Via Stockhouse.com... Brent Cook is one of the grand old newsletter writers of the North American resource scene, a name long respected by investors and sought after by junior miners. Resource guru Eric Coffin is also well respected and a giant on the geo scene.
So when the get together for a chat about all things mining, and veteran geo/promoter Rob McLeod, CEO of IDM Mining (TSX:IDM, Forum), just happens to be about, the resulting conversation goes very deep – literally.
That was the scene when they all stopped by Tommy Humphreys’ burgeoning CEO.CA chat site Thursday morning, and the questions from investors came hot and fast. The resulting outpouring of information anout dozens of companies just seemed too good to not repost.
So we’ve collated some of their best insights below (and edited for clarity), covering everything from locals on the rise to where in the world they’d be looking for new plays, to the weirdness of the Australian scene, and more.
Enjoy, do your own due diligence, and don’t forget to subscribe to Cook’s Exploration Insights newsletter, and http://chat.ceo.ca, for more insights.
On mining in general:
COOK: Long term, the mining industry is not finding enough new economic deposits to replace what is being mined. Gold, copper, zinc, more than most, and FE, AL, U – we’ve got too much. We are in the setup phase that sucks but, really, the few good deposits and explorers will do exceptionally well.
Here is my Sprott presentation that covers it:
On uranium:
COOK: Nexgen (TSXV:NXE, Forum) has made a real discovery and deserves credit. I have not bought it because the depth requires UG mining. Doable but there is a lot more involved than with Fission Uranium's (TSXV:FCU, Forum) deposit that can be mined OP. Big cost and permuting benefits. If I were say Cameco (TSX:CCO, Forum), for instance, that would be a big factor.
I understand the differences between sed hosted and basement hosted at NXE but, for my money, I would rather own the PLS deposit.
COFFIN: Our mutual friend Wallster thinks permitting a new mill will be the biggest challenge in the Athabasca. That's why he's playing around on the eastern side of the basin. Don't have a read on whether he is too pessimistic on that though, it's not going to be quick or easy for sure.
COOK: Now that FCU merged w/ Denison (TSX:DML, Forum), it means FCU is not going to be so adversely affected by the capex the upcoming PEA will show. I think was overall a good move. Now it all depends on uranium price.
On where we should be looking next:
COOK: If I could go anywhere to explore.. Iran. The Tethyan belt, including Turkey, holds immense potential.
COFFIN: Serbia is good, and mining friendly - I'm told Macedonia is too.
COOK: Serbia is great. Reservoir Minerals (TSXV:RMC, Forum) owns the best ground and the Timok discovery being advanced by Freeport (NYSE:FCX, Forum) is world class.
On Turkey:
COOK: I was in Turkey a few months ago and did visit Royal Roads (TSXV:RYR, Forum), as well as Mariana and Pilot. Royal is run by a good geo, found Lydian's (TSX:LYD, Forum) deposit in Armenia. Have some good prospects, probably low grade. Moving into some HG veins in Colombia.
COFFIN: I like a couple of RYR's projects - wish he had better option agreements though.
COOK: Agree w/ Eric on RYR's deals. Tough in this market to raise money on and short timeline as I recall. We will see what the Colombian project looks like. Tim Coughlin has a good eye.
COFFIN: I haven't talked to the Mariana Resources (TSX:MRY, Forum) guys in a while, Brent - you have any sense of what sort of budget the JV partner is going to throw at them? With the resource they just published I assume the Lydia guys plan to put the pedal to the metal (and they can afford it)..
COOK: As I understand it, Rio Tinto (NYSE:RIO, Forum) controls the Bo market then a bit out of Turkey. I looked for it a while in the Mojave. But I suspect ultimately you have to compete w/ Rio. Too hard for me.
COFFIN: Specialty stuff is always tricky. You've got to be able to beat the price of the dominant supplier. That has always held me back on Niocorp (TSXV:NB, Forum). The Brazilians can bury that deposit any time they want.
COOK: Eric makes a good point on specialty minerals etc. When I first started w/ Rick Rule I would get all hot and bothered about some cool mineral that could do some bitchin' thing. But again too hard to figure the marketing and they all have to meet exact specs and the guys that use them have no interest in funding a mine or exploration. Their job is to source the product that meets their specs. Again, too hard.
COFFIN: Dave and I used to get approached by guys with high purity limestone who wanted to get into the filler markets because the price per tonne was so high and it looked great in a presentation. We used to do work for the world's biggest producers and always had to sit the promoter down and explain that 1) A lot of the technology to make those nifty fillers was patented by the dominant producer and 2) Dominant producer was over 100 years old, run by a bunch of Swiss guys and, yes, they would sell at a loss in the market of any new producer until they went bankrupt. That stuff is hardball.
COOK: Mariana resource was close to my rough estimate. It is a good deposit in a company w/ >750mil shares, 30% and will need to fund w/ mega Turkish company spending. Great deposit that will make money.
COFFIN: Mariana has to get credit for their news releases. I've rarely seen a company put so much detail in each release. Finance side of the company is weak though. That's the big issue. How much more dilution?
On Skeena Resources (TSXV:SKE, Forum):
MCLEOD: Brent; check out the soil sample results for a new zone east of the current drilling at Skeena. Up to half ounce Au in soil.
COOK: Rob, so what is this Skeena thing? High grade veins, stock work, bulk? My first look suggested a busted intrusive w/ rather irregular mineralization. I could not connect intersections but may need more time.
MCLEOD: Good question on the geology at Skeena. I looked at it with Homestake as a potential VMS; it isn't. Like most of the northwest BC gold systems, doesn't fit conventional models with a variety of styles. There are high-grade shear zones which show decent, but nuggetty continuity and broad disseminated zones, as well as veins. Similar to Sulphurettes zones at KSM, in my opinion.
On Savary Gold (TSXV:SCA, Forum):
COOK: Savary/Samara: Interesting but you should look at spacing between shears. May be a lot of waste. They need to provide some good cross sections.
On Pure Gold Mining (TSXV:PGM, Forum):
COOK: Not really on Pure Gold. Have reviewed the info but passed.
On Ascot Resources (TSXV:AOT, Forum) / Pretium Resources (TSX:PVG, Forum):
MCLEOD: Ascot Resources is the real deal. Historically at Premier, the mine was highly profitable for multiple decades mining the spectacular grades of the recent drilling. Structurally, the ultra-high-grade have seemed complex in the modern era, but I believe their geo team has it sorted out. I used to work in the mill at Premier when I was an undergrad, and they had these historic stacks of 'curved level plans'; never seen anything like it since. High grade veins at Pretium could do something similar. Start flat, then curve vertical like a fishhook.
COOK: I suspect Brucejack makes money. I have commented on it in detail in EI. The question is, is it like Ascot where small-time miners could do really well following the HG or will taking it all work? The bigger question is, is it worth $800mil? I don't know and I suspect no one knows what is there until it is all mined. Rob care to weigh in?
MCLEOD: Risk on Pretium is they run the risk of overbuilding; unquestionably spectacular grade, but need some underground mining years under their belt to truly reconcile head grade to resource. Concern is that they want to build a 4000 tpd plant (I think), when they should start up with lower capex and indirect and scale up. Nothing wrong with a 2,000 tpd operation producing 300,000+ ounces per year... Rumour has it that PVG project financing will be announced imminently. Haven't heard where the $ is coming from. Work scheduled to commence on power line; forecast is mixed rain and snow in Stewart this weekend. September is usually 'nice' though.
COOK: I would guess all the major miners have reviewed PVG in detail. So far none have bought, that may say something. The Chinese group came in and I would guess will again. Now for those that own a $900mil gold developer, what does it take to double the share price? There have to be better options to own for a double. I think Brucejack is a deposit that we will know what's there when it is mined over a year or two. There is a philosophical split in the resource estimation world on how statistics are used vs. geology. Farquharson is old-school miners. Snowden is young computer jockeys. I tend to go w/ the rocks before stats.
MCLEOD: On rocks before stats; most majors doing the resource DD will put the stats before the rocks with their own in-house resource guys, who are typically conservative. Too much variation in what the true head grade would be to give any major a good comfort. One of the majors that does know ultra-high grade at Red Lake has passed through Stewart multiple times over the past couple of years.
COOK: Passed on TXR. Here's my take. There are 100's of juniors our there w/ something that might work, is small and one could build a case that it makes money and buy the stock. But I only need to own a few stocks, not everything that might work. So if I can own 10 solid, top tier deposits and another 10 top tier explorers, that's all I need. TXR might work, it might make a bit of money and maybe OR gets a royalty. But how much does it cost to prove it works and at what share price do they keep raising the money to prove it? Just my take.
On reporting standards in Canada, and Australia:
COOK: The reporting standards [in Canada] are fine. One just has to trust the estimator knows what they are doing. PVG is certainly an extreme example of nugget effect and maybe it cannot be resolved to the satisfaction of everyone. But high grade deposits can be modeled.
Lived in Australia for about 6 years and been back many times. The junior sector is hard to track as a lot goes down in the pubs, so we are always a day behind and their reporting standards not as good as Canada. We have owned a few, Papillon (OTO:PAPQF, Forum) the most recent, but I find them hard to follow and contact slowly dies down.
Industry insiders hit CEO.CA’s chat site on a regular basis, so if you haven’t seen it yet, go take a look. Also available via app on Apple and Android. Brent Cook’s work can be found at http://www.explorationinsights.com and Eric Coffin’s analysis is seen at Hard Rock Advisors.
--Chris Parry
http://www.twitter.com/chrisparry
FULL DISCLOSURE: TerraX Minerals is a Stockhouse Publishing marketing client.
Read more at http://www.stockhouse.com/news/newswire/2015/08/27/brent-cook-eric-coffin-and-rob-mcleod-reveal-their-thoughts-on-dozens-junior#DS0GEhc5KwFlpBWQ.99
