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Analyzing a Junior Mineral Company News
June 17, 2009
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Dr. John-Mark StaudePresident & CEO
Canadian National Instrument 43-101This sets out standards and guidelines for reporting. It helps the investor.
The Security Commission monitors for compliance.
Professional Geologist- Engineer Certification required on technical portion of news releases.
There are three main categories on resources (Measured, Indicated, Inferred).
www.Sedar.com
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Four types of companies in Resource Sector
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Greenfields
~4 - 5 Years
Pre-Discovery
1 - 2 YearsDiscovery
2 - 3 YearsFeasibility &Permitting
2 YearsDevelopment
1 YearStart-Up
Depletion
Full ValueCompetitive High Risk
Potentially High Value Few Competitors and Lower Risk
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InstitutionalInvestingBegins
Speculative StockAhead Of Known Value Orphan
Period
SpeculatorsLeave
Value Opportunity
Time
Rela
tive V
alu
e
1.1. 2.2. 3.3. 4.4.
Value Chain
Low Probability, Long Time
T
“No one knows”
Highland Valley
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??Context- “make calls, ask questions, due diligence”
Geologic Perspective
1. Company (size, business, track record)
2. Project location, stage 3. Context, past results, context, number of holes4. Possible deposit type? 5. Length of intervals
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Deposit types are keyAssay results in news releases- need to be interpreted in the context of deposit types - (porphyry, epithermal, veins, placer, not disclosed)
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Value vs Length of Intercepts
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Source: Research Capital, 2009
IN-SITU VALUES VS LENGTH OF DRILL HOLE
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250
500
750
1000
1250
1500
1750
2000
2250
2500
0 200 400 600 800 1000
Length (Metres)
In-s
itu
val
ue
(US
$ p
er t
on
ne)
All Data Previous Highs This Weeks High
Young-Davidson (NGX)
Campo Morado (FAN)
40 Mile (FMM)
Double Eagle (NOT)
Gold Ridge (SGA)
Santa Ana (BCM)Copper Canyon (CPY)
Moly Brook (TJS) Kerr-Sulphurets (SEA)
Drill results 4 news factors
1. Grades vs. Lengths vs. Depths
High grades are good but a) is there volume?, is it deep?, how long of intervals?
Gross size of system – giants are very rare, trades are on results and grades
2. Grades that investors should look for when reviewing stocks:1% Cu, 2% Ni, 1 g/t Gold, PGM, 300 g/t Ag, 0.1% Mo, 0.1% U308Think about the $ value of the rock. Current metal prices times
the concentration.
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3. Drilling assays –Core has more data, earlier stages and deposit type
4. Spacing of drilling results – see if there is a map on the website, where are the new holes relative to earlier results
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Drill results 4 news factors
District play – scale potential
Metallurgy
The % metal is going to be extractable
Not just the sexy assay number in the P.R.
Minerals, elements = good and bad
Analysts help at this stage and into the engineering stages
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Examples- on the news the stock jumps
Appleton (AEX), Ventana (VEN), Keegan (KGN), Serengeti (SIR),
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Conclusions
1. Size potential, location, value-meters2. Graphics – maps and sections on website to
see where the numbers are coming from3. Deposit types 4. Stage of project (leverage, risk)5. Ask experts, due diligence
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“John-Mark’s Geotutorial Video”
YouTube Video- released July 1st, 2009- field geology- covers sampling methods- better understand press releases
Email [email protected] to Alex Mason about questions you’d like to see covered from the resource investor or geologic field perspective?
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