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| MCM Featured Stocks Averaging 30% Gains in Under a Month! |
| Saturday, November 25, 2006 |
What a month it's been so far at MicroCapMayhem! After our launch, we have gone on to see a beautiful recovery in resource stocks and the TSX blasting into uncharted territory! On top of that, we have seen phenomenal gains with MCM's own featured stocks, as illustrated below. Check it out!
The following update outlines the progress our featured stocks have made, since being recommended on the MicroCapMayhem site, throughout the month of November. I have calculated our gains using the highs, rather than recent closing prices.
*For original recommendations, check the archive section of the MCM site.
We have seen stellar gains so far this month and with the TSX firing up again, MCM will continue to look for tomorrow’s winners today! |
posted by MicroCapMayhem @ 3:20 PM   |
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| New Section: "TSX WATCH" All Time Record Highs Achieved |
| Tuesday, November 21, 2006 |
"TSX WATCH" is a new section being added to MCM. Periodically, we will be technically analyzing the S&P/TSX Composite Index, which is considered the leading indicator of market activity for Canadian equity markets and also acts as a benchmark for Canadian funds, similar to the S&P 500 for American equity markets.
Generally, most Canadian equities and particularly resource stocks, move in unison with the S&P/TSX Composite Index. Anyone holding Canadian equities during the correction in May, probably suffered losses in their portfolio, as we saw stocks across the board take a beating.
The purpose of "TSX WATCH" is to analyze the TSX (S&P/TSX Composite Index) and hopefully anticipate broader market moves, which will trickle down to individual resource stocks that we can capitalize on.
Just prior to the massive correction, which began in May, the TSX was at record levels, reaching a high of 12,494.72. Today is especially exciting, as the TSX has catapulted to a new all-time high of 12,600.83 and continues to stay above the psychological level of 12,500.
The proceeding annotated weekly chart illustrates the channel, which the TSX has been trading in, and today, has just broken out of:
A channel is created by drawing two parallel trend-lines. In an up-trend, the upper trend-line acts as resistance and the lower trend-line acts as support. In the preceding weekly chart, you’ll notice that the TSX is at its upper trend-line. The following annotated daily chart shows that the TSX’s upper trend-line has officially been broken, called a break-out. If the TSX closes above its upper trend-line, which would also be above the psychological 12,500 mark, we may continue to see strength in the days to come.
The TSX is heavily correlated with commodities and oil. Today spikes in the price of oil, gold, copper and commodities across the board, as well as more consolidation in the resource sector, has been responsible for the rise in the TSX.
We will approach this breakout with skepticism and wait for further confirmation before becoming overly bullish. I tend to use a bottom-up approach for my “CORE HOLDINGS” and a mixture of bottom-up and top-down for my trading alerts. Using a bottom-up approach simply means that I look for quality companies and am not so concerned with the macro environment at the moment. This mitigates some risk, as quality companies with real prospects tend to out-perform in times of economic down-turn. However, as the old Wall Street axiom goes, “when the wind blows, even the turkeys will fly”. This just goes to show that when the markets are ripping, a top-down approach can be used with more confidence, as even the more speculative of the speculative stocks will do well, just based on over-all market sentiment. |
| posted by MicroCapMayhem @ 2:56 PM |
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| Uranium Exposed: Update: Purepoint Uranium (PTU-TSXv) $1.07: 1 day gain +21% |
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I introduced Purepoint Uranium (PTU-TSXv) yesterday at $0.88, since then it has gained 21% in 1 day. If you entered a long position for a simple trade, you may want to think about liquidating part of your position and buying back either when news is released, or on a pullback. PTU still appears to hold potential and could release some stellar results. However, with such a big move in the last two days, we could see a buy the rumour sell the news scenario if drill results don't meet expectations.
Just stay tuned. |
| posted by MicroCapMayhem @ 11:00 AM |
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| Uranium Exposed: How to Make Radioactive Profits in the Athabasca Basin |
| Monday, November 20, 2006 |
Uranium as an investment and source of power, is it ethical? Well, that’s subjective.
Is it safe? Maybe, but we’ll leave that up to the environmentalists to decide. Could it be just about the most lucrative investment right now? .....
Well, hell, I’d thought you’d never ask – Of Course!
Uranium is a unique situation. It’s an element which is in ever-increasing demand and has been appreciating in price non-stop for years. Uranium is made of 16 different isotopes, being comprised mostly of the isotope U-238 (99.3%) and U-235 (0.7%).
 Uranium isotope U-235 is isolated to be used in nuclear reactors all over the world – and nuclear weapons when used in high concentrations. It’s pretty simple actually; U-235 is fissile, meaning its atoms can be split under the right conditions. Leave it to the scientific geniuses of the world to come up with reactors that arrange the Uranium fuel in such a way, so that a fission chain reaction occurs. This reaction creates heat, which makes steam, the steam powers a turbine, which in turn drives a generator and delivers electricity to millions of happy citizens. Its bi-product, the less radioactive isotope U-238 referred to as depleted uranium, is used in many other applications like tank armor, radiation shielding, counter-weights for large planes, an alloy in steel and even to produce plutonium. Well, to avoid sounding like a mad scientist, let’s get to the heart of the situation – how’s we goin’ to make some money from this radioactive super metal?As quickly as uranium atoms split in a nuclear reactor, uranium juniors are popping up claiming to hold the next ultra deposit. Well, I’m only going to focus on one company right now, which I feel holds some real potential and exhibits traits of a high-quality company, with great growth potential. I’ve only recently become aware of this company, so I am only skimming the surface in this report. Going over its fundamentals with a fine-toothed comb would be advised, but let me clue you into why I think its share price could see some rapid appreciation in the near future. The company is Purepoint Uranium Group Inc. (PTU-TSXv) $0.88 +23.94%
Purepoint is a uranium junior exploring Saskatchewan’s Athabasca Basin. If you’re not familiar with the Basin, many of Cameco’s projects like Cigar Lake and Macarthur River are located there. In fact, Purepoint’s 100% owned Turnor Lake uranium deposit is located 12 km east of Cameco’s La Roque Lake Project. Other majors in the area include Cogema and Denison Mines. A uranium mine can be economical at grades as low as .03%, with mines grading on average .15%. Well, in the Basin, grades are a little more economical, like, say, Cameco’s Cigar Lake and Macarthur River projects, which grade 17-18% going as high as 80% in some pockets. The average ore grade in the region is 3%, well above the norm. Purepoint conducted a 3,400 meter summer drill program on its 100% owned Turnor Lake property, for which the results are still pending. Today PTU rallied $0.17 or 23.94% on heavy volume and interestingly with no news release. In my experience, when a company makes a nice move on heavy volume for seemingly no reason, a positive news release is imminent. Putting two and two together, one would gather that summer drill results for PTU’s Turnor Lake project will be released soon and be favorable. PTU’s chart looks good with periods of consolidation followed by periods of explosive growth.  MACD - is in bullish territory. Negative divergence in the histogram, but only because of today’s abnormal trading. CMF - shows good sentiment and that PTU is under accumulation. MA - 50 day SMA is about to cross 200 day SMA RSI - is good for now, above the 70 line, but should be watched for a bearish crossover. The November issue of the Northern Prospector contained an article entitled “ Who’s Leading the Race for the Next Uranium Super Deposit?” This article went over the Athabasca Basin, uranium and miners in the basin and created criteria for which the uranium companies in the area were rated on and given a score based on their potential at discovering the next uranium super deposit in the Basin. Purepoint Uranium topped the pack, coming in the lead, just above Nuinsco/Trend’s Diabase Peninsula Project. It’s still anyone’s race, but Purepoint Uranium seems to have something to it. I’m going to monitor tomorrow’s price action and possibly buy on a pullback, unless we see news released by PTU illustrating favorable drill results, in which case I may buy at the ask and try to ride it as a trade. Depending on where PTU ends up, it may turn into a “CORE HOLDING” and be featured periodically on MicroCapMayhem. |
| posted by MicroCapMayhem @ 6:08 PM |
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| How to Profit from Aurelian's Monster Deposit Without a Monster Bank Account |
| Monday, November 13, 2006 |
If any of you have been following the phenomenal story of Aurelian Resources (ARU-TSXv), an Ecuadorian Gold company, who recently hit the mother-load and watched its share price appreciate from $0.40 to a high of $43.00 in under a year, you are probably curled up in the fetal position, sucking your thumb and crying because you didn’t pull the trigger when you had the chance – tough luck!
Well, maybe it’s too late for you to make a quick double or triple on Aurelian stock, but there is a plethora of junior companies popping up like weeds in close proximity to Aurelian’s key properties trying to be the next company to bask in the limelight.
Aurelian has found a world-class deposit, which in all probability, will not be duplicated by anyone else. However, other juniors moving into the area may have a chance at some of the high-grades of gold that Aurelian has become famous for.
What I have found, is that after the rapid price appreciation of ARU stock this year, people have become almost manic about finding the next company to duplicate Aurelian’s results. What this has created is a multitude of volatile junior exploration companies, whose share prices swing wildly up and down, based upon drill results and property acquisitions in the area.
Although I wouldn’t recommend buying and holding these juniors in hopes of them metamorphosing into a $40 stock, I would recommend taking a closer look at the following stocks, getting to know them and their trading patterns, and trading the news, which can be very lucrative.
What you have to remember is that good news can send these stocks soaring and bad news can send these stocks plummeting. In my experience, one of the best times to pounce on these stocks is after the market has over-reacted and punished them too much for less than satisfactory news.
What freaking stocks am I talking about already? The following is a list of the most popular area plays around Aurelian’s properties:
Plexmar Resources (PLE-TSXv)
Skeena Resources (SKE-TSXv)
Goldmarca Limited (GML-TSXv)
Oremonte Resources (ORR-TSXv)
Lateegra Resources (LRG-TSXv)
At times, these companies can provide excellent trading vehicles if you’re quick and ready to pounce – but be forewarned, holding these stocks for too long can be a mixed blessing. Although at times very profitable, holding can lead to imminent losses in your portfolio.
Example: You wake up one morning and go to check how your new shares of Oremonte Resources (ORR-TSXv) are doing. You notice there is a trading halt on the stock. Then news comes out, touting drill results below that which the street was expecting. Oremonte then resumes trading after gapping down 20% and striking a devastating blow to your portfolio.
The following chart illustrates the frequent gaps on Oremonte's chart created by good and bad news:
Just remember that these are news driven stocks, so be diligent in your approach and don't get too comfortable holding them for the long haul.
I will be providing periodic up-dates and trading alerts related to these companies, who have acquired properties around the Peru/Ecuador border and more importantly – near Aurelian’s monster deposit. |
| posted by MicroCapMayhem @ 10:42 PM |
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| MicroCapMayhem mentioned in article on Roca Mines, Resource Report: There’s something about Moly Stocks (ROK-TSXv) $1.58 |
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MicroCapMayhem mentioned in article on Roca Mines, Resource Report: There’s something about Moly Stocks (ROK-TSXv) $1.58
It has been a busy time for Roca Mines lately and they appear to be making phenomenal progress at their MAX mine site. Roca’s share price has been performing equally as well, blasting to yet another 52 week high of $1.68 today, before closing at $1.58 - its highest close ever.
One of Roca’s strong points is that they are gaining recognition without paying a promotional marketing firm, like many other junior resource companies have do to create a buzz. Roca seems to be on the cusp of getting recognized, having been featured in many prominent publications recently, including: Northern Miner, Stockinterview.com, International Research Partners LLC, etc.
Today, MicroCapMayhem was mentioned in a Stockhouse editorial called Resource Report: There’s something about Moly Stocks. Below is an excerpt from this report, which I highly recommend anyone who is interested in molybdenum and Roca Mines read:
“The MAX deposit is NI 43-101 compliant, with a resource of 113 million pounds. It is also open at depth, and Roca hopes to further explore the deposit in 2007. Analysts (such as Sprott Asset Management) and small-cap reporters (StockIntervew.com, MicroCapMayhem) following the project have pointed out the similarities between this deposit and Phelps Dodge's Urad/Henderson mine, which is to date the world's largest molybdenum deposit.
Another upside to the Roca project is that the company's share dilution is minimal. The company plans to mine its high-grade molybdenum deposit using its cash flow and further explore the property's potential for a much larger deposit.
Take a good look at the company's chart. There is strong indication that this uptrending junior is an excellent prospect.”
Moly looks like it is just starting to heat up and gain recognition with investors. So next time you hear about the metal with the funny name, take a closer look and ask your-self how you are going to profit from it. |
| posted by MicroCapMayhem @ 8:49 PM |
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| MicroCapMayhem Cited in Stockinterview.com Article on Roca Mines (ROK-TSXv) $1.52 |
| Friday, November 10, 2006 |
"CORE HOLDING" Update: Roca Mines gains G-Force! (ROK-TSXv) $1.52
I recently introduced Roca Mines at $1.13 and then again while it was hovering around the $1.23 level. On October 30th, a report was put out by Institutional Research Partners LLC, targeting ROK at $5.00 within an 18 month time-frame. As of today, ROK has blasted to a new 52 week high of $1.52, representing a 34% rise since I originally mentioned it on November 1st. MicroCapMayhem was recently quoted in a StockInterview.com article called "Primary Moly Producers: One Key to the Molybdenum Price", in which I stated, “MAX shares geological similarities to Phelps Dodge’s Urad/Henderson mine, which is the largest molybdenum deposit in the world. (It is speculated that MAX, with its high-grade moly ore, is only the tip of the iceberg, hosting a much larger deposit underneath.) " The cash-flow, which Roca will generate from the sale of 3 million pounds of high-grade moly production in 2007, will pave the way for deep drilling, in an attempt to expand the MAX resource at depth. "Open at depth" simply means that there could be more molybdenum below that which is already outlined at the MAX molybdenum deposit. Deep drilling will be done to determine whether the mineralization continues into a giant Henderson-like resource, or is contained within the already outlined MAX deposit. Should a giant Henderson-like deposit be discovered, the implication for investors is enormous. To read the above mentioned article, "Primary Moly Producers: One Key to the Molybdenum Price", by James Finch of StockInterview.com, visit the following link: http://www.stockinterview.com/News/11092006/Primary-molybdenum.html To read the above mentioned article, "Institutional Research Partners Initiates Coverage on Roca Mines",visit the following link: http://www.rocamines.com/s/ResearchReports.asp?ReportID=157780&_Type=Research-Reports&_Title=Institutional-Research-Partners-Initiates-Coverage-on-Roca-Mines
Disclaimer: I am not an investment or finacial advisor. I do not recommend buying any of the securities mentioned on MicroCapMayhem. Do your own research and contact your personal investment advisor prior to the purchase of any securities. |
| posted by MicroCapMayhem @ 2:05 PM |
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| "CORE HOLDING" Update: Roca Mines: Part II (ROK-TSXv) $1.23 |
| Monday, November 06, 2006 |
"Core Holding"
ROCA MINES: Part II (ROK-TSXv) $1.23
I introduced Roca Mines (ROK-TSXv) the other day at $1.13 and since then it has cleaned up quite nicely, gaining almost 9%.
When Roca Mines was recently in the $1.00 range we saw tell-tale signs that it was about to blast off - and it did - making a move to over $1.20 in a matter of two days.
We are now seeing signs that Roca is ready to move again. But before I get into the technicals, I am going to relay a couple of points, which reiterate the upcoming catalysts that will drive ROK's share price higher, as well as some of ROK's fundamental strong points. ROK's main project right now is their MAX molybdenum project, located near Revelstoke B.C.
1> On track to begin fully permitted production of their high-grade ore by the end of 2006
2> First new metals mine in B.C. in almost a decade
3> Fully financed with no debt
4> Small initial capital expenditure for mine development, which is already well underway
5> 1000tpd mill acquired and being set-up on site with a few final components being shipped to the MAX site as we speak. (pictures of MAX site development available on Roca's website www.rocamines.com)
6> Off-take agreement signed for 100% of production from MAX in 06/07
7> 43-101 compliant, 42 million tonne/113 million lb resource, considered open at depth, with plans for expanding the resource in 2007. 3 Million pounds expected to be produced by the end of 2007
8> Highly experienced advisory board, including seasoned molybdenum experts
9> MAX shares geological similarities to Phelps Dodge's Urad/Henderson mine, which is the largest molybdenum deposit in the world. (It is speculated that MAX, with its high-grade moly ore, is only the tip of the ice-berg, hosting a much larger deposit underneath)
10> 2 highly prospective gold/silver properties in the Eskay Creek and Galore Creek areas of B.C., which will be explored further with cash-flow from MAX in 07
11> Very cheap in relation to other miners
Problems with ROK:
Roca's management team seems to have acquired a reputation for under-promoting them-selves, which could possibly explain why ROK's share price is not as high as it should be right now.
As well, Roca's share price is subject to overall market risks, like corrections in the TSX, as we saw in May and a couple of days ago with the blow to income trusts. ROK's share price fluctuations seem to mirror the TSX somewhat.
And, although molybdenum is trading at historically high levels (currently $25.00 - $25.50 range) and Roca is set to take advantage of these robust prices very soon, a lot of investors don't even know what molybdenum is at this point - this is where promotion and news coverage come into play.
Blue Pearl (BLE-TSX), another molybdenum company based in Smithers B.C., has just sky-rocketed due to a brilliant acquisition of a private molybdenum company called Thompson Creek Minerals, which owned a large stake in another private molybdenum company called Endako. This acquisition made the headlines and brought a lot of attention to the molybdenum space and should continue to do so. This media attention will probably carry over to other high-quality moly juniors, like Roca Mines.
BLE and ROK share the same financier - Sprott Asset Management (SAM) - So hopefully people will recognize this and the calibre of ROK's MAX project, creating spill-over from BLE to ROK shares. People always look for the closest thing to the stock that just exploded.
Technicals:
Roca's chart looks great, having made steady progression with periods of short consolidation, followed by nice gains. Roca's gains have happened during periods of increased volume, with pull-backs happening on thin volume. Ideally, this is the way you want a stock to trade.
Bullish signals:
-20 day SMA crossed the 50 day SMA a couple of days ago
-MACD is about to cross the signal line, histogram is about to turn positive
-CMF is on the verge of turning positive
-Cup and Handle pattern, which began in late August is in the handle phase, which acts as the final consolidation before a break-out
Macro:
-The TSX is approaching pre-correction levels. It closed today at 12,333.28. If the TSX makes it above 12,500, the level it began correcting from in May, we may see break-outs in many of the juniors, including ROK, which seems to follow the movements in the TSX quite strongly, as illustrated below:
I have provided a technical analysis of Roca Mines above, which may prove fruitful for trading, but my recommendation would be to hold on to your Roca shares, at least untill late December/early January, when ROK is set to start mining ore.
Disclaimer: I am not an investment or finacial advisor. I do not recommend buying any of the securities mentioned on MicroCapMayhem. Do your own research and contact your personal investment advisor prior to the purchase of any securities. |
| posted by MicroCapMayhem @ 8:34 PM |
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| "TRADER ALERT" & "Technicals 101" New junior with good looking technicals - Terex Resources (TRR-TSXv) $0.20 |
| Friday, November 03, 2006 |
*Chart Viewing Problems!! After you click on the above chart to view it in a larger window, hold your cursor steady on the image and a box will appear on the bottom right-hand portion of the chart. When you hold your cursor above the box a message will appear asking you if you would like to enlarge the image to its original size. Click this box and the image will appear correctly and clearly.
MicroCapMayhem "TRADER ALERT"
Short-term swing opportunity
Terex Resources (TRR-TSXv) $0.20
*Techicals 101: In this "TRADER ALERT" I will be going into more depth than usual for describing some of the methods I use to analyse potential opportunities. I explain in some detail some of the indicators, which I use to generate technical buy and sell signals. Once in a while, I will be updating readers with new "Technicals 101" segments of MicroCapMayhem.
Today's "Trader Alert" is based solely on a technical basis. The company, Terex Resources (TRR-TSXv), being featured is a Canadian junior with gold properties in Ontario.
Today Terex announced that they have quadrupled their drill program to 20,000 metres and have announced a $1 - $1.5 million private placement.
However, we are only concerned with the technicals of Terex and will be looking at it with a very short time horizon.
Looking at the 6 month daily chart, we see numerous bullish signals forming. For my analysis, I will be using 6 indicators:
1 - Slow Stochastics (%K,14) (%D,3), to measure over-bought and over-sold conditions
2 - MACD (12,26,9) to measure momentum and sentiment
3 - CMF (Chaikin's Money Flow, which measures if the stock is under accumulation or distribution)
4 - Bollinger Bands (20, 2.0), for buy and sell signals
5 - Volume, to see if the rally is sustainable
6 - News, but to a much lesser extent than the above mentioned indicators
7 - Moving average cross-overs
First we will start with an analysis of the slow stochastics. I like to use the Slow Stochastics rather than the Fast Stochastics, because it generates less buy and sell signals and the signals tend to be more accurate.
Stochastics are showing an overbought condition, which occurs when it crosses above the 80 line, the opposite of an over-sold condition, which occurs when stochastics is below the 20 line.
Stochastics is a banded oscillator, meaning it fluctuates between over-bought and over-sold conditions. When a stock is in a strong up-trend, Stochastics can stay in over-bought territory for an extended period of time. A sell signal would be generated when stochastics begins to descend through the 80 line, as well as when the %K line crosses down through the %D line.
In the case of Terex, the %K line has just crossed through the %D line and Stochastics is on the verge of crossing back down through the 80 line.
This tells me that you may want to keep an eye on Stochastics, but for the time being it looks like it may stay in over-bought territory, while Terex continues its trend, which is fine.
MACD is showing us several strong bullish signals, which indicate a strong up-trend and building momentum.
The MACD line has crossed through the signal line, which generated our first buy signal. MACD has also just crossed through the center line, which is our second bullish buy signal. Both of these buy signals were preceeded by a positive divergence in the MACD histogram, which occured while Terex was down-trending starting in October. Looking for positive divergences can give you a heads-up on future moves.
Bollinger Bands look equally bullish. Recently, Terex crossed up through its 20 day simple moving average and since then it has pierced its upper Bollinger Band twice. Yesterday's trading was very bullish, closing near the highs of the day and creating the second puncture through the upper band. Today, Terex gapped up slightly and has remained above the upper band all day.
If Terex pulls back and a trade is entered, one must keep an eye on whether there is enough momentum to push TRR through its upper band again. If Terex fails to pierce through the upper band next time it rips, an exit strategy may be considered.
Yesterday's trading also catapulted TRR above its 50 day SMA adding yet more confirmation of a bullish move.
CMF, which indicates whether a stock is under distribution or accumulation based on where the stock closes for the day in relation to its highs or lows, is giving a reading of +0.323, a bullish score indicative of strong accumulation and good sentiment.
Conclusion:
-One must keep an eye on volume. Volume has increased significantly and TRR must continue to trade big volume to blast through its old highs.
-There is over-head resistance at $0.22. If this breaks you may get a nice rip and a re-test of Terex's old highs of just over $0.26.
-MACD shows building momentum, so if Terex pulls-back below its upper Bollinger Band this may present an attractive entry.
-Monitor Stochastics for signs of a big decline through the 80 line.
-These stocks are highly sensitive to news, so keeping an eye on the fundamental picture never hurts.
Disclaimer: I am not an investment or finacial advisor. I do not recommend buying any of the securities mentioned on MicroCapMayhem. Do your own research and contact your personal investment advisor prior to the purchase of any securities. |
| posted by MicroCapMayhem @ 10:48 AM |
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| ROCA MINES (ROK TSXv) $1.13 - "Core Holding" Worth Taking A Closer Look At |
| Wednesday, November 01, 2006 |
"CORE HOLDING"
ROCA MINES (ROK TSXv) $1.13 - "Core Holding" Worth Taking A Closer Look At
Roca Mines (ROK-TSXv) is my number one core holding at the moment and I will begin by giving you a synopsis of why I think its share price is poised to move much higher in the coming months. You may ask, what does Roca Mines do? That's a good question. Roca Mines is set to become the next primary molybdenum producer.
Molybdenum, or "moly" as it is commonly called is used primarily as an alloy in steel. It strengthens steel and helps with corrosion. It is used in pipelines, cars, lubricants and just about anything else you can imagine. It has the fifth highest melting point of all the elements in the world and has recently made stellar gains, moving from around $4 a pound a couple years ago to a high of over $40 a pound and now levelling off to around $25 a pound.
We will look at the past and current performance of ROK in relationship to its peers. Roca’s peers include AUA, WEX, GPXM, BLE, GMO and others. As of late, BLE, or Blue Pearl Mining has made monster gains due to a breath-taking acquisition of Thompson Creek Minerals, instantly making BLE the world's largets publically traded molybdenum company. We will go over BLE in brief later in this report.
First we will discuss AUA, or Adanac Moly, which recently changed its name to Adanac Molybdenum Corporation, which has a much larger, lower grade molybdenum deposit than ROK, in Atlin B.C, called the Ruby Creek deposit.
The reason I am scrutinizing AUA in relation to ROK, rather than ROK's other peers, is that AUA seems to hold similar merit, and at the moment, both companies' share prices are comparable. Also, both AUA and ROK's projects are based in B.C. BLE would have been ROK's closest competitor, but after their above mentioned acquisition, BLE was thrust into a league of its own.
The proceeding comparison of ROK and AUA also provides a snap-shot of some of the strong points of ROK's business. AUA's Ruby Creek deposit has been owned by various other companies, but has never been brought to production for two reasons.
(1) Capital costs for mine development at Ruby Creek are astronomical. Approximately $400 million capex.
(2) Low prevailing molybdenum prices.
However, Ruby Creek is now looking attractive because of a giant surge in moly prices, which makes the initial capex look more reasonable and gives a robust profit outlook for the future.
The reason Roca Mines is a much better investment (in my oppinion) than AUA is that Roca is:
A) Roca is fully permitted for mining by the government of B.C. AUA is not
B) Roca will be producing by the end of 2006. AUA will not be producing until the earliest of 2008. Who knows where moly prices will be by 2008. Roca will be taking advantage of CURRENT HIGH MOLY PRICES.
C) Roca’s mill is being set up AS WE SPEAK. It will initially process 500 tpd, but will be increased to 1000 tpd after Roca's larger mine permit is approved by the B.C. mining industry. Currently Roca has been approved for a B.C. small mine permit, which they will use to fast-track production of their high-grade ore.
D) Roca’s moly is much higher grade than AUA’s. Roca’s highest grade is 1.95% MoS2, which will be the initial ore mined. 1.95% is very high grade.
E) Roca’s moly deposit shares geological similarities to Phelps Dodge’s massive Henderson moly mine. Currently the LARGEST MOLY MINE IN THE WORLD.
F) Roca has already signed an off take agreement with Derek Raphael of England to PURCHASE 100% OF ALL MOLY MINED at Roca’s MAX deposit in 2006/07. This just goes to show how much of a demand there is for molybdenum right now. Roca just has to mine and mill the ore and Derek Raphael will pick it up at Roca’s site. Roca doesn’t even have to ship it.
G) Roca will be the FIRST NEW MINE to go in to production in nearly a decade in B.C. Obtaining a mining permit is not easy and Roca already has it, AUA does not.
H) Roca has been financed by Sprott Asset Management. Sprott Asset Management is a leading fund and alternative investment company in Canada. Sprott has an extensive history for financing undervalued junior companies, which go on to be very successful. Sprott’s funds have out-performed and have been ranked number 1 by Morningstar many times over. Check out Sprott’s fund performance at http://www.sprott.com/. You can also read a recent report by Sprott Asset Management, which highlights ROK, called “Is Molybdenum Another way to Ride the Energy Bull?” available on Sprott's website, for free.
I) Roca will be the first to production of all the junior moly companies with the exception of GPXM and WEX, which I will get in to in a minute. Roca will be taking advantage of the current extremely robust moly prices by the end of 2006.
J) Roca is fully financed with a tight capital structure, minimal capex for mine development, creating a very short capital pay-back time of roughly 3 months.
K) Roca is also leveraged to gold, with their Foremore gold property in the Eskay Creek area of B.C. From Roca’s site, “Roca's Foremore project is located in one of the most active mining and exploration areas in British Columbia - the Eskay/Iskut Camp. This camp includes Barrick Gold's legendary Eskay Creek Mine, Cominco's historic Snip Mine and Novagold's Galore Creek project.” It is also important to note that Barrick recently put in a hostile takeover bid for Nova Gold, which goes to show how much potential properties in this area have. Roca also owns a property called Seagold, which it has entered into an option agreement with Romios Gold: “Romios Gold Resources Inc. (TSXv:RG), is earning an initial 50% interest in Roca's Seagold Property, now an integral component of the Newmont Lake Project in the prolific Eskay/Iskut Mining Camp of northwestern British Columbia.” Gold prices are at historical highs. This bodes well for Roca’s gold properties, which are not even considered in Roca’s current share price.
*Above is Roca mines 1 year chart, which displays the quick and steady progression it has made.
Other peers include Golden Phoenix Minerals (GPXM) and Win-Eldrich Mines (WEX), which are joint-ventured on the Ashdown deposit in Nevada. They claim they will be the first new moly producers, but have encountered many delays and their stories don’t seem to hold the same merit that Roca’s MAX property does. I must admit that I do not know that much about the Ashdown project, or either GPXM or WEX for that matter. Both WEX and GPXM have seen massive gains in their share prices over the last year, but they are not fully permitted for mining by the government. (All the mentioned moly companies are worth looking at, but I feel through my research and experience that Roca will be a big winner)
The recent gains in junior moly companies' share prices is indicative of the massive need for moly and the very minimal supply, which has created a supply/demand imbalance. The industrial demand for moly from China and India is gigantic. China’s economy is growing at an extremely fast rate and if their economy does not cool, they will require a lot of moly for infrastructure over the coming years, similar to the U.S. during the Industrial Revolution.
Roca’s last peer as mentioned above is Blue Pearl Mining (BLE). BLE has also been financed by Sprott Asset Management (SAM). Any company financed by SAM has an added layer of security. Sprott does not finance companies for a small return on capital, Sprott finances home-runs. Sky Resources (SKR) and Aurelian Resources (ARU) are two very successful companies, which Sprott has had an interest in. You can check them out and use them as an example of what kind of gains Sprott is looking for.
In my opinion both ROK and BLE could both be home-runs. BLE’s deposit is called the Davidson deposit, named for a molybdenum expert who worked on it. Davidson previously worked for BLE, but has recently been employed by Roca Mines to head Roca’s advisory board whose main goal is to expand Roca’s resource at depth. Davidson’s addition to Roca’s team shows a tremendous amount of confidence for the MAX molybdenum project. BLE’s share price has just gone rampant over speculation of a possible acquisition. The rumor is that BLE is either buying a private moly producer called Endako or purchasing Roca mines, which would provide current Roca shareholders with a very quick return on capital.
The reason for the speculation over BLE purchasing ROK is due to two factors. One is the fact that Davidson worked for BLE and is now working for ROK and the other is that they are both financed by Sprott. The problem with BLE is that they do not yet have their permits in place and their deposit is located very near the town of Smithers. The residents do not want the mine to happen. BLE also has to do some more environmental assessments and apply for more permits. Who knows how long this will take.
*(the above was written before BLE's current acquisition was announced. The rumor of BLE purchasing Endako turned out to be true and since then BLE has done extremely well. BLE acquired Thompson Creek Minerals, which owned a large stake in Endako).
Basically, Roca has all the pieces of the puzzle in place. If Roca sticks to its timeline and initiates production by the end of 2006 as planned, the share price could go RAMPANT.
Another great, confidence builder for Roca is the fact that they originally purchased their property from Newmont and Esso Minerals, two very large mining companies. The reason for Newmont and Esso selling the property was the low prevailing prices of molybdenum at the time.
Not long ago, moly was trading in the $5 dollar range, before it exploded to around $45 and has leveled off to around $25-30 a pound. Many analysts are calling for moly prices to go back down to around $11 per pound. This is similar to analysts refusing to believe that oil would its gains. Over the last 9 years a barrel of oil has climbed from around $9 to around $60 right now in 2006.
Newmont and Esso were dealing with $5 moly prices, which does not produce a lot of profit margin after mining and milling costs. Newmont and Esso definitely thought Roca’s property had some serious potential, because they spent $15 million on underground mine development and exploration. And that’s not just $15 million, that’s $15 million 1980 dollars, which would be worth much, much more on an inflation-adjusted basis.
Roca’s Max molybdenum deposit (their deposit is called the MAX deposit, although I have not referred to it as MAX consistently throughout my report), is an underground mine. Newmont and Esso did all the work way back in the 80’s. The underground work is all done, including the access adit and ventilation system.
The MAX deposit is also considered OPEN AT DEPTH. The current resource of 170 million pounds of molybdenum (outlined in the 43-101 technical report, available on Roca’s website), is in the process of being re-explored by their advisory board to expand the resources significantly at depth. But even with just the current resource, Roca will be a cash cow. Roca has a capital payback time of approximately 3 months after initial production, before reaping the benefits of a robust cash-flow/revenue stream. Junior miners are often valued on cash-flow multiples, often trading at 5 to 10 times cash-flow. Roca is trading at about 1 times projected 07 cash-flow, which makes the current share price look measly.
Disclaimer: I am not an investment or finacial advisor. I do not recommend buying any of the securities mentioned on MicroCapMayhem. Do your own research and contact your personal investment advisor prior to the purchase of any securities |
| posted by MicroCapMayhem @ 9:20 PM |
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| MicroCapMayhem |
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I will usually have one or more core holdings. Stocks which I own a substantial core postition in and trade around. I follow these stock's stories and fundamentals in depth and only analyze the technicals if I am going to trade around my core position, or am thinking about liquidating all, or part of my holdings. I will be informing my readers of the fundamentals and stories behind my core holdings and give reasons as to why I am holding the stock and what my timeline for the trade is projected to be.
Most of the stocks we will be dealing with are listed on the TSX Venture Exchange, as well as some OTCBB, Pink Sheets and TSX listed stocks.
On a regular basis I will be posting trading alerts on a basket of stocks, which I follow and watch for signs of a technical break-out. |
| posted by MicroCapMayhem @ 8:26 PM |
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