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XMFSinchiruna (28.57)

Alexandria Minerals Now Has 1.4 Million Ounces Gold

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March 27, 2012 – Comments (32)

With this morning's release of the initial resource estimate for its Akasaba property, Alexandria Minerals' global gold resource just surged 56% to top 1.4 MILLION OUNCES!

http://tmx.quotemedia.com/article.php?newsid=49759865&qm_symbol=AZX

70% of the newly added gold, moreover, corresponds to a high-grade underground resource with an average grade above 5 grams per ton.

Eric Owens, President of Alexandria Minerals, said, "These results are an exciting first step for a deposit with significant potential for further growth. Our exploration during the past year has demonstrated to us several favorable zones which we will be aggressively drilling with additional drill rigs. These new resources at Akasaba have added considerably to our global resources in Val d'Or where we now have one of the largest total resources in the camp. We are favourably positioned to exploit our strategic land package with an enviable discovery cost of roughly $13 per ounce of gold discovered."

Incredibly, the current market capitalization of CAD$16.33m equates to a valuation of only $11.62 for each ounce of gold discovered to date. That's less than the company's discovery cost, which illustrates the remarkable value proposition in these excessively discounted shares.

I am LONG shares of Alexandria Minerals.

32 Comments – Post Your Own

#1) On March 27, 2012 at 10:26 AM, XMFSinchiruna (28.57) wrote:

For prior discussions of Alexandria Minerals, please see:

http://caps.fool.com/Blogs/alexandria-minerals-live/715293

http://caps.fool.com/Blogs/compelling-pm-microcaps/569492

http://caps.fool.com/Blogs/live-chat-with-alexandria/571634

http://caps.fool.com/Blogs/caps-exclusive-online-forum/617724

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#2) On March 27, 2012 at 10:36 AM, XMFSinchiruna (28.57) wrote:

Dr. Owens discusses the results in an interview here:

http://rblcommunications.com/webcasts/AZX/AZX27mar2012/AZX27mar2012.html

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#3) On March 27, 2012 at 10:38 AM, Horiemon (< 20) wrote:

Been slowly increasing my position in this ever since it first fell below 0.12 nearly half a year ago.  Was worried about the NI43-101 taking so long - now to see how the market reacts.

Sinch, I'm fairly new to this (but I know O&G fairly well, so some aspects are similar) but how would you go about valuing this?  Simply a reasonable market price less related costs x # of proved/probable? 

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#4) On March 27, 2012 at 10:45 AM, SN3165 (< 20) wrote:

Wow! Thanks for posting. Not showing up on the website yet.

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#5) On March 27, 2012 at 10:54 AM, XMFSinchiruna (28.57) wrote:

Horiemon, There are no proven or probable reserves as yet. That comes later in the development process. Same applies to production costs, which can not be known until the pre-feasibility stage.

For an exploration company like Alexandria, valuations are measured simply as market cap per ounce of global resource. Alexandria's corresponding valuation of less that $12 per ounce of gold identified thus far is drastically below the industry norm even given the deeply impaired condition of the gold equity space overall. Some folks use $100 per ounce as an approximate target of fair value per global ounce for a junior gold explorer. 

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#6) On March 27, 2012 at 10:55 AM, XMFSinchiruna (28.57) wrote:

Same interview with Eric Owens on YouTube:

http://youtu.be/GsF1mwWsNrs

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#7) On March 27, 2012 at 10:55 AM, kdakota630 (33.34) wrote:

SN3165 

I noticed the same thing, but it got e-mailed if you're on their e-mail list.  

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#8) On March 27, 2012 at 11:13 AM, SN3165 (< 20) wrote:

I put in an email to the editorial staff at Stockhouse to possibly include Alexandria on their exploration valuation column (they release it every month and it shows the valuations for explorers, with over 1 mill. ounces of gold only). 

Now that Alexandria has over 1 mill ounces I dont see why they wouldn't include it on the list. With Alexandria's valuation now at less than $12 per ounce of gold, like you said, they would be among the biggest values on that list ! (And some of the other big "values" on their list are located in politically unstable countries).

 Here's what I'm talking about: http://www.stockhouse.com/columnists/2012/feb/24/gold-junior-average-up-7-8--to-$59-oz---stockhouse

Take a look at EV/MI+I. Today is a great day to be a shareholder and any negative reaction by the market would be shocking!

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#9) On March 27, 2012 at 11:16 AM, Horiemon (< 20) wrote:

I didn't even get it emailed to me - got lucky that I had some downtime at work and saw their/sinch's twitter feed

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#10) On March 27, 2012 at 12:08 PM, XMFSinchiruna (28.57) wrote:

Assays are still pending for 10 additional drill holes conducted at Akasaba, covering a strategic cross-section of the relevant target areas. 

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#11) On March 27, 2012 at 1:21 PM, XMFSinchiruna (28.57) wrote:

As of 1:19pm, the site I use for my TSX quotes (TMX.com) shows the last transaction / quote at 11:46 am. Something is funky there. You don't have 399k shares change hands in the first couple of hours, only to 0 volume for the next 1.5hrs. I'm looking into it.

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#12) On March 27, 2012 at 3:32 PM, XMFSinchiruna (28.57) wrote:

As odd as it sounds, the best explanation I've been able to come up with for the sudden pause in trades today is that the range of bids diverged from the range of asks with a $0.05 gap in between.

At last check, bid orders totaling 564,500 shares had a bid range of $0.085 through $0.105, while asks representing 346,000 shares stood between $0.11 and $0.13.

Totally bizarre action! Buying interest is there, but placed beneath the pre-release price.

Spot market value of gold ounces added today is $850m, yet shares lose ground from mcap of $16 million. If anyone out there sees a rational hand in such behavior, I'm all ears.  :)

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#13) On March 27, 2012 at 3:42 PM, ubernut (23.62) wrote:

I was expecting to see some gains today...kind of a let down that market is not reacting at all to this great news. 

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#14) On March 27, 2012 at 3:45 PM, Horiemon (< 20) wrote:

Bear raid?  I don't mind - it's obviously undervalued, and as long as management isn't taking part in the selling and/or there isn't some terrible news, I won't take my hand off the buy trigger. 

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#15) On March 27, 2012 at 4:00 PM, XMFSinchiruna (28.57) wrote:

Horiemon, Agreed. Management and directors own 15%, and as Eric indicated in today's interview he has continued to add with each capital raise.

In the bid/ask structure I do note another positive in addition to the greater bid demand than ask supply, which is in the smaller average size of the bids compared with a relatively few would-be sellers trying to unload blocks averaging 33,000 shares. Smaller guys like us are the buyers responding rationally to the news, while a few bigger-money players are looking to unload at the pre-release share price for reasons that clearly have nothing to do with the longer-term outlook nor the share valuation.

Looks like a manageable overhang to work through, and news flow from pending assays are likely to help in the near-term.

Still, there's no getting around the fact that this was some very strange price behavior given the undeniably positive developments today!

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#16) On March 27, 2012 at 4:36 PM, XMFSinchiruna (28.57) wrote:

At the end of the day, the stock finished flat on the TSX-V. It's only on the U.S. proxy that we logged a decline, which reflects an arbitrage that had developed. Come to think of it, that could explain the institutional-scale presence in the shares today absorbing the gap between yesterday's close of $0.128 on the ALXDF and CAD$ 0.11 on the TSX-V.

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#17) On March 28, 2012 at 6:55 AM, skypilot2005 (< 20) wrote:

Sinchi,

Do you feel comfortable giving your opinion on a "time spread" for thier production start?  re.:  Minimum to maximum.

I won't hold you to it but, value your opinion.

Thanks,

Sky

Long ALXDF.PK

 

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#18) On March 28, 2012 at 9:14 AM, XMFSinchiruna (28.57) wrote:

Sky... I'm not convinced it will be "their" production start, but if you're talking min to max, I'd have to say 3 to 10 years.

There's a reason why they call them "early-stage exploration companies".

The more relevant and nearer-term scenario for investors, I believe, is one where the currently unsustainable condition of the mining industry and its sub-capitalization is ameliorated by capital inflows in to the sector amid a rising gold price leading to a long-overdue valuation re-rate of the quality early-stage explorers with 43-101 ounces in the ground. I believe stocks like Alexandria have the potential to produce powerful results on such a move.

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#19) On March 28, 2012 at 10:42 AM, kdakota630 (33.34) wrote:

TMFSinchiruna

Looks like your top 2 silver picks for 2012 both got bitten today. 

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#20) On March 28, 2012 at 11:01 AM, SN3165 (< 20) wrote:

Ouch... big drop in Scorpio after dissapointing 4Q.

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#21) On March 28, 2012 at 12:43 PM, XMFSinchiruna (28.57) wrote:

kdak, You can say THAT again! On top of big-time malaise throughout the industry, these guys are pouring lime juice on my open wound.

In addition to the horrendous Q4, Scorpio stripped away my stated investment strategy by delaying the restated resource from Q2 until Q3 or even Q4. My whole hypothesis was based upon buying into the market's reaction to the resource revision in advance of an announcement on the other mill.

Fortuna's implosion is troubling, to say the least. I'm reviewing the call transcript today, and hope to have a word out about it soon.

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#22) On March 28, 2012 at 1:40 PM, johnybottom (< 20) wrote:

sinchiruna, I assume you've seen the PPP release today. I read through the text of the press release. There's a lot of information in it and I like it all. Then they follow up with drill results, one of which has 27g/t Au for over 5 m.... and they plan to access that zone before the end of the year!

I haven't exactly been waiting for another entry point, but if prices stay depressed I'll consider more shares. Especially if I seen signs of bullishness for PMs.

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#23) On March 28, 2012 at 2:56 PM, XMFSinchiruna (28.57) wrote:

Just spoke with Fortuna's Carlos Baca. He's stunned by the ferocity of the selloff here, even considering the shap nature of the company's cost escalation in 2011.

Still projecting 4.6m SEOs for 2012; a 60% increase over 2011.

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#24) On March 28, 2012 at 2:59 PM, kdakota630 (33.34) wrote:

TMFSinchiruna

Thanks for the update.  I wasn't too concerned concerning Fortuna, but was still pretty surprised.

I see even Alexandria dipped to $0.095 briefly today.  I guess I could've kept my limit order at $0.10 after all. 

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#25) On March 28, 2012 at 6:45 PM, Sturmudgeon (< 20) wrote:

Thanks for the update, Sinch.    Seems like ALL my g&s stocks were beaten down today... but then, pretty much everything was the same in my portfolio...  hanging tough! 

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#26) On March 29, 2012 at 11:20 AM, kdakota630 (33.34) wrote:

Ugh, Scorpio is down another 15% today.

My portfolio was much healthier about a year ago.  I'm not concerned, just getting mildly frustrated because I don't have the cash at the moment to be buying at these lower prices. 

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#27) On March 29, 2012 at 11:21 AM, kdakota630 (33.34) wrote:

Plus, I still can't pick Scorpio on CAPS.

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#28) On March 29, 2012 at 12:03 PM, XMFSinchiruna (28.57) wrote:

I am similarly frustrated, and also similarly unconcerned. :)

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#29) On March 29, 2012 at 1:06 PM, SN3165 (< 20) wrote:

You guys are keeping it cooler than I am, the juniors are testing my patience!

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#30) On March 29, 2012 at 1:11 PM, kdakota630 (33.34) wrote:

SN3165

I'm not saying I don't swear at the computer monitor occasionally. 

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#31) On March 29, 2012 at 2:58 PM, Momentum21 (98.18) wrote:

I can't get Scorpio out of my head...had to join you guys at $1.25. As they say in Hold em, this bet is "in the dark!" I can't add any value via the research Sinch has done but I like the sector and this ticker seems as abused as any.  

I hope CB knows what he is talking about!

PAAS would have been the more sensible play but who needs that?? 

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#32) On March 30, 2012 at 12:29 AM, OHGtop10 (< 20) wrote:

I was getting a little depressed watching all my stocks go down on a daily basis.  Than I remembered it is only money. Hang in there fools!!

I love that CGR increased their inferred resources by 236 percent YOY!

Check out these charts to see the massive divergence between GLD/Gold ETF Vs. Jr Gold Miners.

CGR chart V. GLD over 1 year

http://finance.yahoo.com/echarts?s=CGR+Interactive#symbol=cgr;range=1y;compare=gld;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

CGR chart V. GLD over 5 years

http://finance.yahoo.com/echarts?s=CGR+Interactive#symbol=cgr;range=5y;compare=gld;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

 

BRD chart V. GLD over 5 years

http://finance.yahoo.com/echarts?s=BRD+Interactive#symbol=brd;range=5y;compare=gld;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

 

KBX V. GLD over 5 years

http://finance.yahoo.com/echarts?s=KBX+Interactive#symbol=kbx;range=5y;compare=gld;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

 

P.s.  I added TC shares to my holdings today. I will add more over the next year.  I am also planning on buying a small position in FSM.

 

GLTA

 

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