Wednesday, July 31, 2013

Equedia Exposes Warehousing Scams

I wrote a comment in response to the Equedia article, see below.

http://www.equedia.com/get-out-before-its-too-late-commodities-manipulation-revealed/#comment-4522

Oil-igopoly!
Most of our investments are being manipulated. It should come as no surprise that warehousing was a three card monty game. A shell game. An outright deception.
It’s up to us to guess where the manipulations will come in next. We can profit by contrarian investing against just about anything GS says.
It’s true that all of this is done under the watchful eye of the regulators and governments and this is why nothing is done until after the fact. They are allowed to do this because it is propping up a broke government.
There would be more reaction if more of the public invested. More people would be tuned into the realities and governments would be held accountable. This is why there are rules like “accredited investors”.
We the people are directly responsible for the behavior of the governments. Nothing was done about the police killing a Polish visitor on camera at the Vancouver International Air Port. Nothing will be done about the 9 bullets in the guy plus tasering the corpse in Toronto. There will be a bit of feet stamping but the din will subside and the government will get back to business as usual.
This list of wrong doing in North America is staggering when presented in totality and yet it can be passed under the noses of the people when presented one item at a time. I do not expect this nature to change. All we, the real investors, can do is wait for the next snafu.
The guy who wrote the book about how the barbarians eventually take down the elite in a repeated cycle was correct in his ideology. I wrote about how science has advanced so fast that to many it seems like magic. We all know what happened to witches in the dark ages. Are we their yet? For now it seems the armies of the elite have the upper hand. But, for how long.
It is becoming common knowledge that our politicos run a revolving door system. Just look at our own Senate. Google BC’s political scandals and read the wikki page. That’s always good for a laugh. Yet, has there been a change? Nope. They keep voting the same clowns in over and over. I guess they just like it that way.
The new trend that’s emerging is the remake of the people in the image of the corporations. I believe firmly that the destruction of our way of life is to make way for this rebirth. The politicos through big business and with them intend to remake our lives into a ultra fascism dream world. If it fails the politicos will blame the corporations and they in turn will point fingers at the governments. We will be holding the empty bag yet again.

Wednesday, July 17, 2013

Big news Coming for Happy Creek -HPY.v

Drilling has begun! Mark the calender if you're a trader. Given the shallow deposit occurrence the results will come faster. Many of us have waited patiently for some time for this program. In my last report I detailed some of the cost cutting measures but now we have it. 1200 meters gives us a lot of holes. With 12-15 holes we are going to get a very clear idea of the economics.

When the data infills the deposit we may very likely see the Koreans come back to the table with a real offer in hand. I calculate an IRR at 55%. Any IRR over 15% is good. But a small fast operation at @55 or better is outstanding.

For Comparison:
Tungsten Mining NL, (ASX:TGN) a company exploring for tungsten in Western Australia, on Thursday released the results of a scoping study showing the economic viability of its Kilba project. 
The study values the project, an open-cut mine slated to produce 154,000 MTU of WO3 a year for 7 years, with a net present value of $36 million with an internal rate of return of 34 percent. The $56 million capital expenditures outlay is expected to be paid back within the first year of operation.
Happy Creek:
Drilling on the Fox property is planned to consist of approximately 1,200 metres in 12 to 15 holes. Most holes are planned to be relatively short in length due to the near-surface position and near-horizontal orientation of the main mineralized zone, however a number of holes will test for additional mineralized horizons. Mapping between and beyond the known zones will be performed to provide a wider geological perspective of the area.

Drill highlights from 2011 and 2012 at the RC prospect include 7.35 metres of 1.22% tungsten (W03), 19.4 metres of 0.82% tungsten, 11.0 metres of 0.80% tungsten, 20.0 metres of 0.63% tungsten and 24.7 metres of 0.68% tungsten. One kilometer to the south at the BN prospect, F12-27 returned three intervals: 4.1 metres of 1.78% tungsten, 14.8 metres of 4.0% tungsten and 24.0 metres of 0.79% tungsten including 5.8 metres of 2.01% tungsten (Refer to Press Release dated November 19, 2012). Geological mapping and results from drilling in three areas indicate the main calc silicate/skarn unit hosting variable concentrations of tungsten is around 25-40 metres in thickness and approximately two kilometres by over one km in dimension. Results from F12-27 suggest multiple (stacked) mineralized zones occur.

In case you forgot or missed this:

A positive feature of the mineralized skarn zone is its potential to host very high grades: results include 0.40 metres of 9.60% tungsten, 3.64% zinc and 19.20 g/t indium (DDH F11-07). A grade of 0.7% tungsten contains 7.0 kg W03 per tonne of rock, and tungsten APT prices have recently risen to around $40/kg W03. Indium is a rare metal used in liquid crystal and touch screens and prices have also risen to over US$550/kg ($5.50/gram).

Happy Creek is bigger. The known mineralization confined to just the drill holes is $66M. If you expand this out on the asumption that all the data is correct it balloons to over $300M. I'm taking some liberties here but I'm confident about F12-27. Put a 50m by 50m square around it and go a bit deeper...

Highlights of Fox Property Tungsten Drill Results
  HoleFromToIntervalW03W03
ProspectHoleAngle(m)(m)(m)%kg/tonne
RCF11-02-905.710.855.150.919.1
RCF11-07-5514.319.04.71.0210.0
RCF11-08-908.2520.6512.40.747.4
RCF12-01-8514.032.419.40.828.2
RCF12-02-5513.025.012.00.212.1
RCF12-07-9013.016.03.01.1811.8
RCF12-09-9015.026.011.00.808.0
RCF12-10-5517.019.08.00.464.6
RCF12-11-9027.041.014.00.686.8
RCF12-13-9019.022.43.40.646.4
RCF12-17-9020.040.020.00.636.3
RCF12-18-5518.042.724.70.686.8
RCF12-19-5535.040.05.00.323.2
BKF12-20-9028.033.05.00.686.8
BNF12-25-5579.082.03.10.343.4
BNF12-26-483.06.03.01.9319.3
BNF12-27-801.96.04.101.7817.8
BNF12-27-8083.298.014.84.0440.4
BNF12-27-80136.0160.024.00.797.9
BNincludes-80138.0143.85.82.0120.1
BNF12-28-9083.186.02.91.2012.0
BNF12-29-6056.058.12.100.525.2

Copper Fox - Teck

The very long awaited answer is finally here. The question seems to have changed a bit. No, no buyout. Instead, we got a JV that seemed to take way too long. I think there were a few things that held it up. Voting rights for the Liard shares for one. The other biggie, how much was CUU going to give up to get a deal? You can't put $400 million into drilling! So this was going to be one of the big questions that had to be answered.

In past talks with Elmer he said they could build a road or use it for other developments etc. What appears to have been decided was to give it to Teck no strings attached. Well, perhaps one small string, a free ride to production. But wait, didn't they already have that? Well, no, not exactly.
From the Sedar filing:

4. ACQUISITION OF INTEREST, FORMATION OF A JOINT VENTURE 
4.1 Acquisition of Interest. 

(a) Teck hereby covenants to Copper Fox that: 
  (i) concurrently with the entering into of this Agreement by the Parties, 
Teck will make a cash payment of $20 million to Copper Fox; 
  (ii) subject to §4.2(b), Teck will make a cash payment of $20 million to 
Copper Fox within three Business Days of the Production Decision; 
and 
  (iii) subject to §4.2(b), Teck will make a cash payment of $20 million to Copper Fox within three Business Days of the Completion Date. 

(b) Teck hereby acquires, in consideration of its commitment to make 
payments as set out in §4.1(a), an unconditional 75% Direct Holding in the Property which, together with the share of the Indirect Holding it will retain under this Agreement, comprise an unconditional 75% Interest. 

4.2 Further Payments. 

(a) Teck hereby further covenants to Copper Fox that Teck will:
  (i) be responsible for and contribute 100% of Pre-Production Costs, 
without dilution to Copper Fox, until Teck has paid an aggregate of 
$60 million of Pre-Production Costs; and 
  (ii) contribute further funds, by way of loan to Copper Fox, as provided 
in §10.4(b). 

(b) In the event that Pre-Production Costs exceed $60 million, Teck will fund Copper Fox’s pro rata share, in accordance with its Interest, of such PreProduction Costs with such funding: 
  (i) firstly, applied to reduce the amount required to be paid under 
§4.1(a)(iii), and the amount of the reduction shall be deemed paid 
by Copper Fox; 
  (ii) secondly, if the amount of the payment under §4.1(a)(iii) is reduced 
to zero, applied to reduce the amount of the payment required 
under §4.1(a)(ii), and the amount of the reduction shall be deemed 
paid by Copper Fox; and (iii) thirdly, if the amounts of the payments under §4.1(a) (iii) and §4.1(a)(ii) are reduced to zero, paid by loan as provided in §10.4(b).

You can see some differences. For one, there's no claw back until $60 million is spent and that's going to be pretty hard to do. A revised Resource Estimate is coming and an updated FS is in order but the bulk of these two items are already done so they are just in need of updates. Between Teck and the CUU money it total $120 million.
In addition, there's further protection that any over runs would be credited to Copper Fox by way of loan. NO DILUTION!
Unincorporated JVs are, relatively speaking, the easiest to set up.  They are creatures of common law and equity and the rights of the JV parties will be wholly housed within the JV agreement (as opposed to some reliance on corporate law under an incorporated JV).  An unincorporated JV structure is generally also an effective flow-through vehicle for tax losses and revenues.
 Another thing that didn't quit go unnoticed... If the project economics don't look so goo then why did Teck form the JV and why are they now the explorer? The drill program is going to extend the North and the geo drilling will improve our understanding of what's under the mountain. Elmer, in the conference call said, should our understanding of the deposit bear out the extra width will allow the pit to go deeper. Yes, simple geometry. The drills ended in improving copper grades. We need to go deeper.
Does the new deal improve the odds of a buyer? Yes. From FRoR to RoFO. A right of first offer is related to a right of first refusal, but the former is considered to favor the seller while the latter is considered to favor the rights holder. Assets that have a right of first refusal attached to them can be more difficult to sell because potential buyers may not want to go to the trouble of negotiating a deal that must be offered to another party first.  
Overall, the path is becoming clear. CUU has the best operator money can buy ($360M worth). Teck will focus on their prime agenda and that's the main deposit and the economics. They have the CUU EBI money and can go nuts. CUU has a no obligation agreement and royalties that under the worst case per the FS comes in around $100M or so. 
Highlights from the conference call:
We'll be trying to move the project forward no matter what. The 2013 drilling should generate a 2014 drilling plan. 
CUU hasn't thought out in detail they're going to do with that money. We will be spending some money on AZ. 
No offer was made under the First Right to Offer clause. Given the climate today, it's not in the best interests of shareholders to make an offer. My own prediction is that 2015 will be the return to normal. The new exchange is going to help that in a big way.
Drilling will take about four months this summer. We have drilled into Dec. in the past.
Are lots of people showing interest? I think there is a distinct possibility that now we can be approached by companies. The way we're set up now with the interest in the JV solidified we would be of interest to other parties. Just watch and see as the USD changes. Just that alone is enough to spark interest.
All future expenditures of Schaft Creek will be paid by Teck.
Liard shares translate to about $100M per year. We also hold 2% Liard interest outside the JV. Our portion is not subject to the voting clause!
The FS has three very significant upside components to it. 1. considerable amount of inferred resources that is currently treated as waste. 2. Can we expand the paramount to the east, would probably result in pit change that allows greater depth  3. We have other remaining resources that could be upgraded to a resource that would add considerable value to SC.
My conclusions. This will become a mine. It's true that the whole world is suffering because of what a handful of bankers did. It's true that economics will have to improve before many mines turn dirt. I have given Spring 2014 as a date for real meaningful turn around. By 2015 the sp should be really performing. This gives less than 2 years to buy cheap. I'm still going to be wary of a snafu caused by hfts before the new exchange comes online. But, I think this deposit is safe because of the results obtained over the last 3 years in particular.
  
Vancouver, British Columbia -- July 16, 2013 -- Copper Fox Metals Inc. ("Copper Fox") (TSX-V: CUU) today announced the formation of a joint venture (the "Schaft Creek Joint Venture") with Teck Resources Limited ("Teck") to further explore and develop the Schaft Creek project located in northwestern British Columbia, Canada. 

"This partnership is a key milestone for Copper Fox Metals and reflects the spirit of the 2002 Option Agreement with Teck," says Elmer Stewart, President and CEO of Copper Fox. "We are pleased to have Teck as our partner and look forward to the next phase of our relationship. The terms of the Schaft Creek Joint Venture Agreement reflect the advanced stage of the project, and with Teck's expertise in the development and operation of large mining projects and strong commitment to responsible mining we are confident the Schaft Creek project will continue to benefit the Tahltan people, local communities and shareholders.

This agreement gives Copper Fox immediate access to funds and a viable partner to continue the work we have done on the Schaft Creek property without diluting Copper Fox's 25% interest in the Schaft Creek Joint Venture. With Teck's agreement to fund future costs, we have reduced the uncertainty around Copper Fox's future expenditures for the project."

Dale Andres, Senior Vice President, Copper for Teck, commented "This agreement represents an important milestone for our relationship with Copper Fox. We are pleased with the progress they have made and believe they will continue to be a valuable partner going forward."

Terms of the Agreement
  • The agreement replaces and supersedes the 2002 option and joint venture agreement between Teck and Copper Fox in connection with Schaft Creek.
  • Teck will hold a 75% interest and Copper Fox will hold 25% in the Schaft Creek Joint Venture.
  • Teck will be the operator of the Schaft Creek Joint Venture.
  • Teck will pay a total of $60 million in three direct cash payments to Copper Fox: $20 million upon signing the Schaft Creek Joint Venture Agreement, $20 million upon a Production Decision, and $20 million upon the completion of the mine facility.
  • In addition, Teck will fund 100% of costs incurred prior to a production decision up to $60 million; Copper Fox's pro rata share of any pre-production costs in excess of $60 million will be funded by Teck and the direct cash payments payable to Copper Fox will be reduced by an equivalent amount, and Teck will fund any additional costs incurred prior to a production decision, if required, by way of loan to Copper Fox to the extent of its pro rata share, without dilution to Copper Fox's 25% joint venture interest.
  • On signing Teck will reimburse $3.93 million for Schaft Creek mineral tenure acquisition costs and costs related to Stewart Bulk Terminal land reservation agreement incurred by Copper Fox.
  • Management of the Joint Venture will be made up of two representatives from Teck and Copper Fox with voting proportional to equity interests.
  • Teck has agreed to use all reasonable commercial efforts to arrange project equity and debt financing for project capital costs of constructing a mining operation upon a production decision being made; Teck has agreed to fund Copper Fox's pro rata share of project capital costs by way of loan, if requested by Copper Fox, without dilution to Copper Fox's 25% joint venture interest.
Teck and Copper Fox's Interest in the Liard Shares

The shares representing the 78% interest in Liard Copper Mines Limited ("Liard") that are included in the Schaft Creek Joint Venture will be held in the name of Teck for the benefit of Copper Fox (25%) and Teck (75%). Liard holds a 30% net profits interest in the Schaft Creek property.

Summer 2013 Exploration Program

The Schaft Creek Joint Venture intends to approve a Phase I, 2013 summer program aimed at increasing the value of the Schaft Creek project. The program will consist of approximately 10,000 metres of diamond drilling and geotechnical studies. The objective of the drill program is to test the extension to the east of the mineralization in the Paramount Zone and to collect additional geotechnical information for ongoing pit slope stability studies. Drilling is expected to begin before the end of July 2013.

BC Hydro Agreement

In March 2013, Copper Fox entered into a Facilities Study Agreement with the British Columbia Hydro and Power Authority ("BC Hydro") to assess the electrical and equipment requirements to connect the Schaft Creek project to the forthcoming BC Hydro Bob Quinn electrical substation.

Wednesday, July 3, 2013

Has The TSX Gone Crazy?

Oh regulators - - - EXPLAIN THIS!

Notice the price drop on a cross trade of ZERO shares??????
0.55 0  TSXV13:43:52
Macquarie Private Wealth Inc.
P.O. Box 779
Suite 3200,
181 Bay Street,
Toronto, ON M5J 2T3
(416) 864-3600
046

Macquarie Private Wealth Inc.
P.O. Box 779
Suite 3200,
181 Bay Street,
Toronto, ON M5J 2T3
(416) 864-3600
046
0.57500TSXV13:38:27


TD Securities Inc.
P.O. Box 1, TD Tower
12th Floor,
66 Wellington Street West
Toronto, ON
M5K 1A2
(416) 982-8222
007

Merrill Lynch Canada Inc.
Suite 400
181 Bay Street
Toronto, ON
M5J 2V8
(416) 369-7400
039

Happy Creek Issues Shares to get the work done

What do you do when everything is in the toilet until 2014? Well, you issue shares to get the work done. They are also focusing on the star of their holdings, the Fox property. Tungsten holds its value and rightly so. It's on the critical metals list and many of our most important uses are what drives advancement.

Folks were asking what they would do to raise money. Now we know. They issued 750k worth of options. Cheap by many standards. They have trimmed management including accepting a resignation from their money man and cut non-essential work. They are trading off road side geology on other properties for drilling. We noticed that only one person resigned. That means the others are staying on despite wages not being paid in full in cash. This is real commitment. $11.5 k is not a huge amount but this is a small company and the money will go far.

Why focus on tungsten? They can build a mine for about $35 million. Tungsten goes direct to market so there's straight profit. All it will take to get the money to build is some infill drilling and a willingness to part with some equity. This is not like gold where miners are losing money at today's prices or just treading water. Tungsten allows HPY to hold a greater share in an equity deal. The other factor is the very small amount of money needed. In mining this is a dime operation.

I've bought what I can for now. Thank you to those who sold. I plan to hold this for a few years if need be. It's so cheap there's zero need to sell it. I will be accumulating more. Nothing major but I suspect the reward by 2015 will be well worth it.

June 27, 2013 - Vancouver, British Columbia - Happy Creek Minerals Ltd. (TSXV: HPY) (the "Company") is providing an update on its plans for 2013.

The Company is making final preparations to mobilize for a drill program on the 100% owned Fox tungsten property. Drilling is expected to commence around July 15th. To date, drilling has returned top-tier tungsten grade and thickness that are at or in a near-surface setting. Results include 19.4 metres of 0.82% W03, 11.0 metres of 0.80%W03, 20.0 metres of 0.63%W03, 24.7 metres of 0.68% W03, 14.8 metres of 4.0% W03, and 24.0 metres of 0.79%W03 (Refer to Press Release dated November 19, 2012). Drilling is planned to continue testing the extent and grade of the mineralized zone with a view to outlining an initial resource. The Fox is thought to be a unique and attractive new discovery in the global tungsten sector. Tungsten is regarded as a strategic and critical metal for industrial countries and prices have recently climbed to over $35/kg W03. A grade of 0.7% W03 contains 7.0kg W03 per tonne of rock.

To assist in expediting the drilling program, certain short term measures have been negotiated with management, employees, consultants and other service providers. Starting July 1st overhead costs of approximately $11,500 per month are being deferred to help allow the Company to advance the Fox property with drilling.

In connection with these adjustments, and subject to TSX Exchange acceptance, the Company has granted 750,000 Options of the Company to management, employees, and consultants to the Company and exercisable into common shares of the Company at a price of $0.20 for a period of two years and shall vest in accordance with the policies of the Exchange and the company's stock option plan