Juniors see reason for optimism ahead of Vancouver resource conference (V.SIR) (V.PRB)

Peter Kennedy Peter Kennedy, Stockhouse
0 Comments| January 17, 2014


The exploration scene may not be hot as some would like.

But junior mining officials are sensing an opportunity to rekindle interest in the sector as they prepare for the Vancouver Resource Investment Conference to kick off on Sunday.

A traditional meeting ground for retail investors and small resource companies, this year’s conference coincides with the gold mining industry's first big buyout offer in almost a year -- Goldcorp Inc.’s (TSX: T.G, Stock Forum) $2.6 billion takeover bid for  Osisko Mining Corp. (TSX: T.OSK, Stock Forum) – as well as continuing interest in Fission Uranium Corp.’s (TSX: V.FCU, Stock Forum) uranium discovery in Saskatchewan.

As roughly 600 TSX Venture exchange companies are saddled with negative working capital, according to some estimates, financing remains top of mind for the vast majority of exhibitors who will be attending the two-day conference.

Because equity valuations in large parts of the sector remain so beaten down, industry officials will be keeping an eye out for private equity investors who are expected to show up at the conference in search of promising early stage exploration projects.

“These are the people that I’m hoping will stop by,’’ said David Moore, President and CEO of Serengeti Resources Inc. (TSX: V.SIR, Stock Forum), a Vancouver-based junior that saw its stock price jump 27% on Thursday in response to sampling results from a project in northwestern B.C.

This year, some of the more cash-strapped firms are eyeing a proposal by Canadian securities regulators that could make it easier for some of them to raise money for exploration.

The one that is being watched is a proposed prospectus exemption that would allow investors in TSX Venture Exchange issuers who do not qualify as “accredited” to participate in private placement financings as long as the investor owns shares in the company before the financing is announced.

A key condition is that the issuer is in full compliance with regulatory requirements and the amount invested by the unaccredited investor in a 12-month period under the exemption does not exceed $15,000.

While it is far from clear that issuers will ever be able to use the proposed exemptions, the very fact that they are out for discussions, means some of the conference attendees may, for the first time, view exploration projects from the perspective of an investor rather than as a casual observer.

“What this has the potential to do is re-stimulate the retail audience that is interested in the exploration stage companies,’’ said John Kaiser, the California-based publisher of Kaiser Research Online.

A fixture on the mining conference circuit, Kaiser is scheduled to give a speech entitled “A critical role for the retail investor” on Sunday afternoon.

What follows are a list of companies that Kaiser believes will attract attention at this year’s conference.

Kaiser says Dolly Varden Silver Corp. (TSX: V.DV, Stock Forum) and Clifton Star Resources Inc. (TSX: V.CFO, Stock Forum) are potential beneficiaries of Osisko getting bought out by Goldcorp if that were to happen.

Clifton Star is focused on properties near the Porcupine-Destor Fault in Quebec, including the Duquesne and Beattie mine properties. Dolly Varden is focused on the past-producing Dolly Varden and Torbit mines in northwest British Columbia.

Probe Mines Ltd. (TSX: V.PRB, Stock Forum) is a company that Kasier describes as “the perfect junior mining company right now.”

Probe’s flagship asset is the Borden Lake gold project in Ontario, where the company has established a resource of 4 million indicated and inferred gold ounces.

Kaiser says prospect generators like Mexico-focused Riverside Resources Inc. (TSX: V.RRI, Stock Forum) are attracting the attention of majors who are outsourcing their exploration to junior mining companies. Riverside has a strategic alliance with Kinross Gold Corp. (TSX: T.K, Stock Forum)  in eastern Mexico, and can count Sprott US Holdings Inc. Chairman Rick Rule among its shareholders.

Rule is on the roster of Sunday speakers. This year his speech is titled “You have endured the pain, position now for gain.”

Because Tasman Metals Ltd. ((TSX: V.TSM, Stock Forum) has turned itself into a critical metals aggregator, capable of feeding the appetite of majors who are interested in early stage projects, Tasman has seen its stock price jump even though the price of rare metals has softened.

Price to Thursday’s 11.2% drop to $1.42, Tasman has seen its stock price jump from around the 70 cents level in October 2013.

Virginia Mines Inc. (TSX: T.VGQ, Stock Forum) is also expected to attract attention because its key asset is a 2% royalty on Goldcorp’s Eleanore gold project in the James Bay region of Quebec.

Virginia was down 0.86% to $12.74 on Thursday, leaving a market cap of $421 million, based on 33 million shares outstanding. The 52-week range is $12.93 and $7.55.

The Vancouver Resource Investment Conference is arranged by Cambridge House International Inc.

Tags: INDUSTRIAL METALS & MINERALS GOLD SILVER

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