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XMFSinchiruna (27.46)

Compelling PM MicroCaps Series, Volume IV: Barkerville Gold Mines

Recs

32

April 19, 2011 – Comments (56)

On a subconscious level, I won't deny that eyeing my own last name (Barker) within that of a microcap gold producer likely played a role in grabbing my attention when I first came across the company late last year. But from, that point on, it was purely an objective examination of this company's exciting potential that led me to initiate and grow a core position. The first factor to catch my eye immediately as I began due diligence was that this company had already just commenced production at its QR mine and mill facility (purchased from Kinross Gold for a song at just over $2m in shares and warrants, where prior owners had invested $75m).

The company's intention to produce 50,000 ounces during its first year in production will require a positive permitting decision for small-scale production from the Bonanza Ledge property, and the company recently reported positive indications that its application is being favorably received. Once production commences from the enticingly named Bonanza Ledge deposit, the company will focus development efforts on relocating and upgrading a second mill facility purchased late last year in order to further increase throughput capacity and target 100,000 ounces per year by 2013. Any and all significant milestone achievements along the road toward realizing those production objectives will spark powerful upside moves in the share price, and of course the converse applies that any significant obstacles encountered could diffuse some of the anticipation that may be behind the stock's recent breakoutabove $1.50 per share (mcap is now $115m at $1.75/sh.).

In any event, the fact that production is already underway represents a significant de-risking factor for the shares vis-a-vis non-producing explorers. The resulting cash flow will go a long way toward bankrolling exploration and development costs, and I estimate that successful implemetation of targeted production rates are likely to yield net profits either later this year or early next while still providing for expanding development and exploration expenditures.

Of course, another major de-risking factor for the shares is the extent of compliant resources already identified on Barkerville's 100%-owned properties. Within the company's huge land position (112,000 hectares) in British Columbia that hosted 7 historical gold mines (yet another powerful de-risking factor), Barkerville has identified M&I resources of 652,569 ounces of gold (66% of which is within the Company's Cariboo Gold deposit), including 116,640 in the P&P category. Adding inferred resourcfes of 185,729 ounces, we get a global resource identified to date of 838,298 ounces of gold at very attractive grades above 2.5g/t. At $137 per global ounce, the current market cap is above the $100/oz. fair value metric referenced by Alexandria Minerals in our prior discussion, but recall that this is a gold producer rather than merely an explorer, and valuations must be adapted accordingly. More to the point, the company has made incredible mineral discoveries subsequent to those published resource estimates, and in this company we find that same record of consistent exploration success throughout the archives of press releases that substantially buoys an investor's confidence in the further expansion of resources over time.

In September 2010, Barkerville discovered a new zone of gold mineralization through trnching within 100m of the Bonanza Ledge deposit, with those trenches showing sweet hits like 16.8 g/t gold over 38 feet, and later 8.7m of 80.78 g/t! Follow-up channel sampling then expanded both the strike and width of the emerging deposit with multiple 10m-plus hits of between 1.64 and 16.7 g/t gold. The first diamond drilling conducted there has returned 14.1m at 12.1g/t.  As the company explained in its March 21 release: "Four styles of gold mineralization have now been identified in the camp all within close proximity of each other. Three styles; Bonanza Ledge style, quartz-pyrite stockworks and BC Vein (a large gold-bearing quartz strike vein) have all been identified within the Bonanza Ledge proposed open pit area."

Continuing that trend of encountering multiple types of gold mineralization across multiple geological strata located within the region, Barkerville has confirmed "replacement-style mineralization" during the early portion of its ongoing 20,000-meter drilling program its Cariboo Gold project (first indicated in January 2010). This included 16.7m grading 15.g/t within the proposed open pit area, and, more importantly from a resource-expansion perspective, 32.6m grading 10.8g/t encountered 190m northwest of the proposed pit. As the CEO J. Frank Callaghan explained in its February 10 news release: "These are exciting developments around the proposed Cariboo Gold Quartz mine. The current NI43-101 resource and our past drilling here have been based on gold hosted in a quartz stockworks. Finding gold in replacement mineralization similar to the style found at Bonanza Ledge and the neighboring historic Island Mountain Mine brings a new dimension to Cow Mountain. Additionally encountering a higher grading gold in quartz-pyrite veins 190 meters outside of the Cariboo Gold Quartz proposed open pit area really brings up the potential to extend the mineralized area."

None of the recent discoveries discussed above have been incorprated into updated resource estimates as yet, presenting a compelling set of future upside catalysts for the shares.

Because I myself discovered this company only relatively recently, I have not yet had an opportunity to develop the sort of personal rapport that I have enjoyed building with management at many other companies in which I hold core investment positions. I have sought to initiate that relationship by inviting the company to participate in this blog post in similar fashion to Caza and Alexandria's participation in our prior discussions. [I encourage Fools with interest in this company to check back periodically in case someone from the company is able to join us here.] As investors, however, we properly assess management on the basis of prior achievements, and in this case CEO J. Frank Callaghan's 20-year tenure at the helm of this company is as valuable as anything else you'd want to see. He has led the company's amassing of a resource base that will likely sit well over 1 million ounces after recent drilling is considered, and he has seen the company into production in a way that meaningfully reduces risk for shareholders. I am highly impressed with the company's strategic plan for further resource and production expansion, and so I have seen more than enough over the course of my due diligence to feel extremely confident in the effectiveness and strategic direction of Barkerville's current management.

I congratulate Barkerville on a job well done acquiring the QR mine and mill to fast-track into production, and I join with them in anticipating a positive permit decision for production at Bonanza Ledge to utilize a greater portion of the mill's 900-tpd capacity. I believe that ongoing exploration continues to make the case for fast-tracked expansion of mining operations, once approved, to employ the second mill facility that Barkerville proposes to relocate and revamp to a 2,000-tpd facility.

I will apply my my new scorecard system to Barkerville Gold Mines later today or tomorrow, but first I want to run the numbers on a few more companies to give me something to measure the results against. Also, I have not had a chance to seek out information on management's ownership in the company. If anyone has a chance to do so, please post your findings. As always, please ask any questions about this company that come to mind as you have a closer look, and either I or someone from the company will be happy to address those questions accordingly. Thank you again for your own active participation in this ongoing series, and for adding your own findings below as we amass our collective body of due diligence. 

Barkerville Gold Mines company website:

http://www.barkervillegold.com/s/Home.asp

Company description:

Since the mid 1990s the Company has focused on exploration and development of gold projects in the Cariboo Mining District in central B.C. The Company's mineral tenures now cover over 1,225 square kilometers, encompassing seven past producing hard rock mines and three NI 43-101 gold deposits, including the QR Mine & Mill. The QR Property was acquired in February 2010 and includes a 900 tonne/day gold milling facility and a permitted gold mine located approximately 110 kilometers by highway and all-weather road from the Barkerville Gold Camp. Mining operations commenced at QR in February 2010 and the Company began pouring doré gold in September 2010. In November 2010, the Company acquired a second permitted mill currently on care and maintenance in Revelstoke, B.C. for relocation to the Barkerville Gold Camp near Wells, B.C. and upgrade it to a 2,000-tonne/day facility subject to government approvals. In November 2010 the Company and the Lhtako Dene First Nation also signed a Project Agreement in relation to its Bonanza Ledge and Cariboo Gold Projects. The Company has not hedged any of its future gold production.

 

Barkerville Gold Mines Corporate Presentation:

http://www.barkervillegold.com/i/pdf/ppt/CorporatePresentation.pdf

Recent mentions of Barkerville in interviews by The Gold Report:

http://www.theaureport.com/pub/co/2197

http://www.barkervillegold.com/i/maps/claims.jpg

http://www.fool.com/investing/international/2010/03/25/your-treasure-map-to-golds-mother-lodes.aspx

 

Postscript:

It is my sincere hope that someone from the company will see fit to make an appearance, but at the same time I want to point out that we were enormously fortunate on those first two instances, and that it would be somewhat unrealistic for me/us to expect that each company highlighted in this series will have an opportunity or inclination to participate. While I do think it reflects very positively on the quality and character of management in those cases where we do succeed in achieving their direct participation, I certainly would not wish to suggest the converse that a lack of participation conveys something negative about management. Are we clear on that, Fools? Just because we've enjoyed a terrific start at 2-for-2 with respect to achieving direct participation, I ask that you maintain perspective regarding just how rarely companies engage in this sort of dialogue wihtin financial social media. This remains a fresh new experiment in an innovative approach to investor relations, and I aim to approach each company successively without harboring expectations of any kind. Furthermore, I would wish for companies to participate solely because they see a valuable opportunity to connect with existing and prospective shareholders in an innovative way, and not as a result of feeling put on the spot by our collective hopes or expectations. Does that sound like a fair approach for us to maintain here? Thanks for hearing me out on that.

Also, I hope to organize the effort more effectively going forward, and give these companies more time to consider whether or not to participate. I contacted Barkerville only yesterday, and for all I know senior management could be out of the office or otherwise fully occupied this week. My fingers are crossed, but no expectations. :)

56 Comments – Post Your Own

#1) On April 19, 2011 at 10:43 AM, reinman60 (< 20) wrote:

Chris,

I tried finding an OTC pink sheet listing for Barkerville and have been unable to do so.  Is it accessible to US investors?

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#2) On April 19, 2011 at 10:44 AM, geneticbiscuit (98.36) wrote:

Pink:  BGMZF

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#3) On April 19, 2011 at 10:45 AM, silverminer (31.35) wrote:

Sorry ... I should have included the ticker in the post:

BGMZF (or BGMZF.PK as some brokerages will list pink sheets)

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#4) On April 19, 2011 at 10:55 AM, reinman60 (< 20) wrote:

Hmm, my account is at Charles Schwab and they don't seem to recognize the symbol.  Maybe its time to open an E Trade account so I can go direct to the TSE.

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#5) On April 19, 2011 at 10:57 AM, silverminer (31.35) wrote:

reinman60

I'd call and ask what's up. 

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#6) On April 19, 2011 at 11:18 AM, reinman60 (< 20) wrote:

I transposed 2 letters. Problem solved. Dumb.

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#7) On April 19, 2011 at 11:38 AM, jesusfreakinco (28.88) wrote:

Chris

How do you recommend getting positions in stocks like this that have such limited float/volume?

TIA,

JFC

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#8) On April 19, 2011 at 11:44 AM, silverminer (31.35) wrote:

jesusfreakinco

Check the prior posts in the series ... I think we discussed my strategy in one of those 2 posts. :) Basically, check the price in CDN on tmxmoney.com, convert to USD, and consider that your best estimate of a current market price if it's different from the pink sheet listed price. On an up day, one may have to overshoot by a cent or two to get a position filled.

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#9) On April 19, 2011 at 12:09 PM, jesusfreakinco (28.88) wrote:

Chris,

Thanks.  I do remember that now that you mentioned it.  Took a small position in Barkerville today.  Diversity of good quality properties is the key to success IMO.  I have about 18 Jrs / explorers right now and am building as I see some good opportunities.  Looking to build positions in about 30 since any one could be the lottery ticket :-)

JFC

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#10) On April 19, 2011 at 12:48 PM, Jbay76 (< 20) wrote:

Chris,

Your comments in your last paragraph of the initial threadare compeltely reasonbale and amost shoudl have been understood without saying, but its better to be safe than sorry.


As for managment

Mr. Callaghan leads the day-to-day operations of the Company, with the assistance of a dedicated management team. Key members of the team include:
J. Frank Callaghan, President & CEO, DirectorJ. Frank Callaghan has served as President & CEO of Barkerville Gold Mines Ltd. since 1991 and serves as Director for numerous other public and private companies. Mr. Callaghan has sat as President for several publicly traded resource companies in the mining and oil and gas sectors in Alberta, BC and the Yukon. Mr. Callaghan as President of Barkerville Gold Mines has been focused on the Barkerville project continuously for 15 years - since 1994. Under Mr. Callaghan, the Company has been able to amass its large land position, delineate two gold deposits and is credited for the new type of gold mineralization found at the Bonanza Ledge discovery.

Dean Nawata, VP Business DevelopmentDean Nawata has over 18 years of public company experience. He spent 9 years as a licensed stockbroker focusing on financing junior mining and oil and gas projects around the globe with Nesbitt Burns, Research Capital and most recently, Raymond James, formerly Goepel McDermid. Mr. Nawata has also worked for several TSX listed companies in project procurement, corporate development and financing.

Minaz Dhanani, Chief Financial OfficerMinaz Dhanani is the Chief Financial Officer and Corporate Secretary of Barkerville Gold Mines Ltd. Mr. Dhanani brings with him more than 20 years accounting and financial experience obtained both locally and internationally, including several other publically listed resource companies. Mr. Dhanani also has several years of senior administrative experience including a position as managing director of the Workstation Ltd., a business support services firm located in Tanzania. Prior to this appointment, Mr. Dhanani acted in the capacity of controller for the Resource group of companies since December 2007.

Jian-Zhao (Jim) Yin, PhD, P.Geo., Chief Geologist (Wells)Jian-Zhao (Jim) Yin, PhD, P.Geo. received his PhD in Geology from the China University of Geosciences in Beijing and has published over 70 geo-scientific papers. He has more than 17 years of experience serving as Mine Manager, General Manager, Chief Geologist, Chief Representative, and Project Manager for several Canadian, American and Australian mining companies.

Kevin McMurren, Mine Manager (QR Mine)Kevin L. McMurren will be on site, overseeing all of the mining operations at the QR Mine and Mill. Mr. McMurren has over 30 years of mining operations experience most recently as Mine Manager from 2005 through 2009 for New Gold Incorporated at the New Afton Project, an 11,000-tpd, block cave, copper-gold project near Kamloops, BC. In prior years, Mr. McMurren has held senior technical and supervisory positions with an emphasis on the startup of mining operations Projects have included: the LAC Minerals - Billiton Tin Project in New Brunswick, the Canmine Resources' Werner Lake Cobalt Project in Ontario, the Maskwa Nickel Project in Manitoba, and the Tantalum Mining Corporation's Lac du Bonnet Project also in Manitoba.

Dr. Art Ettlinger, PhD, P.Geo., Consulting Mine Geologist Dr. Ettlinger has thirty years of mineral exploration experience with gold, tungsten, platinum, diamond, and uranium projects throughout Canada, the United States, Russia and Central Asia. As a post-doctoral fellow in the Mineral Deposit Research Unit at the University of British Columbia, he studied gold mineralization in the Eskay Creek deposit in the Iskut River area of northwestern British Columbia. As a mining analyst for two Canadian brokerage firms, Dr. Ettlinger performed due diligence site visits on over 100 mineral projects throughout the world. Dr. Ettlinger was formerly President and CEO of Dunsmuir Ventures Ltd., a diamond exploration company exploring in the Canadian Arctic, Chief Geologist at Energy Metals Corporation, and most recently President of True North Mining, a wholly-owned subsidiary of Golden Predator Mines Inc.. Dr. Ettlinger has a B.S. in geological engineering, and a M.S. in mining engineering from Michigan Technological University and a Ph.D. in geology from Washington State University.

What I find intersting is the history of the QR Mine manager, and that he managed the New Afton project for New Gold Inc which has probable reserves of 1 million Au, 3 million Ag, and 993 million #'s of Cu.  If he could run that project and attain those results, surely he can work the same mojo for Barkerville

 

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#11) On April 19, 2011 at 2:43 PM, jesusfreakinco (28.88) wrote:

Chris,

Any comments on when the PM miners will start trading on their fundies again?  This spread trade that Trader Dan talks about it ridiculous.  This has got to be naked shorting by the hedgies, but when will they have to start covering?

My initial thought is that this manipulation won't end until we start seeing some M&A activity and/or some of them start paying a divvy.  Thoughts?

JFC

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#12) On April 19, 2011 at 2:46 PM, tdonb (24.53) wrote:

Chris,

I wanted again to thank you Sinch for making this series. It seems like a lot of work on your part to research these and then to do the write ups on them, so I am very appreciative for the information. It really seems like learning of these junior minors could be very profitable in a few years time.

Also, I appreciate how much generosity you show by taking the time to answer everyone's questions also.

Now, I have a question, and it is a bit off track. It does tie in, however, since I noticed that Jbay brought forth the information that Kevin McCurren worked for New Gold in the past.

I am also looking for some Gold exposure that is a little more developed than these microcap minors, and I know that Pierre Lassonde backs New Gold. He has done very well in the past for Franco Nevada and Newmont, so that gives me confidence. I also saw that you gave them a green thumb back in 2008. Do you still feel they are a solid junior minor with their current resources, production, and inferred resources?

Thanks again. 

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#13) On April 19, 2011 at 3:14 PM, Jbay76 (< 20) wrote:

what does "replacement-style mineralization" mean?

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#14) On April 19, 2011 at 4:25 PM, Jbay76 (< 20) wrote:

Reading the 2011 AGM shareholder circular, on pg 12 it states that Mr. Callaghan serves as President, CEO and current director as a consultant, and gets paid a consultant fee of 180K per yearwith a ttoal compensation in 2010 of 2.28 million.  His consulting started in March 2007.

I don't recall seeing such language used in other proxies and financial statements and wonder if this is normal?  If the leader of the group is designated, and compensated, as a consultant rather than as an executive officer, does this equate to misaligned managment?

 

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#15) On April 19, 2011 at 4:29 PM, silverminer (31.35) wrote:

tdonb,

NGD is a terrific mid-tier player, and their recent acquisition in British Columbia was a great get. Two thumbs up for New Gold ... that and Gammon are two of my favorite growth plays in the mid-tier space.

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#16) On April 19, 2011 at 4:33 PM, silverminer (31.35) wrote:

There is a possibility that we might get a visit from someone at Barkerville. I will keep you posted. :)

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#17) On April 19, 2011 at 4:40 PM, Jbay76 (< 20) wrote:

OK, one more thing that makes me wonder (p17-18 of the  linked document in #14) is the fact that Mr. Callaghan sits on the board of directors with a reporting issuer of Lions Gate Energy and Golden Cariboo Resources. 

I assume this to mean that he is sitting on the Barkerville board as a current member of both Lions Gate and Cariboo Resources, while simulataneously consulting as the President and CEO for Barkerville. Is my assumption correct?  If so, is this typical of the mining industry? It seems like too many allegiances to several companies at once.  Am I over-reacting to this

I have begun reading the 10K and annual reports of other miners to become more familiar with this industry and don't recall reading this type of relationship elsewhere,. but I could have overlooked it.  

The more I participate in this, the more I feel I should start calling myself newbie and not J

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#18) On April 19, 2011 at 4:51 PM, Jbay76 (< 20) wrote:

Management aside for a moment, their press release from March of this year reports the assay resutls from a new find at their bonanza site of

14.1 meters of 12.1 g/T gold between 24.3 and 38.4 meters including,
- 6.3 meters of 25.4 g/T gold between 29.3 and 35.6 meters, and
• 0.91 meters of 11.5 g/T gold between 45.5 and 46.4 meters

That's not bad at all...

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#19) On April 19, 2011 at 7:52 PM, silverminer (31.35) wrote:

Jbay76

Yes, you are totally overreacting, as well as misinterpreting the facts (your assumption stated above is incorrect). :) It's routine for CEOs to sit on the boards of multiple companies. Any services he performs as a consultant are separate from his salaried role as President and CEO. It's fair to ask for more detail about what that consulting entails (I haven't checked the circular), but the rest of your comment is way off base.

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#20) On April 19, 2011 at 8:24 PM, silverminer (31.35) wrote:

Jbay76

Upon reviewing the circular, my own assumption above proved wrong. I apologize for responding too quickly without first reviewing the circular myself.

I assumed from your wording above that the consulting part referred only to his role as director, but you are correct to point out that his renumeration is structured as a consulting fee rather than a salary. I have no problem whatsoever with whatever they want to call it, and my own presumption is that it might have to do with the fact that he also serves as a senior executive for several additional companies (this is also not unusual among mircocap companies, though it would be reasonable for an investor to hope to see those competing contraints upon his available time wind down as the company's activities progress further).

What I found more interesting in the circular was the vast number of cease-trade orders issued by regulatory agencies against a number of resource companies for which Mr. Shirvani and Mr. Thomas served as directors, respectively (pages 7 and 8). I have not encountered such disclosures very often, and it strikes me as quite some number of individual cases when taken in full. There could very well be a simple explanation, but here again that would be a fair question to ask of senior management. Let me reiterate, I jump to no conclusions about those disclosures, as I am not sufficiently familiar with the facts to render an assessment one way or the other, but it's a good example of the kind of item an investor can rightfully inquire about in a polite and respectful manner when conducting due diligence.

JBay ... keep up the good work. Even just the simple discipline of reviewing such circulars and filings is too often ignored by investors. By maintaining that curiosity that makes you want to dig into the nitty gritty, it will be no time at all before you will cease feeling like a newbie. :)

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#21) On April 19, 2011 at 9:16 PM, silverminer (31.35) wrote:

Jbay76

what does "replacement-style mineralization" mean?

Consider the familiar example of petrified wood, which according to my understanding is an example of replacement mineralization. 

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#22) On April 20, 2011 at 2:21 AM, tdonb (24.53) wrote:

I was glad to see that Callaghan owns 9.07% of the common shares and takes no salary. While he did get over a million in options in 2010 and $450,000 in bonuses-a big one for arranging the new mill purchase-he seems very alligned with the company.  

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#23) On April 20, 2011 at 2:30 AM, tdonb (24.53) wrote:

#20. Yes, that is strange. They spend nearly a page outlining how all of the cease-trade orders were not caused by the person who is nominated. I do notice that Callaghan does not have any cease-trade order mentioned in connection to him. Perhaps he is the best one to vote for? He can apparently file financial statements on time.

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#24) On April 20, 2011 at 2:51 AM, tdonb (24.53) wrote:

#20 Later in the document, in Charter A, beginning on page 31, they write, "At least one (1) member of the Committee shall be financially literate. All members of the Committee who are not financially literate will work towards becoming financially literate to obtain working familiarity with basic finance and accounting practices. For the purposes of this Charter, the term “financially literate” means the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Corporation’s financial statements."

Then, they go on for several pages about how they will have an external auditor, "who shall be ultimately accountable to the Board of Directors and the Committee as representatives of the shareholders of the Corporation."

Seems like they have taken precautions to get their financial statements in order. They paid about $100,000 in 2009 and $200,000 in 2010 for auditor fees (p. 21).

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#25) On April 20, 2011 at 4:36 AM, silvermind (< 20) wrote:

JFC,

In answer to your question in #11 (the question all PM investors are asking), there are other possible reasons besides the hedge fund reason given by Dan Norcini.  I came across an answer by a PM guy named Andrew Hoffman today while reading the Miles Franklin free newsletter.   [The Miles Franklin newsletter along with Sinchi have been my guides and still are in the PM world.  The newsletter always features Richard Russell, Jim Sinclair, often LeMetropole Cafe and many others.  The author of the newsletter, David Schectman, is often just fun to read besides being educational.]

Andrew Hoffman basically seems to be saying that the same people who GATA has exposed as suppressing PM prices are also capable and motivated to suppress the shares.  He also says he has been a Trader and says it is ludicrous to think the hedgies are shorting a commodity stock against a commodity.  I have never heard of Andrew Hoffman before today.    

  Here is the link:

http://babybulltwits.wordpress.com/2011/04/18/ranting-andy-occams-razor-and-the-precious-metal-market/#more-6566

Another source that I do know is a heavyweight in the PM world is Eric Sprott.  Here is what Ed Steer says Eric Sprott attributes the shares disconnect to the metals' prices to:

Ed Steer wrote:  

I spoke with John Embry of Sprott Asset Management yesterday...and he wasn't a happy camper watching the non-confirmation of the shares over the last three trading days. He once again stated the opinion that the share prices of both gold and silver were being manipulated.

 

Looks like Sprott is confirming "ranting andy's" view.  

What do you think?

 

 

 

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#26) On April 20, 2011 at 9:05 AM, Jbay76 (< 20) wrote:

silverminer

I completely looked over the cease-order filings, then again, I am still in the dark as to the significance of them.  I can assume, but that doesn't always end well.  Removing management from the evaluation, Barkerville seems like they are finding good amounts of gold where they dig.

Has anyone found what Barkerville considers as their cut-off grade?

It'd be nice to ask their management questiosn today, though it'll be a busy day for me.

Chris, have you been able to use your formula for evaluating Barkerville yet?

Thanks

Newbie J, moving up

 

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#27) On April 20, 2011 at 9:11 AM, silverminer (31.35) wrote:

silvermind

We'll see today with $1,500 gold. If the shares move down today, I'll be ready to rant and rave myself about apparent manipulation. I have kept quiet to date because we lack an evidentiary trail, even though we know the metals themselves were heavily manipulated for years, and we've watched the institutional shorts fail dramatically of late (particularly in silver). In other words, shorting the shares would represent the next logical move ... the last desperate attempt... following failure to contain the metals.

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#28) On April 20, 2011 at 9:20 AM, mhy729 (32.63) wrote:

John Embry isn't Eric Sprott, though he is Chief Investment Strategist at Sprott Asset Management.  Just a quibble.

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#29) On April 20, 2011 at 9:22 AM, silverminer (31.35) wrote:

Jbay76

I can't issue a score quite yet ... I have DD to complete, and comparable scores to compute. :)

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#30) On April 20, 2011 at 10:01 AM, Jbay76 (< 20) wrote:

silverminer

Sorry for being impatient

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#31) On April 20, 2011 at 11:48 AM, reinman60 (< 20) wrote:

Silver stocks priced for 20 to 30 dollar silver?

Commentary from Sprott Asset Management.

http://www.sprott.com/Docs/MarketsataGlance/2011/0311%20Follow%20the%20Money.pdf

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#32) On April 20, 2011 at 12:09 PM, Jbay76 (< 20) wrote:

great read, thanks for the link reinman60!

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#33) On April 20, 2011 at 12:32 PM, Jbay76 (< 20) wrote:

Incidentally, I recommend the presentaton that Chris linked to his original post, the Jan 2011 corporate presentation, as it provides a lot of info.  For example, cut-off grade varies depending on mine site (4g/t at QR, 6 g/t at Bonanza site).  P&P of 116,640 oz of Au at 7 oz/ton from their 43-101.....

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#34) On April 20, 2011 at 3:21 PM, XMFSinchiruna (27.46) wrote:

reinman60

Ditto on the appreciation for posting that link. I've just worked it into an article, and I have you to thank for the timely reference.

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#35) On April 20, 2011 at 3:25 PM, silvermind (< 20) wrote:

mhy729

No quibble at all!  Thanks for the correction in #28.  It was Embry.

 

 

 

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#36) On April 20, 2011 at 3:26 PM, XMFSinchiruna (27.46) wrote:

Hey Fools, unfortunately Barkerville has opted not to participate directly. They did, however, ask me to post their e-mail address (info@barkervillegold.com) and toll-free phone number (1-800-663-9688), and encourage you all to call or e-mail with any questions you may have. I recommend the phone. :)

They added:

I appreciate your call and write up. We remain very excited about the future of Barkerville Gold Mines and hope that all shareholders will benefit as management strives to add value. 

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#37) On April 20, 2011 at 3:38 PM, reinman60 (< 20) wrote:

Chris,

You're welcome.

Looks like SLW has become the new short of choice in the silver market.

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#38) On April 20, 2011 at 3:39 PM, XMFSinchiruna (27.46) wrote:

reinman60

Hah! That would be a collossal mistake. I'm not convinced that's the case, but I am watching the tape.

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#39) On April 20, 2011 at 3:52 PM, reinman60 (< 20) wrote:

Chris,

I agree.  Looks like its being shorted against SLV, though. 

I also read that SLV is becoming hard to borrow.  SLW is easy. IB shows 1.2 million shares available.

 

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#40) On April 20, 2011 at 5:04 PM, Speed03 (< 20) wrote:

The Chris, whats your on the CEO of SLW leaving recently?

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#41) On April 20, 2011 at 5:06 PM, Speed03 (< 20) wrote:

sorry, that should be...

 Hello Chris,  whats your take on the CEO of SLW leaving recently?

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#42) On April 20, 2011 at 5:28 PM, XMFSinchiruna (27.46) wrote:

Speed03

I have none. It doesn't affect their business outlook in the least. Developers will approach SLW for new streams ... it's a business model on auto-pilot. He probably just got bored. :)

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#43) On April 20, 2011 at 6:06 PM, Speed03 (< 20) wrote:

Thanks Chris.

Its not just SLW other silver PM stocks (atleast some that I own) are just not moving with the price of silver but instead they are going backwards. Someone is shorting PM stocks perhaps while covering physical silver???? Could this be the work of JP Morgan or Goldman Sachs??

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#44) On April 20, 2011 at 7:26 PM, XMFSinchiruna (27.46) wrote:

The only thing shorts can achieve when betting against a secular bull market is to prolong the inevitable.

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#45) On April 20, 2011 at 8:25 PM, rfaramir (29.37) wrote:

"it's a business model on auto-pilot. He probably just got bored."

Excellent! I can't find who said it, but when evaluating the long term prospects of a company, calculate its value from the perspective of it being run by idiots, because eventually it will be.

It's nice when a company is so well structured that smart and charismatic leadership is not required to keep running.

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#46) On April 20, 2011 at 11:36 PM, reinman60 (< 20) wrote:

"The only thing shorts can achieve when betting against a secular bull market is to prolong the inevitable."

Agree. This is the mother of secular bull markets, supported by the stongest macroeconomic fundamentals imaginable. But,sometimes the shorts get stubborn and don't give up.  Or in this case, can't give up.  Unlike a small short that cover their positions and slink away to lick their wounds, the shorts here are very large, and they are trapped.  

I can't believe that the protagonists in this drama are stupid enough to be net short (I'm guessing that one of them is my former employer), but clearly they have large short position on the COMEX. While they may be hedged, their problem is that eventually they have to deliver the physical, and there isn't enough available, and they're getting squeezed.

I think a lot of people have never seen a real short squeeze.  A real squeeze doesn't have anything to with just covering your position and moving the price against you in the process. It has to do with having to deliver when the commidity just isn't available at any remotely reasonable price. 

There was a classic short squeeze in hard red wheat futures a number of years ago, and it it was breathtaking,  As I remember, the price rose some 500% in 3 or 4 trading sessions.

Could this be the next systemic risk event?  I hope we the taxpayers are not on the hook for this one.

Just for the record, my comments about SLW are meant to be a sort of bemused take on the absurdity of the short term gyrations in the market, as well as evidence of a broken market structure. I guess I'm just atuned to the trading aspect of these markets, but I certainly don't do that anymore.  I'm an investor now, and long SLW as long as the fundamentals support further price appreciation. To say that thay do is an understatement.

Sorry for going on so long here. Don't mean to ramble, but I think we are all witnessing a historic event in market history.

 

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#47) On April 20, 2011 at 11:48 PM, jesusfreakinco (28.88) wrote:

silvermind

I think you are right - another attempt by TPTB to discourage gold and silver investors.  It won't last.  Just wait until M&A gets heated up and the divvy's kick higher.  They'll be covering their shorts in miners like they are having to do now in the miners.  My thoughts...

JFC

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#48) On April 21, 2011 at 1:11 AM, silvermind (< 20) wrote:

BTW - nobody was shorting Copper Fox today!

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#49) On April 21, 2011 at 1:21 AM, silvermind (< 20) wrote:

JFC,

Regarding shorting by TPTB: in the last few decades they have given new meaning to the expression "the power of the press".  

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#50) On April 21, 2011 at 1:39 AM, silvermind (< 20) wrote:

Silveminer and fellow Fools,

I hope it is okay to post a comment regarding Alexandria Minerals in this string.

In the AZK news release (4-20-11) today this is the hottest item I found:

Separately, an economic study has recently been completed at the Company’s Orenada gold project by a well-known independent engineering firm, BBA Associates of Montreal. Although this study is not compliant with guidelines as laid out by National Instrument 43-101, the Company will be seeking joint venture partners in the coming months.

I would like to see that BBA study!

And one observation regarding AZK - yahoo, scottrade, etc don't get very current reports regarding the stock volume and pricing.  Any suggestions on where to get real time reporting on their stock?

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#51) On April 21, 2011 at 5:15 AM, XMFSinchiruna (27.46) wrote:

I get my Canadian market data here:

http://www.tmxmoney.com/en/research/index.html

Solid update from Alexandria ... thanks for posting.

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#52) On April 21, 2011 at 3:39 PM, silvermind (< 20) wrote:

I meant AZX in comment #50 above (AZK was not correct) regarding Alexandria Minerals 4-20-11 news release.

 

Silverminer,

Thanks for the tip on tmxmoney (in comment #51) - it looks good.

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#53) On April 21, 2011 at 5:02 PM, mhy729 (32.63) wrote:

I think a lot of people have never seen a real short squeeze.  A real squeeze doesn't have anything to with just covering your position and moving the price against you in the process. It has to do with having to deliver when the commidity just isn't available at any remotely reasonable price. 

There was a classic short squeeze in hard red wheat futures a number of years ago, and it it was breathtaking,  As I remember, the price rose some 500% in 3 or 4 trading sessions.

Wow...

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#54) On April 25, 2011 at 2:54 AM, tdonb (24.53) wrote:

Hey, speaking of short squeezes in silver, when are we going to get a compelling microcap silver miner?

Thanks

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#55) On April 27, 2011 at 6:30 PM, 100ozRound (29.48) wrote:

Wow!  I've been gone too long and have missed too much of this series.  Looks like I've got some reading to do!

Good work Chris!

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#56) On February 06, 2012 at 12:34 PM, XMFSinchiruna (27.46) wrote:

Update:

I recently sold my entire stake in Barkerville, and will be watching this story from the sidelines from this point forward. I think they have uncovered a phenomenal mineral deposit, but I do not have the necessary confidence in company management to retain investment exposure.

Sinchi

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