analyzing a junior mineral company news june 17, 2009 1 dr. john-mark staude president & ceo
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Analyzing a Junior Mineral Company News
June 17, 2009
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Dr. John-Mark StaudePresident & CEO
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Canadian National Instrument 43-101This sets out standards and guidelines for reporting. It helps the investor.
The Security Commission monitors for compliance.
Professional Geologist- Engineer Certification required on technical portion of news releases.
There are three main categories on resources (Measured, Indicated, Inferred).
www.Sedar.com
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Four types of companies in Resource Sector
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Greenfields
~4 - 5 Years
Pre-Discovery
1 - 2 YearsDiscovery
2 - 3 YearsFeasibility &Permitting
2 YearsDevelopment
1 YearStart-Up
Depletion
Full ValueCompetitive High Risk
Potentially High Value Few Competitors and Lower Risk
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InstitutionalInvestingBegins
Speculative StockAhead Of Known Value Orphan
Period
SpeculatorsLeave
Value Opportunity
Time
Rela
tive V
alu
e
1.1. 2.2. 3.3. 4.4.
Value Chain
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Low Probability, Long Time
T
“No one knows”
Highland Valley
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??Context- “make calls, ask questions, due diligence”
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Geologic Perspective
1. Company (size, business, track record)
2. Project location, stage 3. Context, past results, context, number of holes4. Possible deposit type? 5. Length of intervals
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Deposit types are keyAssay results in news releases- need to be interpreted in the context of deposit types - (porphyry, epithermal, veins, placer, not disclosed)
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Value vs Length of Intercepts
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Source: Research Capital, 2009
IN-SITU VALUES VS LENGTH OF DRILL HOLE
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250
500
750
1000
1250
1500
1750
2000
2250
2500
0 200 400 600 800 1000
Length (Metres)
In-s
itu
val
ue
(US
$ p
er t
on
ne)
All Data Previous Highs This Weeks High
Young-Davidson (NGX)
Campo Morado (FAN)
40 Mile (FMM)
Double Eagle (NOT)
Gold Ridge (SGA)
Santa Ana (BCM)Copper Canyon (CPY)
Moly Brook (TJS) Kerr-Sulphurets (SEA)
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Drill results 4 news factors
1. Grades vs. Lengths vs. Depths
High grades are good but a) is there volume?, is it deep?, how long of intervals?
Gross size of system – giants are very rare, trades are on results and grades
2. Grades that investors should look for when reviewing stocks:1% Cu, 2% Ni, 1 g/t Gold, PGM, 300 g/t Ag, 0.1% Mo, 0.1% U308Think about the $ value of the rock. Current metal prices times
the concentration.
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3. Drilling assays –Core has more data, earlier stages and deposit type
4. Spacing of drilling results – see if there is a map on the website, where are the new holes relative to earlier results
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Drill results 4 news factors
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District play – scale potential
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Metallurgy
The % metal is going to be extractable
Not just the sexy assay number in the P.R.
Minerals, elements = good and bad
Analysts help at this stage and into the engineering stages
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Examples- on the news the stock jumps
Appleton (AEX), Ventana (VEN), Keegan (KGN), Serengeti (SIR),
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Conclusions
1. Size potential, location, value-meters2. Graphics – maps and sections on website to
see where the numbers are coming from3. Deposit types 4. Stage of project (leverage, risk)5. Ask experts, due diligence
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“John-Mark’s Geotutorial Video”
YouTube Video- released July 1st, 2009- field geology- covers sampling methods- better understand press releases
Email [email protected] to Alex Mason about questions you’d like to see covered from the resource investor or geologic field perspective?
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