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Supatcha Resources (OTCBB: SAEI)
Supatcha Analyzing Recent Market Activity – December 6, 2010
Wow, on volume of over 35 million shares Supatcha went from
.69 back to as low as
.14 in just 5 trading days!
Nodoubt it would have been nice to ride this roller coaster to the top,but let’s not forget that there are just as many currently pukingtheir guts out on this trade. Remember, pigs get slaughtered. [Zurbo]
Crowflight Minerals (TSX: CML)
Crowflight Closes Private Placement, Completes Board Re-Structuring and Announces Management Changes – December 6, 2010
It is looking increasingly likely that Crowflight will declare bankruptcy.
Three years ago Crowflight was projecting $50-$75 millionin annual operating cash flow from its Bucko Nickel Mine at $10/lbNickel. Now the company trades at a market capitalization of under $50million and mining operations have been suspended. A sober reminder thatmining is a tough business and that the economics of a project almostalways look better on paper. [Zurbo]
Goldgroup Mining (TSX: GGA; Pink Sheets: GGAZF)
Goldgroup Hits 332.86 g/t Au over 5.5 m Including 2,424.89 g/t Au over 0.75 m in New Drilling at San José de Gracia – December 7, 2010
Nodoubt these are head-turning results but the question is thespottiness of the high grade gold in the breccia vein structures — havethey perhaps located an ore shoot with continuous bonanza gradesamounting to significant tonnage? Even with this question unanswered,the share price did not react as strongly as I would have thought. Myguess is there is uncertainty about the ability to follow through withmore of the same type of results. Of course it probably also doesn’thelp that a slew of newsletter writers didn’t immediately pump the newsto their flocks as they sometimes tend to do. In any case, the bigprice driver for Goldgroup in my opinion would be to advance one ormore of the projects to the brink of development as a potential100,000/oz. per year mine. They do appear to have several good chancesof doing that even if much work still remains. Furthermore, since theshares haven’t leveraged the recent rise in gold as much as some othercompanies (they were trading near this level in May), there could besome price follow through in the near term even if not due to morebonanza drill results like this one. [Silverax]
Victoria Gold (TSX: VIT; Pink Sheets: VITFF)
Victoria Gold Provides Update on Cove Upper Zone Resource Estimate – December 9, 2010
An extremely disappointing update from Victoria. In late November we updated subscribers on the situation as follows:
Therewas a transcribing error related to the grade of 4 of the 15historical holes used to calculate the upper zone resource at Cove.Some analysts were confused at why Victoria couldn’t just plug thecorrect data into the resource model since they have the correcthistorical data (remember, it was just a transcribing error), but wecan understand that this might not be so simple if after adjusting forthe errors it turns out that grades are much less consistentthroughout the upper zone and due to limited drill data such things asthe cut-off grade would have to be revisited. Remember, this is avery recent development (less than 2 days old), so if nothing elseVictoria’s fast response with a press release and CC is impressive ifnot a bit premature (they were unable to answer several questions toour satisfaction).
Okay, so back to the potential impact. Let’sassume the transcribing error involved moving a decimal place in those4 of 15 holes. That might reduce the resource by 30%, or about100,000 ounces. Worst case scenario Victoria is unable to report theresource at all, but even then we think the 30 cent drop is wayoverdone. After all we’re talking about an inferred resourcethat would have to be more closely drilled in the long run anyways ifit were to be incorporated into a mine plan. That doesn’t mean we’reon the verge of buying, but we’re much more interested here than wewere at $1.50 (in fact, we were selling out our remaining position atthat level, see: http://www.metalaugmentor.com/eforum/?p=5155). No hard time lines were given, but expected to take less than months to resolve this issue.
Itis unfortunate that Victoria has taken such a beating, but thesethings happen. In fact, we recently uncovered an arguably moresubstantial error in a technical report released by a company in themining sector. The consulting company that prepared their technicalreport acknowledged the error and sent a revised report to the company.We’re not experts and we occasionally spot errors like this. You haveto give credit to Victoria for being as open as possible about themistake. But on the other hand we’d like to see Victoria be more openabout sharing historical drill data. Perhaps if they would have beenmore open about this in the first place something like this wouldn’thave happened, or at least the general public would have had thepotential to question the resource figures. Instead the error ends upbeing spotted by a 3rd party conducting due diligence on Victoria’sassets.
It’s currently unclear what effect if any this will have on Newmont’s back-in right for 51% of the project.
Needless to say we’re happy with our call to take full profits in early November 2010 around the C$1.40 level.
Disclaimer: We may own shares in several of the companies mentioned in this analysis (Metal Augmentor subscribers know which ones), but no compensation has been received fromany of the companies mentioned. This is not investment advice;should you seek investment advice we recommend you discuss thecompany with a licensed investment advisor or broker.