Have we finally hit bottom?

4/25/2012 5:50:45 PM | Interview with David Macdonald

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"I'm bullish even though the despair out there is still thick right now. I think that we might have hit bottom."

David Macdonald, Senior vice-president, Chairman-corporate finance with Burgeonvest Bick Securities Ltd. in Toronto.

Focus: Small and mid-sized mining and energy companies.

Can you give us your perspective on what is happening in the market right now?

It's a dismal environment for junior resource companies, making it tough for them to raise financing. It's probably as bad as I've ever seen it. Even major names like Potash Corp. of Saskatchewan (TSX: T.POT, Stock Forum) (NYSE POT, Stock Forum), Encana Corp. (TSX: T.ECA, Stock Forum) (NYSE: ECA, Stock Forum) and Suncor Energy Inc. (TSX: T.SU, Stock Forum) (NYSE: SU, Stock Forum) are way down from where they were a year ago.

How do you think this will play out over the next few months?

"I'm bullish even though the despair out there is still thick right now. I think that we might have hit bottom."

Can you give us some names that you are following?

Copper Fox Metals Inc. (TSX: V.CUU, Stock Forum). The Calgary based company is focused on developing the Schaft Creek porphyry copper-gold-molybdenum silver project in northwestern British Columbia under an option agreement with Teck Resources Ltd. (TSX: T.TCK.A, Stock Forum) (TSX: T.TCK.B, Stock Forum) and (NYSE: TCK, Stock Forum). Copper Fox is hoping to have a feasibility study completed by mid-to-late summer of 2012.
Trading at $1.04 this week, Copper Fox has a market cap of $403.5 million, based on 387.9 million shares outstanding. The 52-week range is $2.54 and 86 cents.

Khalkos Exploration Inc. (TSX: V.KAS, Stock Forum). The company is focused on exploring for base metal deposits in northern Quebec. Khalkos acquired base metal and lithium properties which were transferred from parent Sirios Resources Inc. (TSX: V.SOI, Stock Forum) in exchange for shares. As a result, Sirios holds close to 30% of Khalkos.

Trading at 12 cents this week, Khalkos has a market cap of $2.17 million, based on 18 million shares outstanding. The 52-week range for the stock is 30 cents and 9 cents.

Sierra Madre Developments Inc. (TSX: V.SMG, Stock Forum). The company is targeting historic mining districts in Mexico's Durango Silver Belt. Sierra Madre is earning a 65% stake in its flagship Penoles property from Riverside Resources Inc. (TSX: V.RRI, Stock Forum). The property hosts a partially defined bulk tonnage target known as El Capitan.

Trading this week at 7.5 cents, Sierra Madre has a market cap of $4.7 million, based on 63.5 million shares outstanding. The 52-week range is 26 cents and 6.5 cents.

ABOUT THE AUTHOR

Interview with David Macdonald

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