Relevance of the Andina takeover to VIT & LVN
The proposed takeover of Andina in Chile (TSX: V.ADM, Stock Forum; 78 cents) by mining giant Hochschild carries particular relevance to our speculation of Victoria Gold (TSX: V.VIT, Stock Forum; 27 cents) and Levon (TSX: T.LVN, Stock Forum; 36 cents).
ADM was sitting near a five-year low and even considering the fact that they had more than six million ounces of (low grade) gold, few had any interest in them. The resource had well known metallurgy challenges and the economics were questionable (the company was also running out of money).
The takeover comes only three weeks after we saw Argonaut Gold buying Prodigy Gold. Prodigy's 6.2 million Canadian ounces were valued at approx. $45 per ounce and this was similar in size and grade to Victoria Gold, which we have followed for months in the 20-cent range. VIT has over $35 million in the bank but its gold is only valued in the $10/oz range.
Because Hochschild is willing to buy one of the low grade black sheep of the sector it proves there is significant value in VIT’s Yukon project (especially when we take the Prodigy takeover into consideration). I am hoping others recognize this value in Q1/13.
The Andina takeover also shines a light on one of our other cash rich, low grade (very large) silver projects - Levon (Mexico).
We have been following LVN since the summer in the mid 30-cent range but I am convinced (especially now) that we just need patience with this company. They have $55 million in the bank worth 28 cents per share and ignoring the other metals, Levon is sitting on a lower grade 310 million ounce silver deposit. With 200 million shares outstanding the market currently values that resource at only $20 million, or six cents per silver ounce – this is one of the lowest silver valuations in the junior sector.
310 million ounces silver
900,000 ounces gold
5.3 billion pounds zinc
2.9 billion pounds lead
Read more at http://www.stockhouse.com/opinion/ticker-trax/nov/30/three-cash-rich-copper,-gold---silver-ideas-for-20.aspx#9CYqS1P1AQzJhQJL.99