Currencies, Gold, Silver and Oil

[whiteheron]

stolwyk
You look like you are heavily into mining shares and so am i

One area that i have difficulty in when interpreting mining shares is the mining technical jargon --- things such as the type of ground , rock , etc that contains finds and the various types of processes used to extract the metals , how far processing is taken etc
Obviously these factors have a bearing on costs
Also , i would like to be better able to interpret things such as grammes per tonne and percentages eg what are the ranges to be expected for the various precious and base metals ? and what are average and excellent production costs per gramme , pound , tonne etc ?
I have picked up quite a bit by reviewing many companies , but would like to upskill in this area to be able to better interpret announcements , presentations , articles etc

Can you (or anybody else ) point me in the direction of a booklet or similar on the above matters ?
I have managed to get a certain amount from Google searches and articles on the internet
but something that covers it all in one place and in laymans terms , if such a thing exists , would be great

Any help will be much appreciated

[whiteheron]

stolwyk and Gofish

I have re visited OXR today and still feel quite happy with it
Perhaps there are too many shares on issue , but other than that it is hard to fault in my opinion
Some people are probably put off by the Laos location but OXR have now been in production for some time at their gold mine , apparantly without any political problems
And they will be prospecting aggressively on excellent ground in the next few years

Fat Prophets have recommend OXR and that is how i originally got on to them

As a matter of interest i consider that the next few weeks will be very good for OXR with the price of gold and copper likely to stay VERY strong

But i am still learning --- dont accept my word for it

[stolwyk]

Gofish,

The problem many Aussie companies have is a large amount of shares. OXR got also caught when they took up the 20% from RIO TINTO.

When you read about these and many Canadian explorers, you will find that the number of shares held by many Canadian companies is very low indeed. Also they make placements without calling on the small shareholders and I have always preferred that.

There are some very nice share prices as well.

This extract:

+ + + So the cost per ounce of gold resource for someone who bought in Canadian currency is $6.28/1.2516/0.917= US$5.47 per ounce per US share. US$=CAN$1.2516

+ + + For NG: 8.17/1.2516/0.453=$US14.41 per ounce per US share.

+ + + For OXR: 0.88/1.361/0.014= $US46.18 per ounce per US share.($US=$A1.361)

Says a lot.
_________________

You said:

"They consider - with some "scout" drilling to back it up - that there is a lot more gold and copper out there".
I want to point out that much of the PD/NG 25 mill ounce deposit at Donlin Creek has not been drilled either; they only drilled 2 km of the strike length of 10 km and got the 25 mill resource ounces.

And there is a lot more gold in the projects.

Now, a mine which is nearly ready to produce is allowed a higher cost per ounce rating than that allocated to exploring only.

Anything below $20 would be very good for NDM and NG IMHO. I would expect more than $20 cost per ounce for OXR because they are ahead further. However, the above mentioned $46.18 is somewhat high, I think.

There is a difficulty when the production per share is ascertained: OXR can produce twice as much based on 1187 mill. shares than Nova Gold does on a 100 mill shares and obviously Nova Gold can be 6 times better off on a per share basis.

It really means that OXR is on a threadmill as far as production is concerned particularly at that level they mention in 2010. However the share price will reflect that.


Good luck to the OXR holders. It is up to them.


Gerry
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks. To visit archived posts, please use the Search button.

[stolwyk]

Whiteheron,

One can buy a book with mining terms, I think: Published in Perth. Saw it advertized or mentioned once.

Re Oil and Mining of all sorts, HotCopper has quite a lot of expertise and it would be worthwhile posting there.

The subjects I like are Gold and Biotechs where risks can be higher.


Here are a few terms:

http://www.caseyresearch.com/crGlossary.php

http://www.minebox.com.au/mining_glossary.asp



Gerry

[whiteheron]

Thanks stolwyk

I am printing them out and will study them intently --- hopefully i will be able to increase my knowledge in this area

[Mick100]

WH, If you want to learn some of the basics on mining companies a good read is:

Investing in Australian mining and Resource Stocks

By Allen trench & Thomas judge

I got my copy from Oz a couple of years ago
but I think it is available in NZ now - try here

http://www.goodreturns.co.nz/books/


Mick

[stolwyk]

UPDATE:
Please note that various approvals need to be obtained before mining can proceed. Resources are expanding most of the time, so any resource listings are only valid up to the date of listing.

Al metals including Gold are quoted In Situ.

In some cases, the other metals have been converted to "Gold equivalent ounces" based on $US1.45 for Copper and $US6 for silver. Gold is assumed at $US415/ounce.

TSX is the Canadian TORONTO exchange. A Warrant is expressed thus: WT, eg NG.WT
Supply of warrants can decrease over time and this may result in some "uneven" trading.

So, summarizing, what type of stock did I select?
1. I prefer the North of Canada and Atlaska where the big deposits are. Costs are low per ounce and there often are metal credits as well. There are no souvereignty problems although agreements need to be made with native tribes.

Canada is pro mining while Alaska is even more so: Their program: "Roads to resources" pays for new roads and bridges.

Nova Gold is well known for making agreements with the Alaskan Govt and tribes and was therefore selected as a partner by Placer Dome on their 25 mill + ounces gold Donlin Creek resources. (The latter was defined after drilling of 2 km with another 8 km of that trend still to be explored.

2. I kept clear of companies who didn't have an aggressive expansion policy.

3. I went for mass and these had to be exploration companies where the share price curve can be the most positive ( increase of price) while the resources are rapidly increasing.

Finally, the companies tend to show different characteristics, eg the state of progress made.

So we have:
NDM.TSX: At least 3 years to go before mining can start on a massive scale. Few shares. At the moment resources are 27 mill ounces of gold and 16.5 bill pounds of copper. The Equivalent is a total of 84.6 mill ounces gold resources.

NG.TSX: Start mining in 2006, followed by a much larger mine in 2007, then another one and a joint ventured massive mine in 2008.

Few shares. The resource is 17 mill ounces of gold, some 100 mill ounces of silver and 7.7 bill pounds of copper. About 2 mill ounces of gold can be added each year while drilling proceeds.
The last resource statement was in May and I expect 2 mill ounces to add before Dec 31.

The Equivalent in May was a total of 45.3 mill ounces resources.

WRM.TSX: It is a producer and buys up mines to increase ounces. (Has $US200 mill cash and $US300 mill credit). It also explores. Has quite a lot of shares but little need for new dilution. Top Management and rapid expansion; Likes to buy cheap. No hedging.

Resource (probable, measured and indicated) about 11 mill ounces of gold, 33 mill ounces of silver and has copper. Has been mentioned as a takeover candidate.

NCM, an Australian producer and expanding quickly. Has hedging. A very large company with very low costs coming up shortly. Resources 58 mill ounces of gold and a massive amount of copper. I have NCM.

SEA.TSX: Few shares, one or two key projects, prefers not to run a mine themselves. I don't have SEA.

NNO.TSX: Large copper-gold-molybdenum porphyry deposit and 12.5% stake in ALUMBRERA.
Their deposit AQUA RICA in Argentina has about 10 mill ounces gold and 18 bill pounds copper. With say Gold at $US415 and Copper at $US1.45, the equivalent total gold resource would be about 72.9 mill ounces gold.

NEW: ITF.TSX: A Canadian junior explorer with promise. Share price moving up lately. Shares: 25.5 mill, other:15.8 mill. Diluted: 41.3 mill. Share price CAN35.5 cents.

The mentioned companies have a thread on this site. Most companies are traded in NY as well.


Gerry
Holds NDM; NG.WT; WRM.WT; NNO.WT; NCM; ITF.
Readers, please do your own research and you decide if and when to buy, hold or sell any stocks.

[stolwyk]

Now with the US elections coming up it is time to look at the golds again- See previous post.

Soon, I'll be putting some prices next to these explorers.

Gerry

[stolwyk]

UPDATE WITH PRICES.

So, summarizing, what type of stock did I select?
1. I prefer the north of Canada and Atlaska where the big deposits are. Costs are low per ounce and there often are metal credits as well.

2. I kept clear of companies who didn't have an aggressive expansion policy.

3. I went for mass and these had to be exploration companies where the share price curve can be the most positive (increase of price) while the resources are rapidly increasing.

Finally, the companies tend to show different characteristics, eg the state of progress made.
Please note that various approvals need to be obtained before mining can proceed.
Resources are expanding most of the time, so any resource listings are only valid up to the date of listing.

Al metals including Gold are quoted In Situ. In some cases, the other metals have been converted to "Gold equivalent ounces" based on $US1.45 for Copper and $US6 for silver. Gold is assumed at $US415/ounce.

See websites below for Capital structures and Warrant Conversion time/cost.
Except for NCM (Australia), all other companies are Canadian companies. The latter are quoted on the TSX or Canadian TORONTO exchange while most are quoted on the AMEX as well. Prices of these Canadians are in $CAN. A Warrant is expressed thus: WT, eg NG.WT.
_________________________________________

SHARES:
1. NDM: Shares: 45 mill. Fully diluted: 52.3 mill. Cash on 17 Aug: $10 mill. Share price: $6.27. Prebble deposit to be drilled in 2004, already 169 holes drilled before. Copper and Gold. Equivalent ounces of Gold: 84.6 mill. Several studies this year are being done. I believe, a BFS could be completed in 2005; mining to start in 2007?

2. NG: Shares: 62.8 mill; Unlisted Options: 6.6 mill. Warrants (NG.WT): 3.6 mill, to pay $7.0 to convert before 1 Oct. 2008. Fully diluted: 73 mil. Cash $60 mill on 1 July. Share price: $8.17. NG.WT: $3.40. Copper, Silver and Gold. Equivalent ounces of gold: 45.3 mill. BSF: 2005. To start mining in 2006. (100,000 ounces.), Total cash and production costs $US200/ounce.

By 2007 (Gnome and Galore Creek), about 370,000 ounces of gold, 200 mill lbs copper and 1.8 mill ounces of silver/year could be produced per year. Equivalent ounces of gold: 1.09 mill. Massive Galore Creek deposit: Total production and cash costs CAN15 cents for copper, using Gold as a credit or minus, yes - CAN$180 ounce if Copper is used as a credit.

By 2009, about 600,000 ounces of Gold, 200 mill lbs of Copper and 1.8 mill ounces of Silver could be produced. Equivalent ounces: 1.32 mill.

3. WRM.TSX: It is a producer and buys up mines to increase ounces. (Has $US200 mill cash and $US300 mill credit). It also explores. Has quite a lot of shares but little need for new dilution. Top Management and rapid expansion; Likes to buy cheap. No hedging.

Resource (probable, measured and indicated) about 11 mill ounces of gold, 33 mill ounces of silver and has copper. Has been mentioned as a takeover candidate.

4. NCM: An Australian producer and expanding quickly. Has hedging. A very large company with very low costs coming up shortly. Resources 58 mill ounces of gold and a massive amount of copper.

5. NNO: Shares: 110.9 mill shares and 53.2 mill reserved units, consisting of about 41 mill Warrants (NNO.WT), to convert on May 30, 2007 at $1.65. The rest will be Company Options to Management. Fully diluted: 164.15 mill. Cash (May) $US41 mill . Share price: $3.38. NNO.WT: $1.80. Copper and Gold: Equivalent ounces of gold: 72.9 mill. Close to a BFS but mining date is not certain.

6. ITF: A Canadian junior explorer. Shares: 25.5 mill, other:15.8 mill. Diluted: 41.3 mill.
__________________________________________

WEBSITES:
NDM:
http://www.sharetrader.co.nz/topic.a...earchTerms=NDM

NG:
http://www.sharetrader.co.nz/topic.a...erms=Nova,Gold

WRM:
http://www.sharetrader.co.nz/topic.a...earchTerms=WRM

NCM:
http://www.sharetrader.co.nz/topic.a...earchTerms=NCM

NNO:
http://www.share

[Mick100]

Gerry

I'm interested to know what stage these canadian exploration companies are at.

Have they completed or in the proccess of doing bankable feasability studies.

It's all very well having lots of ounces but if the grade is too low or the geology is too challenging these ounces may not be able to be mined profitably.

Having large indicated resources sounds good but it can cost an awful lot of money to move them into the infered and proven resources which must be done before mining can begin. cheers


Mick