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 Show printable version of 'Bottom-Fish Action Report for March 14-27, 2010' in a New WindowEmail 'Bottom-Fish Action Report for March 14-27, 2010' to a friendSun Mar 28, 2010
Bottom-Fish Action Report for March 14-27, 2010
    Publisher: Kaiser Research Online
    Author: Copyright 2010 John A Kaiser

 

Bottom-Fish Action Report for Week of March 14-27, 2010

Caution grips Junior Resource Sector

The junior resource sector market has been treading water since the third week of January 2010 in what appears to be a self-imposed halt of the uptrend that started in late March 2009. The sharp downtrend that accelerated in early February did reverse itself abruptly in mid February and the TSXV Index has been inching upward. But the uptrend has been tentative, reflecting nervousness that despite flickering signs of an economy recovery in the United States, bad news lurks on the horizon. A dominant theme has been the fate of the Euro in the face of the Greek debt crisis, with a domino effect rippling through the PIIGS cluster (Portugal, Italy, Ireland, Greece and Spain). Europe is already showing signs of sinking deeper into recession, and one cannot imagine that the collapse of the Euro will be overly helpful in stimulating the European economy. The stick in the mud appears to be Germany; perhaps those images of Germans lined up to feed stacks of Euros into bill counting machines before purchasing physical gold or silver were representative of the middle rather than the fringe. Ironically, the prospect of a Euro collapse has not been overly good for the gold sector because it has triggered a flight to the perceived relative safety of the US dollar at the expense of gold which has been trapped in a channel between $1,050 and $1,150 since late December 2009.

An increasingly important theme that has helped pause market enthusiasm for the non-gold junior metals sector is the fear that China's $585 billion fiscal stimulus program in 2009 has created a domestic asset bubble that could lead to an internal crash which will wipe out western hopes that Asian consumer demand will revitalize the global economy. Although copper has recovered nicely from its late January tailspin, hovering at $3.40 per lb as the LME warehouse stocks start to decline, the consensus is that this price level is being maintained by the unwillingness of the low US interest based carry trade to accept that the party is coming to an end. While I am suspicious that the "bubble spotting" craze now underway is a classic example of turning the unexpected outcome of the recent past into a metaphor for the destiny of every new uptrend, I do harbour nagging fears that China's perceived strength is puffed up beyond reality and is vulnerable to a serious setback.

It is my view that the American empire has peaked and is now in a long term process of decline which can be understood in either relative terms where the standard of living of the rest of the world catches up while that of the United States stagnates, or in absolute terms where the American standard of living is in a death spiral for the simple reason that China and India have been empowered with the methods of the "west" and have an enduring competitive advantage unless the rules of the game are changed. The tea party movement, which is devoid of any coherent strategic vision, reflects intense anxiety over a death spiral destiny for the United States. While it looked like the tea party movement was gaining momentum, it has charged over the edge of a cliff. The Obama administration's successful passing of a new health care bill spells the death of the tea party movement, and not necessarily because a Republican dolt was caught on video mocking a Parkinson's disease victim who was campaigning for a health care bill. The new health care bill is a far cry from the universal health care systems of Canada and Europe, and spells neither relief from out of control health care costs nor will it result in any of the dire consequences predicted by the tea party, at least not before the tea party has faded into oblivion for lack of topics to focus on. In terms of pros and cons to get worked up about, it is a non-event, because the real problem looming for the United States is the social security entitlement promises that have been made to the boomer generation and which their children are supposed to bankroll through service sector jobs such as stealing from the pension plans of the boomer generation (aka Wall Street). With the health care milestone behind him Obama will tackle the real problem, which is the competitive role of American workers in the global economy of the future. In this regard it looks like the United States is losing the chess game, with no obvious strategy in sight, or at least being contemplated, to turn the tide. Among the domestic issues Obama still has to tackle is the foreclosure tsunami which is still building in the medium to upper residential home price range. However, because the United States is still the world's largest economy, and without question still has military supremacy, it has the ability to declare "fuck this game" and knock over the chess board. The best way to do this without getting accused of being a sore loser is to accuse China of cheating, and this is what the dispute about the peg of the Chinese renminbi (yuan) to the US dollar is all about. Nobody can currently beat the China Price without protectionist trade measures, but if the soothsayers who suggest the renminbi is undervalued by 25%-40% are correct, then a sharp appreciation by the renminbi against the US dollar, and thus against all currencies, would seriously erode the competitive advantage of the China price. While China would benefit from lower raw material import costs, such a revaluation would cause an economic seizure and inflict a substantial loss in domestic terms on China's $2.3 trillion foreign reserves. China has been reluctant to even entertain a modest currency appreciation, which is stoking tensions between China and the rest of the world. China's vulnerability is that the chess board at which it sits is located in the house of America, and if America chooses to upset the board, it is China that has to go away. And while the chess pieces scattered all over the floor will be a sorry sight indeed, they are America's to pick up and put back on the board to be moved by players chosen from members of the household. This is another way of describing the fragmentation of the global economy that I see as the only way for the United States to buy itself some time to cope with the rise of Asia.

The Obama administration is marching ahead with full knowledge of several unpleasant realities as the mid term elections approach in November. The foreclosure cycle has not climaxed and will have a further negative impact on jobs and GDP over the next six months. Public services at the state and municipal levels will take another hit as the taxable property base lurches lower in value. Obama's attempt at bi-partisan law-making has undermined his credibility and by necessity now resides in the wastebasket. The stubbornness of Israel and Iran regarding their respective national agenda is not fostering Middle East stability. As more details emerge about how the financial crisis was created by the "too big to fail banks" and how its handling by Geithner and Summers led to high fives on Wall Street while Main Street suffered, guess who will be the lightning rod for the public outrage? And economic logic, at last as guided by free market principles, dictates that there is no reason to re-establish manufacturing on American soil unless labor costs are slashed, environmental controls diminished, and social security abolished. As things now stand there is not much good that will be reportable by November and this would be the case regardless which party is in power. With the incumbent party doomed to take a hit in the mid term elections, and because the opposition has been hijacked by a mindless stupidity it would be irresponsible to let anywhere near wielding power, it would be no surprise if Obama adopts a strategy of radical rule change. What is worrisome about this approach is that the outcome is unpredictable. Although these political concerns seem far removed from the junior resource sector, how they play out could have a negative effect on metal prices, particularly if the global economy has to endure a double dip recession in a context where China has itself become trapped in a death spiral. While the debate seems to dwell on when and how much the renminbi will appreciate against the US dollar, some people have floated the "black swan" idea that China may in fact devalue its currency, and not necessarily by choice.

Neither the 2009 nor 2010 Bottom-Fish Editions have made much headway during the past six weeks, due in large part to the wait and see attitude investors have adopted with regard to the destiny of the global economy. During the past week two of our gold bottom-fish, Brett Resources Inc and PC Gold Inc, both of which had been treading water, made strong moves. In the case of Brett the junior received a takeover bid from Osisko which the management accepted in part because it too is nervous about the uncertainty shrouding the future. In the case of PC Gold the junior finally delivered an intersection from its Pickle Crow gold project which convinced the market that this old high grade mining camp may have another life, perhaps not as glorious as the Red Lake camp, but in a similar vein. We published detailed comments this week in which we recommended that bottom-fishers and spec value hunters hold Brett to see if Kinross will make a better offer, and hold PC Gold until at least $2 before even thinking about taking profits. During the past two weeks we also provided updates on Peregrine Diamonds and Quest Uranium, both core KBFO positions we think will do very well on the basis of their fundamentals rather than general market sentiment. In an uncertain market like this speculators need to focus on strong stories that have attracted broad audiences capable of growing larger. As Bob Bishop used to say, this "is a selective market".

Above Bottom-Fish Range Within Bottom-Fish Range Below Bottom-Fish Range Recently Closed Out
Updated this Week New 2 Year High New 2 Year Low New Bottom-Fish High New Bottom-Fish Low

Bottom-Fish Recommendations made from March 14-27, 2010
Company Date
Price Recommendation Action Net
Cash
Net
Stock
Gain New Status
Underworld Resources Inc 3/18/2010 $2.58 BF Spec Cycle Sell 75% Hold 0% Sell 3,947 @ $2.58 $12,249 0 1,125% BF Closeout Hold 0%
Fancamp Exploration Ltd 3/24/2010 $0.46 Closeout Absolute Spec Value Buy Cycle Sell 541 @ $0.46 $249 0 -75% Closeout Hold 0%

New Comments
Company
Volume High Low Close Chg Status
Brett Resources Inc (BBR-V)
31,256,800 $3.000 $1.880 $2.930 $1.010 Good Absolute Spec Value Buy
Fancamp Exploration Ltd (FNC-V)
621,400 $0.490 $0.390 $0.440 $0.020 Good Absolute Spec Value Buy
NICO Mining Ltd (NCL-V) 0 $0.000 $0.000 $0.340 $0.000 BF TP Buy $0.20-$0.29
PC Gold Inc (PKL-T) 25,288,400 $1.630 $0.650 $1.580 $0.870 BF Spec Cycle Hold 100%
Peregrine Diamonds Ltd (PGD-T)
1,762,200 $1.940 $1.680 $1.890 $0.050 Good Absolute Spec Value Buy
Quest Uranium Corp (QUC-V)
2,929,000 $3.010 $2.310 $2.850 $0.290 Good Relative Spec Value Buy
Underworld Resources Inc (UW-V)
11,048,500 $2.590 $2.400 $2.420 ($0.120) BF Spec Cycle Sell 75% Hold 0%

Bottom-Fish Quick Notes

Brett Resources Inc (BBR-V: $2.09)
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Brett was halted Wednesday morning March 17, 2010 at the request of the company pending news. Because Brett recently raised $30 million at $2.10 through a bought deal which will fund work at Hammond Reef through the rest of the year, there is no reason to raise additional capital. Because Brett ranks among the cheapest and best leveraged ounce-in-the-ground gold plays involving a net resource base in excess of 3 million ounces, it is also unlikely management would entertain a friendly takeover bid at current prices unless it involves a substantial premium of the sort a major typically does not offer. There are no other advanced gold juniors halted so it is unlikely to involve a "New Gold" style merger. On March 9 Brett announced a benefits agreement with 8 first nation groups which includes the issue of 2,350,000 shares in stages tied to the project development cycle, so it is unlikely that Hammond Reef has become the subject of a blockade, which Brett's IR rep Tony Perri was able to rule out. Perri, who appears to have been kept in the dark about the nature of the halt, was only willing to speculate that perhaps Brett was in receipt of significant assays from drilling on the RAB zone to the south of the Main zone and as far as he knew drilling had not yet started on the Upper Seine Zone target on the Manley Patents to the northeast where there is potential for a bluesky surprise. I was able to speak briefly with Ron Netolitzky who was only willing to state that the halt was not related to a negative development, that it should be lifted by Friday if the lawyers don't delay things, and that management will be able to make a case that the new development is good for shareholders. This is a clue that Brett has entered into a complex transaction whose wisdom may not be immediately obvious to shareholders. We will provide an analysis when the details are revealed.

Bottom-Fish Action Report for March 14-27, 2010
Peregrine Diamonds Ltd (PGD-T: $1.80)
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Spec Value Hunter Comment - March 17, 2010: Peregrine getting set to drill northern Chidliak targets

Peregrine Diamonds Ltd no longer appears intent to conduct another rights offering, having secured the exercise of 2,685,158 warrants at $1.00 prior to their escalation to $1.50 after February 19. This is good news because a rights offering is typically a disruptive two month ordeal and we are very close to a resumption of news flow capable of boosting the fundamental outlook. There are now 1,066,205 warrants left that are exercisable at $1.50 until Feb 19, 2011. The diamond junior's balance sheet was starting to look a little weak at the end of December, but is now strong enough to carry the company through the winter drill program which is funded by BHP Billiton. During PDAC I had a chance to chat with Peregrine president Brooke Clements and exploration VP Peter Holmes. I was surprised by their optimism about the lake covered 165/166 northern targets which are scheduled for drilling in early April. Each target will get three holes for a total of 2,000 metres that could conceivably collect 5 tonnes of material. During a presentation in December I was shown a pyrope chemistry plot for indicator minerals associated with targets 165/165 that showed a single garnet in the upper left quadrant where one starts to get excited about the diamond potential if there are lots of grains present. Since then Peregrine has received many more micro-probe results from this indicator mineral collection which strongly support the diamond prospectivity indicated by the initial results, and while they are not showing this data it does appear to be the basis for management's expanded optimism for this particular cluster which includes a third anomaly to the northeast. Holmes and Clements are very confident that these targets represent diamondiferous kimberlite pipes, but they remain cautious about the actual pipe sizes these large geophysical anomalies will deliver after last year's drilling surprises where intersected kimberlite did not map well with geophysical interpretations. While there is plenty of potential for many additional kimberlites in the central and southern indicator anomalies of the Chidliak property, the distribution of the indicator minerals in the northern anomaly is more suggestive of a discrete cluster similar to Gahcho Kue on the Slave craton. In fact the distance between 165/166 and the central cluster is about the same as between the Diavik cluster and the DO27 pipe on which Peregrine spent more than $50 million before concluding that this pipe and its smaller companion were not economic on a standalone basis. In the case of Chidliak both locations are under the same ownership, but to be part of a mining plan the 165/166 targets need to be pipes whose tonnage is big, that is, matches the surface expression of the geophysical anomalies. The next meaningful news release from Peregrine will thus be a report on how much kimberlite was intersected and how well it maps to the geophysical anomaly, which we could hear by the end of April, followed by micro-diamond results in June which will reveal the diamond potential.

Peregrine plans to test 10 lake covered targets this winter. Confidence is high for the 5 targets for which ground geophysical surveys were conducted last year; ground surveys will be conducted on the other priority targets during April as well as more subtle lake covered targets that will not be drilled until early 2011. If Peregrine hits kimberlite we should have micro diamond results in late June before the summer program begins. This summer looks set to be a drilling blitzkrieg with BHP Billiton setting a goal of 20 new kimberlites for the 2010 season. By summer the market will be more focused on what the mini bulk sample grades are for the CH-6 and CH-7 kimberlites, which are unlikely to be known before Q4 of 2010. Much more important to me during the summer will be the nature of the targets that underlie any new summer discoveries. All the targets investigated during the past two years were prominent magnetic low or high anomalies, with diamondiferous kimberlites represented by both types. This season drilling will include "lower" priority targets of a more subtle nature of which there are many, in fact more than 250 and this count does not include the results of the airborne geophysical survey now underway. If Peregrine starts converting these targets into pipes during the summer it will boost the market's perception about the richness of the Chidliak kimberlite field, which would receive a further boost in late Q3 or early Q4 if any such kimberlites deliver good micro diamond results. The speculative hypothesis that I have been making is that Chidliak is a new diamond field with a scale and pipe abundance comparable to the Lac de Gras field which hosts the Ekati and Diavik Mines.This hypothesis has a lot of supporting evidence, but it does not yet have full confirmation. The 2010 winter and summer work programs will put that hypothesis to the test, and the results will determine whether or not BHP elects to go to 58% by funding all subsequent work needed to deliver a bankable feasibility study.

I did glean an interesting tidbit from Holmes about the Qilaq project where the indicator mineral hotspots appear to be more isolated and discrete than at Chidliak based on the sampling done so far. Apparently the topography is much more variable south of Chidliak in the form of hills and valleys which disrupt indicator mineral trains; as a result Holmes is not ready to concede that Qilaq might at best host a stray cluster here or there similar to Renard, Jericho or Gahcho Kue. Also, with regard to the Cumberland Peninsula project, the Geological Survey of Canada will be presenting a new geology map during the Nunavut Mining Symposium in Iqaluit on April 13-15, 2010. When I asked Peter Holmes how the De Beers team, of which he was a member, had managed to overlook southern Baffin Island, he responded that all the documented geology indicated that Archean aged rocks were not present in the southern part but were present in the central part where indicator minerals had been documented. De Beers thus focused its regional sampling work on the central part of Baffin Island where it did find indicator minerals with excellent diamond chemistry which unfortunately could only be traced to high grade but smallish dykes similar to the sort that Shear Minerals found on its Churchill project on the mainland. At this stage the new GSC mapping data is academic for the Chidliak project, but potentially newsworthy for the 100% owned Qilaq and Cumberland projects where Peregrine has barely started the diamond exploration cycle.

I should also note that on February 25, 2010 the Canadian brokerage firm Salman Partners published a research report authored by veteran analyst Ray Goldie and Patrick Donnelly which recommends Peregrine as a "speculative buy" with a 12 month price target of $5.20. They devote half the 50 page report to explaining the Chidliak story while the other half is a crash course on understanding the diamond sector. They argue that Chidliak is the most significant diamond discovery since Ekati, Diavik and Snap Lake, though I might quibble about including Snap Lake unless we use money sunk into the project as the measure of "significant". This apparently is the first time that a brokerage industry research department has devoted any serious effort to Peregrine's Chidliak project. What is interesting about the report is how Goldie comes up with his $5.20 price target. He homes in on the CH-6 kimberlite and converts the 1-2 hectare surface expression of its associated geophysical anomaly into a resource of 9 million tonnes to a depth of 250 metres, probably using Peregrine's latest interpretative cross-section as a guide. He assumes a grade double that of Diavik's A154 South pipe, namely 800 cpht, which you can infer from the micro diamond results from at least one of the holes, and generously applies that grade to the entire kimberlite. For value he adopts the cautious number of $61 per carat while admitting there is no basis yet for assigning any carat value to the Chidliak pipes, including the parcel obtained from CH-1. These numbers convert into a pleasing rock value of US $488 per tonne and an in situ value of $4.4 billion. Taking into consideration Chidliak's relative proximity to infrastructure Goldie invents a capital cost of US $639.5 million and a life of mine cash cost of $13.32 per carat for a ten year 2,500-3,000 tpd mine that would produce 6.9 million carats per year starting in 2019. Other parameters include a 6.1% Nunavut royalty, which I assume is a net profits royalty and not a gross royalty, a 40% corporate tax rate, a currency exchange rate stated as Cdn$/US$ equalling $0.816 which suggests an awful lot of pessimism about the future of the US dollar unless they mean to be pessimistic about the loonie, and an 8% discount rate. They also make the silly assumption that when the mine goes into production the current 81.3 million shares will be outstanding and the options and warrants that boost the fully diluted figure to 102.4 million will have vanished. Using these numbers in a simple discounted cash flow model I end up with $3.72 as a price target, while they come up with a higher number of $5.55 per share. They also apply a cash flow multiple approach which generates a $4.79 per share target, and the average between the two works out to $5.20.

Their price targets are, of course, pure nonsense because of the uncertainties the Salman analysts readily admit and because they are assuming nine more years until the start of commercial production during which many parameters can change. The important point, however, is that they have used the CH-6 kimberlite as the starting scenario to arrive at a pretty interesting price target, which has plenty of room to grow if we get confirmation that Chidliak is host to multiple economic kimberlites. As Peregrine generates fresh information in 2010 at least one brokerage firm will be paying attention and recrunching its numbers, and soon its competition will have dissected the Goldie report and be busy cranking out their own versions. A cynic might argue that this is unlikely to happen because in the best case scenario BHP will elect to go to 58% after which there will be no financing needs on Peregrine's part which the brokerage firms could serve, and failing a stepup to 58% the project would be stigmatized as "not good enough" and thus not overly attractive to the brokerage industry. But BHP is no doubt aware that major diamond projects can cost $100-$200 million to bring to a permitted construction goahead decision. BHP will vest after spending only $22.3 million and will be asking itself whether solely funding up to another $180 million in order to enable its partner to raise debt financing is really worth the extra 7%. The alternative scenario is to let Peregrine fund its 49% share by raising equity from fickle capital markets and be at risk of missing cash calls and ending up negotiating with BHP on terms that benefit BHP and hurt Peregrine shareholders. Given that BHP will have to make this decision without the benefit of hard bulk sample grades and carat values involving critical mass tonnage, my guess is that BHP will gamble on good future project fundamentals and unreceptive, slack-jawed markets to allow it to absorb a financially ailing 49% contributing junior partner long before production starts. Brokerage firms such as Salman Partners are jockeying into position to capitalize on the wrongness of the second assumption underlying a decision by BHP not to go to 58% that is opportunistic rather than pessimistic. Our current Spec Cycle Hold 100% recommendation remains intact for bottom-fishers, and we confirm that Peregrine remains a Good Absolute Spec Value Buy below $2.00 in anticipation of a $5-$10 trading range later this year if Peregrine demonstrates that the 165/166 targets are significant diamondiferous pipes, and/or, expands the number of kimberlites with economic grade potential through exploration drilling this winter and summer.

Underworld Resources Inc (UW-V: $2.58)
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Bottom-Fish Comment - March 18, 2010: Underworld secures friendly takeover bid from Kinross

Underworld Resources Inc announced on March 11, 2010 that it had agreed to a friendly takeover bid from Kinross Gold Corp whereby Kinross would issue 0.141 shares for each Underworld share plus $0.01. Based on the prior day's closing price of $18.54 for Kinross and $1.93 for Underworld this valued the offer at $2.62 per share and represented a premium of 36%. The premium is actually somewhat better because there was a noticeable increase in market activity after March 2, the most recent date on which an insider bought stock in the open market at $1.70. On a fully diluted basis of 53,625,637 shares, which includes the 900,000 shares still issuable to Shawn Ryan pursuant to Underworld's option of the White Gold property, the deal put a value of $140.5 million on the company. This deal has attracted a fair amount of grumbling from shareholders who believe Underworld is being taken out prematurely and thus too cheaply, and on the day of the announcement Underworld traded 18,324,300 shares in a narrow range of $2.53-$2.62. Most of that stock was likely bought by traders speculating on a better offer. As of June 19, 2009 Kinross reported that it owned 3,918,181 shares after participating in a 10 million unit at $1.25 private placement brokered by Canaccord, Axemen and Dundee. The Kinross position was less than 10% and would currently amount to 9.5% of the 41,316,914 issued stock (8.5% fuly diluted).If Kinross bought any meaningful portion of the Thursday volume it would have become a reporting insider, which has not happened. On March 16 Underworld announced a definitive agreement and that directors and management had entered into a lockup agreement. The takeover bid is conditional on Kinross receiving at least two-thirds of the fully diluted stock which includes its existing position.

Underworld was recommended a medium priority bottom-fish buy in the $0.10-$0.19 range on December 24, 2008 based on its strong management team and its focus on the White Gold project in the Yukon. The market proved remarkably receptive to Underworld's promotion of the White Gold drill play and had already reached $1 when the company announced a discovery hole in the Golden Saddle Zone on May 26, 2009 which gapped the stock above $1.50. The nature of the hole and geological context suggested that Underworld had discovered a style of gold deposit new for the Yukon and which had open-pittable multi-million ounce gold potential. This enabled Underworld to raise $16,550,000 through a combination unit/flow-through brokered private placement in June 2009 and the stock surged to a high of $2.64 on June 19 before falling back to the $1.40-$1.70 range when better intersections did not follow. On July 7, 2009 I issued a Spec Cycle Sell 25% Hold 75% recommendation at $1.57 in Express 2009-01: Atac's RAU Carlin style gold play steals limelight from Underworld's Pogo style White Gold play and issued a Good Absolute Spec Value Buy at $0.63 for Atac Resources Ltd whose RAU project was another new style of gold deposit emerging in the Yukon which I felt had better ounce development potential than White Gold. (Atac also avoided the winter downturn and is now gearing up for what could be a very high profile 2010 drill season.) Underworld insiders must have agreed with my recommendation because during the subsequent weeks they all sold some Underworld stock. The lowest Underworld traded was $1.25 on September and the stock proved surprisingly resilient to the selling pressure that usually afflicts juniors whose exploration programs have to shut down for the Yukon winter. On January 19, 2010 Underworld published a 43-101 resource estimate which came up with 1,582,142 indicated and inferred gold ounces, of which 1,298,707 oz were attributable to the Golde Saddle Zone as an open-piittable resource with an average grade of 2.93 g/t which translates into a rock value of about US $100 per tonne at the current gold price. The Golden Saddle had downdip expansion potential which would have required underground mining, but it was still open in the northeast direction where the greatest potential for open-pittable ounce growth lay. Underworld planned to return in 2010 with a $12 million 30,000 metre drill program involving 4 rigs to upgrade and expand the resources in the Golden Saddle and Arc zones as well as test new regional targets. Preliminary metallurgical studies indicated that milling and flotation operation would provide the best recovery process.

Although Underworld management has been criticized for selling out too soon, the price offered by Kinross is fair based on the existing resource and the considerable work still required to demonstrate economic feasibility. In addition, the project's proximity to the White and Yukon rivers in this remote region pose both permitting and infrastructure challenges. While the project appears well-endowed with gold mineralization, finding additional open-pittable ounces on a meaningful scale is not an obvious outcome even with the help of 30,000 metres of additional drilling. The payoff for Kinross would likely come down the road if further exploration sorts out the geological controls and discovers signifcant new zones of mineralization at depth. The risk for Underworld if it persisted for another year independently is that shareholders might suffer investor fatigue in the absence of bigger and better intersections, the stock might suffer further dilution from additional funding requirements, and the net result might be a buyout a year from now at twice the current total, but still at the same share price. This assumes that the 30,000 metres of extra drilling has not negatively eliminated the project's mystery potential. Given that White Gold is not a no-brainer multi-million ounce target it is unlikely that a competitor will make a better offer for Underworld than what Kinross has put on the table. Accordingly I recommend that bottom-fishers close out their position now and recommend a Spec Cycle Sell 75% Hold 0% at $2.58. Combined with the earlier 25% sale at $1.57 this results in an overall gain of 1,128% from the original bottom-fish buy limit of $0.19.

Quest Uranium Corp (QUC-V: $2.59)
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Spec Value Hunter Comment - March 19, 2010: Quest's Strange Lake resource estimate expected by end of March

Quest Uranium Corp announced its 2010 exploration plans for Strange Lake on March 17, 2010 and indicated that a 43-101 resource estimate for the BZone rare earth deposit will be delivered by Wardrop Engineering by the end of March or early April. Peter Cashin's best guess for the timing is the week of March 29. This will be a watershed event for Quest because it will give the market the hard numbers it needs to crunch the economic potential of this new discovery made in 2009 northwest of the Main Zone discovered and delineated by Iron Ore Company during the eighties. The resource estimate will include tonnages and grades at a variety of cutoff grades. In Tracker 2009-11 published on December 15, 2009 I offered some rough tonnage estimates for the BZone to give us a feeling for what to expect. While I am fairly confident about my larger tonnage footprint estimates I am eager to see what numbers Wardrop comes up with for the higher grade pegmatite horizons which would be the initial target for open pit mining. I had eyeballed a pegmatitic slab of 800 m by 350 m by 30 m grading 1.27% TREO with a rock value of US $275 per tonne using the 4 year price average Wardrop used as a benchmark for its Nechalacho resource estimate in early 2009. If the formal results from Wardrop are anywhere near this number, which translates into a US $6.6 billion in situ value, the current $126 million value implied for Quest's Strange Lake project will look very cheap. The larger tonnage footprint would have an in situ value in the $10-$20 billion range, making comparable to Avalon's Nechalacho deposit without the throughput constraints of an underground mining scenario. Note that parity pricing with Avalon would put Quest at about $5. Quest plans to produce a scoping study by mid June 2010 which will include at least two main transportation scenarios: a road to Schefferville 175 km to the southwest of Strange Lake which is entirely in Quebec, and a road 125 km eastwards through Labrador to Nain, site of the Voisey's Bay nickel-copper mine operated by Vale. This will quantify the costs of solving a key concern about the economic viability of Strange Lake, namely its remote location. The key concern, of course, is the nature and cost of the recovery process for the BZone ore. Hazen Research has already completed mineralogical and liberation studies, and is currently conducting rare earth separation experiements on BZone material, the result of which is expected by early May.

Quest plans to resume work at Strange Lake in June with a 15,000 m drill program involving four rigs. Of this 13,000 m are earmarked for the BZone whose upcoming inferred resource is based on 150 m centres. Two rigs with deeper capacity than last year's rig will focus on drilling holes on 50 m or 75 m centres in order to upgrade the resource to measured and indicated, as well as test the depth extent of the BZone (all of the 2009 holes were stopped in mineralization). A third drill will be used to probe the eastern extension of the BZone while a fourth rig will test other targets identifed last year through prospecting such as B East. Although you would never guess it by watching Quest's stock price action, the Strange Lake story has ended up on quite a few radar screens. One of the more important ones is that of the Quebec provincial government. High level officials have latched onto two themes of potential economic significance to Quebec. One is opening up Quebec's northern mineral potential through the development of transportation infrastructure in which regard the Renard diamond project has already shown the way and now Strange Lake is doing it in terms of a world class rare earth resource. The other is the possibility that establishing a port city like Montreal as a major rare earth processing centre would have huge downstream job implications that could easily encompass materials science R&D and would readily mesh with the clean energy technology sector Quebec is already cultivating. A formal resource estimate for the BZone could be the tipping point for a dramatic intensification of interest in Quebec's rare earth potential.

Another radar screen we should not ignore are the Freewest shareholders who ended up with 0.02016 shares of Cliffs Natural Resources Inc (CLF-N: $64) for each Freewest share when Cliffs' takeover bid closed on January 28, 2010. At the time Cliffs stock was trading at $40 which translated into a $0.89 Freewest stock price and a $217 million overall value for the takover of Freewest and its Black Thor chromite project in northern Ontario. Since then Cliffs has resumed an uptrend and now trades at $64, giving the paper issued to Freewest shareholders a value of $314 million. Cliffs has not been in a hurry to sell the 3.7 million Quest shares it inherited from the Freewest takeover, and it is doubtful that former Freewest shareholders have been in a hurry to sell their Cliffs stock which provided capital gains deferral and is marginable. Given that Quest's rare earth story belongs to the same specialty metals class as Freewest's chromite story, and will also soon be demonstrated to involve multi-billion dollar value potential, one has to wonder how long it will be before the beneficiaries of the Freewest windfall seek out Quest as the next big story. I have had an open Good Relative Spec Value Buy recommendation since September 23, 2009 when the stock was at $3.14. Since then we have seen Quest's fundamentals firm up and the rare earth space heat up. In a couple weeks I expect Quest's fundamentals to become solid. At the same time the US congressional hearings currently exploring America's vulnerability to China's domination of rare earth supply are bound to turn up the heat on this topic. Based on a conversation I had with a Molycorp representative I expect Molycorp to make key SEC filings in May that could set the stage for a major rare earth based IPO as early as June 2010. By then Quest Uranium Corp will be in a completely different league, well beyond that of Kaiser Bottom-Fish Online and perhaps even testing the limits of The Dines Letter. Quest Uranium Corp is a Good Relative Spec Value Buy at $2.59 up to the $3.14 limit prior to the resource estimate. If the resource estimate is in line with expectations, and the stock is still below $3.14, the recommendation would switch to a Good Absolute Spec Value Buy.

Brett Resources Inc (BBR-V: $2.82)
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Spec Value Hunter Comment - March 22, 2010: Brett accepts friendly Osisko takeover bid

Brett Resources Inc, which was halted pending news on Wednesday March 17, 2010, resumed trading on Monday March 22 after announcing that it had accepted a friendly takeover bid from Osisko Mining Corp which will offer 0.34 Osisko shares for each Brett share. Based on Osisko's closing price of $8.37 on Monday the bid values Brett at $2.85 per share or $335 million based on 117.4 million shares fully diluted, about 50% higher than recent trading levels. In response to the news Brett jumped $0.73 to close at $2.82 on 14,921,100 share volume while Osiski lost $0.22 to $8.37 on 5,593,300 share volume. On initial perusal this looks like a good deal for Osisko, whose $3 billion plus market capitalization struck me as discounting higher real gold prices, and a somewhat anti-climactic outcome for Brett, which I regarded as the best advanced ounce-in-the-ground gold junior offering exceptional leverage to a higher real gold price. The deal thus appears to shore up Osisko's valuation with another major open-pittable gold deposit that could come on stream in 2015, while limiting Brett shareholder upside to Osisko's future. There is, however, some chance that Brett may attract a competing bid, with Kinross Gold Corp, which owns just under 20% with 17.1 million shares, the main candidate. For this reason I am not yet closing out the open bottom-fish and spec value hunter positions.

The takeover bid appears to have been entirely Osisko's idea, which approached Brett management with it on Friday March 12. The stock was halted Wednesday when an uptrend suggested that a leak had sprung while negotiations were still underway. There was no reason to expect a takeover bid at this time. Brett recently raised $30 million at $2.10 and was in the midst of a 70,000 m drill program designed to push the inferred 6.1 million ounce Hammond Reef resource into the measured and indicated category. In November 2009 Brett released a PEA which identified how the company planned to deal with the deposit's proximity with the reservoir and what the cost structure of developing and operating an open pit mine would be. This made it possible for number-crunchers to visualize the impact various gold prices would have on the net present value of Hammond Reef, and which became the basis for my Good Absolute Spec Value Buy at $2.10 on January 21, 2010. On March 9 Brett dealt with the first nations question by announcing an in principle benefits agreement with 8 first nation groups that includes the issue of 2,350,000 shares in stages tied to project development milestones. In addition to infill drilling Brett was testing other nearby targets such as the RAB zone to the south and the Upper Seine zone on the Manley Patents which represent claims Brett painstakingly consolidated since optioning Hammond Reef from Kinross in early 2006. As far as shareholders were concerned Brett management was under no pressure to do anything but push Hammond Reef towards the prefeasibility stage expected to start in 2011, at which stage enough technical data would be on the table to attract the attention of gold producers. Because 2010 was perceived as largely a fully financed mechanical process which would gradually justify a higher stock price and set the stage for a bidding war, while leaving open the potential for the stock to really rocket on the upside if gold took off during 2010, it was understandable why Brett's management had made no effort to shop Hammond Reef around to other gold producers. This state of affairs was evident in the fact that Kinross has maintained a passive relationship with regard to Brett's activities and was in fact not even consulted after Osisko presented its offer to Brett.

So the obvious question everybody is asking today is why Brett did not simply thank Osisko for its interest and request that it come back a year from now. There are two answers to this question. One is that Brett management, headed by Ron Netolitzky and Patrick Soares, has been thinking hard about who will run the prefeasibility stage of Hammond Reef's development cycle. Netolitzky probably does not have fond memories of a past decade when he was involved with developing Loki Gold's Brewery Creek deposit and ended up in charge of Viceroy before Rick Rule and Murray Sinclair eased him out the door. He also had a ringside seat when Novagold took on the development of Galore Creek and no doubt counted his blessings that it was not he who was in the captain's chair. Assembling and managing a competent technical team for the prefeasibility stage of Hammond Reef was thus very much on his mind when Osisko, which has a solid in house technical team, came knocking. The other answer to the question of "why now and not later" has to do with Bay Street's vested interests.

Osisko's management has done such an excellent job promoting and funding its Canadian Malartic gold project in Quebec that its valuation has become too high to attract a takeover bid from a major, though Goldcorp does have a stake of 33,842,500 shares representing about 10% of Osisko. When Brett and Osisko finalized the terms it included a lockup of Brett management shares representing 4.9%, plus 14.7% owned by un-named institutions. No institutions have shown up as 10% or greater shareholders of Brett, and none would have had their arms twisted by Brett management to strengthen Osisko's hand against a competing bidder, so one has to wonder who and why would do so, especially given that until the last two major financings Brett's audience has consisted more of retail than institutional investors. It turns out that the brokerage firm Dundee Securities led both financings, of which the last one was immediately cleared for trading by prospectus. When we look at Osisko's share structure we note that a Dundee investment entity called Goodman & Investment Counsel owns 42,234,789 shares representing 12.6% of Osisko's outstanding shares and we can begin to guess what sort of institutions locked up their Brett stock in Osisko's favor. Curiously, Brett's market has been rather soft following the Dundee led financing, which no doubt caused some mumbling in Brett headquarters and, uncharacteristic as this can be in the mining industry, encouraged management to acknowledge the Peter Principle as something to be avoided.

Is there any chance that a white knight will break up what looks suspiciously like a shotgun wedding? The lockup deal allows Osisko to match any competing offer within 5 days if it is at least 3% higher than the Osisko offer, whose value is a floating number dependent on Osisko's stock price. The lockup deal also requires Brett to pay $17.5 million as a termination fee if management accepts a competing bid. Osisko insisted on this fee because Kinross could easily trump Osisko's bid by offering paper whose value has already been beaten up by the market, while Osisko's paper is close to its peak and vulnerable to a thrashing if gold takes a dump or something delays the Malartic production timeline. Kinross, however, may not be interested in owning and operating an open pit mine in Ontario. During 2008 it had a chance to claw back 60% of Hammond Reef after Brett vested under the terms of its original option agreement, but chose instead to securitize its property stake through a deal which gave Brett 100%. Admittedly the gold price and its outlook have changed considerably for the better since early 2008, and at no time has there been such widespread optimism that gold is in the early stages of a long term uptrend not just in currency or inflation adjusted nominal terms, but also in real terms reflecting the uncertain changing order of the world. My recommendation is to hold Brett for now to see if a better bid materializes during the next two weeks, while keeping in mind that Brett's price will now track 34% of Osisko's price. The takeover circular is expected to be mailed on Aprl 13, 2010 and will expire after 36 days. It is conditional on 66.6% of the stock being tendered. If it becomes clear that Kinross will not mount a competing bid, Brett shareholders will have to decide whether to take the money and run, or accept Osisko stock and participate in its future upside. If it is any consolation to Brett shareholders disappointed by what can be viewed as a premature buyout, it is that Osisko's successful acquisition of Brett should increase its valuation both because the Brett bid is a good deal and because this will enhance the market's perception of Osisko as an M&A based growth story. For those of you worried about missing out on exploration bluesky, Ron Netolitzky assures me that no great targets have yet emerged on the Manley Patents, and so far nothing deserving a trading halt has emerged from the current drilling on the RAB zone.

PC Gold Inc (PKL-T: $1.22)
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Bottom-Fish Comment - March 23, 2010: PC Gold has a Golden Beast by the tail

PC Gold Inc reported a spectacular intersection of 13.13 m grading 43.28 g/t gold on March 23, 2010 which has shifted the market's focus onto the new No 19 Vein at the Pickle Crow gold project in northern Ontario which management has dubbed the "Golden Beast". This interval included 2.02 m of 201.96 g/t gold (5.89 opt), of which 0.48 m graded 299.1 g/t. True width is not known because although the veins are generally steeply dipping in the Pickle Crow camp, the mined out No 2 Vein which was hosted by the same porphyry unit as the Golden Beast had a much more variable dip. PC Gold first reported a No 19 Vein intersection of 1.5 m of 7.5 g/t gold on February 11 as part of the original mother hole Hole 09-52 which targeted the No 1 Vein where it intersected 3.2 m of 134.26 g/t gold at a vertical depth of about 1,100 m. Assays for the No 1 Vein interval were reported on February 22 and confirmed that high grade mineralization persists at least 200 metres beneath the deepest historic Pickle Crow workings. On March 8 PC Gold offered a clue that the No 19 Vein was more than a random zone when it reported another No 19 Vein interval of 7.6 m of 8.23 g/t gold as part of of wedge hole called 10-052-W01 which was terminated early because it was deviating from the downdip No 1 Vein target. Today's No 19 Vein interval is from a "new" mother hole wedged from higher up in 09-052 in an effort to target the extension of the No 1 Vein. As it passed through the porphyry unit it intersected the No 19 Vein downdip from the earlier intersections with even better results that indicate grade improvement at depth. This hole 10-052-W02 is now at a depth of 1,000 m and is projected to intersect the No 1 Vein in another 300 m. If there are no mechanical problems this hole could hit the No 1 Vein in about 2 weeks. If it hits the No 1 Vein and delivers high grade gold mineralization it will have extended the No 1 Vein 500 metres beneath the deepest workings. This will be a big deal if successful, because it will support the hypothesis that the Pickle Crow system may extend as deep as 2,500 m, a theory PC Gold eventually hopes to confirm through deep drilling.

The market focus, however, is now on the shallower No 19 Vein whose apparent spatial position within a porphyry unit north of Shaft 1 has never been drill tested from surface beneath a 300 m depth, nor did No 1 Vein underground development drilling ever probe the apparent downdip projection of the porphyry unit. The No 19 Vein is hosted by a near vertical porphyry unit that is up to 200 m wide and has a strike of 1,800 m; this porphyry unit hosts the No 2 Vein along strike to the northeast from which several hundred thousand ounces were produced via Shaft 3. The market's strong reaction today - the stock closed up $0.54 at $1.22 on 7,095,600 share volume-reflects the fact that the No 19 Vein gold mineralization is increasing at depth, which opens the possibility of a major new "near" surface zone. Furthermore, the porphyry unit is more brittle than the other rocks in the Pickle Crow deformation zone and thus has potential to hold considerable gold mineralization. If the old Shaft 1 workings were not filled with water PC Gold would initiate a horizontal underground drilling program or perhaps even drift toward the No 19 Vein. Testing of the No 19 Vein's downdip potential beyond the current 500 m will thus have to wait for a new mother hole drilled to test the No 1 Vein even further downdip than the mother hole now underway. PC Gold now has an intermediate rig drilling 50 m on strike and up dip stepout holes on the No 19 Vein.

PC Gold Inc was initially recommended as a medium priority bottom-fish buy in the $0.20-$0.29 range on December 24, 2008. We converted the bottom-fish buy to a Spec Cycle Hold 100% recommendation on October 6, 2009 when the stock was at $0.80 and have repeatedly urged bottom-fishers to hold PC Gold as a hybrid gold play that offers exploration bluesky from the downdip drilling as well as participation in higher gold prices once the junior has stitched together the historical 1.3 million ounce remaining resource into a 43-101 compliant resource. With regard to the latter Kevin Keough expects to have a resource ready for publication some time in April, though it will only relate to mineralization in the Shaft 1 area. The significance of the No 19 Vein is that we have new exploration discovery focus that could rapidly build high grade and coherent ounces that are well within reach of the historical mine workings. One reason PC Gold has had trouble developing market momentum is that drilling activity on multiple fronts has created a confusing smorgasbord of results, some of which initially looked exciting only to prove less so. The story is now reducing to a pair of simple questions: how deep and rich is the No 1 Vein, and how laterally extensive is the Golden Beast mineralization of the No 19 Vein. At the current price the implied value of the 100% Pickle Crow project based on 57.1 million shares fully diluted is about $70 milliion. We continue to regard $2 as a minimum target before we would even consider issuing partial sells pursuant to the bottom-fishing strategy.

At the current IPV PC Gold compares favorably with the $74 million IPV of Explor Resources Inc which has just undergone an old-fashioned pump and dump promotion based on "visible gold" whispers and "recheck" assays for holes testing a convoluted model for an old play east of Lake Shore's West Timmins project that has had more than a hundred holes drilled into it. This promotion was so bizarre that even as one newsletter writer wrote 15 page religious tracts testing the faith of his true believer audience the Explor insiders from whom the writer presumably got all his information sold their stock to the extent that two directors even managed to sell every last share they owned. When the results were published on March 4 the rumored "40 metres of visible gold" turned out to be two half metre intervals of visible gold separated by 40 metres of near nothingness while the rest of the results really beg the question as to why Explor still has a $74 million market capitalization. And if you think I am being unfair trotting out the likes of Explor for comparative value purposes, take a look at Premier Gold Mines Ltd, a well managed and financed junior that is the toast of Bay Street on the basis of an Ontario property portfolio whose projects are not that different from Pickle Crow except that Premier Gold has a $400 million market capitalization backed by a 49% stake in a Red Lake play and a 70% stake in a gold deposit it acquired from a moribund junior. My expectation is that the market will start to see the difference between PC Gold and Explor, and the similarity between PC Gold and Premier Gold, with the result that PC Gold's valuation will move toward that of Premier Gold.


Fancamp Exploration Ltd (FNC-V: $0.46)
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Spec Value Hunter Comment - March 24, 2010: Close out Spec Value Hunter Recommendation

Fancamp Exploration Ltd was recommended a Good Absolute Spec Value Buy at $1.85 on October 26, 2007 on the basis of its McFauld's Lake project adjacent to the Eagle's Nest nickel-copper-pgm discovery made by Noront Resources Ltd in late August 2007. The unusually high grade of the mineralization sparked an area play frenzy as the juniors in this fading VMS regional play shifted their focus to magnetic anomalies with EM conductors hosted by ultramafics which had previously been ignored because this was the wrong geology to host a VMS deposit. Fancamp did manage to peak at $3.15 on March 5, 2008 as Noront resumed drilling on the Eagle One discovery and other regional targets while Fancamp mounted its own drilling campaign next door. The McFauld's Lake are play, however, lost momentum when Noront's drilling failed to expand the Eagle One deposit, additional targets failed to deliver zinger intersections, Fancamp itself did not hit anything, and the Noront management under the leadership of Dick Nemis shifted its focus to the Black Tweety Bird chromite zone it had discovered south of the Eagle. Fancamp's market fell apart in September 2008 during the financial crisis, as did Noront's market. A fund manager caught holding the Noront bag engineered a coup that led to the installation of a new Laurel and Hardy team which had so little skin in the game they did nothing to cut back Noront's atrocious overhead. Beyond taking Bay Street for a ride with a downdip hole during the summer of 2009 which did extend the Eagle deposit to great depths, boosting the resource while not doing much for the economics of the deposit, Wes Hanson and Joe Hamilton mounted an unfriendly takeover bid for Freewest Resources Canada Inc that was highly counter-productive for Noront shareholders who had to foot the $1.7 million cost of this exercise in sorely misguided hubris and hypocrisy. By doing what the Nemis gang should have done right away in 2008, namely following the Eagle deposit down structure and see if it perhaps blossoms at depth, Hanson and Hamilton had managed to turn Noront's focus back onto the nickel-copper-pgm story. Hamilton's Noront presentation at the March 2009 PDAC had focused on its Blackbird chromite discovery, a smallish irregular zone which Hamilton described as the only significant chromite discovery in the region, prompting myself and others in the room to ask each other if this guy was possibly ignorant about the clearly larger Big Daddy and Black Thor chromite zones Freewest had found on its own ground and ground shared with KWG and Spider. It was thus good news for Fancamp when Noront caged its Tweety Bird and unchained its Eagle in July 2009. Then in the midst of a rollercoaster Noront market whose gyrations bore little relationship to news flow and during which Noront managed to raise $25 million in flow-through money at $2.80, Noront put the focus back on the chromite story by making a bid for Freewest whose Black Thor had not grown significantly since the 2009 PDAC during which Hamilton could not bring himself to acknowledge its existence. The ensuing takeover battle was a comedy featuring Laurel and Hardy hurling stones from within a glass house which made even the hidden quarterbacks with plenty of skin in the Noront game cringe. Eventually Cliffs Natural Resources Inc wrapped up Freewest with its own takeover bid that handed an asset to Freewest shareholders that was far superior to the mushy value of Noront paper. The prospect that a major would soon tackle the task of bringing transportation infrastructure into the McFauld's Lake region instead of a comedy troupe should have helped Fancamp and its ambition to drill deeper on its property next door to the Eagle's Nest. But unfortunately the fuss attracted the attention of the Marten Falls First Nations group which mounted a blockade Noront described as a "logistics halt" and "denial of service". This threw a wrench into everybody's exploration plans, including those of Fancamp. On March 19, 2010 the natives lifted their blockade without apparently securing any concessions other than the understanding from the mining industry that if it wishes to avoid future disruptions it must make a piece of the action available to the native communities. Although Noront plans to resume work on its Eagle project and other targets in the region - it has a lot of flow-through money to spend - the regional focus is now on the development of the chromite reources. While there is still potential for Fancamp to intersect a nickel-copper-pgm zone at depth on its 100% owned property, the stock in the current context is unlikely to attract any meaningful upside market action until it makes a discovery. Since Spec Value Hunter recommendations are supposed to have specific expectations tied to a timeline, and neither is either compelling or particularly clear for Fancamp, I am closing out the recommendation at $0.46 to record a loss of 75% from the original $1.85 recommendation price. Fancamp remains an interesting junior with a knack for project "bottom-fishing" in eastern Canada, and I do note that Freewest's former CEO Mac Watson has joined the board, so it is a company I will keep on the radar as a future potential bottom-fish.

NICO Mining Ltd (NCL-V: $0.34)
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Bottom-Fish Comment - March 25, 2010: Nico halted for RTO of Turkish Zinc Project

NiCo Mining Ltd, originally recommended as a top priority bottom-fish buy in the $0.20-$0.29 range on December 24, 2008 based on its status as a cash rich shell with three nickel-cobalt exploration permits in southeast Cameroon run by Tony Frizelle, was halted on March 24, 2010 for news that it will merge with Red Crescent Resources Holding AS, a private company run by an experienced South African group that has as its flagship a feasibility-stage zinc project in the Hakkari region of Turkey. The merger terms will be established through an undisclosed formula involving relative net asset values. However, NiCo has warned that NiCo shareholders will end up with 10% of the resulting company, though this will be after Red Crescent raises $10 million brokered by Haywood. NiCo is unlikely to resume trading until this RTO has been completed, and when it does, any upside will depend on the new zinc story.

For bottom-fishers this news can be viewed as a disappointment, in the same way that the decision by Dome Ventures Corp to merge with another publicly listed zinc junior has capped the upside bottom-fishers had hoped to receive in the event that a good story is secured on lucrative terms for the bottom-fish. NiCo, however, has exhibited signs of management dysfunctionality over the past year and it is really no surprise that the NiCo shell is being treated as a disposable shell. NiCo has struggled to get a life since December 2008 when the company was trading at less than half its cash breakup value based on 20 million shares outstanding, working capital of $9.5 million, and a share price in the $0.20-$0.29 range. The company's nickel-cobalt exploration licenses in Cameroon, located alongside Geovic Mining's advanced-stage Nkamouna project, have remained on care and maintenance, and management's use of the company's treasury has been shrouded in obscurity. The February 2009 decision to acquire $3 million in secured debentures of a technology-focused company called View 22 Technologies, which apparently controls or controlled a proprietary technology relevant to ecommerce and social networking applications, apparently did not sit well with some shareholders because the company simultaneously announced a share buyback program of up to 12 million shares at $0.40, the same price at which the company had raised $7.5 million in November 2008 through a private placement of 18.75 million shares. Since the share buyback and the acquisition of the View 22 debentures in July 2009 NiCo has been largely quiet, though there was a flicker of hope when NiCo appointed two new directors in August 2009 who have considerable experience in the mineral exploration sector. With the March 25 announcement NiCo's new goal appears to be to become a medium-term zinc producer.

Even if NiCo bottom-fishers suffer a modest rollback or end up owning stock in a zinc junior with 100 million plus shares outstanding, they may still be in the running for the 500% plus gains we seek in a bottom-fish. The Red Crescent management team has considerable feasibility study and project development experience. It includes South African engineers Alan Clegg and Douglas Taylor and Christian Schaffalitzky, managing director of Eurasia Mining PLC, who led the discovery and development of the Lisheen zinc deposit in Ireland and ran the feasibility study on the Shaimerden zinc project in Kazakhstan. Their current focus is Hakkari, located in a prospective region in southeast Anatolia where numerous high grade Mississipi Valley style zinc deposits have been discovered. Information from the Red Crescent website suggests that early work has been returning grades as high as 35% Zn and 4% Pb, and that the target for the project, where a prefeasibility study is apparently underway, is to establish a 2 million tonne resource of high grade oxide zinc capable of producing 70,000 tonnes of zinc annually. Red Crescent indicates that production could be achievable in 2013, a timeframe that places the project squarely in the period where analysts are tentatively projecting a renewed zinc supply deficit, as described in this Mineweb article from March 25 that quotes Fortis Bank Nederland/VM Group Metals as describing how "the zinc market profile therefore appears extremely tight going forward, especially in the period from 2012-2016...By 2014 we could be facing a zinc concentrate market deficit of as much as 500,000t, rising to ~3 Mt by 2016." We will reassess NiCo and its new zinc story once we have seen the RTO terms and further details about the Hakkari zinc project.

New Bottom-Fish Highs
Company
Volume High Low Close Chg Status
Creston Moly Corp (CMS-V) 5,465,100 $0.345 $0.265 $0.330 $0.040 BF TP Buy $0.10-$0.19
Dome Ventures Corp (DV.U-V) 97,000 $0.790 $0.580 $0.790 $0.100 BF MP Buy $0.10-$0.19

Top 10 Bottom-Fish Volume Traders
Company
Volume High Low Close Chg Status
Brett Resources Inc (BBR-V)
31,256,800 $3.000 $1.880 $2.930 $1.010 Good Absolute Spec Value Buy
PC Gold Inc (PKL-T) 25,288,400 $1.630 $0.650 $1.580 $0.870 BF Spec Cycle Hold 100%
Gleichen Resources Ltd (GRL-V) 15,462,300 $1.150 $0.910 $1.050 $0.080 BF Spec Cycle Hold 100%
B2Gold Corp (BTO-T) 13,874,100 $1.440 $1.270 $1.300 ($0.090) BF TP Buy $0.30-$0.49
IBC Advanced Alloys Corp (IB-V) 13,037,500 $0.210 $0.150 $0.155 ($0.025) New BF LP Buy $0.10-$0.19
Red Hill Energy Inc (RH-V) 12,971,800 $0.860 $0.420 $0.770 $0.350 New BF LP Buy $0.30-$0.49
Underworld Resources Inc (UW-V)
11,048,500 $2.590 $2.400 $2.420 ($0.120) BF Spec Cycle Sell 75% Hold 0%
Linear Gold Corp (LRR-T) 7,140,900 $1.870 $1.540 $1.730 ($0.150) BF TP Buy $0.50-$0.75
Volta Resources Inc (VTR-T) 6,304,900 $1.280 $1.040 $1.270 $0.130 BF MP Buy $0.10-$0.19
Nevsun Resources Ltd (NSU-T) 5,938,900 $3.290 $2.600 $3.090 $0.490 BF Spec Cycle Hold 100%

Top 10 Bottom-Fish Value Traders
Company
Value High Low Close Chg Status
Brett Resources Inc (BBR-V)
$87,909,474 $3.000 $1.880 $2.930 $1.010 Good Absolute Spec Value Buy
PC Gold Inc (PKL-T) $33,249,535 $1.630 $0.650 $1.580 $0.870 BF Spec Cycle Hold 100%
Underworld Resources Inc (UW-V)
$27,844,192 $2.590 $2.400 $2.420 ($0.120) BF Spec Cycle Sell 75% Hold 0%
B2Gold Corp (BTO-T) $18,794,093 $1.440 $1.270 $1.300 ($0.090) BF TP Buy $0.30-$0.49
Nevsun Resources Ltd (NSU-T) $17,839,743 $3.290 $2.600 $3.090 $0.490 BF Spec Cycle Hold 100%
Gleichen Resources Ltd (GRL-V) $16,002,539 $1.150 $0.910 $1.050 $0.080 BF Spec Cycle Hold 100%
Linear Gold Corp (LRR-T) $12,684,929 $1.870 $1.540 $1.730 ($0.150) BF TP Buy $0.50-$0.75
Red Hill Energy Inc (RH-V) $8,429,828 $0.860 $0.420 $0.770 $0.350 New BF LP Buy $0.30-$0.49
Quest Uranium Corp (QUC-V)
$7,991,115 $3.010 $2.310 $2.850 $0.290 Good Relative Spec Value Buy
Volta Resources Inc (VTR-T) $7,430,027 $1.280 $1.040 $1.270 $0.130 BF MP Buy $0.10-$0.19

Top 10 Bottom-Fish Price Gainers
Company
Volume High Low Close Chg Status
Brett Resources Inc (BBR-V)
31,256,800 $3.000 $1.880 $2.930 $1.010 Good Absolute Spec Value Buy
PC Gold Inc (PKL-T) 25,288,400 $1.630 $0.650 $1.580 $0.870 BF Spec Cycle Hold 100%
Nevsun Resources Ltd (NSU-T) 5,938,900 $3.290 $2.600 $3.090 $0.490 BF Spec Cycle Hold 100%
Red Hill Energy Inc (RH-V) 12,971,800 $0.860 $0.420 $0.770 $0.350 New BF LP Buy $0.30-$0.49
Quest Uranium Corp (QUC-V)
2,929,000 $3.010 $2.310 $2.850 $0.290 Good Relative Spec Value Buy
Volta Resources Inc (VTR-T) 6,304,900 $1.280 $1.040 $1.270 $0.130 BF MP Buy $0.10-$0.19
Grayd Resource Corp (GYD-V) 1,198,200 $0.850 $0.650 $0.800 $0.120 BF MP Buy $0.10-$0.19
Marathon PGM Corp (MAR-T) 534,800 $1.240 $1.030 $1.140 $0.120 BF MP Buy $0.30-$0.49
James Bay Resources Ltd (JBR-V) 262,000 $0.720 $0.610 $0.720 $0.110 BF LP Buy $0.10-$0.19
Dome Ventures Corp (DV.U-V) 97,000 $0.790 $0.580 $0.790 $0.100 BF MP Buy $0.10-$0.19

Top 10 Bottom-Fish Price Percentage Gainers
Company
Volume High Low Close Chg Status
PC Gold Inc (PKL-T) 25,288,400 $1.630 $0.650 $1.580 123% BF Spec Cycle Hold 100%
Red Hill Energy Inc (RH-V) 12,971,800 $0.860 $0.420 $0.770 83% New BF LP Buy $0.30-$0.49
Brett Resources Inc (BBR-V)
31,256,800 $3.000 $1.880 $2.930 53% Good Absolute Spec Value Buy
Meritus Minerals Ltd (MER-V) 292,300 $0.150 $0.085 $0.140 40% New BF XP Buy below $0.10
Waymar Resources Ltd (WYM-V) 585,000 $0.420 $0.300 $0.420 31% New BF LP Buy $0.10-$0.19
Flagship Industries Inc (FII-V) 196,000 $0.350 $0.290 $0.340 26% BF XP Buy below $0.10
Realm Energy Intl Corp (RLM-V) 1,485,700 $0.400 $0.290 $0.370 23% BF MP Buy $0.30-$0.49
Calibre Mining Corp (CXB-V) 1,830,100 $0.220 $0.170 $0.200 21% BF XP Buy below $0.10
Source Exploration Corp (SOP-V) 532,100 $0.260 $0.165 $0.210 20% BF XP Buy below $0.10
Gold Port Resources Ltd (GPO-V) 3,501,800 $0.135 $0.095 $0.120 20% New BF XP Buy below $0.10

Top 10 Bottom-Fish Price Losers
Company
Volume High Low Close Chg Status
Amazon Mining Holding Plc (AMZ-V)
558,500 $2.340 $1.920 $1.960 ($0.370) Good Absolute Spec Value Buy
Mundoro Capital Inc (MUN-T) 2,714,600 $1.260 $0.550 $0.900 ($0.260) BF MP Buy $0.20-$0.29
New Oroperu Resources Inc (ORO-V) 96,000 $0.530 $0.390 $0.390 ($0.160) BF MP Buy $0.30-$0.49
Linear Gold Corp (LRR-T) 7,140,900 $1.870 $1.540 $1.730 ($0.150) BF TP Buy $0.50-$0.75
African Aura Mining Inc (AUR-V) 41,800 $1.100 $1.050 $1.050 ($0.150) New BF MP Buy $1.01-$1.25
Kootenay Gold Inc (KTN-V) 479,800 $0.920 $0.750 $0.760 ($0.140) BF MP Buy $0.30-$0.49
Polar Star Mining Corp (PSR-V) 754,100 $1.260 $1.030 $1.030 ($0.130) BF MP Buy $0.20-$0.29
Avalon Rare Metals Inc (AVL-T)
1,659,800 $2.730 $2.360 $2.480 ($0.120) Good Absolute Spec Value Buy
Underworld Resources Inc (UW-V)
11,048,500 $2.590 $2.400 $2.420 ($0.120) BF Spec Cycle Sell 75% Hold 0%
Rare Earth Metals Inc (RA-V) 1,007,500 $0.510 $0.330 $0.390 ($0.120) New BF MP Buy $0.30-$0.49

Top 10 Bottom-Fish Price Percentage Losers
Company
Volume High Low Close Chg Status
New Oroperu Resources Inc (ORO-V) 96,000 $0.530 $0.390 $0.390 -29% BF MP Buy $0.30-$0.49
ICN Resources Ltd (ICN-V) 532,900 $0.190 $0.120 $0.145 -26% New BF MP Buy $0.20-$0.29
Rare Earth Metals Inc (RA-V) 1,007,500 $0.510 $0.330 $0.390 -24% New BF MP Buy $0.30-$0.49
Galena Capital Corp (FYI-V) 862,500 $0.065 $0.050 $0.050 -23% BF XP Buy below $0.10
Mundoro Capital Inc (MUN-T) 2,714,600 $1.260 $0.550 $0.900 -22% BF MP Buy $0.20-$0.29
Pacific Coast Nickel Corp (NKL-V) 424,700 $0.050 $0.040 $0.040 -20% New BF XP Buy below $0.10
Argus Metals Corp (AML-V) 255,500 $0.200 $0.170 $0.170 -19% New BF LP Buy $0.10-$0.19
Benton Resources Corp (BTC-V) 398,300 $0.600 $0.450 $0.475 -18% BF MP Buy $0.10-$0.19
Ucore Uranium Inc (UCU-V) 2,139,100 $0.335 $0.265 $0.275 -18% BF MP Buy $0.30-$0.49
Laurentian Goldfields Ltd (LGF-V) 227,200 $0.225 $0.165 $0.165 -18% New BF MP Buy $0.10-$0.19

New Bottom-Fish Lows
Company
Volume High Low Close Chg Status
Ucore Uranium Inc (UCU-V) 2,139,100 $0.335 $0.265 $0.275 ($0.060) BF MP Buy $0.30-$0.49

 
 

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