Just at the moment, GEL is trading at CAD 52c on high volume of 532,000 for the day so far. The NZ trading also saw one of the biggest days' volume in this share. As the chart from the TSX shows, bigger volume has gone into GEL before, the OBV has also been higher. This time I think it's more a broad awakening to the value held in GEL's permits. Should be an interesting day in NZ..
I missed the really big news for today: a press release covering high gold levels at 'Muirs' in Te Puke, from mainly shallow surface sampling and drilling (more mention of a sizeable system). Included in the release is the note that WKP28,29,30 drill results (Newmont JV) are due to be released soon. Since volume on the TSX for GEL is 10x the NZX level, they usually get the news first.
The updated global reserves and resources for gold mining giant Newmont Mining Corporation has its resources at Newmont Waihi Gold near the bottom of its scale.
The ultra conservative company has adopted a low key approach to the Waihi operations that were acquired several years ago with the takeover of Australian company Normandy Mining Ltd.
The latest figures show for the Asia Pacific region – taking in mines in Australia, Indonesia and New Zealand – that Waihi had no attributable measured or indicated material but had an inferred 300,000 tonnes grading 0.14 ounces/tonne (grading just below half an oz to the tonne).
The figure may well increase in the next inventory with development of the Trio mine to take over underground operations from the maturing Favona mine and, further down the track, Newmont has 70% of the big new WKP West discovery, north of Waihi – in partnership with Glass Earth Gold Ltd.
The global proven-probable reserves were put at 1.632 billion tonnes grading 0.019 oz/tonne for a contained 31.41 million oz gold.
The biggest contributor to the gold inventory was Asia Pacific with a total of 1.632 Bt @ 0.019 oz/t, with the big new Boddington mine in Western Australia dominating with about 70% of the tally.
The US-based company has also used conservative gold prices for its figures -- $US950/oz, $A1,000/oz and $NZ1,200/oz.
The Glass Earth site has the best version of this report, it includes a map showing a satellite picture of the area, with drawings showing the Muirs and Massey Reefs, and the sampling lines.
When it comes to investing in juniors, there are many opportunities to hit one out of the ballpark. You can wait for a company to make a discovery or wait for a company to be bought out.
But at the end of the day, you just have to hit a sweet spot - the perfect combination of the right projects, the right people, and the right timing. If all of these ingredients come together, investors who act quickly can make fortunes on the right company.
That's why in the past few months, I have been looking specifically for an early stage company that I believe has the right ingredients to move their projects forward.
Before I introduce this company and their management, let me share a quick story.
Back in 2006, a new mine in Africa and a steady rise in the price of gold lifted a company called Red Back Mining from obscurity in 2006.
Led by Rick Clark, Red Back went from virtually no revenue in 2005 to $45 million just a year later - on the strength of a new and promising mine in Ghana, the Chirano mine. The Chirano mine achieved commercial production in October 2005 and is the start of what propelled Red Back Mining into new territories.
Six years ago, shares of Red Back Mining were trading at less than $2. Over the next five years, Red Back continued to reward its shareholders with tremendous returns, closing at nearly $35 before it was finally sold to Kinross Gold for nearly $7.2 billion.
If you were a Red Back Mining shareholder five years before its takeover and invested $10,000 at $2 per share, you could have made $165,000. That's a gain of 1650%.
That's why getting involved with companies before they ramp up can return investors with big rewards. I love getting involved with companies at an early stage.
Here is a screen grab of all the recently applied-for permits by Glass Earth. I can't figure out a way to include the map links on any of the HTML or Code patches, which would make it much more useful. But we can see that while GEL will fund 100% of the prospecting permits, the EPs in Otago are 90:10% split with NZ Minerals, maybe this is an historic arrangement, or NZM are the sugar-daddy for the annual fees? Look at some of the areas, they are quite large, in interesting spots. I don't think there would be any other miners in NZ with this many on the go at once.
The map below shows roughly where the two reefs at the Muirs prospect are located. It looks like a drive down No. 4 Road (Te Puke) will take you right over the top of two gold reefs. These extend down over hilly country, towards flatter horticultural areas.
A 2006 article gives some more background on the area.
An optimist like myself could type up a spreadsheet, totting up the upper estimates of the finds GEL might make in some of these permits. If these went into production, you can expect an EV ranging from say 70 to 200 multiples of the resources total (AUD). OGC is about 88, it is low. Average is 180 for smaller miners. GEL has always found some gold after narrowing it down using their instrumentation, and more lately the hit rate for larger finds has improved. The fanciful chart does imply that placer or alluvuial gold has a small part to play, but any reasonable hardrock finds would push the value of GEL into the several hundred million dollar valuation range, making it a multi-bagger from where it stands today. I only need one..
Reply With Quote
Bookmarks