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G. Joel Chury
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G. Joel Chury is a veteran investment columnist for Resource World Magazine and the Editor in Chief of VantageWire.com and author of the Bottom Line Report newsletter. His knowledge of both the mining and oil and gas sectors along with his ability to sift through TSX.V data and press releases... More
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  • Food Strike: Junior Canadian Fertilizer Companies on the Rise

    COMMENTARYProspectingJournal.com (click for original article) – January 7, 2011 – Doomsayers and economists alike are warning the public of the sharp rise in world food prices that are expected in the near future. Already we can use the record levels hit in December in sugar, grain and oilseed prices as our indicator of things to come. With these trends, many investors are seeking the answer in their portfolio to help soften the blow made by the increased cost of dinner time.

    Early in November of 2010, the Canadian Government made a landmark decision regarding the purchase of Potash Corp. [POT - TSX] by BHP Billiton, opting to reject the transaction on the basis of it providing “no net benefit to Canada.” Since the announcement was made, much speculation erupted over what were the true reasons behind the feds' intervention. Potash Corp. currently reigns as the world's largest fertilizer producer, and thus wasn't particularly an entity the government wanted to see handed over to the BHP group from down under. The implied future control over our own food supply is apparently more important to the feds than the foreign entities entering into Alberta's oil sands.

    But in the aftermath of the ordeal, potash as an investment focus has gained a lot of steam. The price for the big players such as Potash Corp. or even its provincial rival Mosaic are a little too high for those who follow the higher-yield, higher-risk TSX Venture Exchange. Here are some of the stocks we're following closely as impacts from the global food market weave their investment magic.

    Marifil Mines Ltd. [MFM – TSX.V]
    Current Price: $0.21
    52wk Range: $0.06 - $0.25
    Market Cap: $10.88M
    Instead of dabbling in the rolling prairie fields of Saskatchewan, Marifil snapped up 47,150 hectares of potash lands in Argentina. The K3 Project as it is called has good potential for salt horizons at depths ranging from 500m to 2,000m, while further analysis in the works from local abandoned oil wells. The site is nearly 50kms NW of Brazilian giant Vale's massive Rio Potasio potash mine, which has a resource of 2 billion tons of potassium chloride. On top of the potash upside of K3, Marifil also has further prospective amounts of uranium, sulfur, lead, zinc and asphaltites on the property. All in all, the company holds over 20 properties that also focus in precious metals, copper, nickel and an oil and gas target called Mina El Carmen.

    Encanto Potash Corp. [EPO – TSX.V]
    Current Price: $0.42
    52wk Range: $0.11 - $0.54
    Market Cap: $93.50M
    A feel good story from Saskatchewan is Encanto and its success in operating with full community support of First Nations. The company boasts four substantial properties totalling over 75000 hectares within an 80km radius. The stock made significant jumps in late November after the positive assay results from its Lestock 11-18 well on its Muskowekwan Property hit the newswires. That said, when results from its third and fourth wells on the property hit in the following month, the reaction wasn't as positive as the previous round. A negative report regarding junior potash companies published on Reuters didn't help the cause either. But the stock is still holding at a price that's double the November values, and results from their other three projects are due in the near future. There's still room for Encanto to grow, and the correction regarding food prices could give it the nudge it needs.

    PhosCan Chemical Corp. [FOS – TSX]
    Current Price: $0.64
    52wk Range: $0.35 - $0.67
    Market Cap: $110.20M
    In order to produce its product, fertilizer companies require phosphoric acid. According to PhosCan's latest corporate presentation, 1/3 of global phosphoric acid production is stranded without its own source of phosphate concentrate (phosrock). North America is a net importer, going from a former level of exporting 10 million tons per year to importing 4 million tons, due to major changes such as permitting issues in Florida and Idaho which have provided environmental issues. Enter PhosCan and its Martison Project to help fill the gap. Timing is everything and PhosCan is banking on giant producer Agrium [AGU – TSX] to come knocking once its Kapuskasing phosphate mine runs out of ore in 2014. PhosCan's target production rate is 2 million tonnes of phosrock, with an added economic bonus of 4 million kilograms of niobium which is used as a superalloy in the manufacturing of jet and rocket engines and as a superconducting material used in magnets and MRI scanners. The stock is currently on a run, jumping $0.10 within a day in December, and holding close to the $0.70 mark ever since. If fertilizer is the gold of the future, phosphoric acid will be used in the alchemical method to produce it.

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    G. Joel Chury

    Editor in Chief

    ProspectingJournal.com

    --

    DISCLOSURE: No fee has been paid for the production and distribution of this article and as such should be viewed in the context of a commentary. The author does not currently own any shares of the companies referred to within the article.

     

     

    COMMENTARY ARCHIVES
    January 7, 2010      - Food Strike: Junior Fertilizer Companies on the Rise
    January 4, 2010      - Hindsight 2010: Prospecting Journal's Inaugural Year and 90% Success Rate
    December 21, 2010 - Silver's Manipulation: Conversion of a Non-Believer
    December 16, 2010 - Taking Internet Silver Conspiracies with a Grain of Salt
    December 14, 2010 - R.I.P. Canadian Penny, Long Live Canadian Penny Stocks
    December 10, 2010 - The Copper Tone, Baby: Copper's Price and PJ's Mining Picks
    December 7, 2010   - Bonanza!: Gold Stocks to Watch While Gold Prices Take Minor Dip
    December 1, 2010   - Evolving Gold: The Post-Grandich Era
    November 30, 2010 - What's Mine is Mined: Buying Gold Stocks When Bullion Prices Are Out of Your Control
    November 29, 2010 - The Elephant Roars: Centric Energy Acquired in Cash-and-Share Swap by Africa Oil
    November 8, 2010   - How Gold Changed the World: Record Nominal Price, Gold Standard Suggested
    November 5, 2010   - Silver's Big Week and the Road Ahead
    November 4, 2010   - BHP-Potash Bid's Dramatic Finale: The Aftermath
    November 3, 2010   - More on the Case of Silver

    October 29, 2010     - Rare Earth Scare Over for Time Being
    October 21, 2010     - China's Rare Earth Embargo Hits North America

    Jan 07 3:54 PM | Link | Comment!
  • Hindsight 2010: Prospecting Journal's Inaugural Year and 90% Success Rate

    COMMENTARY - ProspectingJournal.com – January 4, 2011 – During the late stages of October, the Prospecting Journal made its splash on the internet, providing commentaries and analysis for followers of junior mining and energy stocks in North America. Along the way, we've brought to light an informative take on the Chinese Rare Earth embargo, the rise of the precious metals and copper's surge. With each take, we've provided stocks that we felt were worth following, all of which we felt had potential to bring you the profits you seek. Our portfolio of picks to date (since late October, 2010) is up 18.27% over the course of just over two months, with a positive return success rate of 90%. As we begin our second calendar year, we present you with our greatest hits and misses since our inception.

    GREATEST HITS

    Centric Energy [CTE – TSX.V] – October 31, 2010
    Publication Price: $0.35 Current Price: $0.59
    Performance:  +68.57%
    Written about in Resource World Magazine, and followed up through Claire O'Conner's write-up following the Kenya-based oil company, Centric is currently the Prospecting Journal's top performer. Outside interest from Africa Oil caused the share price to spike. On top of that, legal issues came to a positive close for the company, as the case in Kenyan court was eventually dismissed. We were thankfully aware of Centric due to previous work and interest in the development of Kenya as an oil player through the previous sale of Turkana Energy (also to Africa Oil). Timing is everything, and ours was right on the money with Centric, netting us positive attention and a front-page feature on VantageWire.com.

    Marifil Mines Ltd. [MFM – TSX.V] - December 14, 2010
    Price at Publication: $0.14, Current Price: $0.215
    Performance: +53.57%
    Covered in our death of the penny article, we made some penny stock picks, of which MFM was the big winner. While the investment community was still reacting to the BHP/Potash Corp. drama, our focus on potash as an investment vehicle broadened, and Marifil graced our radar. Picking up extra potash properties along the way in Argentina made this a healthy pick for internationals shooed away from Canadian potash properties, not to mention its balanced portfolio featuring other metal winners in gold, silver, copper and lithium. What was not to like? Other penny stocks covered in the same article were Cream Minerals [CMA – TSX.V] which went up 8.7% from $0.23 to $0.25, and Playfair Mining [PLY - TSX.V] which went up 33.33% from $0.18 to $0.24.

    Pele Mountain Resources [GEM – TSX.V] – October 21, 2010
    Price at Publication: $0.32, Current Price: $0.475
    Performance: +48.44%
    Right before the Chinese Rare Earth embargo hit its height, we picked Pele Mountain Resources due to its position in rare earth elements outside of China. This was the top performer of the picks made at the time, but all of our rare earth companies have performed great since the article was written. Along with GEM was Quest Rare Minerals [QRM – TSX.V] which has boosted 18.06% from $5.04 to $5.95, Neo Material Technologies Inc. [NEM – TSX] up 40.03% from $5.77 to $8.08 and Eastern Platinum Ltd. [ELR – TSX] up 16.88% from $1.54 to $1.80. The rare earth story may be quelled for the time being, but the development of these minerals outside of China will be heavily invested in to safeguard against any future embargoes.

    HONOURABLE MENTION:
    Dec. 10 - Copper One Inc. [CUO – TSX.V]: Up 33.78% from $0.37 to $0.49
    Dec. 10 – Los Andes Copper Ltd. [LA – TSX.V]: Up 31.58% from $0.38 to $0.50
    Nov. 5 – United Mining Group [UMG – TSX]: Up 44.32% from $0.88 to $1.27
    Nov. 8 – Ventana Gold Corp. [VEN – TSX]: Up 23.24% from $10.80 to $13.31

    MISSES:
    We'll gladly admit when we're wrong, and so far of all the companies we've shined a light on, we're only down on two stocks. That's a pretty good record (90% success). But, here's where we admit our shortcomings:

    Goldgroup Mining Inc. [GGA – TSX] – December 7, 2010
    Price at Publication: $1.32, Current Price: $1.24
    Performance: -6.06%
    It's been a while since we heard from Goldgroup, and this could be a case of no news is bad news. Their drilling results piqued our interest, and the thought was that there was still room to rise. Where we'll admit we missed on this stock is the cardinal rule of getting in high, while we currently sit low. Seeing where it's been compared to where it is now, the company still has positive drill results to fall back on, and with prices low, we're still a fan of this stock going forward.

    Trelawney Mining and Exploration [TRR – TSX.V] – December 7, 2010
    Price at Publication: $2.91, Current Price: $2.89
    Performance: -0.69%
    Writing that this is a miss is a bit of a joke at this point, as it really has held still since we wrote about them. The chart still looks great, and it's probably only an update away from another price bump. Trelawney's Chester  Project is still a keeper, and we look forward to upgrading this stock away from the “misses” section.

    Going forward into 2011, we foresee a lot of action in the mining sector. Instability in the global currency market will make the precious metals a fascinating sector going ahead, while infrastructure upgrades in world's rapidly growing economies are pushing the iron and copper markets ahead. We haven't stopped looking at REEs either, and plan to have more commentaries on this sector in the next month.

    We thank our ever-growing readership for its support, and encourage you all to continue to do so over the next few months as we plan to introduce some upgrades for your liking.

     

    Happy panning

    G. Joel Chury

    Editor in Chief

    ProspectingJournal.com

    --

    DISCLOSURE: No fee has been paid for the production and distribution of this article and as such should be viewed in the context of a commentary. The author does not currently own any shares of the companies referred to within the article.

    COMMENTARY ARCHIVES
    January 4, 2010      - Hindsight 2010: Prospecting Journal's Inaugural Year and 90% Success Rate
    December 21, 2010 - Silver's Manipulation: Conversion of a Non-Believer
    December 16, 2010 - Taking Internet Silver Conspiracies with a Grain of Salt
    December 14, 2010 - R.I.P. Canadian Penny, Long Live Canadian Penny Stocks
    December 10, 2010 - The Copper Tone, Baby: Copper's Price and PJ's Mining Picks
    December 7, 2010   - Bonanza!: Gold Stocks to Watch While Gold Prices Take Minor Dip
    December 1, 2010   - Evolving Gold: The Post-Grandich Era
    November 30, 2010 - What's Mine is Mined: Buying Gold Stocks When Bullion Prices Are Out of Your Control
    November 29, 2010 - The Elephant Roars: Centric Energy Acquired in Cash-and-Share Swap by Africa Oil
    November 8, 2010   - How Gold Changed the World: Record Nominal Price, Gold Standard Suggested
    November 5, 2010   - Silver's Big Week and the Road Ahead
    November 4, 2010   - BHP-Potash Bid's Dramatic Finale: The Aftermath
    November 3, 2010   - More on the Case of Silver

    October 29, 2010     - Rare Earth Scare Over for Time Being
    October 21, 2010     - China's Rare Earth Embargo Hits North America

    Tags: mining, energy, tsx, tsxv
    Jan 04 8:12 PM | Link | Comment!
  • Tapping into Brazil: Eagle Star Minerals' Iron Potential

    ANALYSIS - ProspectingJournal.com – December 29, 2010 – VANCOUVER, BC – Over the next six years the world is going to become more and more familiar with Brazil and what it has to offer on a global stage. While billions of eyes are set on Brazil's preparation for two of the world's largest sporting events (FIFA World Cup 2014, Summer Olympics 2016), many in the investment community have been closely following the rapid and exciting development within Latin America as a whole. Built up on the successes of oil giant PetroBras [PBR – NYSE] and mining goliath Vale [VALE – NYSE], the Brazilian economy has been steadily opening up through better transparency, efficient government regulations and high-potential openings for smaller international companies looking for their piece of the Brazilian dream. One company that is seeking to harness this potential is Eagle Star Minerals [EGE – TSX.V], based out of Vancouver, Canada.

    “Brazil is a very attractive country for junior resource companies to operate in. After all, the regime is very similar to what we encounter here in North America. Everything is well regulated by the government, with the National Department of Mineral Production (DNPM) (in the case of the mining industry) granting concessions and making sure that stakeholders fulfill their commitments”, says Eagle Star’s President and CEO, Eran Friedlander.


    “The prolific mining and oil and gas sectors of Brazil were state-owned for many years, and only recently have been opened up to the rest of the world. The result has been the creation of many opportunities for finding large deposits in Brazil for junior public companies, like ours. This is a major benefit to companies like Eagle Star who are positioned to take advantage of the opportunities as they arise.”

    “Since Brazil is home for two international giants (namely VALE and PetroBras) there are a lot of knowledgeable people in Brazil for us to work with who have the capacity and the experience to assist in developing these large scale, natural resource projects.”

    Eagle Star Minerals
    is currently poised to earn 55% interest (with an option to capture the remaining 45%) over a 100,000 acres of mineral claims spread over three parcels in Brazil. Located near pre-established infrastructure which provides easy access, Eagle Star's Angico Iron Project is now six months into development with the goal of proving the iron mineralization previously identified by magnetometer surveys over the project's three claim blocks. The potential within the development of these Brazilian claims has always been apparent to Friedlander and his team.

    With three stages of development planned over the first 30 months since signing the initial contract in February 2010, Eagle Star has successfully moved out of stage one, and remains right on schedule. Exploration work started in June 2010, spearheading what can be considered a very intensive year for a company of this size and level of progression. Since the area comprised within the Angico Iron Project is quite large, exploration is done through both trenching and drilling to maximize the amount of data that can be collected over the claims.

    “Over the last few months we've done work to uncover what's underground, to give us a glimpse of what we should expect,” says Friedlander. “After all, our area is very large and contains three different types of iron mineralization. So while that's good from a risk perspective, it also requires us to do a lot of work to learn more about the quality and potential of the different prospects.”

    “Wherever surface conditions allowed, we went with the trenching method, since it is the most cost-effective. Wherever it wasn't permitted, we drilled. So far our drilling work has been very shallow, as only 500m was budgeted in stage one. In an effort to cover a very large area, we were limited in terms of how deep we could go for the time being. All in all we have completed our intended trenching and drilling work and now await the results from the samples we've collected through these two activities.”

    While the waiting for feedback from the exploration activity continues for the near future, Friedlander remains confident in the potential that Brazil and its iron market presents for the company. No stranger to the area, Friedlander began doing business in Brazil in 2001 while the country was still in recession. Foresight into the opportunities that were opening up in the region, Friedlander began accumulating business ties and a solid network. This development of contacts and acquaintances resulted in some people in high places. It was through an ex-government minister familiar with the Brazilian group that held the rights to the Angico project that presented Friedlander with the opportunity at a stage that sought proper investment. Knowing the potential of the market in Brazil, Friedlander and his team acted upon the opportunity.

    “The iron market is very strong in Brazil. You can see this through the level of exploration that's going throughout the country. There are many projects being explored at the moment, with prices being high,” says Friedlander about the iron climate.

    As a global leader of iron production, Brazil is attracting a lot of international iron companies too. These companies need to guarantee their future supplies, so they seek out new deposits to acquire. The potential afforded for each of these companies by Brazil’s attractive deposits and steadily opening market has made the country a natural choice to seek new projects. This has allowed iron producers more choice to shop for supplies.

    “To further demonstrate the strength of the market, today we know that the pig iron manufacturers in Brazil are struggling for cheap supply, so they are forced to use alternative sources,” adds Friedlander. “This bodes well for local demand going forward”.

    Where Eagle Star currently sits is in stage two of its exploration program, on schedule to make completion two years from now. The risk is diversified over the three claims, from which results from the most recent work should be arriving in the new year. The potential for each claim allows Eagle Star to assess each of the large land masses separately.

    “In terms of potential, a discovery in any one of our three concession areas should turn out to be really enormous. That’s why we like what we've seen for this project. There's significant potential in each and every area,” boasts Friedlander. “And on top of that, because we are already there, and this is an area that can host other attractive projects, there are going to be some opportunities to expand. That's something we are planning to do next year, with the objective being to build up a portfolio that has a potential resource of having one billion tonnes of iron ore.”

    G. Joel Chury‚Ä®
    ProspectingJournal.com

     

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    DISCLOSURE: A fee has been paid for the production and distribution of this article and as such should be viewed in the context of advertising. At the time of publication, the author of the article does not hold any shares in the company described.
     



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: ProspectingJournal.com has been paid a fee to write this article professionally on behalf of the company
    Dec 29 11:43 AM | Link | Comment!
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