trend. Big deposits and high-grade deposits are less affected by rising costs. In addition, Miranda is an explorer and not a producer. We feel this is our niche in the mining sector and we focus on being one of the best when it comes to exploration. As such, we are not overly affected by rising Cap-Ex and production costs.

Q: If you could only buy and hold 1 stock (other than Miranda Gold) for the next 12 months which one would it be and why?

A: I follow many of the junior gold stocks, especially those exploring in Nevada. I prefer investing in the juniors as they expose investors to the possibility of a multiple return on their investment. Having said this I would also caution that they are very high-risk and not suitable for many investors. To pick a single company I would go outside the gold sector and mention Uranerz Energy (URZ). This is a bit self-serving as I sit on their Advisory Board. Regardless, this is a serious company run by very qualified mining engineers. They are involved in ISL uranium mining in the Powder River Basin of Wyoming and should be in production by 2010.

Q: Lastly, if possible can you please highlight one sector among resource stocks (e.g. it can aluminium stocks, nickel stocks, steel, gold, silver etc.) that you believe to be overbought and due for a correction and one sector that you believe to be oversold and due for a bounce and why.

A: I think we have recently seen the most obvious and needed correction. It came earlier this summer when the spot price of uranium began to decline. There were too many start up uranium companies without management experienced in this particular sector. This happens every time a commodity price takes off. With regards to an undervalued sector, I would like to think that the junior gold exploration sector is undervalued with regard to the recent upward surge in gold price. If indeed, the junior gold sector is undervalued and does rebound I would expect Miranda to be one of the companies that benefits. At Miranda we are expecting to see 3 properties drilled between now and the end of 2007. These include some of our most promising properties, Red Hill - a JV with Barrick, Red Canyon - a JV with Romarco Minerals and Angel Wings - a JV with White Bear Resources. I hope we are undervalued with respect to the potential of these properties. Time will tell.

Thank You in advance!

If you like this post, please take a moment to Stumble or Digg it using the appropriate links at the bottom of this post! You can also post a link to it on relevant forums/bullboards.

Don Coxe Basic Points October 2007

Don Coxe Basic Points October 2007 - "The Ghost Of Octobers Past"

To download Mr. Don Coxe's October 2007 Edition of Basic Points click here

For the Mr. Coxe's weekly Institutional and Client Call Click Here

Guyana Goldfields (GUY:TO) – Buy, Sell or Hold?

Guyana Goldfields Releases Initial Resource Estimate



On October 10th Guyana Goldfields announced its initial resource estimate for its wholly owned Aurora project, which said “at a 0.50 g/t Au cut off the Total Indicated Resource is 1.97 Million Ounces and the Total Inferred Resource is 2.68 Million Ounces for a total
of 4.65 Million Ounces.” At a cut -off grade of 1.0 g/t the resource amounts to 4.4 million ounces and the gold price used for calculating the cut-off grade was US$ 525/ ounce. The resource was determined for three nearby zones within the Golden Mile, including Aleck Hill, Rory’s Knoll, and East Walcott Hill. The press release also indicates that the “resource is amenable to open pit mining practices with high recovery ratios (approximately 92%).”

According to Dundee Securities Mining Analyst Mark Smith, “a scoping study is still needed for the Aurora project in order to better understand the economics.” He slaps a 12 month MARKET OUTPERFORM rating on Guyana Goldfields with a C$11.80/share target. His target is based on “85% of the $130/oz (net of cash) that Newmont Mining Corp. is paying for Miramar Mining Corp., Guyana’s C$27 million in current cash and C$8 million in securities and the current market caps of Aranka Gold (ARK.TO) and WSR Gold (WSR:TSXV).

Catalysts

Share price appreciation can come by drilling success at the Aurora property and the nearby Aranka joint venture project. With 5 drills turning at Aurora, Guyana Goldfields “continues to infill the drill spacing to better define the resource.”

If you like this post, please take a moment to Stumble or Digg it using the appropriate links at the bottom of this post! You can also post a link to it on relevant forums/bullboards.

Novagold (NG:TSX, AMEX) - Buy, Sell or Hold?

Buy Novagold For Leverage To The Gold Price?



While the price of gold may undergo some short term consolidation after hitting multi year highs recently, Citigroup metals and mining analyst John Hill is as bullish as ever for the yellow metal. In a research note released today, he writes “Gold has set 28-yr highs above $740/oz, and seems to be entering a new investment-driven phase. Drivers are shifting from safe-haven demand and exchange rates, to a broader "re-flation trade" with help from seasonality.” Based on his bullish outlook, he maintains his $750/oz forecast for 2008 while hiking his “forecasts for 2009/10 to $800/820 and long-term valuation to $700.”Consequently he also raises his Earnings Per Share estimates for North American miners, bumps the target price of their favourite big cap gold stock Barrick Gold to $48/share, Freeport McMoran to $122/share and upgrades Novagold to a BUY from Hold. He goes on to say that any corrections in gold are buying opportunities and that a test of “$850-1,000/oz is likely.”

Reasons for upgrading Novagold from a Hold to a BUY (with a Speculative Risk rating)

“We are upgrading our recommendation on NovaGold shares to Buy with a target of $23/sh (previously $18) based on a higher long-term Gold assumption, which drives optionality and asset value at the massive Donlin Creek (AK) Gold project. On a 100% basis, this is worth an incremental $1.0 bln NPV.”

Pivotal to his bullish stance is Novagold’s interest in the Donlin (AK) gold deposit. While many basic details such as mining rate, power supply, process metallurgy, ownership remain uncertain, the resource is the largest undeveloped gold deposit in North America with an “inferred resource of 21–32 mln ounces, plus exploration upside.” Additionally, Novagold’s Galore Creek copper/gold project, which is in a joint venture with mining giant Teck Cominco adds further value to the company.

Hill writes “After five years of earn-in efforts, Barrick is obliged to produce an “economic feasibility study” and make a board-level construction decision by Nov-12 to earn a 70% interest (from 30% now). NovaGold and Barrick are at odds over interpretation of the agreement, with litigation a high possibility. We believe 40% of Donlin is worth fighting for, but the outcome is squarely “in the grey area.”

Splitting the difference for valuation – We are upgrading the shares of NovaGold, on a valuation basis of 42.5% interest. This can be viewed as the expected value in a 50-50 settlement with Barrick, assuming Native interests back in for 15%. Consensus appears to value NovaGold at 30% of Donlin.”

Hill also writes about Teck Cominco as a potential solution to the litigation issues between Novagold and Barrick Gold. He writes “This might involve contributing Donlin, Galore, and Teck's large Pogo gold mine to "Nova-Teck," with Barrick taking a minority shareholding in exchange for some/all of its Donlin stake plus the Grace claims near Galore. In this way, expensive, time-consuming litigation might be avoided, while providing investors an exciting new mid-tier North American based gold/copper miner.”

If you like this post, please take a moment to Stumble or Digg it using the appropriate links at the bottom of this post! You can also post a link to it on relevant forums/bullboards.

Buy, Sell or Hold – Golden Star Resources (GSS: AMEX

CIBC Research Update in Response to Golden Star's Q3/07 Production Numbers

On October 3, Golden Star released its Q3/07 production results and updated its estimates for 2007 gold production at its Bogoso/Prestea and Wassa operations. Overall gold production in the third quarter amounted to 70,097 ounces and Golden Star confirmed that flotation recoveries at its Bogosa Sulfide plant will “attain design levels by the end of 2007” (October 3rd press release). The company also said, “We are updating our estimates for 2007 gold production to 125,000 to 150,000 ounces at Bogoso/Prestea at an average cash operating cost between $550 and $650 per ounce. We expect Wassa to produce approximately 115,000 to 125,000 ounces during 2007 at an average cash operating cost between $430 and $480 per ounce” (October 3rd press release).

In response to the results, CIBC World Markets analysts Brad Humphrey and Forbes Gemmell wrote “Although output was in line with our expectations for the third quarter, the higher cash cost and lower production guidance for 2007 is consistent with our
view that Golden Star continues to be a 'wait and see' story” (according to an update put out on October 4th)

Regarding the expansion issues at Bogosa, Humphrey and Gemmell write “Given more than 80% of the reserves on the Bogoso/Prestea complex are refractory sulfide and cannot be effectively processed using the existing processing facility, Golden Star’s future hinges on the successful ramp-up and operation of the Bogoso Sulfide Expansion (BIOX plant). Throughput at the sulfide plant steadily increased throughout the quarter
achieving design throughput by quarter-end. Recoveries continue to improve and are expected to reach design levels by year-end. The ramp up of the sulphide plant has been negatively impacted by a number of mechanical issues, which are currently being resolved, although it seems to be taking longer than originally estimated.” Humphrey and Gemmell are looking for the Bogosa/Prestea operation to produce 140,000 ounces at costs of $650/oz for 2007.

The analysts seems to be pleased by the progress at the Hwini-Butre and Benso (HBB) projects and expect first delivery of ore from the HBB operations to the Wassa mill in Q3/08.
As for Wassa, gold sales (29,063 ounces for Q3) were minutely better than the analysts’ expectations of 28,000 ounces and Humphrey and Gemmell are expecting it to produce 115,000 ounces of gold at cash costs of $445/oz for 2007.

With regards to the power rationing program coming to an end on October 1st , Humphrey and Gemmell write “We suspect power curtailment will continue to be a risk in Ghana.”

Humphrey and Gemmell maintain their $4.50/share target and “Sector Perform” rating.

If you like this post, please take a moment to Stumble or Digg it using the appropriate links at the bottom of this post! You can also post a link to it on relevant forums/bullboards.

Buy, Sell or Hold – Aurelian Resources (ARU:TSX)

Update on Aurelian Resources (ARU:TSX)

Yesterday, Aurelian Resource came out with their first 43-101-compliant, inferred mineral resource estimate for Fruta Del Norte (FDN), a buried epithermal gold-silver discovery on its wholly-owned Condor Project in south-eastern Ecuador.

The results which were based on 22,942 assays taken from 85 drill holes and indicated that the FDN deposit hosted an inferred resource of 13.7 million ounces of gold, and 22.4 million ounces of silver using a low end cut off grade of 2.3g/t.

Initial metallurgical testing confirmed recoveries of 85-95% “using a process combining gravity separation of coarse free gold, followed by flotation and gold recovery by Carbon in Leach (CIL)” (Aurelian Resources October 4 Press Release).

The deposit has been divided into 4 separate zones depending on grade, location, metallurgical composition. According to a flash update released on October 4th by Canaccord Adams analyst Wendell Zerb, initial mine planning suggests a 2 phase program. “Phase 1 would incorporate a production plan targeting the high-grade core of the deposit at 3,000-5,000 t/d starting three to five years out. Grades of this phase 1 zone could average about 9.3 g/t Au but initial years would exploit a significantly high-grade zone near section 3400N. Initial mine planning for phase 1 assumes using long hole stope mining; further studies will review lower-cost bulk mining of this zone. Assuming a 5,000 t/d throughput using 20 g/t Au would produce about 750k oz Au per year. Phase 2 would involve exploitation of bulk mineable but modestly lower-grade zones. We assume throughput would increase to at least 10,000 t/d in total with phase 2 coming on-line; however, grades will also trail off and overall production is not likely to significantly increase despite the higher mining rate.”

Upcoming Developments and Catalysts

-Infill and expansion drilling at Fruta Del Norte (FDN)

-Follow-up on 30 or more gold targets at Aurelian’s Condor project

-Continued permitting, baseline work and mine planning at FDN

-New announcements of mining reforms and laws from the Ecuadorian government in late 2007

Price Targets

Canaccord Adams analyst, Wendell Zerb upped his target from C$11.00/share to C$13.00/share citing “We believe the FDN prospect has the potential to develop into a large high-margin mining operation and, as such, we feel justified in applying a premium in-situ valuation to the FDN resources of US$115/oz. To account for what we view is excellent exploration potential, which we believe remains both at the FDN zone and on additional targets within the Condor Project, we have chosen to apply a 1.1 growth multiple to our in-situ valuation.”

According to an update relased October 5th , Dundee Securities analyst, Mark Smith maintains his 12 month target of C$14.00/share and says that while size of the deposit has been confirmed the political situation in Ecuador hasn’t. He does not expect the majors to pay $2 billion to acquire Aurelian before the political uncertainty disappears. However, he does say that once the new mining laws and reforms come into place and the FDN project is advanced a little bit, “the majors will line up for an opportunity to own a new flagship operation.”

Conversation with Mike Niehuser - Metals and Mining Analyst

A short conversation with Mike Niehuser , metals and mining analyst with Dutton Associates and Beacon Rock Research, LLC., SLB Equity Research, LLC.

Biography

Mike Niehuser is the founder of Beacon Rock Research, LLC., SLB Equity Research, LLC., and The Colonel John Boyd Memorial Scholarship, Inc. He also provides metals and mining research for Dutton Associates. Formerly, Mike was a Vice President and Senior Equity Analyst with the Robins Group, LLC, a registered broker dealer. Mike was employed by U.S. Bank for 18 years as a lender with expertise in all areas of real estate lending and valuation. He graduated from Pacific Coast Banking School in 1998 and successfully transitioned into investment research to become the RedChip Review's bank analyst from 2000 to 2003. Mike has written hundreds of research reports and related articles on investing in small cap companies. He is a generalist with expertise in recognizing value in under-followed companies in a wide variety of sectors.
Mike joined the faculty of the Pacific Coast Banking School in 2005, following his participation as an Alumni Associate Director and Grader. Mike also served as an elected school board member, serving ten years in Oregon’s fourth largest school district. Mike considers himself to be an example of the life-long learner, graduating from the University of Oregon with a BS in Finance and is currently preparing for the Level III CFA exam. He currently holds NASD Series 7, 63, 86 and 87 licenses.

Q: With spot gold prices remaining steady above $700/oz, I was wondering if you could please summarize in a few sentences, your views and outlook on gold and gold stocks.

A: Gold is currently trading at about the 70th percentile in real terms since January of 1968. This may suggest that gold may be overextended at $700 per ounce. While some believe that gold is headed higher this is really just icing on the cake. From a value or more risk averse point of view, we believe it is more important for the forecasted gold prices to remain above potential costs of production. This is important for companies to have bankable projects and more importantly to be able to raise capital to develop projects and expand/upgrade resources. While all gold stocks seem to be correlated to the price of gold, those with economic projects should fare better over time. We see that with somewhat inconsistent performance in metal stocks at historic highs, concerns in the credit markets, that a new phase may be starting where there is a flight to quality, or to projects that make sense. We remain bullish for companies with good projects and solid management.

Q: If possible can you please give us a summary on how you evaluate/quantify geopolitical risk, in light of Eldorado’s mine being forced to shutdown in Turkey and the unexpected suspension of Gabriel Resources’ environment impact assessment due to NGO opposition?

A: I can’t speak to the two stocks you mentioned because I do not cover them. We are bullish on metals stocks but assuming there is an equal number of winners and losers we attempt to compartmentalize risk. In the real world, risks are often related and become apparent in real and horrifying ways. In general, when selecting metal stocks, we look at political and permitting, project characteristics including expansion potential, and management. We assess these issues in relation to each other, relative to where a specific company is in relation to its peers, and in relation to its own development plan. We also attempt to isolate the critical path items which may hold a project up and cause it to lose the confidence of investors.

Q: Lastly, among precious and base metals, can you please highlight one metal (and its corresponding stocks) that you believe to be overbought and due for a correction and one metal that you believe to be oversold and due for a bounce and why.

A: We have a long-term perspective. In any event, with the rise in metal prices, from a long-term perspective, values of most metal stock seem reasonably under control. It comes as no surprise that with historic global growth all precious and base metals may be expected to remain in demand for some time. For this reason, while all metals are well above their average real price over the last hundred years, we may be in a very long metal cycle substantially above historic levels. It would also appear that continued worries regarding additional supply of metals coming into the market may be overdone. The greatest concern from a near term perspective is good information coming out of previously closed systems such as China. From a longer term perspective, should increasing demand persist without a complimentary rise in supply, prices will increase and stabilize. Until prices rise to the point of increasing inflation and slowing economies prices will remain high, if this doesn’t occur in an orderly manner, there could be great and unsettling consequences (depression, war, etc.).

Thank you, Mr. Niehuser!

If you like this post, please take a moment to Stumble or Digg it using the appropriate links at the bottom of this post!

Buy, Sell or Hold – Oilexco (OIL:TSX)

Company Profile (According to Wellington West Capital Markets)

Oilexco is a Calgary-based exploration and production company with assets in the UK North Sea and the United States. Oilexco trades on both the Toronto and London stock exchanges under the symbol OIL.



Analysts Malcolm Shaw and Kyle Hunter of Wellington West Capital Markets put out a research note today (October 2, 2007) on Oilexco, saying they expect the company to exit 2008 at 55,000-60,000 bopd. Their outlook includes ‘incremental production in 2008 from one infill well in the Balmoral field (the “B29” well) as well as the development of the Delta satellite accumulation located adjacent to Balmoral.” Additionally, they estimate Shelley to come on-stream in August 2008 with an initial rate of 25,000 bopd. Shaw and Hunter estimate “$3.17/sh 2008E DACF” as Oilexco’s relative short reserve base transforms into a more mature reserve base as “new projects with lower decline rates are brought onstream.”

Looking further out to late 2009, they expect Huntington to come on-stream in Q3/09 at an initial gross rate of 60,000 bopd with a 40,000 bopd second phase in mid 2010.

Upcoming Catalysts

Shaw and Hunter figure that after the appraisal work is done at Huntingdon, Oilexco will focus their attention towards their “72.7% owned 22/13b block (called Morro/Coronado), immediately west of the Huntington discovery. They estimate this prospect to be drilled in Q4/07 and assign a 70 mmbbl target for Morro/Coronado with a 25% chance of success.

Shaw and Hunter raised their target price for Oilexco from $15.00 to $17.00 and maintain their ‘BUY’ rating. They also “estimate a fully unrisked total asset value of $24.46 for the nine “core” projects” in their model – which include Brenda Nicol, Balmoral, Sheryl, Black Horse, Shelley, Ptarmigan, Bugle, Kildare and Huntingdon.

If you like this post, please take a moment to Stumble or Digg it using the appropriate links at the bottom of this post!