Thursday, 20 March 2014

Investing in Mineral Discoveries - Steve Todoruk at Sprott

HT IKN ........

Suggests waiting until the first drill successful drill hole before investing.
Ride through to take-out by major.
Before that is "guessing".
After discovery hole will take 2-3 years of drilling after initial discovery putting out drill results every month.
Looks at historic cases :
4:30 2004 Virginia $1>$10,
5:00 Aurelian $3 > $34, 43rd drill-hole before hit the big one.
8:00 Hathor 80c > $4.50 - Financial crisis and Japanese Tsunami creating buying points.

After discovery majors sign confidentiality agreements, get close to the story.
Other stocks move into the dip in the "quiet time".

11:00 - Serengeti as small deposit when drills started to miss.
12:00 - Colorado Resources - good drill hole, next hole didn't hit
12:30 - MAG Silver - moving into feasibility / development, building mine and de-risking - quiet period. Impacted during financial crisis. Will own 44% of mine production. Likely Fresnillo will buy out.
14:10 - Pretium Resources. Big high grade. Unanswered questions for majors, developing and de-risking. Expects buy-out for such big deposit.
15:00 - Fission / Alpha Minerals. Mineable width and economic grade. $1.50 + $1.80 warrant > $7. Partners merged into Fission making it easier for buy-out. Fission could grow more.
17:00 - Reservoir Minerals - JV with Freeport McMoran. 62mT @ 3.5% Cu.

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