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XMFSinchiruna (27.56)

Compelling PM MicroCaps Series, Volume II: Caza Gold

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63

March 28, 2011 – Comments (51) | RELATED TICKERS: GG , AUQ , EXK

To kick-off this series in style, we're going hunting for gold south of the border with Caza Gold (Caza is Spanish fort 'the hunt'). Many of you have seen me refer to the company repeatedly since its IPO in late November, and now I aim to convey to you why this particular early-stage exploration company has attracted my attention to such a degree.

Caza trades on the Toronto Venture Exchange under the symbol CZY, and in the U.S. on the pink sheets as CZGDF.PK.

Often, when sifting through the overwhelming universe of microcap exploration companies in search of noteworthy standouts, the process involves something of a checklist that one must run through to ensure that a company meets one's own parameters for what constitutes sensible investments in the space. For example, we Fools routinely emphasize the quality of management within a range of important selection criteria for stocks, but among early-stage exploration companies, this can often present something of an unknown entity. In the case of Caza Gold, however, Fools who are familiar with Endeavour Silver and the first-rate, proven management team behind it are encouraged to transfer that same degree of confidence in management to Caza Gold.

I can't say enough positive things about the people behind this project. I had already owned Endeavour Silver shares for a few years, and developed considerable confidence in their management before I spoke with CEO Bradford Cooke last August. Through that conversation, however, and confirmed through all of my subsequent contacts with their staff, I have come to consider Endeavour's management one of the most impressive teams in the business. And of course it never hurts that, in addition to being skilled exploration geologists with considerable business acumen to boot, they happen also to be some of the friendliest and most pleasant folks I've had the pleasure of communicating with in this industry. Bradford Cooke serves as Chairman of Caza Gold. Caza CEO Greg Myers has considerable experience under his belt, having served as a regional manager for Phelps Dodge, and as a project development manager for BHP Billiton. Mr. Myers took considerable time walking me through his perspective of the mineral potential at Caza's various properties, and I found his own enthusiasm regarding the nature of these prospects very infectious. Caza director Tony Hankshaw is the CFO of Rio Alto Mining, a stock that has enjoyed a very nice run of its own.

Here's a partial transcript of my August 2010 interview with Bradford Cooke:

http://www.fool.com/investing/small-cap/2010/08/13/endeavour-to-pinpoint-one-major-growth-spurt.aspx

Before we leave the subject of Caza's quality management team, I have an exciting announcement to make. Caza's Manager of Investor Relations, Gregg Williams, has graciously agreed to participate in this discussion directly here on the CAPS blogs, to the extent that his time allows. He recently joined our ranks as a registered Fool, with the username caza2011, and I know that you will all join me in welcoming him warmly to our Foolish online community. He plans to login here at about 12:30pm EST tomorrow (Tuesday). I wish to thank Gregg in advance for his willingness to make himself available to existing and prospective shareholders in this unique way, and I consider his presence among us here entirely indicative of the caliber of Caza's management team as discussed above.

Has Caza's gold already been snared?

Skilled hunters don't wander aimlessly through the wilderness in hopes of a chance encounter. They rely upon detailed knowledge of their surroundings, a comprehensive understanding of their prey's behavioral traits, historical knowledge of past encounters, and a mastery of reconnaisance techniques to target their prey in a way that is most likely to result in success. In the brief time elapsed since the company's IPO, my review of the company's chosen hunting grounds leads me to attribute a high likelihood of success to their ongoing quest.

We'll begin with the Santiago property, which is located in the famed Batopilas district in Mexico, and only about 35km from Goldcorp's El Sauzal mine along the same regional fault. Rock-chip sampling has returned grades as high as 30.3 gpt. The target here is a high-grade underground vein structure that the company considers capable of hosting a deposit of 500,000-oz. or more. After sampling in December discovered a new extension of the primary vein structure 400m NW of the known Cliff Zone veins, discontinuous surface sampling to date implies potential for a strike length of >1km. A 2,000 meter drilling program has been undertaken, with assay results forthcoming. With Endeavour Silver's immense background working efficiently to unlock underground resources from high-grade vein structures, investors can anticipate that Caza will move swiftly toward production if exploration drilling continues to confirm the company's present interpretation of the deposit.

Caza's Moris property is the type of prospect that could easily justify an investment in these shares even if it were the company's sole property. You all know how significant a deposit I consider Gammon Gold's flagship Ocampo mine to be, and Caza Gold's Moris property extends to within just a few kilometers of Ocampo. Nestled into another corner of the property's boundaries is Hochschild's prolific Moris Mine, and Caza believes that one of the four target areas on the property may represent an extension of that mine's mineralized structure. The company believes that two of these targets alone -- Balleza and La Cienega -- form a 7km trens of veins and quartz stock work that may be capable of hosting more that 2 million ounces of gold in a bulk mineable deposit. As in the case of the 500,000-ounce target noted above for Santiago, these figures are early-stage guidelines for strategic planning that have yet to be confirmed through expansive exploration drilling. Unlike many of the optomistic assessments of mineral potential that I remind Fools to remain skeptical of under most circumstances, my degree of respect for Caza's management team leads me to take these informal assessments seriously. Caza has drawn intriguing geological comparisons between the Moris property and Minefinders' Dolores property.

Have I mentioned that Caza's present market cap is just over $20 million?

Although Caza set out to hunt for gold with an emphasis on Mexico in order to capitalize on management's extensive regional expertise, I believe the company's move to acquire the Los Andes project in Nicaragua epitomizes the opportunistic nature that any skillful hunter must also possess. Here again, because Caza has only just recently acquired the property and initiated surface mapping and sampling, we can not yet ascribe a high degree of scientific certainty to the exact extent or characteristics of the deposit, but as I understand the strong initial geological indicators of the site's mineral potential, it must be stated that Los Andes shows very exciting potential to develop into a world-class gold mine as exploration work proceeds over time. Caza is targeting a multi-million-ounce deposit at Los Andes, and recently staked 11 new properties along the same gold belt that display similar geological characteristics.

According to their website: "The Los Andes high sulfidation gold system is exposed on surface as an extensive alteration zone of hydrothermal vuggy quartz, pervasive silification, and alunite associated with highly anomalous gold, silver, and trace elements.  The alteration zone covers a 45 square kilometer area and measures 12 kilometers long by up to 6 kilometers wide.  It is similar in size, nature, intensity, and trace element geochemistry to world class gold deposits such as Yanacocha and Pierina in Peru." As we saw above with the Moris Mine, Caza's Los Andes property also enjoys a strategic location flanked by existing mines. Los Andes sits between the locations of B2Gold's producing mines on the Central Nicaragua Gold Belt.

"High sulfidation gold systems are important sources of precious metals throughout the world and are some of the largest gold producers.  The geologic setting, geochemical signature, and alteration patterns are well documented.  The extremely large alteration zones versus the much smaller footprint of the economic mineralization are a challenge during exploration presenting the classic "needle in a haystack".  A well thought out and systematic exploration plan is required.  Many of the world class deposits have been well studied and the understanding of alteration and geochemical patterns will add greatly to exploration efforts at Los Andes."

In other words, while the company is clearly excited about the potential to pinpoint a significant, economic gold deposit within this property, they also acknowledge that considerable exploration effort may be required to advance the property toward that ultimate goal of production. I would not be at all surprised to find some of the gold industry's big dogs eventually approaching Caza with respect to facilitating an optimal scale of exploration resources brought to bear on the site.

Conclusion:

Provided the risks common to all microcap precious metal exploration companies are well understood, and the speculative nature of the wager is properly grasped, I consider Caza Gold among the more superbly positioned stocks in the space based upon the exciting initial indicators of potential mineral wealth buried beneath its properties. Along with my own very considerable confidence in the character and the expertise of the company's management, the perceived potential for two of the company's three project areas to host multi-million-ounce deposits renders this explorer particularly exciting. The location of all three properties within the vincinity of proven gold-bearing ore structures, and along the axes of significant geological trends in common among those mines, I believe that Caza sits upon a high probability of success for confirming the existence of gold in economic deposits.

While the Santiago and Moris properties offer entirely sufficient avenues for potential exploration success to render the stock a strong speculative play in its present price range, the added prospect that a truly world-class gold deposit could be identified through exploration at Los Andes gives the stock's potentioal payout the sort of high-octane boost that I'm looking for among my selections in the microcap space. If just one of these three properties were to make good on just half the currently targeted mineral potential of that site, I believe we would find a sufficient catalyst for meaningful share price appreciation. If all three were to hit in a solid gold trifecta, those returns could quickly turn legendary.

I consider this particular junior explorer a solid choice for a high-octane speculative play, and anywhere beneath $0.80 per share strikes me as an attractive price range for share accumulation. Long-term target prices are very highly dependent upon how targeted resources ultimately compare with confirmed success in exploration efforts over time. I will hazard a guess and suggest that $2.50 may be a reasonable target price during the next few years, while best-case scenarios like a world-class gold deposit at Los Andes could conceivably carry a double-digit share price into the picture. As with any early-stage exploration company, there are more guesses than guarantees involved; but, particularly for a company with no officially established resources on the books, the strength of Caza's prospects yield an uncommonly compelling risk/reward ratio for a play of its type.

I welcome your thoughts on this company, and invite you to share with your fellow readers below your own process of due diligennce on the stock. As mentioned above, Caza's investment relations manager has indicated he will join us in the converation below as his time allows, and I know you will thoroughly enjoy and appreciate his presence among us here.

For more information, please spend some time expoloring Caza's website at cazagold.com. A careful inspection of the company's presentation, accessible from the home page, is recommended.

Disclosure: I own shares of Caza Gold, Endeavour Silver, Gammon Gold, Goldcorp, and Minefinders.

 

 

51 Comments – Post Your Own

#1) On March 28, 2011 at 7:49 PM, Valyooo (99.60) wrote:

Do you know Caza's cost per ounce by any chance?

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#2) On March 28, 2011 at 8:04 PM, silverminer (30.68) wrote:

Valyooo

By "cost per ounce", I assume you mean with respect to share valuation, i.e. market value of resources to mcap. Those metrics do not apply here. When assessing early-stage exploration companies that have yet to produce a resource estimate, a more forward-looking and hypothetical approach to valuation considerations is required.

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#3) On March 28, 2011 at 10:43 PM, Bays (30.26) wrote:

Could you comment on the non-geological factors?

Is there infrastructure already in place nearby?  highways, powerlines, ports, etc? What about a smelter? Could they JV with a producer nearby and use their smelter?  Or would they have to build their own?  Is it open-pit amenable?

The answers to these would obviously affect the future cost per ounce if that's what Valyooo was wondering. 

Thanks for the info, and great start for DD.

+1

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#4) On March 29, 2011 at 12:37 AM, Valyooo (99.60) wrote:

I'm sorry, I meant to say cost of extraction per ounce as in how much profit will they be making per ounce of gold at current gold prices....but I guess they don't have that either.

I really wish I understood these junior miners...there is so much money to be made here...but I just don't understand quite what to look for other than what you have already laid out.

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#5) On March 29, 2011 at 1:06 AM, tdonb (< 20) wrote:

I found a great interview with Greg Meyers at http://www.kereport.com/2011/02/11/exclusive-interview-ceo-caza-gold-unexplored-gold-deposit-mexico/ Korelin is convinced and has invested heavily already.

I have watched most of the stuff on their webpage too. Meyers seems very confident and very knowledgeable.

It is down to .58 today. Very tempting at that price.  

 

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#6) On March 29, 2011 at 1:16 AM, tdonb (< 20) wrote:

Bays,

 On the Santiago project there are power lines and an all weather raod in place. On the Morris property, Gamon Gold's Ocampo property is visible in the satelite shot. The project in Nicaragua is between 3 mines owned by B2Gold.

They have a corporate presentation at http://www.cazagold.com/_resources/gallery/jan11/gallery.html

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#7) On March 29, 2011 at 2:00 AM, traderbach (< 20) wrote:

Sinchiruna,

I have been watching Caza myself & don't have anything to add that you have not covered well & apologize in advance for going off strict subject somewhat.  However I don't often get the opportunity to address you personally.  I follow your work on TMF with great interest &, if I'm not violating any protocol here, I often wonder, & would love to know, or at least have some inference, as to how much of your own portfolio is precious metals' miners?  I find the reasoning behind making a large part of my own portfolio metals miners very compelling & in fact I'm sure the percentage of my ownership is much higher than purists would think prudent.  

My sincere thanks for making this discussion occur and for always taking the time to share the fruits of the necessarily intensive work that your observations spring from!

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#8) On March 29, 2011 at 7:43 AM, silverminer (30.68) wrote:

traderbach

I don't often discuss my own personal allocation because I try not to issue any sort of recommendations with respect to allocation to pms. I have always considered allocation a high personal matter for each investor to decide. With pms, further, it is of paramount importance that Fools not let their allocations surpass their own level of confidence in the long-term bull market. Those with any doubt as to whether they could endure a deep and prolonged correction without selling into weakness are encouraged to limit their exposure to the sector to modest extents. I am about 75% allocated to pms, down from about 80% no long ago; but keep in mind that I have the luxury of working full time at the due diligence required to steward such an exposure.

With that said, let's steer the conversation back to Caza. :)

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#9) On March 29, 2011 at 8:20 AM, silverminer (30.68) wrote:

tdonb

tdonb, thank you for addressing bays' question with respect to infrastructure. That is just the sort of collective approach to DD I was hoping would emerge from this sort of discussion.  

Bays

Looking for nearby infrastructure like roads and electricity is always a great idea, and because these sites in Mexico are located along well established gold trends with major mining operations so close by, the general environment for mining-related infrastruicture is very favorable. I am less familiar with the degree of infrastructure development at Los Andes, so someone seeking more detail on that question might consider addressing it to Gregg Wilson when he comes in later today (around 12:30pm EST). 

Moris and Los Andes are conceived as bulk-mineable deposits, while Santiago is a high-grade vein structure that would imply underground mining techniques. 

Valyooo

I'm trying to think of the best way to convey this thought. Basically, the life of a miner can be broken up into stages, and the market-derived price as well as a company's sum of accomplishments dictate which stage one might be in at any given time. Caza Gold is in a very early stage of development, and is priced accordingly. Once sufficient drilling intercepts are encountered to confirm and further enhance confidence in the targets as envisioned, then you may see the market graduate Caza to something of a mid-stage explorer. Once those results warrant preparation of an initial resource statement, scoping study, PEA or other such report, then we may begin to apply terms like "advanced-stage" exploration company to Caza. My point is thyat it's a progression, and one that enhances implied shareholder at each step along the way. A stock like Caza Gold could conceivably multiply several times over before a single ounce of gold is extracted (for i.e.: Osisko Mining, Sabina Gold and Silver, Rainy River Resources, etc., all of which have been astounding multi-baggers for me without ever producing an ounce).

I think Fools often struggle with how to conceive of valuations for in-ground resources (whether P&P, M&I, Inferred, presumed, targeted, or otherwise). Well guess what, the entire market is pretty terrible at figuring out valuations as well (though it's getting a little better). As it presently stands, an investor can perform extremely well merely by understanding this process of enhancing shareholder value that explorers do every time they post a positive drill result, stake a new claim, or issue a new report.

Before one deals in ounces of gold, in other words, one first has to recognize that knowledge about those underground ounces is a commodity in its own right. I think that is a significant crux of successful microcap resource investing.

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#10) On March 29, 2011 at 8:47 AM, Jbay76 (< 20) wrote:

Sinch,

First off, thanks for this post...its very provacaticve/exicting.I really do respect the work you do and to bring in the manager of investors relations to this blog and TMF is outstanding!! My hat off to you sir!

Now somewhat similar to Valyoo's question, but different, is if you know what price Caza Gold has developed their business model after.  In other words, often times we read that business X has an extraction cost of Y and and has developed this model based on a sales price of $Z.  When I read those statements, I interpret that to mean that the companies break-even price is set at $Z, and from there we can determine how profitable the company will be in the near future by taking the value of  currrent PM price - $Z  and multpilying it by the amount of PM being brought up. I'm wondering if Caza has a PM sales figure that they are basing their business model on?  Is too early for a mining company to have such a figure in their business plan yet withto knowing for sure what they have underground?

Disclaimer:  I just read your post and have not followed on the links yet, but will.

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#11) On March 29, 2011 at 9:29 AM, Jbay76 (< 20) wrote:

Anyone invest with Merryll Edge?  I tried to put an order through to get shares of Caza Gold but was not allowed to unless it was an order of 25K or more...sucks for the little guy..

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#12) On March 29, 2011 at 9:34 AM, silverminer (30.68) wrote:

Jbay76

I'm not sure I followed your question entirely, but suffice to say it is entirely premature to even discuss extraction costs. At this stage of the process, investors are best-off focusing upon ore grades sampled as the best forward indicator of profitable extraction. Economic assessments that would tackle issues like extraction costs in a preliminary way are still some steps away, as resources must first be quantified through exploration. 

Upon a second read of your question, it seems you may be harboring some significant misunderstandings with respect to mine planning criteria. There is no magic number that a company models its business strategy around, and in any event most companies (including Caza) possess multiple properties that each will have their own independent planning processes. Miners will estimate an average life-of-mine production cost figure during the mine planning phase, but there is wiggle room worked into those figures within the decision making process of whether or not to approve mine construction. If the estimated IRR is insufficient to warrant construction, a mine proposal may be shelved, but companies don't start with a targeted break-even price and work down fropm there into the planning process ... it works the other way around. You determine what you have, how it can be most efficiently extracted, and you use cut-off grades to insert prevailing price trends into the equation, model long-term production costs, consider long-term price expectations as of the time that decision is being made, and render a construction decision accordingly when a comfortable operating margin is anticipated. 

In any event, as stated above, it is WAY too early to discuss such matters with respect to an early-stage exploration company like Caza Gold. 

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#13) On March 29, 2011 at 9:47 AM, silverminer (30.68) wrote:

Jbay76

Merrill provides no "edge".  That is, in my personal opinion, the worst of the worst when it comes to brokerages. That is al wish to say on the topic for now. :)

..........

Hey Fools ... I won't be able to be here at 12:30pm EST (or thereabouts) when Caza's Gregg Williams checks in here to say hello to the community. I hope some of you will make a point to check in periodically around that timeframe, let him know how much we appreciate his presence here, and pose any questions you may have about Caza to keep the conversation rolling for a bit. If this goes well, as I am confident it will, my intention is to make similar things happen for a range of resource companies. 

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#14) On March 29, 2011 at 10:10 AM, Jbay76 (< 20) wrote:

Chris,

Thanks for both replies, although your first one is very insightful and appreciated.  I have always been looking at thigs, erroneously as I see now, as I would if I were to open a brewery or aquaculture operation.  So, thank you for improving my understanding of the company models.  I am sorry I didn't see your first blog of this series until after I posted on this one, as I feel this woudl have been mopre appropriate there...again sorry.  

And yes, Merril Edge sucks..I have had it up to my knickers for the 2nd time, maybe 3rd time this year with them and know have to do so DD on a different brockerage company.....ugh!

I look forward to parts 2 through infinity on this Silverminer!!!

Thanks for all the education you provide!

J

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#15) On March 29, 2011 at 10:37 AM, jacobske (< 20) wrote:

It appears the biggest opportunity maybe the Nicaragua prospects and it comes with risk.  It would be interesting to get a read from the company on how their relationship with the locals and government is coming along.

Some info on Nicaragua and B2Gold Corp that has producing gold mines there:

Total presentation, but also focus on slide 8:

http://www.b2gold.com/wp-content/uploads/2010/05/01-21-11-B2Gold-Presentation.pdf

Total page, but also focus on Background, Political Parties and Leaders (notice who's in the above photo Slide 8), and Economy sections:

https://www.cia.gov/library/publications/the-world-factbook/geos/nu.html

US State Department view of Investment Climate in Nicaragua--it's a dated report:

 http://www.state.gov/e/eeb/ifd/2008/101855.htm

Mining in South America, bottom of page 10, left hand side--again it is a dated report:

http://magazine.mining.com/Issues/0901/MiningCentralAmerica.pdf

I've taken up a position in Caza Gold.  Thankfully not all the prospective mining sites are in Nicaragua.  This is going to be one exciting company to watch over the years!

Kip 

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#16) On March 29, 2011 at 10:42 AM, Gonzhouse (47.22) wrote:

 silverminer

Like a lot of posters to your blog, I am trying to get my head around analytical/valuation metrics for a seemingly-esoteric investment:  pre-production PM microcaps.  It seems to be a process like peeling an onion:  at each layer there is set of applicable indicators and as the lifecycle of the mine plays out the indicators get more discreet.  At this point in CAZA, there isn't much in the way of discreet indicators.  That's just where we are and it's a risk inherent with pre-production PM microcaps.

As CAZA plays out, I know you'll suggest which metrics are applicable at specific lifecycles and I appreciate your efforts to transform us from fools to Fools.

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#17) On March 29, 2011 at 1:12 PM, Gonzhouse (47.22) wrote:

To Gregg Williams/ caza2011,

Exciting times for Caza.  The Los Andes project, if it plays out as hoped, will be transformational for you.  Can you give us a rough event/timeline expected for this project?

Thanks for joining us!

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#18) On March 29, 2011 at 1:22 PM, caza2011 (< 20) wrote:

Good day,

My name is Gregg Wilson and I would like to thank Christopher for the invitation to interact with the Motley Fool community on behalf of Caza Gold.

I would first like to say that I am not a geologist, however, I do have access to some very good ones (in my opinion) so anything I can't answer I will find out for you.

On a personal note, I really consider it an honour to be invited into a discussion with you. The reason is when I first became interested in financial investing The MotleyFool and The Wealthy Barber were my original guide books so I am delighted to help this community in any way I can.

Finally, I apologize for being late to the party today, no excuse, however, my reason is this is the first time I have done something like this but I think I've got it now...so here we go...

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#19) On March 29, 2011 at 1:27 PM, Gonzhouse (47.22) wrote:

To Gregg Williams/ caza2011,

Exciting times for Caza.  The Los Andes project, if it plays out as hoped, will be transformational for you.  Can you give us a rough event/timeline expected for this project?

Thanks for joining us!

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#20) On March 29, 2011 at 1:34 PM, golfer121501 (< 20) wrote:

Hello caza2011,
In your 3rd quarter 2010 financial statement, page 16, it states:
"The Company will require significant additional funding to meet its short-term liabilities and administrative overhead costs, and to maintain its mineral property interests in 2010." 

What progress has been on this?  Can you comment on the plan for raising short term liquidity as is neccessary for the business?
What proportion of this will be from issuing more shares?

Thank you for taking the time to better inform us about your company!

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#21) On March 29, 2011 at 1:54 PM, 4everlost (29.53) wrote:

Sinchy,

What a great start to the PM Microcap Series!  Caza looks like it is well worth additional due diligence.  Thanks for thinking of the series and executing.

caza2011,

Thanks for joining us here at the Fool.  I look forward to reading what you have to say.

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#22) On March 29, 2011 at 2:07 PM, Jbay76 (< 20) wrote:

Caza2011/Greg,

Welcome ad thansk for taking time out to answer the questions we may have, like golfer121501's questions.

 How are Caza's relationships with both Mexico and Nicaragua? 

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#23) On March 29, 2011 at 2:07 PM, Jbay76 (< 20) wrote:

Caza2011/Greg,

Welcome ad thansk for taking time out to answer the questions we may have, like golfer121501's questions.

How are Caza's relationships with both Mexico and Nicaragua? 

Thanks

J

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#24) On March 29, 2011 at 2:37 PM, traderbach (< 20) wrote:

Sinchiruna,

Very nice of you to answer my off-topic question!   No more will be forthcoming from me.  Very much enjoying this.

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#25) On March 29, 2011 at 2:43 PM, jesusfreakinco (28.98) wrote:

Chris,

Good stuff.  Bought some Caza in real life a few months back.  Looking forward to the discussion.

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#26) On March 29, 2011 at 3:31 PM, silverminer (30.68) wrote:

jacobske

Thank you for bringing up a very important topic.

Jurisdiction represents a very important metric by which investors must also assess their eagerness to enter a stock. Although quite some years have passed, I have traveled to Nicaragua, and have a sense of the political and security climate there as it would relate to mining operartions. You make a fantastic connection by looking to B2Gold's operations there for precedent, and seeing that indeed the former executive team from Bema Gold has built with B2Gold a highly sucessful operation there. I would be willing to bet that security measures are taken to safeguard transport of products, but as Torex Gold's recent announcement that several trucks filled with concentrate were swiped highlights that such security concerns exist in Mexico as well.

I initially gave pause when I first learned of the Nicaragua claims, but only because I had not given the matter sufficient thought. As I reminded myself of what B2Gold has been able to accomplish there, analyzed the geology behind the desire to explore the region, and considered Mexico and Nicaragua side-by-side as jurisdictions go, my initial misgivings easily gave way to excitement. After speaking with Caza CEO Greg Myers about the project, and gaining a grasp of how enormous it could potentially be, I soon came to view the move as an excellent strategic step.

There are some countries I won't invest in. I won't touch Venezuela with a ten foot pole after witnessing what happened to Crystallex. And one jurisidiction I try to limit exposure to that might come as something of a surprise: the U.S. That's right, I am more comfortable with Mexico as a jurisdiction than I am with the U.S. [That's a topic for another day.]

Anyway, those are my thoughts on Nicaragua as a jurisdiction. I think B2Gold has opened the door, and I applaud Caza for amassing such an enormous district-scale opportunity before more companies get a whiff of the country's potential.

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#27) On March 29, 2011 at 3:43 PM, caza2011 (< 20) wrote:

Hello Gonzhouse,

Thank you for your question. It's difficult to be exact when developing time lines for mineral exploration but here is an outline of our work program for Los Andes. 

This year's program will be to continue soil and rock-chip sampling work (approximately 3000 samples to be gathered) until the rainy season which generally runs from May-September. Then depending on those sample results roads will be constructed to the drill target areas and hopefully we will be drilling by the end of Q4 or early Q1 of 2012.

The LA project is a large one measuring 12 km long and 6 km wide. To use an old expression, the haystack at LA is 45 sq. kilometers but the good news is we think there are a number of needles to be found. Remembering this early stage exploration it will take time to cafefully consider the sample results to define our drill targets but our target is an "Elephant".

To give you an understanding of the size of Caza's holdings in Nicaragua, not including Los Andes, Caza has 100,000 hectares (approximately 247,000 acres). Outside of LA we've identfied 12 more areas of interest. Of those twelve, our geologists have briefly looked at five areas they consider to be as interesting as LA and we hope to have targets prioritized in those areas by 2012.

I hope this helps to answer your question.

 

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#28) On March 29, 2011 at 4:02 PM, caza2011 (< 20) wrote:

Hello golfer121501,

All outstanding debt and property payments are up to date thanks to Caza's November IPO (C$2.8 million) and the C$8.15 million private placement which just closed this month.

Caza has sufficient funds to complete all of its planned exploration and drilling programs for 2011 and 2012 unless there is a major gold discovery. So there are no plans to go back to the market for funding but when we do the hope will be that Caza's shares will be at a higher price.

Thanks for your question. 

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#29) On March 29, 2011 at 4:47 PM, tdonb (< 20) wrote:

Caza2011/Gregg,

Welcome, and thank you for offering your insights on how this company will develop. I hope you continue to check this conversation and to add to it as more information is gathered.

Perhaps you will open your own blog for us to track. I have added you to my favorite players in the hope you will make occasional announcements here to give us a better understanding of what for many of us is a foreign language.    

I am wondering if you could elaborate a little on what your team is like at Caza. Is is still a fairly small operation at this point? Do you meet with the geologists on a regular basis, or are they out in the field and the management team is seperate? Do you have offices in Nicaragua, or is it a lot of flight time?

Also, is there a lot of inside ownership of the stock amongst the team?

I imagine it is a very exciting time there.

Thanks again.

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#30) On March 29, 2011 at 5:49 PM, silverminer (30.68) wrote:

Gonzhouse

I think you answered your own question in a way that I could not have stated any better:

"It seems to be a process like peeling an onion:  at each layer there is set of applicable indicators and as the lifecycle of the mine plays out the indicators get more discreet.  At this point in CAZA, there isn't much in the way of discreet indicators.  That's just where we are and it's a risk inherent with pre-production PM microcaps."

I think that's exactly right. It's not always the same sort of information or development that leads me to initiate a stake in a particular pm microcap, although the sort of information  /development it may be is often typical for a company in its stage of the life cycle.

With a company like Caza, it might be the enormity of a land package like that 100,000 hectare package in Nicaragua, combined with a consideration like how scantily the region has been explored given its geological likeness with highly productive areas in the Americas. If I had already looked closely at the Santiago and Moris properties, and felt that "must-own" feeling on the basis of those alone, then a subsequent understanding of the enormity of the Nicaragua opportunity is a great example of the kind of clinching piece of the pie that summons me to the buy button.

For a company that has already been drilling, I'll hone in on things like assay grades, depth, thicknesses, byproduct metals, size of the drilling program, regional geology, etc. I look for whether the market has adjusted properly for those discoveries, and if it seems it has not I may aim to pounce before a resource estimate is released. [In the life cycle of a pm company, there are several key watershed events that serve as potential catalysts, and resource estimates are certainly one important type of potential catalyst]. Once a resource is defined a bit, you're looking forward toward likely parameters of mine design and economics, and attempting to gauge whether the market may be failing to reflect the eventual NAV of the project to a significant degree.

So yes, the parameters I use for selecting purchases shift continuously throughout the life cycle of a pm company, and I thank you for atating it above in such a clear and visual way.

I look, I look some more, and I look again ... all the while taking note of pros and cons; until at some point the pros reach a critical mass and I end up with that information-based compulsion that tells me I must own more of the stock. I know that doesn't sound very scientific, but I have found the approach helpful. Because there are so many companies to choose from out there, the bar is high in terms of what sorts of strong pro arguments I have to be able to construct that tells me Company A is more important to own than all the other candidates. I'm sure I have looked at hundreds of pm microcaps, so it takes something more than just a couple of solid drill results to catch my attention. One develops a sense of what they like to see at each successive stage in the life cycle, and a nose for when the market may be failing to account for that quality properly. All the while, one is vigilant in seeking red flags that might lead one to consider reducing allocation even if maintaining some exposure remains prudent.

I'm rambling, but I wanted to try to vocalize in some way the process by which I personally select pm microcap investments.

Most important of all, and this goes out to everyone, don't feel discouraged if the process of enhacing proficiency in this area takes time. Thankfully, we're in a powerful bull market for gold and silver that ultimately makes the environment relatively friendly toward a mistake or two. The other advantage in this field, as referenced in the prelude post, is that very small bets can turn into meaningful gains when they do work. So A.) it is not necessary to bat 1000 in order to make money here, and B.) by placing carefully thought-out limits on your allocations to such stocks during the learning process, the proportion of one's investment capital placed at risk can be quite small.

Fool on, everyone, and a huge THANK YOU to Gregg Williams for for taking time out during a busy period for Caza to join us Fools here in our own element. I am very happy with how this went today, and I will be keen to encourage execs from other companies to join us as this series progresses.

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#31) On March 29, 2011 at 6:36 PM, caza2011 (< 20) wrote:

Hello J,

Jurisdition is a very important consideration for any mining company working abroad and silverminer makes great points.

From Caza Gold's point of view, both Mexico and Nicaragua are favourable mining jurisdictions. Mexico has a long history of mining and is one of the best mining jurisdictions in the world. Nicaragua re-wrote their mining law in 2001 which opened up the country to mining and foreign investment.

Of course safety and security are important issues in any country and we make certain our people are well recognized and that everyone knows why we are there and what we are doing. 

Caza also takes very seriously its relationship with the local Ejidos or municipalities and we recognize that to operate successfully in the country we must be a fully contributing member of that community.

Our corporate contribution in both countries incudes, the hiring of local people whenever possible, supporting schools and community activities, road and water reservoir maintenance, and re-vegetation programs.

I expect and hope that as we get more established in these communities our involvement will increase substantially.

Great question! Thanks 

 

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#32) On March 29, 2011 at 7:40 PM, Jbay76 (< 20) wrote:

Many thanks to you Greg for addressing those issues.  Nicaragua is a beuatiful country with loving people, great pineapples and amazing surf, so its comforting to see such measure taking place.  Security is something I always think about in those countries as their history suggests the possibility of a quick 180 back into war and strife, which could always affect production. 

Cheers and thanks again!

J

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#33) On March 30, 2011 at 8:48 AM, rock448xxx (< 20) wrote:

Sinchiruna,

I have just requested CAPS to make Caza Gold a pickable stock. We should be able to pick it soon.

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#34) On March 30, 2011 at 8:48 AM, rock448xxx (< 20) wrote:

Sinchiruna,

I have just requested CAPS to make Caza Gold a pickable stock. We should be able to pick it soon.

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#35) On March 30, 2011 at 11:00 AM, kdakota630 (29.84) wrote:

I think the market cap for CZGDF.PK is too low to be rated on CAPS yet.

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#36) On March 30, 2011 at 9:48 PM, skypilot2005 (< 20) wrote:

On March 29, 2011 at 9:29 AM, Jbay76 (75.07) wrote:

Anyone invest with Merryll Edge?  I tried to put an order through to get shares of Caza Gold but was not allowed to unless it was an order of 25K or more...sucks for the little guy..

I discovered some $ in my breadbox this AM and pulled the trigger.  Well less than 25K shares. 

I used the symbol CZGDF. 

You may want to find a more accommodating broker.  I would.  After all, a trade is just a “commodity”.  As long as it happens when you click your mouse, all is good. 

I wouldn’t tolerate a broker jumping me through “hoops”.  It doesn’t take any unique skills for a broker to execute a trade.  There are many competent companies available to provide the service. 

Hope this helps.

 

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#37) On March 31, 2011 at 9:55 AM, reinman60 (< 20) wrote:

Chris,

Thanks for your great analysis.  I've done my DD and have taken an initial position.  Seems like Caza has some intriguing properties with great potential.  What particularly impresses me, though, is the quality of the people involved.  It seems to me that in an exploration play which is at such an early stage, with no resource report, the experience, and above all honesty and integrity, of the management is a large part of what you are buying.  Will sure be interesting to follow the progress of Caza.  Thanks again.

Off topic, and I apologize for that, but I wasn't quite sure where to post this question. Have you seen the amended resource estimates that Rubicon just filed?  It doesn't seem like there is anything particularly material here, in my very unprofessional opinion, just some technical qualifications to their previous report.  The stock is certainly reacting positively (up 14% as I write this).  I'd love to hear your analysis.

 

 

 

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#38) On March 31, 2011 at 12:28 PM, golfer121501 (< 20) wrote:

Anyone having trouble getting an order filled on CZGDF.PK?  The charts show volume but I am not able to get a seller to work with.  My brokerage company doesn't recognize CZY.  Any tips on getting an order filled?  I  have been trying for a few days now...

Thanks,

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#39) On March 31, 2011 at 1:13 PM, jacobske (< 20) wrote:

Golfer121501,

I'm the last guy to take any advice from! 

Typically when I purchase a foreign issuer pink sheet I bid at least .02 cents above the current ask price.  I understand that can be a lot of money depending on the number of shares you are going to purchase.  I made purchases of CZGDF.pk on 22 and 25 Mar 11 to fillout my position.

Unfotunately right now I don't have real time and/or Level Two stock quotes for my Canadian pink sheet stocks.  In the near future I'm going to be looking for a new online broker service that allows me to trade foreign issue pink sheets without a phone call and provides me real time stock quotes.

I wish many of these junior miners were OTC versus pinksheet stocks.

Kip

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#40) On March 31, 2011 at 4:12 PM, silverminer (30.68) wrote:

golfer,

jacobske has the right idea. I may begin my limit order at the last transacted quote price, but if it doesn't fill soonafter, that usually means the Canadian listed shares have moved a bit higher without a corresponding action in the pink sheets as yet. You can go to tmxmoney.com for better quotes on the Canadian exchange, then use a currency converter site to convert from CDN to USD to gauge an approriate limit price that's likely to get filled. In the big scheme of thing, though, I try not to let a difference of a penny or two stop me from acquiring the positions I want.

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#41) On March 31, 2011 at 4:14 PM, silverminer (30.68) wrote:

reinman,

\

I'll prepare an analysis of the RBY restatement for tomorrow. :)

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#42) On March 31, 2011 at 8:52 PM, skypilot2005 (< 20) wrote:

On March 31, 2011 at 12:28 PM, golfer121501 (98.66) wrote:

Anyone having trouble getting an order filled on CZGDF.PK?  The charts show volume but I am not able to get a seller to work with.  My brokerage company doesn't recognize CZY.  Any tips on getting an order filled?  I  have been trying for a few days now...

Thanks,

Golfer,

Try a Market order or try a Limit order above the last quote. 

All 3 of the brokers I use are using CZGDF as the stock symbol.  Only 1 provides quotes for CZGDF.PK, as well and it was exactly the same volume as CZGDF.

The broker I used to buy CZGDF shares quoted and charged me in USD.  I only trade online. I only talk to a broker when ABSOLUTELY necessary.  That’s just me. 

You have to be ready to move into any Exchange when following Sinch’s and complete your own D. D..  He thinks outside of the box and is open to investigating all credible opportunities. 

In light of this, I am ready to move in all exchanges including the Dar es Salaam.

Hope this helps

 

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#43) On March 31, 2011 at 9:10 PM, skypilot2005 (< 20) wrote:

On March 31, 2011 at 4:12 PM, silverminer (99.88) wrote:

"golfer,

jacobske has the right idea. I may begin my limit order at the last transacted quote price, but if it doesn't fill soonafter, that usually means the Canadian listed shares have moved a bit higher without a corresponding action in the pink sheets as yet. You can go to tmxmoney.com for better quotes on the Canadian exchange, then use a currency converter site to convert from CDN to USD to gauge an approriate limit price that's likely to get filled. In the big scheme of thing, though, I try not to let a difference of a penny or two stop me from acquiring the positions I want."

 **

In the spirit of a collective endeavor, here are some sites for currency conversion:

http://www.xe.com/ucc/

 

http://finance.yahoo.com/currency-converter/#from=USD;to=CAD;amt=1

 

 

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#44) On April 01, 2011 at 5:10 PM, golfer121501 (< 20) wrote:

Thanks for all of the information, I was able to get my order filled and now have some new sites for reference!

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#45) On April 01, 2011 at 6:43 PM, caza2011 (< 20) wrote:

Dear tdonb,

I enjoy interacting with Fools about Caza and would like to continue, however, I don't think my schedule would allow me to have my own blog so I'll leave it to the experts like Sinchiruna.

Regarding your other questions, right now the Caza team is typical of most junior mining companies, "lean and mean". In my opinion, this is a great advantage over larger corporations because smaller companies can make strategic decisions and move quickly without a lot of bureaucracy involved.

Our field geologists can provide project updates to management daily. This cuts down on travel time which can be expensive, time consuming, and of course exhausting. Caza's senior management are all geologists and speak together regularly which also helps in making timely decisions. 

We have offices in Mexico and Nicaragua and a public relations firm in Managua. Finally, Caza insiders own approximately 8% of the company.

Thank you again for your questions.

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#46) On April 01, 2011 at 11:05 PM, mhy729 (29.77) wrote:

Gregg thanks for your time and the information.  Best wishes!

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#47) On April 02, 2011 at 1:04 AM, tdonb (< 20) wrote:

Gregg,

Thanks for the information. I have taken a small stake in Caza and look forward to watching how this company grows over time.  

 

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#48) On April 13, 2011 at 10:18 PM, silverminer (30.68) wrote:

The Caza Gold discussion has been reposted here on Michael Campbell's "Money Talks" website:

http://www.moneytalks.net/market-opinion/5145-compelling-microcaps-series-volume-ii-caza-gold.html

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#49) On June 26, 2011 at 6:17 PM, tdonb (< 20) wrote:

Wow, it is at $0.34 now. I can't see any reason for this. Just might have to buy twice as many shares as at my first purchase. 

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#50) On July 27, 2011 at 8:15 PM, SN3165 (< 20) wrote:

I'm certainly looking to add more shares at these levels.

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#51) On April 20, 2012 at 9:46 PM, tdonb (< 20) wrote:

VANCOUVER, BRITISH COLUMBIA, Apr 20, 2012 (MARKETWIRE via COMTEX) -- Greg Myers, CEO and President of Caza Gold Corp. (otcqx:CZGDF)(frankfurt:CZ6), is pleased to announce that the Company's shares will commence trading on the OTCQX International at the opening of the markets today, April 20, 2012, under the symbol "CZGDF". OTCQX International is the OTC market's prestigious tier.

"The OTCQX will allow Caza Gold to access the vast premium market in the US. There is a large number of US investors who cannot easily acquire shares of Canadian junior mining companies and the potential that these companies can offer to investors. The OTCQX is the place where Caza Gold can reach out to these investors, and we are very excited to begin our relationship," stated Dr. Myers.

Caza Gold Corp. has retained Merriman Capital Inc. ("Merriman") to serve as Principal American Liaison ("PAL") on the OTCQX, responsible for providing guidance on OTCQX requirements. Merriman Capital Inc. is a wholly owned subsidiary of Merriman Holdings, Inc. (MERR, Trade ) and is a member of FINRA ( www.finra.org ) and SIPC ( www.sipc.org ).

Spencer Grimes, Managing Director at Merriman, commented: "We are pleased to have assisted Caza with the launching of its trading on the OTCQX and look forward to extending our relationship with the Company as its PAL."

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