NorthWest Resources (NWR.ASX)

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Here is another stock that is disappointing the market. NWR has plugged from 15c to 10.5c today on the basis of its announcement today that it will need to perform more drilling of its orebody extensions to upgrade its resource. That seems like an over-reaction. The company has $9 million in cash, and the company is capitalised at just $13mil, thats putting just a value of $4mil on its idle treatment plant and 230,000oz of high grade gold that must be worth a quid at $A1000/oz. Most mines go 4-6g/t, but this one is 23g/t. They have several prospective structures. I see the delays as just a sign of the difficulties contracting mine services in the current environment. I am suspicious about this project in several respects:
1. I am accustomed to being disappointed on refurbishments of 2nd hand plants. Is it going to be a case of turning on the electricity, or does the plant require a major overhaul. It strikes me as poor disclosure that such details are not released to the market. The biggestr problem with these plants is rust if they have been using saline process water, as they are inclined to do in the desert. On that basis I am sceptical.
2. Might they have a nuggetty gold effect, where the consultants worry that they might not have as much gold as they think.

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Andrew Sheldon www.sheldonthinks.com

IMX Resources (IXR), previously Goldstream Mining (GDM.ASX)

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IXR Resources, previously called Goldstream Mining, has always has a suite of world-class assets so its surprising that it has over the last 8 years that I have known the company, they have done very little with them. Part of the problem I think has to lie with the executives, and there seems to be some recognition of that because the board has had a reshuffle in recent times. I'm not aware of the problem, but I suspect that their JV partners did not have to meet financial commitments, so they placed a low priority on their projects. There has long been a complaint about South African companies tying up resources...maybe this was a contrived arrangement to do just that, a scheme that would satisfy those wanting 'Black Empowerment'. I dont know. Performance is what matters, and they haven't delivered. In a mining boom might we expect a better board?

Well the company is being restructured as IMX Resources, and they intend to farm-out their iron ore project to a Chinese company to establish a cashflow. They intend to retain their listed investments, which are worth around $US85mil"
1. They have 39.5% stake in Uranex (UNX.ASX) - a uranium explorer
2. They have a 51% stake in Continental Nickel, a Toronto-listed company (TSX:CNI)

IXR has some 164mil shares on issue at 57c worth $93mil. The implication is that the company is trading at the value of its listed investments. The board makes the argument that these assets are worth more to shareholders in the IXR Group - clearly that is not the case since these listed securities are worth $85mil according to the latest presentation (check figures), so its great assets are worth $5-8mil. Mind you one of the stocks is vendor securities - so they can't be sold for 2 years (that would be newly listed Uranex). As you can see from the chart volatility IMX makes for great trading. I would be inclined to recommend it to investors as well at this point because of the low value places on the projects, and the fact that one is getting close to development.
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Andrew Sheldon www.sheldonthinks.com

A1 Minerals (AAM.ASX)

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A1 Minerals (AAM.ASX) would have to be one of the better buys around at current prices. Quite apart from the trading opportunity, it makes a lot of sense to sit on this one to realise the benefits of this strategic gold resource. You could be forgiven for thinking this company is slow to develop its resource - true enough - but I suggest the reason is they are attempting to lease, buy or toll treat their ore through a processing plant rather than having to finance plant construction. I think the plans to build a plant are really 'fluff' or just a backstop. There are several existing plants in the area that could process the ore, so it seems much more likely that 'a deal will be done' that will offer so much more value to shareholders. Very quickly AAM could be in production. Given that gold is going to $2400/oz by my thinking, there is no reason to hurry. This stock makes a lovely passive investment. Fortuitously the stock has fallen back to an important support as investors loose patience. The problem of course is that plant operators also see the strategic value of their plant and are likely holding out for a higher gold price. I however dont see how waiting longer is helping AAM's cause. A higher price means A1 Minerals has to pay more for a new plant, or the existing plant operators can extract more value from A1. It makes me think I should be investing in the plant owner. I think the plant owners know more about the outlook for gold than the A1 board. The company has a number of interesting exploration targets that add speculative upside to the stock. They have $5.9mil in cash, so with a market capitalisation of just $16mil, thats valuing the gold resource at roughly just $10mil, but it has a conservative 0.7mil oz x $A300/oz profit margin = $US200mil. Looks very cheap. You of course would have to discount those cashflows likely to be extracted over 5-7 years, so lets say $120mil. With a strong $A likely, I will suggest $A100mil. And there are these other projects that are at an early stage of assessment.
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Andrew Sheldon www.sheldonthinks.com

Bendigo Mining (BDG)

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There are times when you know you are just about to make some money because all the charts you look at some positive signs. Its like an alignment of the moons, something that doesn't happen enough, but it gives you the confidence to throw all your money at the market and say 'Yes'. On those occasions I can make $35-50K in a matter of a month. In actual fact these are the moments when I make 90% of my income, so you need to fight the tendency to overtrade and 'seize these moments'. Picking the right stocks is key. I am currently working on a report to help you do that.

Bendigo Mining is an emerging gold producer. Based on the nuggetty nature of its gold, it is difficult for the company to establish the veracity of its grade control system without proceeding to trial mining. This will occur from mid-2008. I dont see a great deal of price movement before then, but the stock should gain some support from a strong gold price. Currently the stock is trading at a strong technical support.
Nuggetty gold results in considerable statistical variance that can skew ore reserve calculations. The only way to ultimately determine how much gold is in the lode structures is to mine them. Historically these reefs produced an average of 10-11g/t of gold. The company has an operational gold treatment plant on-site and $58mil in cash. This places a value on the mining operation of just $110mil. Given the implied resource, this is a very low value. There is however the prospect of difficulties at the start of operations because its not the easiest operating conditions. ie. Narrow, often variable, discontinuous reef structures. See my Google Finance forum.
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Andrew Sheldon www.sheldonthinks.com

McMahon Holdings (MAH.ASX)

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McMahon Holdings is an Australian mining services provider, and as such is greatly benefiting from the strength of the resources sector. The flipside is that service providers too are having a challenge managing costs and completing projects because of labour shortages.
McMahon appear to have reached a support level at $1.30 per share. Though given the poor earnings & dividend yield of 6.2% and 2.2% respectively, might we expect them to fall back to $0.97-1.00, as its a far stronger support level. These are historical figures mind you, so you might want to wait to see the latest earnings growth figures. For more information on McMahon see Google Finance and my discussion forum. -----------------------------------------
Andrew Sheldon www.sheldonthinks.com

Alkane Exploration (ALK.ASX)

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Alkane Exploration is developing a gold mine at Tomingley in Central West NSW, and not far away in Dubbo is developing a VERY large zirconia-niobium-yttria project. The last time I looked they were still proving up the commercial viability of the process route. This deposit has some 200 years of reserves at initial mine capacity, so there is project upside, and it has very low overburden strip ratios. The stock has been trending up over the last few years, and its very volatile, so I would suggest its a stock to trade. Entry is at 30-34c. The target price is 53-55c resistance. For further info see Google Finance and my discussion forum for this stock.
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Andrew Sheldon www.sheldonthinks.com

Marengo Mining (MGO.ASX)

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Marengo Mining is a small player developing a world-class gold-copper project in Papua New Guinea. The project is not far from the Ramu Nickel project being developed by Highlands Pacific. Though if I'm not mistaken I believe poor hedging decisions forced them to sell Ramu to the Chinese. They have over a billion tonnes of ore of low grade copper & gold, but the low overburden costs should
make this a low cost mine. Both copper & gold prices are very favourable, but this is a long term project, so I would be more inclined to trade this stock, since it might not be operational for another 3 years. The stock is currently drifting towards a technical support. Gold looks like going higher (from $US905/oz), copper I suspect is close to resistance at $US3.75/lb. Anyway I like Marengo at 19c support as a trade. That capitalises the company at $US38 million.
For further information go to Google Finance or participate in my discussion forum for this stock.
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Andrew Sheldon www.sheldonthinks.com

Lepanto Consolidated Mining Corp (PSE.LC)

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Lepanto Consolidated Mining Company is a Philippines-listed gold mining company. As of Dec'06 the company had reserves of 1 million ounces of gold, though it was not profitable according to its latest financial statements by Google. Unbelievable given the gold price. I dont know much about this stock, though it has fallen to a strong support level. On technical grounds I like them, but the fundamentals look dubious. See Google Finance and my discussion forum for any news updates.
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Andrew Sheldon www.sheldonthinks.com

Apex Mining (PSE.APX)

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Apex Mining is a Philippines-listed gold miner with a project in northern Luzon. Last year a major UK-Canadian miner Crew Gold took a major stake in the company, with the intent of tripling output from 500tonnes per day of ore to 1500tpd. This is a 2 million oz resource company if I'm not mistaken, with the promise of more. The disclosure of this company, as is customary in the Philippines, is very poor, so I would pay close attention to the charts. The stock appears to have good support at $5.00, though late last year the stock fell to $4.00, so it remains to be seen if it falls back to this support. A downgrade of reserves or delays upgrading the project would surely do that in the current market. I would be a little cautious with this stock. Hold above $5.00 support. The best source of data is clearly going to be the parent company in the UK or Canada. If you would like to read more on this stock - see Google Finance or my discussion forum.
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Andrew Sheldon www.sheldonthinks.com

Philex Mining Corporation (PSE.PX)

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Philex Mining Corporation is a Philippines listed gold-copper producer that has drifted lower despite recent strength in the market copper & gold prices. The company I understand has a JV with a major international mining company in Mindanao. The project is a large-scale, long life mine that will generate healthy earnings, which is already evident in the income statement - see Google Finance or my discussion on this stock.

The attraction of this stock is that appears to be getting support at $9.00, and that it has a stake in a major gold-copper mining project, and thus a nice flow of inflation-adjusted earnings. We should be cautious however if this stock falls below $8.00, as the next support level is $6.00. I dont see any reason for this happening in the short term, though copper prices are close to a peak. It remains to be seen just how robust copper demand will remain. For this reason I prefer a pure gold producer. But I would look for support above $9.00.
Another alternative to Philex is its listed parent company Manila Mining (PSE.MA) - see Google Finance or my discussion of this stock.
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Andrew Sheldon www.sheldonthinks.com

Jabiru Metals (JML.ASX)

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JML has been one of my better performers since I recommended them in the 18-22c area. They rose to a peak of $1.70, but have since fallen back to $0.72 in recent times, along with other base metal miners. The attraction was always their high grade volcanogenic base metal deposit in Western Australia. Such deposits also hold the potential for a cluster of deposits, so there was always alot of upside. So reading now the latest report.....there seems little appeal with the Benambra-Stockman project in Victoria, but too early to write-off the exploration potential around the Jaguar-Tectonic Bore project areas.

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Andrew Sheldon www.sheldonthinks.com