Brent Cook is editor of Exploration Insights. His focus is on junior mining stocks and commodities.
Lydian International Ltd.
I initially purchased Lydian after visiting the property. I have added to it a few times, most recently this Monday after the company released a resource update of 4.3 million ounces in all categories. The Amulsar gold deposit in Armenia is one of the best, high-margin, relatively low-capex deposits in the world. A feasibility study based on the previous resource estimate came in at about NPV 5 per cent $1-billion. The stock is being valued at about $200-million.
Fission Energy Corp.
Fission has made what could be a new uranium discovery in the Athabasca Basin with 50-per-cent Partner Alpha Minerals Inc. Fission is trading at more than a 10-per-cent discount to Alpha. The discovery is quite shallow and if the early drilling proves up a deposit, it will offer relatively low mining and capex costs. With Fission you also get exposure to .355 shares of Denison Mines Corp., which purchased the Waterbury uranium deposit from Fission.
Lara Exploration Ltd.
My most recent purchase was March 1 after Lara announced drill results of 197 meters grading 0.73 per cent copper on the Liberdade property in Brasil. The company follows a joint-venture business model whereby they generate exploration concepts and bring in partners to test those ideas. The advantage to this exploration business model is that shareholder dilution is minimized and we are ultimately exposed to more shots at a discovery. Lara has sufficient funds to last several years and 14 projects are being explored by partners in Brazil, Peru and Colombia.
Past picks: March 7, 2012
Glass Earth Gold Ltd.
Total return: –68.92 per cent
Eurasian Minerals Inc.
Total return: –24.01 per cent
Lydian International Ltd.
Total return: –32.95 per cent
Total return average: –41.96 per cent
The junior and major mining and exploration sector has met the New Normal. I think it highly unlikely we will see a rush of dumb money back into this sector for quite some time – meaning, up to a third of the Venture-listed explorers go away. The upshot is that this will be a rough year for most junior speculators but one of the best times for serious investors to purchase quality mineral properties and management teams at a discount. However, you will have to know exactly what you are buying, what the property is really worth and how a company will finance and advance a project. For early stage discoveries it will be critical to identify the fatal flaw in the geology, metallurgy, jurisdiction and management ahead of the crowd.
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