Thursday, February 28, 2013

The Merc Geo and Blackheath Resources

I feel vindicated.


"The chart shows that throughout its short trading history, Blackheath Resources has had low liquidity; some would say it “trades by appointment only”. Because BHR is a new company, it stands to reason that a tightly-held share structure is the reason for its low trading volume."

Sign up for Mickey Fulp's Musings and read why he's settled on this company for Tungsten.

You can see from my previous writings that I'm definitely interested in tungsten. Given the cap of $7 million and holding at least $250 million in pay dirt, this one is a no brainer.

See the link below to sign up for the Merc Geo's reports.

BTW, since some shares will hit the market in June that's going to be the best time to buy. The problem is that there will only be 5 million shares. As mentioned before, there is a billionaire buying up shares. I will also be trying to increase my holdings. I know several others who are taking some of the shares too.

Monday, February 25, 2013

Galore Creek Proves Worthy

The recent news tells us it's worth going after.

"Last year's exploration program yielded excellent drill results with impressive widths and gold grades which have extended the mineralization well beyond the current pit,” said Greg Lang, NOVAGOLD's President and Chief Executive Officer. "More importantly, 2012 drilling at Galore Creek led to the discovery of the new Legacy zone located in close proximity to the projected pit. With these positive drill results, we are now well positioned to update our reserves and resources and further improve the overall economics of this project as we pursue the sale of our share of this exceptional asset. If developed as envisioned in the PFS, Galore Creek is expected to become the largest and lowest-cost copper mine in Canada, one of the last geo-politically safe jurisdictions where copper miners can build new mines. This factor is particularly important considering the critical challenges copper miners face today in jurisdictions such as the Democratic Republic of Congo, Indonesia, Argentina, Mongolia and Peru.”

We've been waiting for this catalyst for some time now. The results came very slow but they've finally been put on display. What a lot of investors knew was that GC needed to be bigger. 95kt/d was not enough and the LOM needed to be extended. With the new discovery there is now enough to ramp up the tonnes per day and extend the Life of Mine.

Grades were never an issue. Tunnels and hardness were. Now they have enough proof to add size while extending life. They should want to see 130kt/d and about 20-25 years of mine life. What the new discovery suggests is a strike greater than 700 meters adjacent to the main pit. as they drill deeper they are likely to fill in the bottom. At 300 meters North of the Bountiful zone these are basically connected and it will be cheap to get at it. This is going be easy to add to the pit design and should reduce costs even more.

I would expect a buyer to step up to the plate. Teck already owns an option on the high quality Schaft Creek deposit that also just keeps growing in size and quality. Together, these form an incredibly attractive investment district. I think the majors have been waiting for the proof at GC because they need to see the big picture. This adds to the geo political safety. At this point there would be a public backlash should a new government in BC attempt to stop any of the projects connected to this area. After all, the public are building the power line to feed these monsters.

I've heard the political rumblings. Tax hikes and labour changes. Looking at the PFS and BFS numbers from just these two projects shows there's a great deal of sensitivity here. However, the Golden Triangle is now approaching "too big to fail" status. Additionally, the environmental challenges are starting to abate. A lot of the focus will be on the pipe lines. There's only so much attention span you can get so I suspect more will be on the oil patch and a lot less on mining. There might even be some grumbling about interference by foreign interests at the highest levels. So for it's just been lip service. But, do the Americans want to be excluded from future projects?

With 2 word class deposits within stones throw of each other, one in BFS and the other ready to update this is the catalyst the area has been waiting for. I have no doubt that with new numbers and this year's drilling at GC and SC we will see a new robust forecast.The question is will a buyer wait or buy before the value skyrockets on both. I think they will strike now.

Looking back at the reasons for buyers not stepping up when they could have paid a lot less didn't quite justify their waiting. With the global geo political situation deteriorating there was an impudence in the majors who stayed the course in those countries. They are paying the price. Now to get assets in a safer jurisdiction they will pay a higher price and may even be excluded entirely as the social circle tightens amongst the majors who cooperate in tough times.   

Saturday, February 23, 2013

More Bad News for the Juniors

The derivatives are part of what is setting the valuations of Juniors so low. Add naked short selling to the mix and ETF's who've drawn off huge numbers of retails combines with the flight of investment from traditional backers and you get valuations below cash value.

"Another way of saying that is that because of recent financial crises, the value of junior silver exploration and development companies have plunged to such an extent that when they rebound, their present value should double or triple in value if you invest in the right junior miner.

He went on to say, “So I can go to you and say you have a chance to buy into something which only happens every 30 years, how rare it is, you might be intrigued. There doesn't seem to be any interest in that right now.” 
 
Morgan was asked whether or not increased industrial demand for silver would help drive up silver values.

His reply was that while supply and demand always drive the market, in the case of silver this was somewhat distorted by the number of available derivative products out there, but that in the end supply and demand did affect the market."


This is not going to change any time soon. The robbery of the HFT abetted by the regulators and funded by the exchanges is going to continue. The proposed changes by IIROC and others are just lip service and lies.

The figures provided by IIROC are false. The truth is that they don't know. The USA figures are more accurate. This is actually tracked in the USA.

"Data collected by IIROC suggested that high-frequency players accounted for some 42% of trading volume, a figure that is dwarfed by some markets where the activity accounts for most of the daily volume — a recent Morgan Stanley report cited by the Financial Times pegged HFT as comprising 84% of the total market volume in U.S. equity trading."

AND...

"The technology that regulators have to monitor market abuse is far, far behind the technology used by traders,” says Mr. Piron, who traveled to Canada this summer to make a sales pitch to IIROC to use his firm’s technology.

He says high-tech experts, as those who employ high-frequency trading strategies are, will be able to calibrate their tools to stay just over or just under whatever thresholds are set by regulators, dampening the intended effect of the new rules."

The truth is ugly. IIROC lies to us and does nothing about the abuses that tiny Juniors have to deal with. You need to know what lurks under the covers. Here's an example I cited in a previous post. http://www.barkerminerals.com/s/NewsReleases-Dr.-Susanne-Trimbaths-STP-Advisory-Services

A quick sum up:
Derivative pricing
ETfs
Naked Shorting
Retails burned
Brokered Finance flight
High Frequency Trading
Chart Painting (red)

All the talking heads who say the interest will return are trying to fool you. It's not going to happen. The damage has already been done and the markets will never self repair.

What is not being said is what happens to those rolled up packages that people are buying when the Jr market gets the carpet pulled. All the big miners depend on the Jrs. If they evaporate who will bear the risk? The ETFs will be the first to collapse. Eventually the big guys will feel the heat.

Take copper as an example. They are already saying there will be some volatility to the supply side. They expect a shortage. With 90% of the explorers being wiped out where will the new supply come from? Given the current resources we can expect about 7-8 years of supply before the world wakes up to the urgency of the supply collapse.

Still, no one will invest in the explorers. There might not even be a market. I expect that without arrests and gargantuan fines that the TSX-V will not survive more than 5 years.  Within the next year all that will remain are the machines. With no retail to thieve from those traders will not have a reason to exist in the Jr space. I equate investing here like dipping your toe in a pool of Piranhas. Once you've lost a toe you'll never try that again. It is becoming common knowledge that this is the case. Witness, NO RECOVERY.

Your exchanges are to blame. Yes, they are just beginning to realize that an end is coming and so the news engine is being ramped up to try to convince people that they are all trying to do something. It's all lies! You can tell that IIROC and the others are lying because they blame. In addition, they claim they can't keep up with the technology. What a load of crap! They make the rules and as long as they are behind what's going on they and they alone are responsible.

I expect the cries of foul to increase as the end nears. Once the trading is near 100% machine and there's no one left to rob the market will suddenly go dark. Watch for the milestones. You'll soon see Jr after Jr go belly up. There will be a whole lot of consolidation of claims and a whole lot of noise from angry investors.

Last week 40 of the stocks I watch were hit by mini run offs. Those are the traditional backers trying to sneak out the door before the public knows about it. BMO hit HPY with a machine driven run on Thursday followed by more through anon on Friday.

I expect a big increase in floor and ceiling trading in the coming months as the market implodes. That's actually a good sign if it's happening to a stock you own. These guys have already picked their winners and plan to ride them out the door. When that crop is gone there will be nothing left.

The more noise you hear about what they are doing to change the market, to make a level playing field, blah blah blah, the more you need to focus on your getaway plan.

The stocks I'm focusing on are about as defensive as you can get. They have exit plans. They will still suffer the abuses such as F&C capping and NSS but they have specific values on exit. Protect yourself and come out swinging. Notice that Ernesto bought BHR? You need patrons to survive. Also, why did thqat billionaire come to roost there? Food for thought.

Sunday, February 17, 2013

Copper Fox Joint Venture Creates Value

Not many people are thinking about Copper Fox becoming a new company under a JV agreement. This is obviously what Teck and Copper Fox are heading towards. The first thing we look at is the beneficial tax incentives and what that can do for the new firm. Of course, an underlying rule is that both entities will want to be able to buy/sell their interests with the best tax advantage they can have. The structures also needs to allow for capital partners with a tax advantage. This is especially true when a First Nations group is involved. (no tax).

The JV will bring borrowing power. Not that CUU needs it, they have a billionaire patron. Instead, going forward, the JV will make the deal marketable.

Teck and CUU will have to haggle out who does what and is responsible for what. They will also need to agree on the launch. A number of structure considerations will have been ironed out as shareholders need to be rolled in. The new face will be Teck, CUU and a billionaire.

"Despite the simplicity of the general concept explained above, the negotiation of joint venture agreements in the international mining industry can sometimes be surprisingly difficult due to the differing perspectives and motivations of juniors and majors. This article seeks to briefly describe and explain some of the main tension points between juniors and majors which appear repeatedly in joint venture negotiations."
http://www.mccarthy.ca/article_detail.aspx?id=5975

"A junior’s concern is often even more pronounced in relation to the joint funding phase."

In the case of CUU we see that they are on equal footing because of their patron. However, there can be a perception that the insider(s) is holding too much of the float. In some cases this is not received well. I should say in the past this over concentration worried retail share holders. In today's financial environment this is becoming a requirement. In past articles and other stuff you've probably read online there is the wide expectation that a massive weeding out will occur amongst the Jrs.

"Generally, a major will also worry that its junior partner may use any veto power as leverage to force a buy-out of the junior by the major or to achieve some other objective not originally bargained for, such as additional financial support from the major."

The Liard royalty is a hot button issue as of late. However, in discussions with CUU I've brought this up several times and my general conclusion is that they will cooperate with Teck until it hurts. The appointment to the Board of Directors was a good sign of what the two companies were planning. This is a chief negotiation position. It is leverage.

"Discussions around this general theme often focus on specific minority protections, which juniors would like to have and which majors oftentimes would sooner not grant. In particular, juniors seek minority protections (usually in the form of supermajority voting requirements, which effectively confer vetoes) in respect of such matters as:
  • disposals of project assets;
  • dividend or distribution policies;
  • project financing;
  • the granting of security interests over project assets;
  • affiliate transactions (i.e., between the project management company and other companies in the major’s corporate group);
  • mine development decisions (i.e. decisions to proceed with mine development, which are discussed under the next heading) and
  • decisions to cease or curtail commercial production once a mine is up and running."
I could add a number of specifics related to the contract between Teck and Copper Fox but I'm going to assume the reader is fully versed in the contract. If you are here for the first time this should give you an idea of what kind of items are being discussed. Due to the particulars of their contract there are a number of items in the article cited where the shoe is on the other foot!

"However, in other cases, juniors are instead more concerned that majors may fail to opt for mine development even when a favourable feasibility study exists, perhaps because the majors might prefer to dedicate capital to projects they deem more worthy."

This has been a subject of some public debate for the last six months. In this particular case the BFS just passed the bar due to a requirement that the inferred that is sitting on top of the deposit be classified as waste because it has not been adequately drilled. Some speculate this was a gamble on the part of CUU but in a past article I explained in some detail why they chose the route that led us to this point. Simply put, there are enough holes but they are historical in nature. They know it has value and even have a pretty good idea of what it's worth but they will have to do some drilling to bring it in as a resource.

"The junior may argue for a veto. However, if it is unable to negotiate a veto, the junior may instead propose that the board of directors may only make a development decision the basis of a "bankable feasibility study" and propose further that any dispute about whether a particular study is in fact a bankable feasibility study be resolved through a time-consuming referral to an expert."

This is one of the more complicated parts of the discussion. As we have seen, a number of experts have already been engaged. This is a unique case because this was done by agreement with Teck. Teck also wants the best plan because they do want to mine it. We all know about the impending copper supply shortages in part due to the decimation of the Jrs.

"Juniors often prefer to keep their options open as much as they can. They will seek contractual powers that give them leverage or exit options or that they may use to induce majors to purchase their interests."

This last item is where I think the discussions are at now. Our reluctant partner scenario has finally seemed to be shifting. Yes, the company wants out but to get the best for the share holders it's obvious that the JV route is going to be the most profitable. Once all the rights are determined and before the major capital commitments start is when CUU should sell.

It should be noted that there is a 4 year clause to production. There must be no delay in selling and I do expect this clause will be modified. The BFS gave a longer period to build so a more reasonable time line will be struck. I would not be surprised to see a "favourable conditions" clause inserted due to the impending change of government in BC. This would not deter another major from entering because both would understand the value to that.

Click this link if you want to see a template that covers a basic set up for a JV. http://www.ampla.org/modeldocuments/documents/model-documents65


Friday, February 15, 2013

Copper Fox is in Discussions With Teck

As stated in the NR, the company is in discussions with Teck. I would like to see updates on the drilling plan for Schaft Creek and Arizona while they chew the fat. I'm not alone in that wish. Yet, on various discussion boards a lot of people want nothing else to happen except a closure with Teck. I find that a curious predicament for the company.

Copper Fox has an obligation to update us on those items yet they may be reluctant due to the pressure they get from share holders. I try to tell those people that those NRs are good signs. If the negotiations were getting tough it would be reasonable for the main geo/CEO to be focused on handling objections. Getting our corporate update on time shows us that things are going smooth. We should be happy to see updates on our next lines of business.

So what are they talking about... oh to be a fly on that wall. From our outside prospective we can speculate that Teck is looking at its giant land position and considering the full scope of what it intends for the next 50 years. Yes, I said 50 years. I do not expect that to be concluded over night.

I've also recently speculated that CUU may have a partner in line already. I'm basing this on the lack of an overt statement by either company saying the BFS has been accepted and the shares transferred. The simple fact that this has not been concluded suggests that a partner is involved. This is not delayed by the 30 days the contract allows. Sure there would be bankers involved as a third party to say what the bankability entailed interest wise. But, I suspect the parties involved do not require banker money.

Teck has had ample time and a hand in the crafting of the document. They cannot doubt what they have in hand. This has been reviewed by everyone and their dogs. This one smoking gun leads me to be pretty sure that one or more interested parties are involved. The hush hush even on general questions is a good sign that this speculation is correct.

All along the directors have advised that Teck could act without warning. I suspect this was a smoke screen. A project of this size is like a herd of elephants. My first inkling of this was about two years ago. This was when the company was talking about who might be interested. Then we found out that a few specific geologist visited the hill. This would be an appropriate timeline for those companies to fully investigate the offerings. The last key piece of info was the over worked BFS. In terms of BFS's this one got worked over harder than almost every one I've studied. Elephants are not fast over long distances but they can be heard miles away.

In my last discussions with the company there was a decided lack of interest in pushing the contract lines. Yes, we could have triggered the RFoR and while that would seem to be a proper step towards selling the project clearly that could be construed by Teck as a WTF. So that won't happen. Before the verbal lock down we discussed many of the contract items. Why the 30 day clause, what would happen if Teck didn't notify re the BFS etc. In all of this the tendency was to lean towards flexibility. There was no sense of us pressuring Teck at all. I think past communications with the company in this respect may have been more as a result of the share holders than as a result of what Teck was doing. Beside, the company does have to give the impression that we can stand on our own two feet.

The discussion right now would be aimed at creating a complete understanding of the underlying contracts. Both companies would be discussing a mutually beneficial stance that would make third parties happy. If this was not going on then we would have our Liard shares already. These shares make a very important negotiation point. Their value cannot be understated. They are not just a feather in our cap. They can be used to finance the project!

In addition to the above we should also be discussing our role as a partner. Now don't jump on me just yet, I know the company has said it wants to sell and nothing else but... What's more valuable, the interest we have or a partnership with one of the largest miners in the world? Suppose you had to go to Japan to make an offering. Which one would you rather present? Clearly, the best bang for the buck is the partnership. And what would you speculate they are talking about?

We want to cement our rights in the partnership and Teck wants those royalty shares off the table. They want them absorbed into a mutual frame work. We want that too but we want the best sales package possible. I see grounds for some horse trading. Teck has an interest in sending us out to the third parties with a very good deal to offer.

A while back I was pretty sure Elmer (CEO) was given the Liard appointment to facilitate a deal. My speculations appear to be accurate. Who better than the guy who's peeked under every rock on the hill. Again, the time frames of these various items reveals an undercurrent that suggests a third party. If it was just the two companies the time lines would be a little more straight forward. There would also be much less of a cone of silence. After all, the contract belongs to the two companies so nothing would require then not to talk to us unless there was indeed a third party.

Interestingly, the perceived route is not the only one! There are in fact, more options than what you read on the surface. These must also be discussed. How do you slice a pie that's this big? What about selling royalty streams to finance the project? What if the third party is a consortium? That would make the discussions complicated. What if we want to retain an interest? Let say we want to retain the Liard shares and 10% of the deposit? This would fund exploration for years to come and Teck might want us to develop the district.

These are just some of the possibilities. There are more. It's my feeling that we want to retain an interest. We are the prover upper in this equation and the other guys are the builder uppers. I might reveal what I consider the highest probability in the near future. It's also possible that before I write about it there may be an abundance of proof.

One thing I know for sure is that the next time I call we should have a lot to discuss regarding the potential deal. (Unless we get some Az guidance or the drill program for SC).

CUU - Is the BFS Bankable?

The contract states that they have to agree in writing what economic factors are used. This agreement in writing has to be done prior to the commencement of the report. 5.5a

Did this take place? We have not been notified that this agreement was reached and so, many people believe the work has been done under 5.5b where cuu proceeds without written agreement but is then subject to the tonnage and discount clauses.

Copper Fox has met 5.5bii. So this report has been accepted at positive.

Now we split hairs. Is the report bankable? Teck has the right to deem this Not a bankable feasibility study. The contract does not split hairs over positive and bankable.

What we are waiting for is that Teck must decide what production rate it wants to proceed with. Clearly, they will not proceed with the smaller output. They are deciding whether to proceed or not to period. If Teck does not give notice then under 5.5bii the BFS is deemed positive. I do not see any other option.

So what if Teck allows the agreement to lapse without making a determination? This would mean 5.5bii is in force. It would also mean that the contract continues with all subordinate clauses intact. The next step would be Teck making an election of option for its "earn back in" or taking the royalty and walking. This could take a full 120 days.

During this time Teck has 60 days to submit a JV Option agreement. The DJVA sets out the terms embodied in the master agreement and allows for changes to the contract by agreement. The master contract sets out that the companies must make a "best efforts" effort to reach an agreement. Some people see this as jumping the gun especially where Teck has 120 days to elect what option they want for the earn back in.

This is easy to confuse. Teck will set out the same master agreement but will augment the sections regarding rights under the back in clause allowing them to expand on those. In a sense, it would tell CUU what Teck wants but it might not actually end in the election of any option.

I do not see Teck letting the election lapse. I do not see them delaying it either. The only issue I see is that we don't want to be their partner. There would be some difficulty altering the agreement as CUU needs to get the best sales tool it can have. The base line is the original agreement. Would Teck trade some details with CUU to the company's mutual benefits? Possibly. This leads me to believe they would want the 40% where they would remain the operator.

This would fund all the drilling and get them a major partner. What might Teck ask for in return for the larger stake to CUU? Liard shares would be my guess. I would also expect them to sweeten the pot to a matching value for those royalties. What I don't see happening is Teck take 20% and lets CUU run with the ball unless there is a change to the agreement. This would be possible and could be mutually beneficial. It would probably imply that a partner or two is/are already in the wings.

One thing that has not been discussed in the right light is Teck's First Right of Refusal. Suppose CUU submitted an offer to Teck to buy it out. Teck would have to respond and it does appear that they would only have the reasonable time to respond based off the time specified in the offer and not governed by and other part of the contract. In short, the contract doesn't specify when and what limitations such an exercise would have. Typically, an offer specifies a validity time frame. So assume it's 30 days. What happens if Teck refuses?

This is where the fun begins. CUU could offer the project with the full terms of the agreement up for sale. This would be a great question for the management. Why has this not been done? It would seem better to have the option to sell not subject to the FRoR. I expect management will tell us that they wanted as much time as they could get so as to advance the project further thus creating more value. Still, could this not be done to increase the options available?

Well, we just got our corporate update so it's time to study the numbers and see what's new. Perhaps something can be gleaned from the language or the numbers. Until then.

Friday, February 8, 2013

USD Shock But No Awe


Anyone wondering why the USA is drilling up oil like crazy? Oil is the only currency they have left. 

I couldn't help myself. I had to repost this. 24HG might be biased but its authors are usually bang on. If you don't already subscribe I suggest that you do.

SHOCK YEAR 2013
So the Jackass call is that 2013 will see the US Dollar finally isolated and put in a position for rejection. It might not suffer a sudden death, but it will be corralled after being identified as the toxic agent flowing within the global financial arteries. However, the quarantine will be conducted in an extraordinarily clever fashion. Since the United States and United Kingdom, with its loyal court of followers in Western Europe, control the global banking system, the sovereign bond system, and the FOREX currency system, even the commodity markets including Gold & Silver, the solution had to be loaded with innovation if not guile. The alternative to the US Dollar as a solution had to be formulated and planned as a counter-attack, but done so outside the oversized pockets of strength where the Anglo bankers ply their trade and controls. As many trade partners have been public about their objectives, when two parties come together to conduct trade, no rational reason can dictate that the US Dollar should be used as a vehicle to settle trade, when both parties are located halfway across the globe. The New York and London bankster crowd cannot dictate Gold's new role, when their vaulted gold supplies are being vacated to points in Asia, when their vault contents are demanded in official accounts for return, when their past gold shipments have been contaminated with tungsten. These banksters are being outed as criminals.

Thursday, February 7, 2013

Altius Earns A Royalty

Does the chart justify the opportunity? As we all saw, the price fell before Alderon released their BFS. There's no reason for the price drop. If the BFS was junk Altius lost next to nothing. This was pretty much a pure gain for them but the sp was driven down! Is this naked shorting? See: http://www.barkerminerals.com/s/NewsReleases.asp-Naked Short Study

Looking across the spectrum of my watch list makes me wonder if the entire Jr market has been a victim of these devious actions. What naked shorting does is it inflates the legally set number of shares for a brief period then reduces it to what was prescribed by the company. The exchanges know this is being done and have done nothing except to pay the responsible parties for doing it.

The effect of the naked short is to drive the price down by selling fake shares. These are shares sold for less and not actually bough back. There's zero risk! Retail can drive the price up and it will just get walked down again. Sounds crazy? Read the report cited above. This is a fact.

Wednesday, February 6, 2013

More CUU Details

As seen in the NRs, the bottom gets better. In my last post I showed why.


Initially, the most plausible cut-offs for appropriate grade shells were thought to be 
0.20 CuEq% for Paramount and 0.25 CuEq% for Liard.  If a 0.20 CuEq% cut-off was chosen for Liard, the deposit would have been overly extended with vague 
boundaries only driven by the existence of data.  This suggests that the bottom of the deposit has not been defined by drilling, and that the mineralization is still open at depth.  Additionally, the 0.25 CuEq% cut-off grade shells have plausible envelopes that may relate to the alteration and mineralization patterns.  For these reasons, cutoff grade shells of 0.25 CuEq% were used in the resource estimation.



A top-cut or “cap” of 1.8% was chosen for copper.  Out of 25,398 samples with assays, 39 are greater than 1.8% copper, or 0.122% of the sample population. Figure 14.11 depicts the characteristics of the total copper grade distribution within the Paramount and Liard Zones combined.  Note the lognormal deviation of the highgrade samples around the 1.8% copper position.


It's worth noting the new data vs the old samplings. See figure 14.11 in the document.


Ore is stockpiled during the pre-stripping activity in the pre-production period and the first six years of production.  The majority of the pre-production stockpile is fed to the mill in Year 1.  The mid- and low-grade stockpiles continue to grow peeking in Year 9 at 140 Mt. A significant portion of this ore stockpile is then used as mill feed in years 10 to 12 while stripping down to ore in Phase 3N.  The ore stockpile is also used as a source of mill feed in Years 15 and 16 while stripping the final Phase 4N to ore. series of small accelerations in Phase 4N will reduce the need to use the stockpile but has not been designed into the schedule at this time.


Perhaps some more to come. As you can see, there are a number of details not reported in the NR. Instead, they gave broad ideas of the improvements to come.

Tuesday, February 5, 2013

Copper Fox CUU.v Hidden Details

Sometimes you have to read the fine print.


PR O S P E C T S
The high-resolution magnetic and Quantec Titan surveys, discussed later in Section 9.0, identified a number of significant structural features typical of a porphyry copper district within the Property area.  These include the Discovery, ES, and GK Zones of copper mineralization, and the Mike chargeability anomaly.  The Discovery Zone, located roughly 2.5 km northwest of the centre of the Paramount Zone was drill tested by 2011CF422 and confirmed the presence of mineralization.  The Mike Zone is situated immediately east of the deposit, over the ridge of Mount LaCasse.  The ES Zone is located approximately 3 km north of the Paramount Zone and has an extent of about 1,100 m long by 300 m wide.  The 32 samples collected from this zone averaged 0.87% copper and 0.31 g/t gold.  The GK Zone is located approximately 3 km north of the ES Zone and has an extent of least 1,700 m long by 250 m wide.  The 17 grab and chip samples collected from the GK Zone averaged 1.24% copper, 16 g/t silver and 0.07 g/t gold.  The locations of these anomalies are shown in Figure 9.3.


Primary results from Phase II are summarized in Gharibi and Faucher (2010):
The eastern part of the survey grid displayed a high resistivity background 
containing an elevated conductivity feature with resistivity of ~1500 Ωm in a ~N‐S 
orientation.  This anomaly displays an eastwards dipping trend that extends to 
great depth of more than 1000 m.  The conductive anomalous body displays a 
resistivity of ~500 Ωm at this depth and constitutes the easternmost part of the 
survey grid.  The western and northern parts of the survey grid display the most 
conductive materials with resistivity as low as 500 Ωm.  A large conductive body in 
the westernmost part correlates with Hickman batholith.  The shallow conductive 
zones resolved in the western part construct an elongated conductive body with a 
~NNW‐SSE trend.  The elevated conductive features in this area associate with 
outcrop of Hickman rocks and volcanic rocks in the Main Zone and Paramount 
Zones.  The West Breccia Zone is distinct in this area with slightly higher resistivity 
of ~2000 Ωm.  The southern part of the survey grid generally displays resistive materials with resistivity of a few thousand of Ωm.  This zone partially associates 
with Andesitic Volcanic rocks in this area.  The chargeability models generally 
display a very low chargeability in the eastern part of the grid.  In the western part 
of the grid the chargeability cross‐sections display elevated chargeability in an 
area associated with Main, West Breccia, and Paramount Zones.  The southern 
portion of the western part of the grid illustrates a highly chargeable subsurface that extend beyond the survey grid.  The two southernmost lines (L800S and L400S) surveyed in the phase II of the Schaft Creek project revealed a large and highly chargeable area.  A chargeable anomaly is resolved in the central part of these lines at a depth of ~100m with a chargeability of more than 40 mrads.  The anomaly appears to extend to depths greater than 400 m.  The northernmost lines (L2000N and L2400N) surveyed in the phase II display a slightly elevated 
chargeable feature in the central part of the line.  The anomaly shows a maximum 
chargeability of ~20 mrads in a ~N‐S orientation.  This chargeable zone is the 
northern extension of the chargeable anomalies resolved in the central part of this 
area.  A total of 16 potential targets with different priority levels have been 
resolved along the survey lines surveyed in phase II of the Schaft Creek project.  
The potential targets are prioritized as High, Moderate, or Low, and their 
intermediate ranges based on the category of the chargeability and conductivity of 
the anomalies as well as the size.




A total of 31 potential targets with different priority levels have been resolved along the survey lines surveyed in phase III of the Schaft Creek project


More to come...


Monday, February 4, 2013

Copper Fox Teck Decision in 30 Days?

BFS submitted
Teck's review to be completed by April
Financing period begins at the end of April
Long lead ordering to begin in June

Given that there are other things that require work the stated timelines indicate that the project is more advanced than is known. Part of the contract stipulates a JV has to be formed should Teck execute one of their back in options. The contract does stipulate 60 days after the BFS. However, it has been noted that the Liard royalty shares have not been transferred. This is a very important component to us.

Interestingly, the Economic Analysis was complete October 15, 2012! It is one of the last components of a BFS for obvious reasons. We also know Teck downloaded the database. This would have given them 4 months to come up with their own internal review.

As you read the document you will notice that a number of the items this author speculated about are true. At depth in certain locations we are seeing a big increase in the copper content. These specific locations are producing the mineral mix I said they would and if that continues to hold true this is going to be one hell of a deposit for decades to come.

A singular point to note. This deposit comes under 1 permit. One permit to rule them all as it were. That's a cost and time saver in was that are hard to understand for the layperson.

I can see why the negotiations have taken this long. The bare bones NR announcing a barely acceptable BFS pales in comparison to what's really there. I think CUU want's to drill. Ya, I know they keep saying they want to sell but I think we have a tougher negotiation without the assays. It's true that Teck has enough evidence to support a high price but you know my opinions on valuation.

Someone who shall not be named recently told me that Teck was buying us out and preparing to shelve the operation. They said price was a sticking point or this would already be a done deal. Once Teck owns it they can shelve it if the political scene is not suitable. The key is that they have to own it first.

If the political scene turns ugly and a deal is not struck then Teck has an uphill battle with Copper Fox. It's widely expected the NDP will take control and they will tax a number of mines out of business plus they intend to use environmental reviews to shut projects down. A quick survey of the headlines reveals what will come if they win. Considering that it's almost for certain this is coming I expect a deal will be struck shortly. Teck will have to fight for its portion. They will also have to take the political risk that comes with it too. Walking is not an option.

Sunday, February 3, 2013

Agora Hubs delete posts about NDP and Capex

There are hub leaders on agoracom who are clearly NDP supporters and they don't want you to read this.

There's a hub here that processes his own complaints. I take from the comments on my post that I should show what happened to capex's under the NDP?
What, did you think mining left BC just because of the park expansion? Really.
You are provoking me into detailing a case that you don't want to hear. You can delete this but I can just blog it and you won't be able to deny people the right to read facts.
The expanding regulation of economic activity, in health and safety, labour markets, and countless other sectors, is increasingly drawing the attention of economists, policymakers, and concerned citizens. The reason for this increasing attention is that regulations represent a cost to both individuals and businesses. Although there are many important areas affected by regulation, including transit, energy, and the operation of Crown Corporations, this study covers two of the more important areas of regulatory activity: labour and natural resources, specifically, forestry.
BC's Attempt at Reform
The NDP government of British Columbia announced a review of regulations in its 1998/99 budget. The Business Task Force on Regulatory Impact was formed and some areas of regulation are under review. The task force's mandate is to recommend ways to reduce the cost of doing business in British Columbia by streamlining regulations and eliminating red tape as well as devising institutional processes to prevent unnecessary regulation. The streamlining initiative, particularly, indicates that the provincial government has apparently taken the need for regulatory reform seriously.
In addition to creating the task force, the provincial government also passed the Regulatory Impact Statement Act (RISA) in 1999. Under RISA, government ministries and agencies must scrutinize proposed regulation based on an OECD checklist. Over time, RISA should lead to better and more carefully considered regulatory decisions. In addition, spurred by the task force, reviews of several existing areas of provincial regulation are now under way. Unfortunately, recent changes to labour laws indicate a weak commitment to these principles as most were ignored.
History shows us that exactly the opposite occured. Please notice the spike in regulation. Did you think that was free? No cost?
Regulatory Figure 2: Regulatory Complexity (1975-1998)
Regulatory Figure 3: Cost of Regulation in British Columbia for Select Years (Real 1993-94 Dollars)

Post script. They have not deleted it yet because they are reading it here and don't want to be shown to be complete idiots. Instead the post was cited and a warning was issued but they didn't give an explanation. As a hub leader I can read the complaints too. Gutless cowards. Provoke me to cite facts and then have a tantrum about it. Clearly NDP supporters. Typical NDP behavior too.

Friday, February 1, 2013

BC Elections Worries Big Business

We all know what the NDP stand for and what they did to the Province during their last reigns of terror. Er, ah I mean when they were in power last. But while I have the tar and brush out a little history is in order: contributor-columns/column-kinsella-bc-ndp-getting-back-into-power/

It's not just the NDP. As our columnist points out the politicos have been hopping all over this dog like fleas for decades. You all know that if a clown puts on a bigger red nose suddenly it's not the same clown! So a dirt bag Socred thief and a cover-up-memo-back-dating-casino-license scoundrel are what makes up the representation for a good chunk of the people of BC. Oh, if you are wondering why the Socreds are scumbags just do some googling: "was exacerbated by Vander Zalm's eccentricity, and the constant scandals that plagued his government."  Remember the student strikes?

What's really disgusting: In the news recently: "gas prices jump 5 cents over night for no apparent reason". Shocking to see the mainstream media stop making up excuses for the rape and plunder that the common folk have to deal with every day. So no more excuses now it's just a blatant in your face.

Now we turn to the comments of Teck Cominco's CEO now just known as Teck   "We need a stable, competitive investment climate in order to have the confidence to explore for, develop, and commit the major investments needed to move these projects forward," Lindsay said. "I'm just going to say that one more time, given that we have an election coming up: we need a stable, competitive investment climate in order to commit the major investments needed to move our projects forward."

If that isn't a shot over the bow I don't know what is. What I do know is that under the Liberals we the people are screwed and big business with thrive. Under the NDP we the little people are screwed and select big business will thrive. Under either party we are screwed and in the long range the whole province is screwed.

It's time for a change and I don't mean Conservative. Nooo nooo noooo. What the people need to do is compare all 4 parties platforms side by side to see who stands for what. Then discount the three parties who are controlled by special interests and vote for the remaining unfettered platform. The problem as I've stated before is that the people are largely too stupid and far too lazy to do anything that even remotely resembles self preservation.

More on this as we approach the election here.

The New Abnormal

With many Jr companies finding there's no bottom dilutions of an abstract nature will become the new norm. What used to be a warning sign will become an acceptable standard. Where companies used to grow their share pools to a couple hundred million to complete a project we will now see that become a billion.

Like one person said of deficits, we are now using numbers that rightly belong to astrophysics. From millions to billions to trillions. Soon we'll be measuring shares in AU's or parsecs. But this should not come as a shock. Look at deficits. They have inflated the money supply in to the realm of funny money once the ledger domain of cartoons and theoretical mathematicians.

So just what is this going to do to valuations you ask? Currently, we advise hanging on to companies that are banked in the old money system. If they have cash from the old system they will survive the transition period. If they do not have cash they must venture into the new system and most will fail. Our only way to pick new projects will be done using every method we currently use minus the money equations. We will have to translate between the old and the new.

I see this as the realm of the computer only. Like chess, the human machine hybrid will dominate until the machine shapes the market entirely to its own purpose. Humans will slowly fade into the background as the landscape changes to a trading ground only. At this point we will begin using equations from quantum mechanics. Our humans senses cannot bridge the gap from the quantum to the Newtonian. There is a barrier there where our senses just simply break down. This too is becoming true of trading with shares held for milliseconds and ruled by Failure to Deliver.

In nature, subatomic particles are strapped to order by the filter of our three dimensions. This is also true of investing in shares of a company in the landscape of mining. But our problem is primarily the speed with which the trading occurs. Just like the atomic transition barrier you can't be sure what shares will end up where. But unlike nature, this scheme is by design! It's rules can change and in fact, they have been changed to screw you, the retail. And who is responsible for that? You are. Just like in the political arena, if you don't speak out then they do what they want and not what you want.

As the fabric of the ethereal investo universe unravels, the minds behind the screen are beginning to realize that Skynet has indeed taken over. They have begun to realize that they alone are responsible for the destruction of the human market force. With that comes the responsibility of feeding the machines. For without fresh meat the machines can only feed on themselves until there is one super dominant machine left standing. In the race to build the super chess program these same competitions play out every year. They usually end up with one machine being leaps and bounds above 99% of all others. So to is this true of algo traders.

In the investo universe, there are less and less human combatants willing to enter the battle field for in the investo universe the blood is real. In chess, a beaten machine feels no remorse over the loss and gets no pleasure out of its wins. But with humans, once scorned...  And so, the humans are being beaten into submission. What's even more disgraceful is the gods of investo universe pay the machines to fight it out but not the humans. What and ugly lopsided affair. Now that 65% of the trading has been replaced by machines (a rapidly growing number) it's pretty clear the humans are being displaced. Like chess, I predict that by the end of this year there will be only a handful of investment grandmasters who are willing to brave these waters and very quickly they will discover that the machines can't be beaten.

"It is possible to make no mistakes and still be beaten." (Guinan's advice to Data) What these brave GM's have yet to realize is that the machine never tires. In chess, the GM's quickly figured that one out. So give them this year to reach the same conclusion in investosphere.

The return of the humans. The gods recognize the loss of the humans and are striving to figure out how to entice them back into the trap set by the machines. They are trying to create a world where both can coexist but they realize the machines will just evolve to dominate the new realities they create every time. The gods of Mount Olympus understood that if the people didn't worship them that they would fade away. They eventually realized that it was the time of man and had to accept that. The gods of investosphere have yet to recon with this.

Give this year's investments time to play out and watch as the people drop off and do not return. They will gravitate to the main markets and hole up there until the machines begin to consume that world too. In the wake of their exodus there will be no Jr market left. Not even the seasoned backers of Jr mining will remain for there will be no profit to take and all money that enters the system will be lost to the machines. When this happens the gods who pay the machines will begin to feel the pressure as they themselves will not have any money to continue this lopsided affair. And like a crooked casino who's patrons have all left, they will try to attract them back. I don't see that happening.

When the gods stop paying the machines all that will be left is a cold still universe. The machines will eventually be turned off or put into sleep mode awaiting the unwary should one accidentally stray into their domain. There will be no Jr market left because they were forced to transform or die. All those that could not transform will be dead.

These are the machinations of the disaster economics doctrine. As our weather becomes more extreme companies seek to profit by it. As is above so it is below is the philosophy. They deliberately try to shape all things below in the mold of the disasters above. The Jr market is but one example. Look at agriculture and in particular farming. One only has to look at the chicken quota system here in Canada to realize what's coming. Much to my shock I discovered that most Canadian's do not know that Chicken is and has been a controlled substance in this country for a very long time. They have no idea how lopsided the rules are when it comes to small farms which were once the backbone of the world. They do not recognize the peril that comes with their destruction.

So, just like farming, investors will have to create their own world. Small farmers created a network of farming designed to be hidden and designed to exclude the evils that are represented by Monsatan et al. So to will investors also have to strive to keep the machines out. They will have to create a new investo universe and appoint new gods who will stand guard over the humans. These gods may have to do battle with the old gods but with the support of the humans they should be able to win. The only question left is how long will all this take?