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Minera Andes (TSX: MAI; OTCBB: MNEAF)
Hochschild Mining
(LSE: HOC; Pink Sheets: HCHDF)
Resource Life Up at San Jose
- October 19, 2010

Hochschild helps bring some additional context to the recent announcementby Minera Andes, telling us that the resource at San Jose has increasedabout 50% as a result of these vein discoveries. Assuming all resourcecategories can be converted into reserves, this increases the mine lifeat San Jose from roughly 8.4 years to 12.5 years as at September 30,2010. The extended mine life gives us a base case valuation target forMinera Andes of about C$2.00 per share based on San Jose alone, i.e.zero value given to the early stage Los Azules copper developmentproject. [Zurbo]

Extorre Gold Mines (TSX: XG; Pink Sheets: EXGMF)
Results for Cerro Moro Preliminary Economic Assessment
- October 19, 2010

When estimated undiscounted, pre-tax cash flow from a company’s flagship development project at currentgold and silver prices comes in at barely more than the current marketcapitalization of the company it is probably fair to say that thecompany in question is overvalued. Cerro Moro does have explorationupside, but a project like Minera Andes’ San Jose arguably has moreexploration upside and is already in production at a similar scale(factoring in for Minera Andes’ 49% interest). Since both companiestrade at a similar market capitalization, Minera Andes seems like thesmarter choice. And considering that there seem to be even better valuesout there than Minera Andes, we see no compelling reason to own Extorreat this time. [Zurbo]

Greystar Resources (TSX: GSL; Pink Sheets: GYSLF)
Greystar Announces Angostura Environmental Impact Study Public Hearing Date
- October 18, 2010

It is unclear what the time line will befor a decision to be made following the public hearing on November 21,2010 to consider Greystar’s Angostura Project Environmental ImpactStudy, but hopefully we’ll have a better idea after the hearing takesplace. More than likely trading in Greystar is likely to be relativelysubdued over the next month barring any negative surprises as a resultof the informational hearings to be held in early November. Followingthe formal hearing volatility is likely to pick up as speculators moveinto the stock in anticipation of a decision being made. Soon we expectto publish a more detailed analysis of Greystar for subscribers. [Zurbo]

Argonaut Gold (TSX: AR; Pink Sheets: ARNGF)
Pediment Gold
Friendly Business Combination
- October 19, 2010

It was no secret that Argonaut was on theprowl for M&A targets, and as luck would have it a few days afterplugging in both Argonaut and Pediment into our comparative valuationmodel they announced a friendly business combination.

Our calculated fair value for bothArgonaut and Pediment happens to comes in at about C$4.40 per share.Considering that the calculated base case value for Pediment gives onlyminimal value to La Colorada (since it has not yet been the subject ofan economic study) this transaction should be highly accretive toArgonaut even when only considering the more advanced San Antonioproject. [Zurbo]

Callinan Mines (TSX-V: CAA; Pink Sheets: CCNMF)
Hudbay Minerals
(TSX: HBM; Pink Sheets: HBMFF)
Callinan to Appeal Order of the Manitoba Court of Queen’s Bench
- October 20, 2010

It was a volatile ride for Callinantoday, with shares trading as high as C$2.52 before closing near the lowat C$2.16. There has always been a lot of talk about the potentialbehind the suit with Hudbay, and this decision by the Manitoba court ofQueens Bench does not bode well for the likelihood of any sort of backpayments or windfall payments being made in the near future. More delaysto the process. Business as usual.

Frankly we’re not sure how strong of acase Callinan has against Hudbay, but slow as the process may be itshould prove interesting to watch the audit unfold. Meanwhile Callinan’s6.67% net profits interest in Hudbay’s 777 mine is currently producingcash flow of over $4 million per quarter, such that with or without anysettlement this royalty already more than justifies the current shareprice at current metal prices. For this shareholders can be thankful.Look for our upcoming report on royalty companies to see how Callinan’scurrent valuation compares to a group of its peers. [Zurbo]

Hathor Exploration (TSX-V: HAT: Pink Sheets: HTHXF)
Hathor’sRoughrider East Delivers Best Hole to Date, Intersecting 63.5 m of 7.75% U3O8, including a 17.5 m interval of 24.3 % U3O8, with assays as highas 87.2 % U3O8 - October 21, 2010

The results of this hole were roughly inline with our expectation that the preliminary scintillometer readings —released earlier — would not adequately foretell the eventual U3O8assays for at least one of the drill holes from the summer 2010 programat Roughrider. That said, this hole is an infill and does not representan extension of the mineralized system at Roughrider East, so itsimportance is mainly in helping to better define the uranium-bearingenvelope for resource modeling. In my estimate, it does that quiteadequately: possibly adding as much as 2.5 million pounds of U3O8inferred resources to the initial Roughrider East estimate of 7.5million to 15 million pounds. Combined with the main Roughrider zonewhere the sophomore resource estimate will probably come in around 15million pounds, Hathor’s Midwest-Northeast project is reaching acritical stage as it knocks on the elite 30 million pound threshold.Combined with Fission’s (TSX-V: FIS; Pink Sheets: FSSIF) recentdiscoveries to the west in the J-Zone where an additional 5-10 millionpounds have been delineated so far, we are definitely looking at aworld-class uranium deposit.

Hathor’s share price has rallied nicelyin the past few weeks in sympathy with rising uranium prices and theuranium sector in general while the start of drilling at Russell Lakeplus anticipation of new resource numbers at Roughrider and RoughriderEast are keeping the market interested. This is a welcome change fromthe summer lows around C$1.40 and indeed we are inclined to square oursizeable position a bit on this recent strength. Our expectation remainsfor a C$3.50 to C$5.00 price level to be achieved in the medium termalthough at this pace we could get there sooner than later. More forsubscribers. [Silverax]

Oro Gold (TSX-V: OGR; Pink Sheets: OGRSF)
Oro Gold Completes 1200-Metre Drill Campaign at Cimarron Gold Project in Rosario Mining District, Mexico - October 20, 2010

Oro Gold is merging with sister OroSilver (no longer trading as of today) in a clawback that reunites twosmall but decent flagship gold-silver projects under a single umbrella —El Compas in Zacatecas and Trinidad in Sinaloa, Mexico. This was a casewhere a spinout did not return significant value for shareholders — OroSilver had been spun off Oro Gold in 2007. In any case, Trinidad ishosted on the same regional trend as Cimarron (which itself appears tobe on the same local trend as the historic Rosario Mine) where Oro Goldhas just completed 1,200 meters of shallow RC drilling. No doubt some ofthis drilling will return decent grades when the assays are reported ina few weeks due to being set up near historic gold-bearing holes butinterestingly the company is also stating that they expect to haveexpanded the known mineralized zone with several stepout holes. At theend of the day, we are not likely to see barnburner results from thisimpromptu drilling campaign but owing to the near-surface andlikely-oxidized nature of the gold, it does represent a validexploration target. We are in the process of evaluating the speculativeopportunities presented by the combined entity and will report ouropinion shortly. [Silverax]

Grayd Resource Corp. (TSX-V: GYD)
Completion of PEA on La India Gold Project
- October 21, 2010

The economics of La India are impressive,and the share price of Grayd has largely reflected this reality.Although we calculate fair value at the current gold price to be aboutC$2.50 per share, since many other gold developers show similar upsideto their base case targets we’re most comfortable on the sidelines fornow. [Zurbo]

Capstone Mining (TSX: CS; Pink Sheets: CSFFF)
Significant Results in 200m Step-out Drilling on Mala Noche Footwall Zone, Cozamin Mine
- October 20, 2010

Using the term “significant” was not anexaggeration. The new zone being defined at Cozamin has the potential togreatly improve the economics of Capstone’s flagship mining operation.The company isn’t cheap, and remains vulnerable to a decline in copperprices. But if hole U235 is proves to be the tip of a much higher gradeiceberg of mineralization at depth, then valuations will need to berevised upwards. [Zurbo]

Virginia Energy Resources (TSX-V: VAE; Pink Sheets: VAERF)
Preliminary Economic Assessment Indicated Outstanding Profitability Potential for the Coles Hill Uranium Project in Virginia
- October 18, 2010

The use of “outstanding” here is a bitdeceptive considering that Coles Hill’s economics are actually quitemarginal at the current spot price for uranium. To be fair suchvulnerability/leverage is typical among uranium developers, where thesuccess of a project is heavily reliant upon a higher uranium price. Butbe careful not to get carried away here. While the net present valuefigures given the in press release look very attractive when reported ona 100% basis, investors should be aware that Virginia Energy only holdsabout a 30% interest in the project. Oh, and don’t forget to factor infor the moratorium on uranium mining in Virginia? [Zurbo]

Minera Andes (TSX: MAI; OTCBB: MNEAF)
Hochschild Mining
(LSE: HOC; Pink Sheets: HCHDF)
Production Results from the San Jose Mine for Q3 2010
- October 20, 2010

Silver and gold production increased for the quarter, along with recoveries.



As you can see from the above charts,recoveries are improving and greatly exceeding expectations. Meanwhileproduction is growing but still not quite up to the levels assumed inthe 2009 technical report. [Zurbo]

Antares Minerals (TSX-V: ANM; Pink Sheets: ANMFF)
First Quantum Minerals (TSX: FQM; Pink Sheets: FQVLF)
First Quantum Minerals to Acquire Antares Minerals in Cash and Share Transaction Valued at Approximately C$460 Million - October 18, 2010

It was a great day for shareholders ofAntares and it is hard to imagine anyone is complaining about theproposed arrangement with First Quantum. However, we would note that atthe current copper price Antares’ Haquira project has a pre-tax netpresent value north of $5 billion using an 8% discount rate, whichimplies fair value of over C$30 per share. This is precisely what wemean when we say that it is not unusual for copper companies in thisenvironment, especially developers, to trade at significant discounts totheir calculated base case valuation. While extreme, this discountisn’t uncalled for in the case of Haquira. After all, the capital costof Haquira is estimated to be over $2 billion, and since it is a highercost operation the project fails to break even with copper prices ofless than $2/lb (i.e. there is significant price risk). Another way tolook at this arrangement is to determine what copper price results in abase case value for Antares of roughly $6 per share. This happens to beabout $2.10/lb copper. The only other copper developer currently in ourvaluation model that boasts a base case valuation at $2.10/lb copperthat is greater than 100% its current share price is Coro Mining (TSX:COP; Pink Sheets: CROJF). Coro would probably be one of our top picks ifit were not for the particular risks associated with its project. It isnow in the midst of some important public hearings on its flagship SanJorge project. It needs these to go smoothly, and then it needs apositive decision from the Ministry of the Environment. If that happens,the share price should do very well. We’ll be monitoring the situationclosely to take advantage of any low risk entry opportunities. Our subscribers will be the first to know should we officially enter a position. [Zurbo]

Jaguar Mining (NYSE: JAG; TSX: JAG)
Jaguar Mining Declares Caete Operation Commercial; Provides Q3 2010 Operations Overview
- October 20, 2010

Another disappointing quarter from Jaguar, with increasing cash costs and lower than expected production. What else is new?



For a moment there we thought Jaguarmight find a spot in our speculative gold and silver portfolio, butresults like this continue to repel us. Even assuming the September 2010production targets are attainable and cash costs fall back in line withearlier expectations, our base case valuation target for the company isunder $10. That’s not enough to interest us at this point, especiallysince a considerable amount of our valuation relies upon the successfuldevelopment of the Gurupi project in 2013. That said, Jaguar is veryleveraged to higher gold prices due to its high cash cost of operations,and this might open up some compelling options speculationopportunities if gold looks like it is about to move much higher.[Zurbo]

Disclaimer:  We 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.