Tuesday, May 25, 2010

David vs Goliath TNR.v, MAI.to, Xstrata, Copper, Gold

It's usually quite interesting when lawsuits are started by junior miners against deep-pocket major corporations - really make you think there's some validity to their claims, no?

Last week junior miner TNR Gold amends their statement of defence and essentially defends their right to back-in on the large Los Azules project.

At current valuation $25 million market cap for TNR Gold, even a conservative 15% of Los Azules (valuated last by Canaccord at over $700 million) represents nearly a 3x multiple NAV (Net Asset Value).

As always please complete your due dilligence with a qualified advisor prior to any investment decision. Keep in mind, management and insider already holds more than 50% of outstanding shares - rarely do you see a company with execs holding that much.

If you think about it - they have much more to lose than the average shareholder - knowing this at least gives me comfort my money's being put to work hard by the management.

Vancouver, B.C.: TNR Gold Corp. and its wholly-owned subsidiary, Solitario Argentina S.A. (collectively, "TNR"), have filed an Amended Statement of Defence and Counterclaim in the Supreme Court of British Columbia responding in detail to the Statement of Claim filed by Minera Andes Inc. and certain related entities (together, "Minera Andes").

As disclosed in our April 23, 2010 press release, TNR notified Minera Andes that it was exercising its back-in right for 25% of certain of the properties constituting the Los Azules project in Argentina (the "Los Azules Project"). Minera Andes is contesting TNR's ability to exercise its back-in right. The Amended Statement of Defence sets out, among other things, TNR's position as to why the back in clause in the May 2004 Exploration and Option Agreement should be rectified to remove reference to a feasibility study being completed within 36 months, and why the condition linking the timing of the back-in right to the production of a feasibility study was for the sole benefit of TNR and, therefore, could be waived by TNR. TNR has brought a Counterclaim which seeks a positive declaration from the court that TNR's April 23, 2010 back-in notice is valid and enforceable.

We encourage interested parties to review the Amended Statement of Defence and Counterclaim in their entirety on our website for a better understating of our position. The link for this information is as follows:

Download Link to Amended Statement of Defence


TNR and International Lithium Corp ("ILC") are diversified metals exploration companies focused on exploring existing properties and identifying new prospective projects globally. TNR has a portfolio of 18 active projects, of which 9 will be included in the proposed spin-off of International Lithium Corp. For further details of the spin-off please refer to TNR's April 12, 2010 press release or visit

Monday, May 10, 2010

Gold's new price level $1,200+ TNR.v, GG, KRC, FDN.v, DEC.v, MB.v

Gold has now solidified its new position above what was previously lofty - $1,200 an ounce.

With further bailout actions for Greece - the global monetary supply now increases further. The pace of price increases is become apparent even to those not educated in the ways of capital markets.

Gold Prices To Rally As Currency Volatility To Continue

Chicago -- (Kitco News) --Gold prices might have fallen in reaction to the European Union’s bailout package for its ailing southern-member states, but the pull back appears to be nothing but a bump in the road to higher prices.

Spot and futures prices fell in early dealings Monday once the 750 billion euro aid package was announced, with futures prices falling nearly 2% at one point before curbing some losses. Meanwhile, the euro and global equities markets – stymied by worries that the initial debt-relief package for Greece wasn’t enough and that the debt problems bubbled under in other countries such as Portugal, Spain, Ireland and Italy would finally surface – rallied sharply.

The rally in riskier assets suggests, at least initially, that financial markets believe Europe really means it when it says going to stand the troubled southern euro-zone. The deal cobbles together funds from euro-zone countries, the International Monetary Fund, and the European Central Bank. Other global central banks, such as the U.S. Federal Reserve, are offering assistance.

What makes this aid package different than other EU and IMF offerings is the size, market watchers said. “This is a much bigger plan,” said Frank Lesh, futures analyst at FuturePath Trading.

With recent developments in Gold - more investors are looking back at Gold. Let's revisit some of our favorite projects on the TSX.

1. TNR Gold Corp (TNR:TSXV)

It is, TNR Gold, after all!
Despite popular belief of TNR's focus on copper - it's focus was on gold just a few years ago with its large project in Alaska called Shotgun.
The Shotgun property is located 175 kilometres south of Donlin Creek within the Kuskokwim Gold Belt in Southwestern Alaska, an area emerging as a world-class gold district hosting more than 40 million ounces of aggregated gold resources. The Shotgun property includes a number of prospects, including Shotgun Ridge and nearby Winchester. Donlin is an intrusion-associated system and represents one of the largest undeveloped gold deposits in the world. (See NovaGold.net.) The Company believes that there are several key similarities between prospects in the Shotgun area and that of the Donlin Creek gold deposit as well as other intrusion-associated deposits. Previous work at Shotgun Ridge by joint-venture partner NovaGold Resources Inc. has a estimated historical resource of 980,000 ounces grading 0.93 gram per tonne (g/t) at a cut-off of 0.5 g/t (National Instrument 43-101non-compliant resources).The geology and style of mineralization at Shotgun is very similar to the Dome area of the Donlin deposit.
What's amazing about this is a million ounces anywhere else would equal an operating mine and a mine life of easily 10+ years. The most drill program was back in 2006, where the company struck incredible intervals:
If these numbers were today - TNR would be trading much higher, you can be assured!
Drilling during 2006 at Shotgun Ridge intercepted 210.5 metres grading 1.29 g/t Au. Results from this drill hole were key in enabling TNR staff to identify two steeply dipping feeder zones and structurally reinterpret the Shotgun Ridge zone.
Good comparable is Aurizon Mines (ARZ:TSX) which has a profitable mine in Ontario producing 100,000 ouncs of Gold and using this revenue stream to bring a 2nd mine online - their reserve is at a million ounces (100k production x 10 years!)

Difference? Market cap of Aurizon is at $800+ million.
A pounds in the ground estimation of 1,000,000 ouncs of Gold, using $1,000/ounce gold is a $1,000,000,000 (billion), still a rough $200 million discount off Aurizon's market cap.

Post-spin-off - TNR Gold will still continue to benefit from share valuations from this. Thus we believe the ILC spin-off will bring a nice summer bonus for shareholders.


Decade Resources has hit similarly interesting numbers - and the stock skyrocketed earlier this year - jumping from $0.08 struggling to close financing - to oversubscribing after results like 7.3 g/t over 28.35 metres. See attached price chart with overlaid news flow from the last half year.

Arguably - gold results now would be very timely. We've also noticed another junior group, Foundation Resources, do significantly well with high grade results - jumping nearly 5-600% within the last few months.

Given the level of inflationary forces worldwide, as interest rates start to climb up, raw materials and hard assets are still anticipated to outpace the growth rate on fiat currency.

Disclosure: Mining101 writers are typically long and bullish on commodities. Please do your own due dilligence before investing.

Monday, May 3, 2010

US Pentagon in Race for Raw Materials - WSJ TNR.v, AVL.to, RES.v, QUC.v

This would be quite the junior take-out story wouldn't it, if Department of Defence comes in and buys out your favorite juniors for a measly $50 million dollars. Keep in mind 2010 Military budget overall came to over $500 billion. (reference DOD) Going forward it's expected to rise to $600+, accounting for over 19% of the US's overall GDP.

DoD Releases Fiscal 2010 Budget Proposal

President Barack Obama today sent to Congress a proposed defense budget of $663.8 billion for fiscal 2010. The budget request for the Department of Defense (DoD) includes $533.8 billion in discretionary budget authority to fund base defense programs and $130 billion to support overseas contingency operations, primarily in Iraq and Afghanistan.

The proposed DoD base budget represents an increase of $20.5 billion over the $513.3 billion enacted for fiscal 2009. This is an increase of 4 percent, or 2.1 percent real growth after adjusting for inflation.

Given that monstrous budget, you'd think the US would have been alerted by the 90% figure that China holds in terms of rare earth resources - after all, these are the very material you need for:

Night vision goggles - heavy use of Rubidium
High capacity lithium-ion batteries - you think there's power outlets in Afghanistan? Not to mention every car manufacturer is hyping up their own versions of the electric car...alot of new demands coming online!
Radars, high tech computer chips, capacitors - Needs for tantalum, cerium, dysprosium - drastically increasing as miniaturization becomes necessity - nobody wants to carry around bricks like this anymore!

Before tantalum / miniaturization

After Ta / miniaturization

The U.S. may stockpile lithium, thin pieces of which are shown here at the Center for Lithium Energy Advanced Research lab in North Carolina

Pentagon in Race for Raw Materials
Stockpiling Minerals Takes on Greater Urgency as Global Supply Gets Squeezed

The U.S. military is gearing up to become a more active player in the global scramble for raw materials, as competition from China and other countries raises concerns about the cost and availability of resources deemed vital to national security.
The Defense Department holds in government warehouses a limited number of critical materials—such as cobalt, tin and zinc—worth about $1.6 billion as of late 2008. In the coming weeks, the Pentagon is likely to present a plan for Congress to overhaul its stockpiling program,

The new plan, dubbed the Strategic Materials Security Program by the Pentagon, would give the military greater power to decide what it stockpiles and how it goes about buying the materials. It would also speed up decision making at a time when military technology evolves rapidly, commodity markets swing widely and countries around the world fight to secure access to natural resources.

"It's a risk-management program," said Paula Stead, who oversees the effort for the Defense National Stockpile Center at Fort Belvoir, in Virginia. The goal is to be able to obtain "a much broader" array of materials in "a much shorter time," she said.

Right now, the military can't add to the stockpile list without congressional approval, a process that can take as long as two years. The military wants to remove that restriction. It also wants the authority to strike long-term deals with companies or allied nations to provide emergency supplies of materials that the military says are irreplaceable for making weapons, jet engines, high-powered magnets and other gear.

U.S. allies are also increasingly alert to possible supply threats. Last year, Australia blocked a Chinese firm's bid for control of a company that was developing a mine for rare-earth elements, which are used in products such as alloys, electronics and computer monitors.
China controls more than 90% of global production of rare-earth elements, which the U.S. military uses in lasers and high-powered magnets. The U.S. in October added several of these elements to its list of materials that it might warehouse.

The proposed changes to the stockpile system are part of a broader overhaul of the way the Pentagon buys raw materials. The military currently uses hundreds of millions of dollars worth of raw materials annually, for building weapons and equipment, among other things.
The military has recently tested a system of bulk-buying commodities—by putting in joint orders across the armed services—which could cut purchasing costs. The military also wants the latitude to have private companies stockpile materials in "buffer stocks" that the military can tap if other supplies dry up.

Critics argue the current stockpiling system—set up in 1939 for World War II and shaped by the Cold War—is outdated and leaves the U.S. vulnerable to a shortage of critical supplies. That could weaken the military's negotiating position or leave it at the mercy of wild price swings in the market, or unable to get the material it needs for key weapons.
The huge purchasing power of other nations such as China and India makes this even more critical, according to a Department of Defense report given to Congress last year. Worries about potential shortages of strategic materials escalated in 2007 and 2008, as commodity prices jumped and demand from emerging economies soared.
At a hearing on the stockpile last July, a Defense Department official told Congress that the price of rhenium, whose heat-resistant qualities help jet engines operate at higher speeds, at one point shot up 1,000%. Rhenium is one of many materials the department already screens for stockpiling.
China looms large in the debate. In addition to dominating production of rare-earth elements, China is an aggressive deal maker with countries and companies that produce raw materials. The Chinese government also stockpiles a range of natural resources.
The rising competition for raw materials has sparked fears in the U.S. military that some materials that once seemed abundant could suddenly become hard to get at any price. In 2008 the military suspended or limited sales of 13 commodities it had previously considered excess. Last year it added 14 materials to its list of resources it considers for stockpiling, including specialty steels, lithium and some rare-earth elements, taking the total to 68. More additions are expected, said Ms. Stead of the Defense National Stockpile Center.
The changes being proposed by the military have the potential to move prices, especially on materials for which the market is small. If the military decides to add a commodity to the stockpile, it could cause "some upward pressure on price," said Roderick Eggert, a mineral economist at the Colorado School of Mines, who has tracked the proposal.
The Defense Department is also a major buyer of raw materials for immediate consumption, as opposed to stockpiling. It purchases about three-quarters of a million tons of raw materials a year for immediate consumption, and it uses almost 1% of U.S. steel production and nearly 5% of its aluminum.
The stockpiling system evolved over the past few decades into a network of warehouses containing material that, after the Cold War, the military largely concluded it no longer needed. Much of what was stored has since been sold off, shrinking the hoard and netting about $7 billion.
In 1995, the stockpile held 90 different commodities at 85 different locations. Today, it holds 20 commodities in 10 locations, Ms. Stead said.
The system amounted to "putting stuff into big piles," said Robert Latiff, a retired Air Force major general and lead author of a recent study on managing raw materials for the National Academies. The process for adding new material was "not only lengthy but torturous," said Mr. Latiff, who is now a professor at George Mason University.
The military has been caught flat-footed in the past. A special type of steel was needed early in the Iraq war to reinforce Humvees to protect soldiers from powerful explosives used by insurgents. The Defense Department didn't have the steel in its stockpile, and couldn't find a domestic firm to produce all it needed.
The rules were changed to allow the military to use material from Mexico, according to testimony to Congress last year.
At the same time, the military has also adapted to emergencies. When it was racing to build bomb-resistant trucks to use in Iraq, the Pentagon invoked authority it hadn't used in decades to force contractors to give key projects top priority access to essential material, because it feared shortages of ballistic glass and other components.
Write to Liam Pleven at liam.pleven@wsj.com"