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- The Quiet Summer of 2011, and Honest Work
- Respectable Showing For the Diamond Sector at PDAC 2011
- PDAC 2011 – this March
- Promising Diamond Find by Metalex in Northern Ontario, Plus Grades from Chidliak and Movement at Renard
- Peregrine Finds 1.15 Carat Diamond at Chidliak
- Stornoway Diamond Corp. Works to Expand Resources at Renard Project
- 2010 Toronto Resource Investment Conference
- Newsworthy Week For Canadian Diamond Companies
- Different Types of Diamonds at Fort à la Corne
- Kimberlites and Diamonds of Western Canada
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More potash for Marifil Mines Ltd.
Posted by David
Yesterday, Marifil Mines Ltd. (TSX-MFM) announced that it had expanded upon its Potash discovery on its K-2 project in Argentina. The K-2 project is 100% owned by MFM and covers 100,000 hectares in the Neuquen basin. As mentioned in a previous article, MFM first announced that it had discovered two potash horizons during petrophysical logging of an abandoned oil well drill hole on their property close to Rio Tinto‘s Rio Colorado potash mine. The data from the logs from the two drill holes suggests that the two horizons extend along strike for at least 13 km. The grade of the newer hole varies between 11% and 20% K2O. The intecepts of potash recorded by the most recent logging activity were 5.8 m and 5.4 m thick. MFM expects a NI 43-101 complaint report on the deposit within the next couple of weeks.
Further asset diversification by Marifil Mines
Posted by David
Marifil Mines reported today that exploration in their new Neuqen Basin property in Argentina has resulted in the discovery of two horizons of potash, one 11 m (upper) and the other 9 m (lower) thick. The grade of the upper horizon grades 5-15% K2O and the lower at 15-20% K2O. The lower horizon is believed to be of higher grade than that currently being mined nearby at Rio Colorado, owned by Rio Tinto.
For those who have been living under a rock for the past six months, potash has become the new darling of the commodities market. Not to be confused with pot ash, the residue often found after a Deep Purple concert, potash is a variable mix of evaporite minerals: sylvite (KCl), halite (NaCl), and various oxides, carbonates, nitrates, sulfates, and phosphates of alkali metals. Potash’s main use is as a fertilizer to provide better crop yields to plants by enriching soil in elements beneficial to plant growth and resulting in enhanced crop yields. Producers such as Agrium (TSX-AGU) and Potash Corp. (TSX-POT) have seen their shares prices rise substantially in the past few months due to increased demand for food staples such as corn, soybeans, wheat, and other grains. The increased demand has led to the producers being able to negotiate for higher sale prices of potash to major producers such as China. Even juniour potash explorers such as Raytech Metals (TSX.V-RAY) have benefited from the craze. Now Marifil is getting some of the investor love, seeing its share price settle up ~24% by the end to the day to $0.445.
Disclaimer: The author holds 1000 shares of Marifil Mnes. This article is based on the personal opinions and experience of the author. Please do your own due diligence when investing.
Marifil Mines Ltd. holds diverse assets in Argentina
Posted by David
The strategy of Marifil Mines Ltd. (TSX.V-MFM) seems similar to that of Franco-Nevada (TSX-FNV): Prospect out a property with good potential, get in a larger joint venture partner to shoulder the development costs, and then collect royalties after production commences. MFM is focused solely in Argentina, where is has a variety of resources
In various Argentine provinces MFM is prospecting for Au, Ag, In (indium), Pb, Zn, Mo, Cu, cement-grade limestone, Ni, Co, PGM, U, and oil/natural gas. Activities are in 18 properties across 7 provinces. This company is no one-trick pony.
Having thrown off the Peronist junta in 1983 in place of a democratic system and surviving the economic crises of the 1990s, Argentina has been stable politically and economically since 2002. Although Argentina is on good relations with other South American nations, it does not seem to have caught the socialist nationalization trend of so many of its neighbours, such as Venezuela, Ecuador, or Bolivia, that has put a halt to mineral exploration in those countries.
The current share price is hovering around $0.40, but it had a recent pop to $0.89 a couple of months back due to results from one of its PGM projects that is a JV with Castillian Resources (TSX.V-CT). The project centers on the historic Las Aguilas Mine and neighbouring areas that the layered ultramafic complex extends to. Values of 0.61 g/t to 2.10 g/t Pt+Pd were found over significant widths (7 to 14.68 m) and zones up to 5.66 g/t Pt were found in smaller zones (~1 m). In terms of base metals, grab samples on the property have returned values of up to 6.71% Cu, 2.21% Ni, and 0.21% Co. Following the company strategy, CT is earning an interest in the Las Aguilas Ni-Cu-PGM project from MFM.
Aside from PGM, the In deposits are of particular interest as the metal is used in LCD screens. Old-fashioned CRT monitors and TVs are longer being produced and the increase in LCD screen production has resulted in a rise in In prices (see image below).
Current In prices average between $800/kg and $900/kg. The demand caused by the LCD market for In is supplemented by other uses in the chemical and electronics industries. In commonly occurs in sphalerite ((Zn,Fe)S) by replacing iron or zinc. In grades of up to 0.5 kg/t over 4.5 m have been found in core from the San Roque property (epithermal Au-Ag-Zn-Pb-In breccia vein deposit).
MFM has another JV with ATW Venture Corp. (TSX.V-ATW) on the Amarillo epithermal Au-Ag and Cu-Au porphyry deposit. Although sampling has recently started on this project, early grab samples have returned values of up to 2251 g/t Au (65.28 oz/t) from a 10 cm wide vein. This property is located in the same gold belt as Barrick’s (TSX-ABX) Veladero and Pascua Llama deposits. The geology is also similar to that of the Newmont-Buenaventura (NYSE-BVN) Yanacocha Mine in Peru. ATW can earn up to 70% interest in the property over 5 years in return for investing resources in the project. What is interesting about this deposit is that in addition to the potential for high grade Au and Ag, there is also the potential for high tonnage as well as most porphyry-type deposits are quite large in volume, being the left-over hydrothermal systems associated with volcanism at convergent oceanic-continental boundaries.
MFM has two non-metal projects: Mina El Carmen (oil/gas) and Punta Colorado (limestone). Although these commodities are not their specialty, the intent of the company as expressed to me by a company representative at last March’s PDAC is to sell them or enter into a JV in order to begin production and use the proceeds to fund their core metals exploration. Due to the nature of the deposit, MFM management believes that it will be much easier to exploit (particularly the limestone) or sell off one or both of these assets than any of the metal properties. They also believe that in the long run, many of the metal assets will prove to be more lucrative than the non-metal ones.
MFM certainly has a diverse set of properties with much potential. Their main challenge right now is to better define the deposits that have returned such promising values: Amarillo, Las Aguilas, and San Roque. To do so, this means coming up with enough cash for the drills. This may be difficult as MFM (using 2007 annual financials) has only about $1,000,000 (CAD) in cash and equivalents in the bank, and about $380,000 in debt. Their burn rate for 2007 was about $500,000, so they should probably be good until the end of the year, even if they ramp up spending on drilling a little. Using their FNV-inspired plan they should be able to mitigate these costs as JV partners take on a higher share as operators.
It seems that with their sound corporate strategy, diverse holdings, and liquid properties, MFM is poised to continue returning strong results from Argentina in spite of economic pressures on juniour explorers.
Disclaimer: The Author holds 1000 shares of Marifil Mines. This article is intended for entertainment purposes only and is based on the author’s personal opinion and experience. Investors are responsible for their own due diligence when investing.
Small cap Cu-Mo producer gives steady payout
Posted by David
At the Prospectors and Developers Association of Canada (PDAC) convention this March, I stopped by the booth of a company that I had visited last year and remembered to have stood out amongst the rest. Amerigo Resources (TSX-ARG) operates a facility in Chile near a huge copper (Cu) porphyry mine run by Codelco. Codelco is a nationalized Cu-mining company that owns 20% of the world’s Cu reserves and is run by the Chilean government. ARG has an agreement with Codelco to process the tailings from current and past mining operations at the El Teniente mine. These tailings are processed for mostly Cu, but with some molybdenum (Mo) credits as well. The royalties paid by ARG to Codelco vary with the Cu price and are capped at 13.5 % for a Cu price of (US) $1.20/lb or higher. The current Cu price is over $3.50/lb.
What really attracted me to investing in ARG was their steady business model. They do not have any mining or crushing costs. Nor do they have any exploration costs as the old tailings piles represent around thirty years of stockpile, and El Teniente is expected to be in production and providing fresh tailings for at least another sixty years. As a result of their steady production, they can pay out a $0.065 (CAD) semi-annual dividend, an annual return of almost 6% at recent prices.
ARG management has a good record of getting tasks done on schedule. Their plant to recover Mo from the tailings was built in 3 months, ahead of schedule and was paid back in only three months. Current projects are the expansion of their main plant, the installation of generators to offset energy costs, and negotiations with Codelco to process the higher grade (older tailings are 0.3 % Cu vs. newer tailings at 0.1 % Cu on average) tailings from historic production (Colihues tailings pond and others).
Company representatives at the PDAC commented that 2007 profit was cut into by increasing electricity costs that have plagued South America recently. They are awaiting delivery of two large generators from overseas to combat this problem. The generators will burn relatively cheap bunker oil to produce the electricity. They also commented that they expect the negotiations regarding their access to the old tailings piles to wrap up by the end of spring.
In spite of increasing energy costs, ARG managed to increase Cu output by 35% last year from 2006 numbers. The company also increased its annual cash flow to (CAD) $0.33/share from $0.29/share in 2006. Good investments in juniors such as Chariot Resources (TSX-CHD) amd Candente Resources Corporation (TSX-DNT) have contributed to this strong cash flow. ARG also has zero long term debt.
I got in at this share price as it is near historic lows and gives a strong return. I do not personally know of any other base metal producers paying out such a high dividend. On the downside, ARG is sensitive to Cu and Mo price fluctuations (i.e. the occasional hand-wringing and incompetence south of the border), along with increaing electricty costs. These problems are tempered somewhate by the factors described above, and the long-term demand from growing economies (e.g. the BRIC countries). Of course, most mining companies have found new 52 week lows during these past 52 weeks and dividends are not set in stone, so do your own due diligence when investing.
Disclaimer: The Author holds 500 shares of Amerigo Resources. This article is intended for entertainment purposes only and is based on the author’s personal opinion and experience. Investors are responsible for their own due diligence when investing.
Lundin Let-Down
Posted by David
Lundin Mining (TSX-LUN) posted almost a half bilion dollar loss last quarter mainly due to costs associated with their takeovers of Rio Narcea and EuroZinc last year. considering how the value of most companies fell these past 8 months I am sure the Lundin family are kicking themselves for missing the money they could have saved if they had waited a little. Oh well, hindsight, they say, is 20/20. And here I thought I was getting it cheap when I got in at $7.26 on Jan. 21 when the TSX was down 600 points.