ANALYSIS – ProspectingJournal.com – February 2, 2011 - Already, the year has opened with a bang for Vancouver-based Eagle Star Minerals [EGE – TSX.V], as it successfully concluded its first stage of exploration on its Angico Iron project in North Eastern Brazil. An announcement dated back to January 18th not only relayed the information that the company always knew it had, but more importantly influenced the investment community that had been waiting patiently to see what Eagle Star had up its sleeve. Two sets of trenching data returned the message loud and clear: Eagle Star has iron, and lots of it.
In the build-up to the results announcement, the stock price had taken a run from its December low of $0.15/share on December 15th to its current price of $0.315. But what led to this rise? First off, the results from each trench shone a light on the massive iron potential contained within the Angico Iron Project, with Trench 1 showing 44.66% Fe2O3 across 39m, with 47.27% over 32m and Trench 2 showing 48.72% over 22m and a whopping 51.98% over 18m. And the trading volume in the aftermath of the results spoke highly of the confidence the higher-end investors with interests in mining had in Eagle Star, which is poised to gain its 55% earn-in interest in the property.
“It's the sort of thing where before you have the results, you can tell whatever story you want. But the sophisticated investor normally won't buy it at that point,” says Eran Friedlander, President and CEO of Eagle Star of the latest response from the market his company has received. “Now that we have the results and people can make their own calculations, they can see the quality, the length of those structures and can easily calculate and see that we have something massive here.”
One of those who recently took notice is author of the popular Midas Letter publication, James West, who recently boasted Eagle Star as a healthy candidate for a takeover on the Business News Network (BNN). Coupling Eagle Star with comparatives in Capex Ventures Ltd. [CVE – TSX.V] and Oceanic Iron Ore Corp. [FEO – TSX.V], West did however cite that he's more intrigued with the familiarity of dealing with mining companies in Canada, but he felt it still important to list Eagle Star based on the massive results they'd announced.“Give me an iron takeover target in Canada any day over on in Brazil for example... but I'll take Brazil as well,” said West to BNN's Andrew Bell on the January 27th episode of Commodities.
Other than it being far away, the reasoning over doubting Brazil's potential can usually be attributed to protectionist-leaning skepticism. Gaining momentum over the past decade, Brazil has led the way of the emerging quartet of Brazil, Russia, China and India; affectionately referred to as the “BRIC” countries. Already talked about on the Prospecting Journal, the potential for infrastructure growth within Brazil alone is impressive to say the least, and its momentum is being gained as a resource leader from its massive oil reserves to its rapidly developing metal industry.
Friedlander is very familiar with the outside skepticism surrounding doing business in Brazil, but given his experience in dealing with the BRIC country, he has nothing but praise for the potential it holds. “It may be far away from here, but its a very stable country politically,” says Friedlander. “It's transparent, and the Brazilian mining industry is capably administered by the National Mining Department. I don't really see why it is so crucially more beneficial to be here in Canada rather than in Brazil.”
And nor should he. While others may be pushing through with magnetic surveys, Eagle Star has now produced results. Now the company is officially at a new stage of its development, moving on schedule into phase 2 of its three-phase exploration program. Within its current Brazil holdings, we're talking the potential for a few hundred million tonnes of iron ore, at favourable $1-$1.50 per tonne in the ground (pre-mining) prices, the valuation of the company at around 10 million CAD is grossly understated. Friedlander firmly believes that had not the company lived through the 2008 economic discount era, the current price would not be so low.
But the current situation in 2011 has not only invigorated Friedlander and his team. As they start to gain the attention of investors and potential buyers of the company, he can confidently move forward towards his company's stated goal.
“My mission is to build a company with a billion tonnes of iron ore in proven resource,” boasts Friedlander. “I really believe that we are on the right track to achieve that. When it happens it will by way of this project and probably another project. That is our mission and that's what our plan should let us do.”
G. Joel Chury
Editor in Chief
DISCLOSURE: A fee has been paid for the production and distribution of this article and as such should be viewed in the context of an advertorial. At the time of publication, the author of the article does not currently hold any shares in the company described, but maintains the right to acquire shares six weeks after publication.
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