Tuesday, December 16, 2008

Counting down to last trading days... NG.to, MAI, TNR, GG

Another week of exciting developments and trading leading up the final days of trading in an otherwise turmoil-filled 2008. 

NovaGold is surrounded with rumors of a buyout. Since dipping to its lows of $0.60, NG.to made a surprisingly rebound last Friday and yesterday with a 60-70% gain per day. Currently it's up another 20% to $2.20. Rumors of spinout of Alaskan property Rock Creek to major is storming news sites and getting investors a run for their money. 

Brien Lundin must be liking this pick, calling it a buy at $0.60 last few weeks. Can't say much for his other selections of late...

Lundin says buy NovaGold

2008-12-02 23:05 ET - In the News

Brien Lundin, in the November, 2008, edition of the Gold Newsletter, says buy NovaGold Resources Inc., recently $2.45. Mr. Lundin said buy NovaGold six times between May, 2001, and December, 2007, at prices ranging from 64 cents to $15.97. Assuming a $1,000 investment for each of the six buys, the $6,000 investment is now worth $5,198. The newsletter editor says chief executive officer Rick Van Nieuwenhuyse has not lost confidence in NovaGold's strategic plan. Mr. Lundin also says Mr. Van Nieuwenhuyse is more resolute than ever that he is on the right track. The company is ramping up to produce 100,000 ounces of metal yearly from its Rock Creek gold mine in Alaska. Rock Creek is a conventional open-pit mining operation that is run year-round. The gold producer has also "delivered excellent results in support of company plans to produce a feasibility study and start permitting in early 2009." Drill highlights include 130 metres of 3.58 g/t gold. As for Galore Creek, the goldbug says he will wait until the end of the year to see how the company plans to develop the project. The stock market guru still believes NovaGold is a company worth buying for the long term.

What's great about this?

Well for one thing, it shows how vialble this area of the world is for large scale deposit and production. And remember TNR Gold Corp? It has 50% joint venture at Shotgun project with NovaGold, not to mention a giant early stage property at the footsteps of the mammoth Pebble project that BHP Billiton owned before - Iliamna property... I think many majors would consider the project if only the credit markets were not so shaky right now. 

Honestly, for $0.05 a share for TNR these days, it's not too much to risk - and a tremendous amount to gain.

A reminder as well seeing as it's December - Minera Andes should be delivering an update on Los Azules 11.2 billion pounds of copper very soon with their scoping study. I personally can't wait to see their cost per pound of production and more! Minera Andes is trading at $0.50 - down almost 1/5 from their $2.50+ stock price earlier in 2008 - but yet they are making money and with an updated inferred resource with a large elephant copper deposit - featured by Canaccord.

Let's hope the rate cut today by US gives more optimism and will wake the public up to the inflation that is coming late 2009. Auto bailout or not, no amount of low-quality and horrid resale value Ford and Chryslers will move the economy - $15 billion won't even be enough at the rate the factories are burning through cash. it has been said that for each car Ford sells, $3000+/car in legacy costs is added on.


Of union fees, dues, benefits, and pensions.

If GoldCorp (GG.to) ran a terrible business and it lost money quarter after quarter - does the government come and say "Oh that's not good!" and give them billions to burn through because they are paying their contractors $300/hour???

Things like this makes me see why people get really upset and throw shoes at Presidents.

Monday, December 8, 2008

Reserves? Types and categories

Speaking of 43-101 resources, this is usually when a junior mining company jump from a lofty dream of finding precious metals or anything worthwhile in the ground - to something tangible... or as some goldbugs like to refer to it as - pounds in the ground.

Let's review the few categories - which generally increases in quality and accuracy, as more holes are drilled and a better idea of how the deposit is formed underground can be projected.


Inferred: Usually only crude, high level ground survey or statistical "sampling" of the area has been performed. Not enough actual testing has been performed. "Gee, it kind of looks like that outcropping way over there has some gold in it too; it looks like it starts here and continues all the way." 

Indicated: Only a "few" drill core samples and assays of those cores may be completed and sufficient to calculate tonnage and grade. Inferred projection of the "goodies in the ground" at a measurable distance away from the drill holes is permissible with limitations. It is very expensive to drill every few feet, so you have to make reasonable assumptions about what is hidden between the drill holes; it may be a bonanza, it may be nothing. 

The thickness, grade (in grams of gold per ton of host rock), distribution and extent of the deposit is "fully" known, or at least with great statistical confidence. Where the ore starts and stops in every direction should be "known." Many, many drill holes and assays are completed and analyzed. Relative concentrations of gold ore to host rock and overburden are "known."


The term "Reserve" is used only for mines that are actually producing or very near that point. Much more is known about the richness, depth and expanse of the ore body. Drilling is complete and assays have been verified. Reserves are classified as proven, probable or possible. 

Proven: The actual entire ore reserves are stated explicitly in terms of the mineable tons. The chemical and metallurgical properties of the mineralization are very well known and documented. The mining method is clearly identified and optimized. The estimate of the "mine life" before resources are exhausted is extrapolated. All of the supporting infrastructure, ancillary requirements and capital costs are identified and indexed to expected price and "net profit" per ounce. This is the most important category and should always be carefully analyzed when picking a potential stock for inclusion in your portfolio.Almost everything else is a "sales pitch." You've been warned.

Probable: Only the mineable ore grades and tonnage are stated. The vein thickness is known and the way the gold ore lies in the ground is also known fairly well. Where mineralization starts and stops is reasonably estimated. This is often estimated from following industry accepted and permissible "ethical" procedures after drill results. 

Possible: This is a big estimate of how much gold might be here; it is sometimes referred to as "potential" How many of us know people that never lived up to their "potential" for one reason or another? Same thing here. It may be no more than some geo-pseudo-scientific guess based on little more than review of earth mapping satellite imagery or surface surveys. 

The ore can migrate from one category to another over time as the deposit is better measured and understood after more drilling and extraction is completed. Any given "zone of occurrence" can have only one classification at any given time. Lodes can turn out to be either richer or leaner than initially "guesstimated." It is NEVER an exact science, errors are inevitable. A simple decimal point higher or lower in any mathematical measurement can be the difference between profit and failure.

Wednesday, December 3, 2008

DOW-Gold Ratio, Tax Loss Selling, and CIBC Jeff Rubin Speaks!

My apologies for the lack of updates last few days. Needless to say this week the optimism on Wall street came to a screeching halt on Monday with a near 10% drop on DOW and major indexes. The 14% 4-day rally last week is only going to last so long.

CIBC's Jeff Rubin says gold will soar (along with oil and other key commodities) on BNN Monday evening.

$1.5 trillion US deficit = 11-12% GDP

"War Level deficits" - Vietnam and Korean War Level mortgaging the US future. He calls it future taxpayers generations afterwards might wonder why the government chose to mortgage.

He goes to advise possible monetization of these deficits (as they have in the past) - unlike Brazil and Argentina - people lend money in US$ Funds. 

"When US tries to finance these deficits - the US$ is going down." Instead of sending $1.5 trillion to public - might give it to Federal Reserves Board to spend, resulting in inflation forces = higher commodity prices, real estate, and goods. 


The chart to the left is from an intelligent investor in Minera Andes. The chart tracks the volatility in the DOW to Gold index over time.

The index, as its name suggests, compares the DOW Index number to the value of gold at that certain point in time to achieve a ratio. As you can see in the last little while the ratio has been jumping all over - similar to the VIX^ index we discussed in previous entries. 

This environment is perfect for daytraders - difficult for value investors. Short term optics remain blurry - Warren Buffet's entry point 2 months ago could not have been worse - so far. In 3-5 years he might very well be correct as a value investor - but the short term challenges for any investors remain as the only clarity in this market. 


On a more positive front, Tax Loss Selling seems to have subsided for a bit - perhaps the sellers were using their redemptions on a shopping spree on Black Friday

For those unfamiliar with the Tax Loss Selling rule here it is in a nutshell. Hopefully that means we will see a slight turnaround in markets in early 2009.

Since we're heading into December, the timing is right to look at a possible silver lining to those investing losses. 'Tis the season for tax-loss selling – when you sell equities that are losing money to claim the tax advantage that comes with capital losses.

Experts are expecting a huge amount of tax-loss selling this year because the conditions are perfect for it. Over all, share prices have plunged (as of yesterday, only 12 of the 241 stocks on the S&P/TSX composite have gained in 2008) and the markets have already seen big selloffs, particularly in September and October.

Losses are also coming after a few good years on the markets, which means that many investors have claimed capital gains over the past three years. According to tax expert and Globe and Mail columnist Tim Cestnick, the issue of capital gains is one of two crucial factors for investors in deciding whether to take advantage of tax-loss selling. (The other: “If you just don't like the investment any more.”) If you file for losses this year but have filed capital gains in the past three years, you can get a refund for some of the taxes you paid.

Wednesday, November 26, 2008

Great List of Useful Mining / Geological Glossary Terms

Airborne survey - A survey made from an aircraft to obtain photographs, or measure magnetic properties, radioactivity, etc.

Alloy - A compound of two or more metals.

Alluvium - Relatively recent deposits of sedimentary material laid down in river beds, flood plains, lakes, or at the base of mountain slopes. (adj. alluvial)

Anomaly - Any departure from the norm which may indicate the presence of mineralization in the underlying bedrock

Assay - A chemical test performed on a sample of ores or minerals to determine the amount of valuable metals contained.

Assay map - Plan view of an area indicating assay values and locations of all samples taken on the property.

Assessment work - The amount of work, specified by mining law, that must be performed each year in order to retain legal control of mining claims.

Basement rocks - The underlying or older rock mass. Often refers to rocks of Precambrian age which may be covered by younger rocks.

Base metal - Any non-precious metal (eg. copper, lead, zinc, nickel, etc.).

Basic rocks - Igneous rocks that are relatively low in silica and composed mostly of dark-colored miner

Bear market - Term used to describe market conditions when share prices are declining.

Bedding - The arrangement of sedimentary rocks in layers.

Biotite - A platy magnesium-iron mica, common in igneous rocks.

Bulk sample - A large sample of mineralized rock, frequently hundreds of tonnes, selected in such a manner as to be representative of the potential orebody being sampled. Used to determine metallurgical characteristics.

Bullion - Metal formed into bars or ingots.

Bull market - Term used to describe financial market conditions when share prices are going up.

Byproduct - A secondary metal or mineral product recovered in the milling process.

Capitalization - A financial term used to describe the value financial markets put on a company. Determined by multiplying the number of outstanding shares of a company by the current stock price.

Cesium magnetometer - An geophysical instrument which measures magnetic field strength in terms of vertical gradient and total field.

Chalcocite - A sulphide mineral of copper common in the zone of secondary enrichment.

Chalcopyrite - A sulphide mineral of copper and iron; the most important ore mineral of copper.

Chip sample - A method of sampling a rock exposure whereby a regular series of small chips of rock is broken off along a line across the face.

Chromite - The chief ore mineral of chromium.

Claim - A portion of land held either by a prospector or a mining company. In Canada, the common size is 1,320 ft. (about 400 m) square, or 40 acres (about 16 ha).

Clay - A fine-grained material composed of hydrous aluminum silicates.

Complex ore - An ore containing a number of minerals of economic value. The term often implies that there are metallurgical difficulties in liberating and separating the valuable metals.

Concentrate - A fine, powdery product of the milling process containing a high percentage of valuable metal.

Core - The long cylindrical piece of rock, about an inch in diameter, brought to surface by diamond drilling.

Country rock - Loosely used to describe the general mass of rock adjacent to an orebody. Also known as the host rock.

Cyanidation - A method of extracting exposed gold or silver grains from crushed or ground ore by dissolving it in a weak cyanide solution. May be carried out in tanks inside a mill or in heaps of ore out of doors.

Cyanide - A chemical species containing carbon and nitrogen used to dissolve gold and silver from ore.

Development - Underground work carried out for the purpose of opening up a mineral deposit. Includes shaft sinking, crosscutting, drifting and raising, stripping/open pit mining.

Development drilling - drilling to establish accurate estimates of mineral reserves.

Diamond - The hardest known mineral, composed of pure carbon; low-quality diamonds are used to make bits for diamond drilling in rock.

Diamond drill - A rotary type of rock drill that cuts a core of rock that is recovered in long cylindrical sections, two cm or more in diameter.

Disseminated ore - Ore carrying small particles of valuable minerals spread more or less uniformly through the host rock.

Drill - There are various types of drills for exploration such as a diamond drill (produces core) or reverse circulation drill (produces chips). Other types of drills are used in the mining process which do not produce a core, but are used to make circular holes in the rock which are filled with explosives.

Drill-indicated reserves - The size and quality of a potential orebody as suggested by widely spaced drillholes; more work is required before reserves can be classified as probable or proven.

Dyke - A long and relatively thin body of igneous rock that, while in the molten state, intruded a fissure in older rocks.

EM survey - A geophysical survey method which measures the electromagnetic properties of rocks.

Epithermal deposit - A mineral deposit consisting of veins and replacement bodies, usually in volcanic or sedimentary rocks, containing precious metals or, more rarely, base metals.

Exploration - Prospecting, sampling, mapping, diamond drilling and other work involved in searching for ore.

Fault - A break in the Earth's crust caused by tectonic forces which have moved the rock on one side with respect to the other.

Ferrous - Containing iron

Flow-through shares - Shares in an exploration company that allow the tax deduction or credits for mineral exploration to be passed to the investor.

Gabbro - A dark, coarse-grained igneous rock.

Geiger counter - An instrument used to measure the radioactivity that emanates from certain minerals by means of a Geiger-Mueller tube.

Geophysical survey - A scientific method of prospecting that measures the physical properties of rock formations. Common properties investigated include magnetism, specific gravity, electrical conductivity and radioactivity.

Geophysics - The use of geophysical techniques to search for mineral deposits. Common geophysical surveys include: magnetic, electromagnetic, induced polarization, resistivity and gravity

Geothermal - Pertains to the heat of the Earth's interior.

Grab sample - A sample from a rock outcrop that is assayed to determine if valuable elements are contained in the rock. A grab sample will not provide a representative picture of the value of a deposit, only an indication.

Grade - The value of a mineralized deposit. Precious metals are usually expressed as ounces per tonne or grams per tonne. Base metals and uranium are expressed as a percent. Diamond values are expressed as value/carat/hundred tonnes. 

Hematite - An oxide of iron, and one of that metal's most common ore minerals.

High grade - Rich ore. As a verb, it refers to selective mining of the best ore in a deposit.

Host rock - The rock surrounding an ore deposit.

Hydrometallurgy - The treatment of ore by wet processes, such as leaching, resulting in the solution of a metal and its subsequent recovery.

Hydrothermal - Relating to hot fluids circulating in the earth's crust.

Igneous rocks - Rocks formed by the solidification of molten material from far below the earth's surface.

Intermediate rock - An igneous rock containing 52% to 66% quartz.

Intrusive - A body of igneous rock formed by the consolidation of magma intruded into other rocks, in contrast to lavas, which are extruded upon the surface.

Mafic - Igneous rocks composed mostly of dark, iron- and magnesium-rich minerals.

Magma - The molten material deep in the Earth from which rocks are formed.

Magmatic segregation - An ore-forming process whereby valuable minerals are concentrated by settling out of a cooling magma.

Magnetite - Black, magnetic iron ore, an iron oxide.

Metallurgy - The study of extracting metals from their ores.

Metamorphic rocks - Rocks which have undergone a change in texture or composition as the result of heat and/or pressure. (ex. Sandstone becomes quartzite)

Minable reserves - Ore reserves that are known to be extractable using a given mining plan.

Mineral - A naturally occurring homogeneous substance having definite physical properties and chemical composition and, if formed under favorable conditions, a definite crystal form.

Open pit - A mine that is entirely on surface. Also referred to as open-cut or open-cast mine.

Orebody - A natural concentration of valuable material that can be extracted and sold at a profit.

Ore Reserves - The calculated tonnage and grade of mineralization which can be extracted profitably; classified as possible, 
probable and proven according to the level of confidence that can be placed in the data.

Outcrop - An exposure of rock or mineral deposit that can be seen on surface, that is, not covered by soil or water.

Overturned - Where the oldest sedimentary rock beds are lying on top of a younger beds.

Oxidation - A chemical reaction caused by exposure to oxygen that results in a change in the chemical composition of a mineral.

Pellet - A marble-sized ball of iron ore fused with clay for transportation and use in steelmaking.

Pentlandite - Nickel iron sulphide, the most common nickel ore.

Pig iron - Crude iron from a blast furnace.

Pitchblende - An important uranium ore mineral. It is black in color, possesses a characteristic greasy lustre and is highly radioactive.

Placer - A deposit of sand and gravel containing valuable minerals such as gold, tin or diamonds.

Primary deposits - Valuable minerals deposited during the original period or periods of mineralization, as opposed to those deposited as a result of alteration or weathering.

Private placement - Sale of shares to individuals or corporations outside the normal market, at a negotiated price. Often used to raise capital for a junior exploration company.

Prospect - A mining property, the value of which has not been determined by exploration.

Prospectus - A document filed with the appropriate securities commission detailing the activities and financial condition of a company seeking funds from the public through the issuance of shares.

Pulp - Pulverized or ground ore in solution.

Qualified Person - A qualified person (QP) is defined in NI 43-101 as an individual who is an engineer or geoscientist with at least five years of experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these; has experience relevant to the subject matter of the mineral project and the technical report; and is a member in good standing of a professional association.

Quartz - Common rock-forming mineral consisting of silicon and oxygen.

Quartzite - A metamorphic rock formed by the transformation of a sandstone by heat and pressure.

Radioactivity - The property of spontaneously emitting alpha, beta or gamma rays by the decay of the nuclei of atoms.

Reconnaissance - A preliminary survey of ground.

Recovery - The percentage of valuable metal in the ore that is recovered by metallurgical treatment.

Reserve - That part of a resource that can be mined at a profit under current or reasonably anticipated economic conditions which are specified. In addition to the information required for a resource estimate, the technical, operating, legal and financial factors must be considered in a reserve estimate.

Reserve (probable) - Part of a resource for which economic viability has been demonstrated at a confidence level which would justify a commitment to major expenditures.

Reserve (proven) - Portion of a resource for which technical and economic factors have been established at a high confidence level. The term is generally restricted to that part of a reserve which is being developed or mined, or for which there is a detailed mining plan.

Resource - The calculated amount of material in a mineral deposit, based on limited drill information.

Rock - Any natural combination of minerals; part of the earth's crust.

Run-of-mine - A term used loosely to describe ore of average grade

Sample - A small portion of rock or a mineral deposit taken so that the metal content can be determined by assaying.

Sampling - Selecting a fractional but representative part of a mineral deposit for analysis.

Scaling - The act of removing loose slabs of rock from the back and walls of an underground opening, usually done with a hand-held scaling bar or with a boom-mounted scaling hammer.

Scintillation counter - An instrument used to detect and measure radioactivity by detecting gamma rays; more sensitive than a geiger counter.

Secondary enrichment - Enrichment of a vein or mineral deposit by minerals that have been taken into solution from one part of the vein or adjacent rocks and redeposited in another.

Sedimentary rocks - Secondary rocks formed from material derived from other rocks and laid down under water. Examples are limestone, shale and sandstone.

Seismic prospecting - A geophysical method of prospecting, utilizing knowledge of the speed of reflected sound waves in rock.

Silica - Silicon dioxide. Quartz is a common example.

Siliceous - A rock containing an abundance of quartz.

Slag - The vitreous mass separated from the fused metals in the smelting process.

Staking - The measuring of an area of ground and marking with stakes or posts to establish and acquire mineral rights.

Stockpile - Broken ore heaped on surface, pending treatment or shipment.

Sulphide - A compound of sulphur and some other element.

Taconite - A highly abrasive iron ore.

Tailings - Material rejected from a mill after most of the recoverable valuable minerals have been extracted.

Tailings pond - A low-lying depression used to confine tailings from the mine operation, the prime function of which is to allow enough time for heavy metals to settle out or for cyanide to be destroyed before water is either recycled back into the mill operation or treated before discharge into the local watershed.

Talus - A heap of broken, coarse rock found at the base of a cliff or mountain.

Trend - The direction, in the horizontal plane, of a linear geological feature, such as an ore zone, measured from true north.

Uraninite - A uranium mineral with a high uranium oxide content. Frequently found in pegmatite dykes.

Uranium - A radioactive, silvery-white, metallic element.

Vein - A fissure, fault or crack in a rock filled by minerals that have travelled upwards from some deep source.

Volcanic rocks - Igneous rocks formed from magma that has flowed out or has been violently ejected from a volcano.

Wall rocks - Rock units on either side of an orebody. The hangingwall and footwall rocks of an orebody.

Zone - An area of distinct mineralization.

Zone of oxidation - The upper portion of an orebody that has been oxidized.  

Tuesday, November 25, 2008

Truth About Bailouts - NG.to, TNR.v, BVG, GXS, and more

The Truth About Bailouts

Peter Schiff
Nov 24, 2008

As the Federal bailout bonanza prepares to spread beyond the mortgage and financial sectors to fill Detroit's depleted coffers, few economic or policy analysts have spared a thought for the destitution of the U.S. government itself. Put simply, our government doesn't have enough spare cash to bail out a lemonade stand let alone a bloated and failing industry that is losing tens of billions of dollars per month. Washington can only offer funds that it has borrowed from abroad or printed. Unfortunately, the nation is in the grips of a delusion that money derived from these sources has the power to heal. But history has clearly shown that borrowed or printed money only has the power to destroy.

The argument that energizes the pro-Detroit camp is that the government should extend the same courtesy to the rank and file auto workers that it lavished upon the fat cats of Wall Street. While two wrongs certainly do not make a right, the fact remains that the Wall Street firms are still floundering despite the bailouts. What's worse, the money spent was either printed or borrowed from abroad. Both options are destructive to America.

When it comes to bailouts, the real discussions are not centered in Washington but rather in Beijing, Tokyo, and Riyadh. With no money of our own, our ability to bailout our own citizens is completely dependent on the world's willingness to foot the bill. While I am sure that Bush and Paulson are doing their best to convince the world that open ended financing of the United States is in the global interest, my guess is that, unlike Congress, our foreign creditors will see through the self-serving nature of our plea.

Like any bailout, our foreign creditors should consider the moral hazard of rewarding bad behavior, and the old investment adage of not throwing good money after bad. By continuing to "lend" us money, the world is merely delaying the necessary rebalancing of our upside down economy. By continuing to subsidize our reckless and outsized consumption, the world merely delays the inevitable re-balancing and exacerbates the underlying problem at the root of the current global financial crisis.

If Washington bails out General Motors, the funds will never be recovered. GM will simply burn through the bailout money and then be back for more. Talk of designing a new fleet of "green" cars that will pave the way to profitability by spurring a new buying spree is simply delusional. Given the staggering "legacy" costs of health care and pensions for millions of current and former workers, Detroit cannot produce cars profitably. Unless these costs are seriously brought down, and there is very little chance that they will be, Detroit will remain a bottomless money pit.

Similarly. any money that the world lends to America to finance more consumption will never be repaid. We will simply blow through it, and be back, hat in hand, begging for more. As we painfully learned in the housing bust, lending people money that they cannot pay back makes no sense. This applies equally to foreign central banks lending to America as it does to commercial banks lending to homeowners.

So for the same reasons that Washington should not bail out General Motors, the world should not bailout America. Like GM, our economy is in desperate need of a restructuring. Spending must be replaced with savings, and consumption with production. The service sector must shrink and manufacturing must expand to fill the void. The dollar must fall, wages in America must be brought down to a competitive level, and hopefully government spending and burdensome regulation can be reduced.

This transformation will not be fun, but it is necessary. Our standard of living must decline to reflect years of reckless consumption and the disintegration of our industrial base. Only by swallowing this tough medicine now will our sick economy ever recover. By accepting a lower standard of living today, we will eventually be rewarded with a higher one tomorrow.


NovaGold (NG.to) had a terrible yesterday, dropping almost 80% from $2.20 Friday's closing price. The reason? Skepticism about their latest action plan to cut cost - and the halting of the Rock Creek production mine.

With loan payments coming and no more imminent cash flow - NovaGold's in a dire situation. NG closed at $0.70 today. We will keep readers updated - short term is bleak but a probable merger deal is likely given the cheap assets NG has in the portfolio (what's new on TSX?)


Friday, November 21, 2008

Consolidation Continues... Gold's back to $800/ounce on China Asia rise...more^

Top news of the day... Lundin (LUN.to) announces:

HudBay Minerals, Lundin Mining to merge

Mr. Allen Palmiere of HudBay reports


HudBay Minerals Inc. and Lundin Mining Corp. have agreed to a business combination (the transaction) that will create a new Canadian leader in global mining.

The transaction will be structured as a plan of arrangement under the Canada Business Corporations Act.

Highlights of the transaction:

  • On completion of the transaction, each Lundin common share will be automatically exchanged for 0.3919 HudBay common shares, and Lundin will become a wholly owned subsidiary of HudBay.
  • The consideration Lundin shareholders will receive pursuant to the transaction represents approximately a 32.0-per-cent premium over Lundin's 30-day, volume-weighted average trading price on the Toronto Stock Exchange, based on HudBay's 30-day, volume-weighted average trading price on the TSX.
  • On completion of the transaction, HudBay will have approximately 306 million common shares outstanding.
  • The chief executive officer of the resulting company will be Allen J. Palmiere.
  • The boards of directors of both companies have approved the transaction with all voting members in favour.

Creating a new Canadian leader in global mining

After the combination, HudBay is expected to be the second-largest base metals company in Canada, measured by market capitalization. It will have a broad portfolio of producing assets in Canada, Portugal, Sweden, Spain, and Ireland, along with a strong growth pipeline that includes the world-class Tenke Fungurume and Fenix projects, located in the Democratic Republic of Congo and Guatemala, respectively.

Following the completion of the transaction, the combined company's profile will include:

  • Combined 2007 actual metal production of 187,115 tonnes of copper, 278,289 tonnes of zinc, 44,560 tonnes of lead, 3,270 tonnes of nickel, 102,587 ounces of gold and 4,184,536 ounces of silver;
  • Cash on hand of approximately $900-million (Canadian) and total debt of approximately $240-million (U.S.), based on reported amounts at Sept. 30, 2008;
  • The financial strength to capitalize on opportunities arising from turbulent markets;
  • A strong management team and an experienced board.

"The combination of HudBay and Lundin creates a company that is financially strong, has excellent internal growth projects, and has the size and strength to take advantage of opportunities over the next 18 months," said Phil J. Wright, president and chief executive officer of Lundin. "This arrangement is in the best interest of Lundin shareholders, and I look forward to making a contribution toward building what has the potential to be a major new Canadian mining house."

"We're excited to create a Canadian base metals company that we believe will be a major presence on the world stage," added Mr. Palmiere, chief executive officer of HudBay. "We will continue to grow the company with discipline, and use its financial strength with a view to creating future value for all of our shareholders."

Following the completion of the transaction, HudBay's board will be composed of Mr. Palmiere, Mr. Wright, Lukas Lundin, M. Norman Anderson, Colin K. Benner, Donald K. Charter, Ronald P. Gagel, R. Peter Gillin and William A. Rand.

Private placement and loan

In connection with the transaction, HudBay and Lundin have entered into a loan agreement, pursuant to which HudBay will lend Lundin approximately $135.8-million on a subordinated basis. Lundin will use the proceeds of the loan to finance capital investments and other general corporate purposes. HudBay and Lundin have also entered into a share purchase agreement, pursuant to which HudBay will acquire approximately 97.0 million common shares of Lundin, representing approximately 19.9 per cent of Lundin's outstanding common shares, at a price of $1.40 per share, in a private placement for total gross proceeds to Lundin of approximately $135.8-million. The proceeds of the private placement will be used to repay the loan. Completion of the private placement of the Lundin common shares is subject to the satisfaction of certain regulatory requirements.

Board recommendation

The transaction has been approved by the board of directors of Lundin (with interested directors abstaining), following the unanimous recommendation of a special committee comprising independent Lundin directors. The board of directors of Lundin recommends that holders of Lundin shares vote in favour of the transaction. The transaction has also been approved by the board of directors of HudBay.

The definitive agreement includes a commitment by Lundin not to solicit or initiate discussions concerning alternative transactions, including the sale of material assets. Lundin has agreed to pay a break fee of $24.25-million to HudBay in certain circumstances, and has granted HudBay the right to match competing offers. HudBay has also agreed to non-solicitation provisions.

In addition to the 19.9-per-cent ownership to be acquired by HudBay pursuant to the private placement, certain shareholders holding approximately 21.1 per cent of the outstanding Lundin shares, as well as certain directors and officers of Lundin, have agreed to vote in favour of the transaction.

Advisers and fairness opinions

GMP Securities LP is acting as financial adviser to the special committee of the board of directors of HudBay, and GMP has provided an opinion to the special committee of HudBay that, subject to certain assumptions and limitations set out therein, the proposed transaction is fair, from a financial point of view, to HudBay shareholders. Haywood Securities Inc. has provided an opinion to the special committee of the board of directors of Lundin that, subject to its assumptions and limitations, and its review and analysis of current market conditions, the consideration to be received by the shareholders of Lundin in connection with the transaction is fair, from a financial point of view. Cassels Brock & Blackwell LLP and White & Case LLP are acting as external legal counsel to HudBay, and Osler Hoskin & Harcourt LLP, Shearman & Sterling LLP and McCullough O'Connor are acting as external legal counsel to Lundin. Fraser Milner Casgrain LLP is acting as external legal counsel to the special committee of HudBay.


Completion of the transaction is subject to customary conditions, including a favourable vote of two-thirds of the Lundin common shares voted at a special meeting of shareholders called to approve the transaction, and the receipt of court and all necessary regulatory approvals.

An information circular for the special shareholders' meeting of Lundin is expected to be mailed during the first quarter of 2009. The transaction is expected to close prior to May 30, 2009.

Conference call

Mr. Palmiere, HudBay's chief executive officer, and Mr. Wright, president and chief executive officer of Lundin Mining, will host a joint conference call to discuss this transaction.

The details are as follows:

Date:  Nov. 21, 2008

Time:  2 p.m. (Eastern Time)

Webcast:  HudBay or Lundin website

Dial in:  416-644-3415 or 800-733-7571

Replay:  416-640-1917 or 877-289-8525

Replay passcode:  21290286, followed by the pound key

The conference call replay will be available until midnight (Eastern Time) on Nov. 28, 2008. An archived audio webcast of the call also will be available on HudBay's and Lundin's websites.

We seek Safe Harbor.

Thursday, November 20, 2008

TNR Gold Corp (TNR.v) Announces El Salto Results

Remember Bob Moriarty's visit to El Salto and El Tapau earlier in 2008 that resulted in a spike of share purchases of TSX miner TNR Gold?

Well it would seem like he's right... there is mineralization on the large properties! Tapau had first drill results of 0.59% Copper over 82+ metres... easily economical... and TNR just announced El Salto results yesterday. (see below)

While it isn't as groundbreaking as say, Los Azules (estimated at $652 million by Canaccord) - keep inmind this is just the first 12 holes.

Los Azules had what, 35+ holes drilled in the entire region which is much smaller than Salto!?
The potential of Los Azules is suggested in successive exploration drilling programs in which significant high-grade copper mineralization has been discovered. For example, in 2006 an 11-hole drilling program returned intervals including 1.62 percent copper over 221 meters (about 725 feet) and one percent copper over 173 meters.

For the 2007-2008 field season, a 10,000-meter, 24-hole drilling program will further gauge Los Azules' potential.
Funny though - as TNR and the company improves its value and assets - share prices have taken a tumble as have most other quality miners. Teck Cominco today has dropped to $3/share...  keep the faith!


2008-11-18 20:33 ET - News Release

Mr. Gary Schellenberg reports


TNR Gold Corp. has provided assay results from seven diamond drill holes of the 2008 exploration program on its 100-per-cent-owned El Salto project in Argentina. TNR drilled 12 exploratory drill holes, totalling 6,446.45 metres, to evaluate a copper-molybdenum-gold porphyry system on this underexplored property.

Of the 12 drill holes (ES07-01 and ES08-02 to ES-08-12), eight holes were drilled in the northwestern (ES07-01, ES08-02, 03, 04, 07, 10, 11 and 12), and two holes each in the central (ES08-05 and 06) and southeastern (ES08-08 and 09) parts of the property. These holes targeted a large (4.8 kilometres long and up to 1.3 kilometres wide) IP chargeability anomaly extending from the northwest to southeast end of the property. This anomaly corresponds very well with a distinctive alteration system (largely phyllic with local potassic and silica alteration), and is also partially coincident with geochemical anomalies (copper and molybdenum) delineated during the reconnaissance program in the 2006 and 2007 field season.

Of the eight drill holes (3,690.55 metres) that tested the northwestern property, six holes were located in a stockwork-breccia area. Assay results currently available show copper values exceeding 500 parts per million (0.05 per cent) in samples from all six holes, anomalous molybdenum and, in some instances, gold associated with copper mineralization.

The two drill holes (ES08-08 and 09) in the southeastern part of the property intersected anomalous copper and molybdenum throughout but yielded no intercepts of economic significance.

The results from drill holes ES08-07 (northwestern property), ES08-05 and 06 (central property) are still pending. Significant intervals of copper and molybdenum mineralization from seven drill holes in the northwestern part of the property are in the table.

 SELECTED ASSAY RESULTS FROM HOLES ES07-01 TO ES08-04               AND ES08-10 TO ES08-12   Drill hole      From     To     Width    Cu      Mo No.              (m)     (m)     (m)     (%)     (%)  ES07-01         6.00   173.20   167.20  0.077  0.007                199.05   254.40    55.35  0.205  0.012 Includes      217.75   224.00     6.25  0.511  0.015               340.00   367.90    27.90  0.180  0.015 ES08-02       399.00   421.10    22.10  0.106  0.002 Includes      399.00   401.00     2.00  0.233  0.002               470.30   515.45    45.15  0.078  0.002               581.00   601.05    20.05  0.082  0.003 ES08-03        95.30   176.70    81.40  0.077  0.002 ES08-04       185.70   232.25    46.55  0.225  0.002 Includes      208.60   210.60     2.00  0.550  0.001               309.30   417.80   108.50  0.186  0.003 Includes      381.00   411.60    30.60  0.246  0.003               438.70   488.60    49.90  0.106  0.003 ES08-10        14.50    57.50    43.00  0.215  0.004 Includes       46.45    50.35     3.90  0.317  0.001               114.60   125.00    10.40  0.299  0.001 ES08-11         3.00    66.40    63.40  0.098  0.003 Includes       23.60    29.60     6.00  0.190  0.001 Includes       57.75    66.40     8.65  0.177  0.0005               243.00   257.60    14.60  0.110  0.003               457.00   476.00    19.00  0.147  0.001 Includes      471.50   476.00     4.50  0.403  0.0005               535.00   546.00    11.00  0.110  0.002               577.50   593.00    15.50  0.094  0.0007 Includes      577.50   582.65     5.15  0.108  0.0005 ES08-12         9.00    25.85    16.85  0.152  0.008 Includes        9.00    16.00     7.00  0.260  0.008                54.35   168.20   113.85  0.094  0.008 Includes      136.80   165.85    29.05  0.134  0.012               187.50   208.45    20.95  0.115  0.005               570.10   608.00    37.90  0.086  0.001 Includes      570.10   579.30     9.20  0.159  0.0006 

All of the seven drill holes in the northwestern portion of the property with assay results intersected significantly anomalous copper and molybdenum mineralization over relatively large widths. The best mineralized intercepts were observed in drill holes ES07-01 and ES08-04. Drill hole ES07-01, intersecting several stockwork and/or breccia zones within hornfelsic sedimentary host rock, yielded 0.077 per cent copper and 0.007 per cent molybdenum over 167.20 metres (6.00 m to 173.20 m), and 0.205 per cent copper and 0.012 per cent molybdenum over 55.35 metres (199.05 m to 254.40 m), which includes 0.511 per cent copper and 0.015 per cent molybdenum over 6.25 metres (217.75 m to 224.00 m).

Drill hole ES08-04 targeted a strong chargeability feature situated at the centre of a Y-shaped anomaly and located approximately 850 m southeast from drill hole ES07-01. ES08-04 intersected highly anomalous copper and molybdenum mineralization throughout the entire length of the hole. Significant mineralized intercepts contained 0.225 per cent copper and 0.002 per cent molybdenum over 46.55 metres (185.7 m to 232.25 m), and 0.186 per cent copper and 0.003 per cent molybdenum over 108.50 metres (309.3 m to 417.8 m), which includes 0.246 per cent copper and 0.003 per cent molybdenum over 30.60 metres (381.00 m to 411.60 m).

Assay results from these exploratory holes, though subeconomic, are suggestive of a large porphyry system with copper-molybdenum mineralization, especially in the northwestern part of the property. Recent mapping also suggests that a substantial part of the northwestern area contains a significant hydrothermally altered stockwork-breccia zone. Identification of this zone is an important step in developing the exploration model for El Salto, which is based on Chilean porphyry deposit models.

"We are very encouraged by these results from our first reconnaissance drill program. We have confirmed that we have a large copper-molybdenum porphyry system with anomalous copper and molybdenum values present in seven of the nine holes assayed to date. We will now focus exploration efforts to identify and delineate a high-grade core of the system," says president and chief executive officer of TNR Gold, Gary Schellenberg.

This news release has been prepared under the supervision of Ike Osmani, PGeo, TNR's qualified person on this news release.

The El Salto property

The El Salto property, consisting of 3,300 hectares in the San Juan province, is located within the Yellow Belt district of San Juan, which hosts the two well-known copper deposits, the El Pachon deposit (724 million tons at 0.65 per cent copper) in Argentina and the Los Pelambres mine (1,487 million tons at 0.66 per cent Cu) near the Chile-Argentine border (note: property and resource figures obtained from Falconbridge/Xstrata and Antofagasta websites).

We seek Safe Harbor.

Wednesday, November 19, 2008

Worried About Your Favorite TSX Miner?

Don't worry, everyone's portfolio is  looking like your favorite ski hill... unfortunately - it's going down instead of up.

Today's articles are very real and come from credible sources - just to show you that even stocks well above $5+ which people tend to think is safe and stable... means very little. Quality juniors like TNR has bottomed out and presents a great entry point...even while Minera Andes has fallen back from $1 to $0.60 today.

Take a read at the following article and scan down the colum of average % losses across the board. 

Well known miner in Canada Teck Cominco has certainly bit off more than it can chew with a terribly timed acquisition of Fording... TCK.b is down to $5.10 today, a new one year low.

From July 2008 we see Teck confidently acquiring coal giant Fording at $12.4 billions in cash + 37 odd million shares of TCK. 

Vancouver, BC -- Teck Cominco Limited [TSX:TCK.A and TCK.B, NYSE:TCK] (“Teck”) announced today that it has entered into an agreement with Fording Canadian Coal Trust (“Fording”) under which Teck will acquire 100% of Fording’s assets, which consist principally of a royalty in respect of Fording’s 60% non-operating interest in the Elk Valley Coal Partnership (“Elk Valley Coal”).  Under the terms of the transaction, Fording unitholders will receive US$82.00 in cash and 0.245 of a Teck Class B subordinate voting share per Fording unit.  Based on the 20 day volume weighted average price of Teck Class B shares on the New York Stock Exchange (“NYSE”), the proceeds to Fording unitholders represent a 18% premium to the 20 day volume weighted average price of Fording units on the NYSE, in each case for the period ending July 25. In aggregate, Teck will pay approximately US$12.4 billion in cash and issue approximately 36.9 million Teck Class B subordinate voting shares in consideration for the Fording assets.  The cash portion of the consideration is expected to be primarily funded by a US$9.8 billion fully underwritten bridge and term loan facility arranged with a syndicate of banks and the proceeds of the sale of Fording units held by Teck prior to closing.

A large Canadian financial newspaper, The Globa and Mail, mentioned about valuation of Fording
The Globe and Mail reports in its Thursday edition to understand the enormity of Teck's bad timing on the Fording takeover, Teck paid $12.4-billion for coal mines the market would now value at $3.5-billion. The Globe's Andrew Willis, writing in Streetwise, notes Teck's stock has dropped 83 per cent this year
Essentially, Teck has lost $9 billion in just a little over 3 months. Scary? Read on for more huge drops.

Author: Barry Sergeant
Posted:  Tuesday , 18 Nov 2008


Across the broad landscape of globally listed mining companies, silver bullion miners, developers and explorers are less wanted than anything else. Looking at 43 names listed in the category, the average stock price loss from highs, measured on a weighed basis, is currently around 83%, leaving especially the smaller stocks fully vulnerable to facing the prospect of shorter term bankruptcy.

Silver bullion itself is 56% off its highs, seen in March this year. Amid the apparent dire state of affairs for both silver bullion prices, and stocks operating in the silver space, bullish comments and forecasts remain the order of the day. This week, ScotiaMocatta insisted that in spite of poor demand outlook in the short term, the long-term outlook for precious metals remains bullish, and that "silver is well placed to outshine gold"...

...continued, click link above

Selected silver stocks













USD bn


GBP 0.98




Silver Wheaton

USD 2.78




Pan American Silver

USD 10.04




Hochschild Mining

GBP 1.16




Silver Standard

USD 8.28




Coeur d'Alene

USD 0.52




Hecla Mining

USD 1.31





EUR 3.60





CAD 1.66




ECU Silver

CAD 0.58




Apex Silver

USD 0.74




First Majestic

CAD 1.26





CAD 0.46




S. Métallurgique d'Imiter

MAD 242.00




Endeavour Silver

CAD 1.20





CAD 0.22




Fortuna Silver

CAD 0.53




Great Panther

CAD 0.29




Genco Resources

CAD 0.32




Impact Silver

CAD 0.29




Revett Minerals

CAD 0.08




US Silver Corp

CAD 0.04








Abcourt Mines

CAD 0.08




Apogee Minerals

CAD 0.04




Aquiline Resources

CAD 0.93




Arian Silver

CAD 0.05




Aura Silver

CAD 0.04




Avino Silver

CAD 0.38




Bear Creek Mining

CAD 0.80




Esperanza Silver

CAD 0.48




Klondike Silver

CAD 0.08




MAG Silver

CAD 4.70




Mexican Silver

CAD 0.11




Minco Silver

CAD 0.46




Mines Management

USD 0.85




Oremex Silver

CAD 0.08




Orko Silver

CAD 0.40




Oro Silver

CAD 0.08




San Anton Resources

CAD 0.05





CAD 0.30




Silver Eagle Mines

CAD 0.07




S American Silver

CAD 0.16




Southern Silver

CAD 0.04









Weighted averages














JSC Polymetal

USD 2.67





CAD 4.58




Gammon Gold

CAD 4.01




Kimber Resources

CAD 0.75




High River Gold

CAD 0.09




New Gold

CAD 1.10




Ovoca Gold

GBP 0.03












BHP Billiton

GBP 8.76




Polska Miedź

PLN 24.20





GBP 0.98





GBP 2.36




Pan American Silver

USD 10.04





USD 19.97





EUR 3.60





USD 12.48




JSC Polymetal

USD 2.67




Southern Copper

USD 11.50




Hochschild Mining

GBP 1.16




Rio Tinto

GBP 24.35




Coeur d'Alene

USD 0.52




Oz Minerals

AUD 0.73





GBP 7.95














iShares Silver Trust

USD 9.35




ETFS Silver

USD 9.33




ZKB Silver

CHF 1,085.00









Weighted averages















Spot silver/oz

USD 9.42




* 12 mon