URanium stock Rising High
A resources company that bought a bankrupt prospector has now struck gold - and there's a chance of big uranium finds, too.
We've had three bites of the cherry in the past two years of gold prospector Navigator Resources (ASX code: NAV) and there'll be more fruit to pick yet when drilling begins on its rare earths-uranium targets in the Cummins Range of Western Australian's Kimberley region.
Navigator has traded up from a 12-month low of 17¢ to a high last month of $1.35 and closed the financial year on the last day of trading at $1.27. Last week, the company reported a 25% increase in its resource estimates at its Tonto and Merton's Reward gold projects north-east of Leonora.
Profit-takers rapidly sold the stock down to as low at 86¢ at one point, since they can now lock their taxable gains into the new financial year and hold the taxman at bay for another 12 months. Other sellers were probably disappointed that the announcement included no update on the planned drilling of the company's rare earths-uranium prospect and, of course, many uranium hopefuls have eased significantly in the past few weeks.
New buyers at prices under $1 can expect a good run for their money. Managing director and geologist Tom Sanders tells me the Cummins Range program "is not too far away".
We first bought into Navigator ( B, March 21, 2006) with the purchase at 5.2¢ of 20,000 options exercisable at 20¢ by June 30, 2007. We sold too soon, but doubled our money when we dropped them at 12¢ in September last year. The Speculator then bought back into the options earlier this year ( B, March 6) at 31¢ and later paid 20¢ to convert to shares at a total cost of 51¢ each.
A bit of history: Navigator floated in 2003 with a bare $3m in cash and got lucky when the now-failed Sons of Gwalia went into administration then liquidation three years ago. It lodged the winning bid of just $250,000 with the Gwalia administrator for that company's dormant gold prospects embracing many shallow old workings embracing the Mertondale-Cardinia shear zones with a known productive strike length of more than 35km. This was partly paid for with an issue of 1 million Navigator shares at 13¢ each. Then, in May 2005, Navigator scored another coup when it paid just $5000 to cancel a buy-back option the administrator held over the areas.
With last week's news, the company has now established a resource of 12.5 million tonnes of 2.2g/t gold for 872,300oz - a 25% lift in global ounces and a 10% lift in grade since its last resource upgrade seven months ago.
Navigator also confirmed two rigs were at work under a $5m exploration budget for 2007-08 "to accelerate resource build and assess multi-million ounce exploration potential".
A soon-to-start 5000m drilling program at Cummins Range will test an anomaly CRA discovered in the 1970s with an estimate of 3 million to 4 million tonnes of 2% to 4% rare earths plus uranium content never assessed.
Opportunities abound as profit takers sell down stocks to keep ahead of the taxman.
PROFIT TAKERS OFFER WINDOWS OF OPPORTUNITY: Several of our portfolio stocks were aggressively sold down last week as profit takers unloaded their inflated paper on to the market. That pent-up selling pressure was to be expected following the end of the 2006-07 financial year on June 30. Sellers after that date could move their taxable gains into the new 2007-08 year and won't have to pay tribute to the taxman until after June 30 next year.
The sell downs also present canny new investors with buying opportunities in companies with potential for further success, such as some of our prospectors with active field programs. Such stocks sold down last week include:
- Andean Resources (ASX code: AND), the successful gold prospector in the Patagonia region of Argentina, which was sold down to as low as 91c last week, from a high of $1.12 in the week before June 30 and a recent 12-month high of $1.18.
- Prairie Downs Metals (ASX code: PDZ), with a zinc-lead-silver project 110km south-east of theWA iron ore centre of Newman,, sold down to a low of $1.05 last week from a pre-June 30 year's high of $1.30.
- Navigator Resources (ASX code: NAV), the principal subject of the forthcoming Speculator column in this week's Bulletin magazine, on sale Wednesday. An expanding gold prospector with a forthcoming drilling program on a rare earths/uranium project, this company was sold down from a year's high of $1.35 in the last week of June to as low as 86c last week, before recovering to close at 91.5c.
MINERAL SANDS GIANT SEES CRISIS: West Australian mineral sands miner Iluka Resources (ASX code: ILU) has fallen from a year's high of $7.70 to $6.01 last week after new CEO David Robb warned of a review of "all options" for its declining WA operations, including possible mine closures, assets sales and job losses.
Its residual heavy mineral (HM) sands in WA have a relatively low content of high-value zircon (13.2m tonnes of contained HM, with an average grade of 5.1%; ilmenite assemblage of 59% and zircon 9%). Hence the company is studying a possible $400m development of its rich but remote Jacinth-Ambrosia deposit in the Eucla basin of South Australia, about 200km north-west of Ceduna on the Nullabor Plain. Its resource there comprises 9.4m tonnes of contained HM with a relatively low grade of 3.9% but a zircon assemblage of 48%.
Iluka, at $6.01 carries a market capitalisation of $1429m, compared to its much smaller neighbour on the northern Perth basin and our portfolio stock Images Resources (ASX: IMA), which at a last sale of $2.37 carries a market capitalisation of $177m. Spectacular drilling results on its tenements have led to expectations that the company in coming months will confirm a resource in excess of 100 million tonnes of greater than 5% HM, including a high grade core of up to 10 million tonnes of 10%-plus HM.
Punters might see some fertile ground here for corporate rationalisation. I note RM Research, of Perth, published a review on Image in mid-June at $2.22 with a price target of $3 a share.
Riding high on resources
Three stocks in the portfolio climbed to record highs last week giving followers good reason to smile.
ANDEAN RESOURCES FINDS A NEW SUMMIT: Followers of the Speculator, who sometimes complain that I manage to sell out of stocks for a few cents more than they do, may all now chortle.
Two editions ago ( The Bulletin, June 19) I halved the portfolio's holding in Andean Resources and sold 6000 at 76c. As I've said before, I still have confidence in the stock, but I have to buy and sell so I've got something to write about.
So, last Friday, our Argentine gold prospector shot to a record high of $1.18 after reporting a string of excellent drill results from its Cerro Negro gold project in Patagonia.
Best was a sensational 51.8m intersection below 227m averaging 25.3g/t gold plus 379g/t silver. All seven holes were reported with an assumed cut-off grade of 2.5g/t gold. They were all from the silver-rich Eureka West vein whose strike length has now been doubled while confirming mineralisation remains open to the west.
Site geologist David Shatwell reported Andean's phase three drilling program was now complete, with 8003m drilled for 25 diamond drill holes on the Eureka West vein (results of six are yet to be reported) and eight holes on the Main vein. A new resource upgrade will be available in the third quarter of 2007.
A NEW HIGH ALSO FOR ZINC PROSPECTOR: We added TNG Ltd (ASX code: TNG) to the magazine's portfolio at 56c ( The Bulletin, June 19) after I learned that a party of resource writers and analysts would soon tour the mine. As it happened I was one of them and a jolly four days we had tramping around the Top End of the Northern Territory and barramundi fishing on the Ord River while we checked out the immense zinc-lead-silver project TNG is now drilling. More of that in Wednesday's edition of TheBulletin. Readers who followed the Speculator should be well pleased. The stock ran to a new high of 92.5c last Friday, up from a low this year of 22c and now carrying a market capitalisation of $130 million.
COOPER ENERGY TOUCHES YEAR'S PEAK: South Australian oil and gas producer Cooper Energy (ASX code: COE) touched a year's high last Friday at 79c valuing the company at $130m. We added the stock to the magazine's portfolio ( The Bulletin, June 19) at 56c after the company announced plans for eight wells to be drilled by the end of the year.
They included a large prospect to be spudded on July 15 (Kurnia-1) on the Indonesian island of Madura, 80km east of the city of Surabaya, in which Cooper has a 30% free carried interest.
The company has since added an extra two appraisal and development wells on the Worrior oilfield in South Australia's Cooper Basin on PEL93 to boost production and reserves.
The company confirmed last week that its "proved reserves" were expected to be just greater than one million barrels of recoverable oil reported for June 30, 2006. Production for the year 2006-07 is expected to be in the range 230,000-275,000 worth almost $20m in sales revenue with final numbers to be announced at the end of July.
What we didn't mention in our June 19 review was Cooper's long-dormant Tunisia area adjoining the east coast of Tunisia in the Mediterranean Sea. Last week the company announced the letting of a $US1.5m contract to acquire nearly 1000km of 2D seismic on its Bargou permit to be shot over about 19 days beginning in early July. This will prelude further seismic shoot next year and the probable drilling of a first well in early 2009. Cooper holds 100% of this project and can be expected to line up a fruitful farm-out deal for a major to pick up most of the drilling costs.