KIM Report

Improved Outlook to be Seen at PDAC 2010

Posted by David

This Sunday March 7th to Wednesday March 10th will see the Metro Toronto Convention Centre and its environs overrun with geologists, students, executives, reporters, salesmen, and the much-maligned investor relations personnel at this year’s PDAC International Convention.

While the trade show section is prohibitively expensive for most ($210-$710, seniors and students get in cheap), the other half of the show, the Investor’s Exchange is free. This sections is where all of the publicly traded mining companies have their booths. They range in size from independent prospectors, exploration-juniors (PC Gold, Diamonds North Resources, Terrane Metals), near-production juniors (Stornoway Diamond Corporation, Shore Gold), producing intermediates (Yamana Gold, New Gold, Harry Winston, Thompson Creek Metals), and large-caps (Rio Tinto, Goldcorp, Vale). For an idea of participating companies and the show layout, check out their Virtual PDAC Interactive Floorplan and Event Planner. Booth space in both sections of the event are completely sold out. I suppose the minerals industry hasn’t imploded after all.

As an independent investor, this is your chance to speak with company management face-to-face, handle the rocks (see the Core Shack exhibit), and meet other investor’s and geologists. Whether you are happy or displeased with a company’s performance, this is the event in the mining and minerals exploration industry. Though, from a student’s point of view, I routinely recommend not eating at the convention as the food is typically awful and overpriced in my experience. Check out the Royal York Hotel in the evenings for any after-hours festivities.

For diamond bugs, drop in on the Monday afternoon series of talks 2-4pm in room 716. Some true gems (pardon the pun) are there to spread their wisdom. Kimberlite petrologists, gemologists, and CEOs make an appearance.

Let me know how you did at the PDAC…

Great Expectations for Great Panther Silver

Posted by David

Some investors seem to have had a bit of premonition as Great Panther Silver Limited (formerly Great Panther Resources: TSX-GPR) finally closed above the $1 mark this week on another record 4th quarter report that was 6% higher than the targeted amount and a 22% increase over Q4 2008 in terms of silver equivalent ounces produced (2.203 Moz.). Both mines at Topia and Guanajuato reported excellent recoveries and increases in production of Ag, Au, Pb, and Zn.

GPR is not the only small-cap precious metals producer on a strong rise, Wesdome Gold Mines Ltd (TSX-WDO) has been a steady gainer moving from $1.00/share in March to well above $2.50. As the new CEO, Donovan Pollitt told me at the last PDAC (also in March 2009, when he was VP corporate development): “We manage to get more money out of the ground than we put in. It’s a rare thing.” Indeed, back in March that was an exceptional achievement amongst is peers (and even larger companies) and WDO is continuing to build upon their now 20+ year history of turning good properties into mines. A big factor with WDO’s apparent business model is the old adage “The best place to look for a new mine is within sight of a headframe.” In WDO’s case one of their new Au discoveries: Dubuisson, is right next door to Agnico Eagle’s Goldex mine.

The high price of gold has also re-invigorated juniors exploring in Canada’s traditional gold-producing regions: Ontario-Quebec, and British Columbia. Both new properties and old mines/projects are being looked at closely now with Au appearing to have some permanence at above US $1000/oz. Companies such as Hawthorne Gold Corp. (TSX.V-HGC), PC Gold Inc. (TSX-PKL), and Alto Ventures Ltd (TSX.V-ATV) have reported promising gold-related finds in the Cassiar Gold Belt, Pickle Lake, and Abitibi Greenstone Belt regions, respectively.

Regardless of the size of the company, these regions (and others), so historically tied to the country, will continue to produce viable Au prospects for many years to come. The scope of the geologic processes that create such deposits is typically so large that it takes more that a just few mines to fully exploit them. Furthermore, previously uneconomic deposits became attractive again as new technologies develop. This was the case when the heap-leaching method of gold extraction came to mainstream use.

This history of the exploration, development, and production cycle with gold (and other types of deposits) plays a major part in the economic well-being of Canada. Also its continued existence is a far greater certainty than some other supposed “backbones” of the Canadian economy. While it is easy to move an automobile plant to a country where workers are paid less than $20/hr for semi-skilled labour, it is quite impossible to move a mineral deposit.

Disclaimer: The author owns shares of HGC, ATV, and GPR. This article is based on the personal opinions and experience of the author. Please conduct due diligence when investing. ©KIM Report 2010 www.kimreport.com