Saturday, July 28, 2012

Omineca mining & minerals (OMM)

This is an interesting story...

The Sullivan mine was a large underground mine in Kimberly British Colombia discovered sometime in the 1890s. Over the mines lifetime (ending in 2001 iirc) it produced over 150 millions tonnes of ore, containing three billion ounces of silver, eight million tonnes of zinc, and eight million tonnes of lead.

Anyways, since that time, many companies have been working in the area trying to find, what has been dubbed as, Sullivan 2.

In 2010 and 2011 a company called Omineca mining completed a surface geophysical survey where they detected a large gravity anomaly, sharing many geological features with the SEDEX (sedimenary exhaultive deposits, ) formation found at the original Sullivan mine.

From the press release...

        In 2010 and 2011, Gravitas completed an extensive surface geophysical program, outlining a prominent gravity anomaly with dimensions of approximately three kilometres by one kilometre, at an interpreted depth of up to approximately 1,000 metres.This geophysical feature is located seven kilometres south of the Kootenay King deposit, a past producer that contained mineralization of similar tenor and mode of occurrence as Sullivan

In early April of 2012, word got out that drill results would be released. As expected, the share price of OMM shot up to .45 as highly speculative investors hoped for results that may indicate the discovery of a Sullivan 2.

The anomaly was determined to be at a depth of 600m - 1000m and they began drilling to reach such depths. Unfortunately, as a April 19th press release informed investors, the drill hole deviated from its' intended target. From the press release...

   As described in previous news, the drill hole has experienced deviation in its planned dip and direction such that the bottom of the hole is not located where it was originally intended. The drill hole's trajectory appears to be following in steeply-dipping Fort Steele rocks, interpreted to be in the immediate footwall of the gravity target. Downhole survey readings also indicate the possibility that both the temperature gradient and magnetic field are decreasing with depth, suggesting that the deviated hole has been moving away from the target over the last 150 metres to 200 metres of drilling.

This saw investors hitting a continually dropping bid and the stock price saw a drop of over %50 in one day of trading. Unfortunately for me, I wasn't at my computer when the news release came out. The following day I got to see my position worth a little less than half of what it was worth the day before. I had purchased 3000 shares at .37. Had I'd been around at the time I certainly would have sold, but once it dropped so much I figured I would just be patient and wait for the next drill campaign. The company has a little less than 3 million in cash in the treasury, so further funding is likely unnecessary for further drilling.

With a current share price of .09 it may be worth looking into at some point in the near future. I'm not sure what the drill season is in Kimberly B.C, but one can expect any announcement of further drilling to shoot the stock price up. They may actually have to find something for me to make money off of this, but I believe that if I'm patient I'll loose less money on it.
Here's an excellent report that was released not to long ago, detailing the number of  1million and plus oz Au deposits world wide.

It details the largest deposits of developed and undeveloped deposits world wide, as well as the top developed and undeveloped deposits in Canada and the United States.

One thing to consider here is that Porphyry deposits were only marginally included; when the authors concluded that the amount of gold was to high to look past. There may very be many other 1 million + oz Au porphyry deposits around the world, which were not included.

I hope to do a write up on porphyry deposits in the near future.

The report also shows the top Gold containing countries. Its nice to see Canada and the States up there.

Anyways....happy reading!

Friday, July 27, 2012

Sabina Gold and Silver (SBB)

It looks as though SBB has turned the corner today. Having been resisted at around  $1.80 for a while, it took a jump of over .40 over the last 2 days. Over 3 million shares crossing.

Even at the current prices, SBB looks like a good buy, being beaten down far from its 52 weeks high of ~ $7.

From their last press release...
          "The Company had cash of $147.4 million at March 31, 2012 and added $34m to the treasury in June 2012 after completing a financing."

This means that the company has roughly 180 million dollars in cash in the treasury. with a market cap of 389.79 million, SBB is being valued at 173.24 million by the market.


SBB has a little less than 7 million ounces of gold found on their Back River property in Nunavut. As well, they have a large "grass roots" property adjacent to the Back River property (roughly 50km away) which management considers to be highly prospective for more gold discoveries. 

Sabina stands to earn a substantial silver royalty on the Hacket River silver-zinc property, currently being developed by Xstrata. Their royalty agreement is set up such that they will receive %22.5 on the first 190 million/oz Ag produced, than %12.5 on any remaining silver production.

SBB filed a NI 43-101  technical report last month, as well a PEA study. From the press release...

 "As previously announced, the PEA was prepared by SRK Consulting (Canada) Inc. ("SRK") and contemplates a scenario with concurrent open-pit and underground mining operations delivering mineralized material from the Llama, Umwelt, Goose and George deposits to a centralized 5,000 tonne per day ("tpd") processing facility located near the Umwelt deposit. Gold production is projected to average ~300,000 oz/year over 12.3 years for total production of 3,677,000 oz Au, beginning in late 2016 or early 2017. Sabina is currently funded to advance the Project through final feasibility and permitting. The conclusions and recommendations of the PEA are that the Project may be economically viable and the Company should proceed to a Pre-Feasibility Study ("PFS")."

Silver has historically been extremely volatile. It has traded in a range of $3-$50/oz and currently sits somewhere in the middle. Although the outlook for precious metals seems to be a, by and large, bullish on; it is possible that silver slides down and trades in the $10-$15 range. In such a case, it would be unsure if Xstrata would continue with developing the property. Xstrata has had an a myriad of problems with their camp in Nunavut, which caused them to put the project on hold. The deposit is significant so one can expect that if Silver holds, or rises, Xstrata will end up developing the Hacket River Project.

As the governments of Latin America and Africa begin to impose less and less miner friendly regulations one may expect to see a premium be applied to large, high grade, deposits in safe, mine friendly countries. It will be interesting to see how SBB develops over the next few years, especially if gold prices continue their upward trend. 7 million oz at $2000/oz may be a realistic situation in the future.