Saturday, December 25, 2010

Yukon Conference to Highlight Area Play

As our Christmas present to our web log readership, just below is an offering that normally would have been reserved for Vultures (Got Gold Report subscribers) only.  Enjoy and Merry Christmas.  

Our generation may remember as kids, on Saturdays we were glued to our black and white TVs watching the Saturday serials such as The Rex Allen Show, Roy Rogers, Lassie, The Lone Ranger, The Whirly Birds, Rescue 8 and Sea Hunt to name but a few.  One show, probably already a re-run then, helped to form a lasting impression of the Yukon country in the minds of young Texans.  That show was Sergeant Preston of the Yukon, the story of an intrepid Canadian lawman and his trusty dog Yukon King bringing law and justice against heavy odds to an otherwise lawless crowd of gold-crazed Klondike boomers in the late nineteenth century. 

The show appealed to young Texans because Preston was the equivalent of our own Texas Rangers.  Tough, fair, fearsome and capable, no one wanted to be on the wrong side of a Texas Ranger lawman, or a Northwest Royal Canadian Mounted Policeman like Sergeant Preston.  

Today we know that most of the scenes in the show were filmed a long way from the Yukon country, (around Bear Lake, California) but it’s funny how the mental image of that wild wilderness area is still shaped today by the rugged romantic landscapes in those grainy TV images of almost five decades ago.

20101225PrestonYukon 
 

There is a good reason that prospectors flocked to the Yukon nearly 114 years ago.  Some of the creeks and rivers in the area held amazingly large quantities of placer gold.  All that placer gold originated somewhere.  Even though less than 10% of the people who set out for the gold fields actually made it there and only a tiny fraction of the ones who did make it would actually file a paying claim, there were indeed a precious few who beat all the odds to become immensely wealthy from the Yukon yellow-orange metal.    

In 2010 the Yukon Territory of Canada saw some significant discoveries and re-discoveries of potential mineral wealth.  A few of the explorers working up there saw their market caps blast higher as they announced drill news and important new zones of mineralization. Largely because of those early successes, the Yukon has once again become a significant rare “area play” and dozens of companies have rushed up to the Eastern Alaska – Yukon – NWT wilds to stake untold tens of thousands of hectares of new “prospects,” hopeful they might cash in on the biggest dash in to the area since the Klondike.

As with all true area plays, by definition, there are real reasons for the new gold rush there.  The “good stuff,” defined as economic ore bodies of gold and other important minerals, has already been found beyond any argument. We need look no further than the Underworld Resources discovery in the White Gold district which Kinross, who already owns and operates the Fort Knox mine in Alaska, thought important enough to acquire last Spring for about $140 million.   As we recall, that was for a resource estimated at less than 1.5 million ounces, perhaps not large enough to attract a major producer by itself, but we guess that Kinross saw more potential than just what Underworld had already drilled up.

Remember that Kinross held about 10% of Underworld before they acquired the remainder.

Continued...

Other discoveries in the Tintina Gold Belt received attention from newsletter writers, investment advisors and investors.  Shares of ATAC Resources exploded from just over C $1.00 to as high as $9.00 in the span of six months (May to October) following their success with sampling and drilling at the Rau and Osiris prospects.  Gold, silver, lead, zinc and indium showings excited investors hungry for the next Underworld.  ATC shares have since retreated back to a $5 handle as insiders and early speculators cashed in on the investor over-enthusiasm.  The drill results were certainly good, no doubt about it, but probably not good enough, yet, to support an $800 million market cap for ATAC.

The enormous rise in price for ATAC underscores an extremely large appetite for good discovery stories in the Yukon and a willingness on the part of investors to “pay to play” in them. 

20101225ATACmap 
(ATAC area map. Tintina Gold Belt shown in yellow-gold.)  
 

We Vultures are interested in the region because there will very likely be some huge winners emerging from the rush in of many tens of millions of dollars of high-risk capital already raised and about to be raised.  The wealth already “created” in the Yukon this cycle has provided a compound effect because people who have now cashed “lotto tickets” from early exploration are able to press their “luck” by parlaying their gains into other plays in the hot area.  That kind of capital generation can be self-sustaining for a good while in the largest area plays and the Yukon play has the potential to be quite large because so much of the geology of the area, the ancient rocks and limestone layers are truly prospective, but under-explored.  That’s partly because of the remoteness and harsh conditions of the Yukon, but also partly because there have been other, easier pickings to be had elsewhere.

20101225ATACDrillRau 
 
(ATAC drill in the Yukon hill country.)

   
Small resource company gurus Eric and David Coffin, owners of the Hard Rock Advisory service, an excellent publication for people interested in exploration stage companies and one of the gurus we attempt to “game” here at Got Gold Report, were in ahead of the crowd with some of the companies working the new Yukon gold play.  ATAC was one the Coffins had pegged as a leader in the area well before they made the huge jump higher in price. 

20101225ATACgraph 
 

 
Another of the “Yukon possibles” the hard-working brothers focused on was Kaminak Gold (KAM-V) which has seen at least a 7-bagger price improvement since the HRA gurus first mentioned it to their Crew.  The Coffins have a well-deserved reputation for discovering the best of the public-company prospectors well ahead of the game.  That doesn’t mean that all the companies that the Coffins end up covering do well.  That’s just not the nature of exploration, but if one wants a shot at being on board before a company-making discovery is made, we believe the HRA guys are a great source of ideas and opportunities to do just that.  

20101225KAMgraph 
 

The HRA list of Yukon and eastern Alaska prospects is not all that long, and today it includes a number of companies that have good real estate, but have not yet cut enough pay dirt to garner very much attention or respect.  We have our eye on a couple of those for potential Vulture Bargains in early 2011.  Included in that list are Northern Tiger Resources (NTR.V) and Aldrin Resources (ALN.V) to name two. 

Of those two, Northern Tiger probably has the edge because of their high-grade showing at what they now call the “Discovery Zone” of their 3-Ace prospect east of Whitehorse near the border with the NWT.   Sampling and drilling in early 2010 there returned grades up to 4 oz per tonne over 1.3 meters inside a 10.9 meter interval of 14.8 grams per tonne.  Drilling later in the year also had gold shows, but compared to the first set of results that drilling seemed a disappointment and led to a harsh selloff around the U.S. Thanksgiving holiday.

20101225NTRgraph 
 

If any of the images are too small click on them for a larger version. 

After a site visit there to NTR’s Sleeping Giant project, in November David Coffin remarked, “The basic job of confirming a discovery is now done. NTR has cemented its position in the select group of highly active and heavily watched Yukon explorers for 2011.” 

We here at Got Gold Report took advantage of that harsh sell-down in NTR shares in November and early December to build an initial position in NTR shares based upon the confidence the Coffins showed in that project and in Northern Tiger management.  We do not personally know the principals.  Between the November disappointment selling, tax loss selling and additional pressure related to a $3 million financing at C$0.35 per unit in December, NTR shares remain low compared to their peers in the area as we write in late December, 2010.   NTR closed Thursday, December 23 at C$0.37. Our appetite for NTR would increase if there is a gold pullback related selloff in early 2011.    

Other companies we already follow have been active this year in the Yukon preparing for the Spring exploration season.  Of those, we are most interested in Constantine Metal Resources (CEM.V) which has, together with a partner (Carlin Gold), staked some potentially interesting Yukon ground, some of it in close proximity to ATAC’s Osiris project.

Just as there were very few actual winners in the first Klondike gold rush, there will likely be only a handful of success stories once the current area play up there is done.  But one need not be involved with all of that potential handful of companies in order to profit handsomely.  One need only get involved with one or two or three good speculations a little ahead of the game.  Then, once the speculation “hots up,” we can get to “Free Shares” as quickly as possible so as to be able to weather the inevitable ups and downs of the discovery companies with little to no stress.

It just takes one 10-bagger or 20-bagger to make all the research effort and chance-taking worthwhile, but in order to get those kinds of returns we have to be willing to take chances BEFORE it is safe to do so.  We have to be willing to take a shot with our high-risk speculative capital and then be willing to let a portion of that risk stay involved through the discovery process.  That is, of course, much easier to say than to do, but if we can get to Free Shares with our speculations it makes it a lot easier to hang on for the few brass rings the Trading Gods allow us.   

In order to get a better idea of the companies and of the play itself, Vultures would do well to mark their calendars for an upcoming e-conference scheduled for January 19th and 20th.  Leading experts will be a part of that conference, including the Coffin Brothers, Mickey Fulp (the Mercenary Geologist), financier and savvy investor Rick Rule, Brent Cook, Dr. Michael Berry and a number of others. GATA's Bill Murphy will be there as well as Lawrence Roulston, representatives of Yukon government and famed prospector Shawn Ryan.   

Companies we follow that will be making presentations or hosting exhibits include ATAC Resources, Kaminak Gold, Golden Predator, Northern Freegold Resources, Carlin Gold and Constantine Metal Resources.  

For more information about this important e-conference which is open to anyone and everyone can participate in the comfort of their own study or office, and for conference registration in advance, just click on the following link http://theyukonroom.com/ 

 

20101225YukonRoomLogo 


Sergeant Preston and his faithful, very smart dog King were mythical legends, but they were based on a grain of truth.  Important geologists believe that great wealth lies hidden underneath the Yukon country waiting for discovery.  We are in a period now where enough speculative capital will be flowing in to the area that it is almost a certainty that there will be some spectacular breakthrough stories and perhaps one or two true monster deposits will be found. But only a few of those stories will survive the test of time.  

There will be lots of hooligans, promoters and pretenders involved in the Yukon, as there always are in these kinds of popular plays. Parasitic people ready and willing to stake out worthless moose pasture and then ride the wave created by a few pioneering producers that have The Right Stuff to find The Real Deal.  

Our best defense against those pretenders, our Sergeant Preston, is good information and our reliance on the knowledge and experience of the geological experts and gurus we trust.  The e-conference above brings both of those together for us Vultures, information and the best experts in the area, … and that makes it a “must-do” in our agenda for January. 

(Edit January 26, 2010:  Eric Coffin checked in to say that if any of our readership was interested in their report on companies operating in the Yukon, all they need do is to send their email address to HRA via this link: http://www.hraadvisory.com/yukon_report.html

Eric says that report may be a little dated now, and it will be perhaps a month before it is updated, but for those just beginning to look into the region and the new Yukon area play or those who have not had the benefit of the HRA thinking before, it will be invaluable.  The price is right (free) and it comes from the no-question best in the business.) 

That is all for now, but there is more to come. 

To subscribe to Got Gold Report please click on the GGR Subscribe link above and to the right, and thanks very much for doing so!  Subscribers help to make GGR possible.

We may be quite scarce for a few days, but we are gearing up for what we believe will be an active Q1 in 2011.


Disclosure:  The author and or his family holds long positions in Constantine Metal Resources, Aldrin Resources, Nothern Tiger and Golden Predator. Please read our relevant disclosures located on every GGR web page.   


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The Original
Vulture Speculator

Trading gold, silver and mining shares since 1980 with a focus on taking advantage of volatility extremes, Gene Arensberg analyses the markets through a basket of technical and fundamental indicators and shares his findings from time to time here at Got Gold Report. Mr. Arensberg has been quoted in the Wall Street Journal, Dow Jones MarketWatch, USA Today and dozens of other news organizations.

"I've been a huge fan of Gene and his amazing work for years..."

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