Vital Metals (VML:ASX) - drilling results uninspiring

Share |

Its early days but the drilling results from Vital Metals (VML.ASX) do not strike me as very good. There are a few commercial intersections, but early drilling suggests mostly low-level grades. Not impressed, so I shall not be re-entering this stock without a substantial drop. They do not have such a large exploration lease, which means their prospects for finding something commercial are lower.

You can read the report yourself at their website.

Japan Foreclosed Guide Profiting from the Gold Boom Mining Fundamentals eBook

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Crescent Mining (CRE.ASX) - a basket case???

Share |

Ouch! Just lost a few grand trading Crescent Gold. The problem with this stock is the inadequate disclosure and regulation. Already fired off a letter to ASX. The company came out with a statement that the company had repaid all debt. It should have been suspended pending a disclosure of its finances.

It is so stupid not having a separation of regulation from the market maker. Who benefits from such a situation....investment bankers like Deutsche Bank with 'inside information'. i.e. Chinese walls made of Japanese paper. Yep. The same paper I have had the pleasure of falling through after a night out drinking, and returning to an ryoukan (Japanese guest house).

Japan Foreclosed Guide Profiting from the Gold Boom Mining Fundamentals eBook

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Crescent Mining (CRE.ASX) - now debt free

Share |

Today is a good day to re-enter the market for several stocks I believe. MIL Resources (MGK.ASX) has bedded down its issue, and so I bought 200,000 stock this morning at 2.2c. These funds will allow the company to explore its various PNG gold deposits.

The other entry I very much like at 5c-5.2c is Crescent Gold (CRE.ASX). The company has just raised $48mil to cancel debt. The company has since seen its gold mining operations flooded. This was of course bad news, a short-medium term cost, but this did not stop the share price from falling from 11c to 5c. With 1 billion stock on issue, the company is now capitalised at $54mil. This is with an arrangement with Barrick Gold to treat gold ore through the plant, a 2mil oz resource, plus resource upside. Most importantly, this company is in the position to produce gold, and has just raised $48mil at 11c. I remain a little suspicious as to the value of the resource...as indicated by previous post. Residual ores have a wonderful tradition of being 'non-mineable'.

The fact that yesterday (10th March 2011) Crescent Gold paid off all of its debts. What is the significance of this? For me, it means the company is well positioned to refinance operations, and shareholders can be comforted by the prospect of a recovery in the share price. The downside has been reduced. Most importantly, the share price has fallen to a 2-year low, so its a very important 'support level'. So, there should be a good trade here when equity market confidence resumes.

Japan Foreclosed Guide Profiting from the Gold Boom Mining Fundamentals eBook

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Crescent Mining (CRE.ASX) - mining suspended

Share |

In the last week Crescent Gold (CRE.ASX) has been collapsing, and one is inclined to question the tangibility of this mining operation. A number of salient issues arise:

1. The company had an operating mine producing 110,000 oz per annum of gold

2. The company completed a $31mil rights issue; actually they were trying to raise $45mil

3. Deutsche Bank have been dumping the stock - having previously held over 50%.

4. The board is full of analysts, financiers and accountants. Where are the geologists and mining engineers. Looks like a recipe for failure.

I am left wondering whether news of expanded output from the Summit project area, is the same scam performed by Matrix Metals, which proposed an expanded 60% increase in output, but when broke instead. No clarification from management...it makes people wonder. The prospectiveness of a 2km exploration target seems moot in that context.

The gold price is at record highs...but I am always suspicious when I see some 20-odd resources in a resource inventory. The implication is that they are going to develop mine plans for all these 'pithy' little resources, and make a go of it. There is something to be said for virgin gold provinces, as opposed to the scraps from old mines which closed down. But of course, this is a gold boom. I keep telling people....but it seems more people lose money than gain in such times...at least in these small companies where regulators could not be bothered to tread.

We'll see. It gives one confidence to see that the company raised $31mil at 11c, and the stock in now 8.1-8.4c, and capitalised at $85mil. They ought to be able to make $50mil a year at their output, with the prospect of gold price upside. That's all I can garner from the limited info available.

Japan Foreclosed Guide Profiting from the Gold Boom Mining Fundamentals eBook

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

A few issues of late - MGK, UCL, AZS

Share |

There are a number of my favourite stocks having rights issues at the moment. There are a number of things to note about these issues:

1. MIL Resources (MGK.ASX) - The company remains good value in the medium to long term. They are having an issue which is diluting of existing shareholders in two respects - it was at a low price, and its a sizeable issue. Understand however that the issue price at a huge discount, effectively makes it a combination of a rights issue and a bonus issue. The implication is that the stock you bought into at 3c is going to be worth 2.7c to you after considering the issue if you hold it until the record date, which I think is the 16th March 2011. These are renounceable rights, so they will trade on the market. The rights are underwritten, which also means there will be some pressure upon the stock after the rights issue, as many underwriters, and this seems like a small group who are likely to have limited financing resources, will dump the stock. The underwriter can be expected to support the stock above 2.8c (technical support) until the record date, and perhaps as long as the rights still trade. Given the size of the issue, I am expecting a lot of volatility, so I have been a seller. In the last 2 weeks I was a little suspicious of an issue, as there was support, but all off-screen buyers picking off sellers. I'm uncertain about the prospect of future results. I'm inclined to think it will be several months before we see results from more trenching, and they will need to build roads and drill pads for drilling...which has probably been contingent upon these funds. There is of course still the prospect of a JV partner. Maybe prospective JV partners are waiting until some holes have been drilled.

2. Union Resources (UCL.ASX) - This company is having an issue as well - at 1.2c. I just bought back in at 1.3c, though my particular interest is the gold stocks, I like this stock, as the fertiliser project has a lot of appeal. I think this stock will hold 1.2-1.3c.

3. Azure Mining (AZS.ASX) - They are having an issue - this will be a temporary setback. Its a minor capital raising, and I do expect they will recover when results from their main project are released. I think the extra capital is needed for the manganese project, which looks good. This stock has good support in the low 9c.

Vital Metals are not having an issue to my knowledge, though one can expect drilling results soon. The stock has sunk back in the meantime from 18c to 13c today. This I think will be a support level.

P.S. Check dates indicated as I didn't.

Japan Foreclosed Guide Profiting from the Gold Boom Mining Fundamentals eBook

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com