The BarkerLetter

October 12. 2007

Greetings investors!

Aber Diamond Corp. (TSX:ABZ) is chasing the remaining stake in Canada’s Diavik mine in the Northwest Territories.

I see this as bullish. For several years now I’ve noticed a lot of jockeying for position in the diamond patch, and a trickle of M&A activity among the smaller long-term players such as Southernera (SDM.TSX).  Last month, London-listed Mwana Africa announced that it has successfully acquired control of SDM, owning approximately 69.4% of the outstanding shares.

Aber was responding to a media report that suggested mining giant Rio Tinto plc was considering shedding the property.

Oh really?

This is the first time I’ve seen a major mining company respond affirmatively to an unconfirmed media report, which is really little more than a plain old rumour. 

 What does all this mean? Why, merely that Aber is hungry. Very hungry in fact.  It will be interesting to see if and how Rio Tinto responds.

Aber has the first right of refusal to purchase Rio’s interest in the Diavik, which produces some of the world’s finest gems and helped put Canada on the map as a preferred source of diamonds among jewelers.

Aber owns 40 per cent of Diavik, as well as all of the Harry Winston high-end jewelry store chain.  Rio Tinto owns 60 per cent of Diavik and conducts the exploration work.

Rio has been so busy on the acquisition trail of late that it may have to regretfully divest itself of something of value. I suppose that’s what Aber is hoping for.

I think diamonds are a stealth play, and it’s been going on for some time. If and when somebody kicks over something big, preferably in Canada’s NWT but I’d settle for Africa, we’ll see a global staking rush at the very least.

Hang onto your diamond shares!

October 11. 2007

Greetings investors!

I’ve been analysing the daily chart for Canada’s Venture Exchange, the CDNX.  The index is heavily weighted in junior mining stocks, so it’s a good barometer of where stock prices in the sector are headed over the short and long term.

Last week I said there were bullish signs suggesting a move back to previous highs, and that this week would tell the tale. I haven’t seen any major crosses yet. The weekly chart suggests the three major indicators, the slow stochastic, relative strength index, and MACD, are still in an upward continuation trend and all well short of being in overbought territory.  My forecast is slow, steady, even progress upwards.

To the investor, that means we should hold our positions for the time being. Rising oil and precious metals prices have certainly helped keep the market bouyant, and until those taper off I’m not selling. The time to buy of course was during last August’s sell off.

Meanwhile, some of my favourite stocks are doing well. We saw a nice spike in Ivanhoe Mines (IVN.TSX) today, up $1.70 Cdn in midday trading to $15.40. We got involved in that one in our October 3 edition (Reiterated BUY on Ivanhoe Mines) when it was at $12.50 Cdn, and predicted it would retest an earlier high of $18 Cdn.

My fave oil and gas junior, Lexaria Corp (OTCBB LXRA) has also seen some action in recent sessions, rising about 10% to $1.64 US yesterday and today. The company has new wells and new production coming on stream from its joint ventured properties in Mississippi, so I expect to see better cash flow from operations going forward.

I’ve got a pair of Canadian nickel juniors still under a buck: Crowflight Minerals Inc. (CML.TSX-V) and First Nickel Inc. (FNI.TSX) should fare well over the medium term, and if this rally gets legs we could see them double in the next three months.

I also like QGX Limited (QGX.TSX) , with coal, gold, and silver in Mongolia, and Rubicon Minerals Corp. (RMX.TSX), with copper/zinc in Alaska.  RMX is up $0.34 to $2.08 Cdn as of midday today.

Careful out there!

Kb

October 10, 2007

Greetings investors!

I strongly urge miners in Canada to be cautious in their relations with the First Nations.

I like to pick mining stocks with Canadian projects because Canada has terrific geology and a ‘mining friendly’ regulatory climate second to none in the world. There is some exposure however (isn’t there always?) in the form of environmental impacts and the rights of First Nations.

Witness the recent scratching match between Northgate Minerals Corp. (TSX:NGX) and aboriginal chief David Luggi over the Kemess copper/gold project in northern British Columbia.

Having followed that project for years, I was as disappointed as anybody last month to learn an environmental review panel had recommended the project not be approved as proposed. However, I was even more disappointed to read allegations by Mr. Luggi about name calling and racist remarks on various message boards. I’m not sure how wise cracks are supposed to help Northgate or Canadian mining in general. I suspect it will have the opposite effect.

Shares of NGX have been on the decline since hitting a high of $4.50 Cdn per share last winter. The share price has rallied over recent sessions thanks in part to a brokerage recommendation and the fact that the stock was oversold.  The apparent rejection of Kemess notwithstanding, the company has a P/E of 10.60 and trades at price/book of 1.30, which makes it attractive. The stock is a buy in my opinion.

I suspect Northgate will lose no time in filling its portfolio with other, perhaps even more valuable assets. I certainly hope they do.

I’m also hopeful that Northgate will do whatever it needs to do to smooth the waters. The last thing we need is the imposition of a ’risk premium’ on Canadian mining by the world’s financial industry.

Let’s try and keep this out of the newspapers, ok guys?

Kb

October 9, 2007

Greetings investors! 

Metals giant CVRD Inco Ltd. has announced an aggressive capital project in Canada’s Thompson Nickel Belt (TNB), in northern Manitoba province.

That’s a vote of confidence for the region, and a handful of juniors with projects there like Crowflight Minerals Ltd (CML.TSX-V. Recent cls. $0.70 Cdn), trading on Canada’s venture exchange.

Last year our readers made a ton of money on these start up nickel plays, and though the bottom has since fallen out pricing wise and the stocks have come off their previous highs, I’m still bullish over the long term. I also like the TNB as an area play.

Crowflight is destined to become the TNB’s next nickel producer. A feasibility study released last winter demonstrated the company’s wholly-owned Bucko Lake deposit has a 117.6% rate of return based on a value of $157.3 million Cdn and an average nickel price of US$8.00 per pound.

They’ve already begun ground prep for the building of a mine, and drilling continues to encounter more ore: Last spring they intersected hit 41 meters of 1.45% Ni and 0.14% Cu!

What has held the project up is the lack of a mining permit. I expected that earlier this year, but so far they’ve only achieved a ‘confirmation’ from the government for an environmental licence. Mine permitting is a lengthy process in Canada. However, I’m confident they will receive it in due course and that will definitely help the stock price along.

Crowflight has a suite of properties in both the Thompson Nickel Belt and the renowed Subury Basin nickel camp in Ontario (AER/Kidd Creek). All were obtained by joint ventures signed with Falconbridge Ltd., shortly before the giant nickel producer was sold to Swiss based Xstrata plc. last year.

The company also has inferred resource calculations at the M11A, Apex, Bowden Lake, and Halfway Lake deposits all located within spitting distance of Bucko Lake. The preliminary figures infer 63 million tonnes at 0.68% Ni at Bowden Lake and 1.1 million tonnes at 1.08% Ni at Halfway Lake. My hope is that Crowflight will continue to develop these resources into a sort of ‘mini’ TNB mining camp, with their own milling/mining facilities. In the meantime, the stock price keeps limping along due to unstable market conditions and the lack of that mining permit.  However, these are details which I believe are destined to change for the better.

Get timely details on this and other Canadian nickel plays by subscribing to The BarkerLetter.

Kb

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Greetings investors!

The weekly MACD lines turned positive on the S&P500 index last week, which suggests the recent rally could have staying power. It’s a bullish crossover, and an unusual one due to fact that it occured as the market hit a new high.

Usually such a MACD event occurs before that happens. However, the deep correction last August has probably forced a delay in the indicators, causing some of them to intersect. Although a bit late, it’s an encouraging signal.

Canada’s mineral-laden venture index, the TSX-V, also looks promising on the weekly chart, though it stumbled last week. The MACD on the weekly chart there appears to be headed for a bullish cross in coming sessions. If that doesn’t happen we’ll be looking at a pullback.

 What excites me however is the possible formation of a triple head on the chart which would take the index back to its previous highs set in April of this year and last. I think this week and next will tell the tale. I’m holding my positions.

The CDNX index tends to shadow the bigger moves in oil and gold commodity pricing, reaching its highs after those prices pull back. That’s like an early warning system. Very handy!

Subscribe to The BarkerLetter for timely buy and sell alerts on Canadian mining stocks!

October 8, 2007

Greetings investors!

Here’s a premarket heads-up on Lexaria Corp.  (OTC BB: LXRA) for Monday, October 8.

The oil and gas junior has been drilling targets at its Palmetto Point project in Mississippi since mid August. The results of that are expected very soon, possibly this week.

We should also get word on additional flow from the wells hit during Phase I and Phase II drilling earlier this year. The first well at Palmetto was spud August 15 and an earlier well elsewhere in Mississippi is being flow tested, which should have the net effect of boosting the company’s production.

Lexaria appears to be verging on a period of rapid exponential growth … always a good thing for the stock price!  Cash flow and earnings are destined to increase as additional discoveries and wells are brought onstream in the weeks to come.

I’m buying.

Kb

October 5, 2007

Greetings investors!

Shares of Ivanhoe Mines (IVN.TSX) were on the move today, two days after we called it (!) The stock is up $0.75 Cdn per share in midday trading today.

On Tuesday I wrote about the company’s emerging fortunes with Rio Tinto plc on the Turquoise Hill copper gold project in Mongolia.  The market also seems to like the company’s emerging metals play near Mt. Isa, Australia.

They’ve discovered a high-grade zone of copper/gold mineralization at the 2,400 square kilometer Cloncurry lands, located on the western margin of another Ivanhoe play, the large, open-ended SWAN iron oxide copper gold project.

A drill hole there intersected 90 metres grading 2.02% copper and 1.3 g/t gold, including 54 metres of 3.04% Cu and 1.89 g/t Au … nice!

Ivanhoe’s strategy is to seek large, mammoth size base metals deposits in  the regions of the world where they tend to be found: Australia, the Far East, and Canada’s north. They’re already developing one, and I think (and certainly hope!) they’ll find more.

For more picks like Ivanhoe subscribe to The BarkerLetter.

Kb

October 4, 2007.

Shares of Sulliden Exploration Inc. (SUE.TSX-V) popped over 30% today on news of an all stock takeover bid by Century Mining Corp. Stock holders will get 0.72 of a Century common share, which values each at $0.41 Cdn, a premium of 51%.

As of today’s close there was still a slight upside to the price. There wasn’t a huge amount of selling, and the volume was close to the daily average.

I’m glad to see mergers taking place again after the recent credit debacle, though I think we’ll see fewer cash offers for companies.

Sulliden has some exploration plays going in Northern Peru and in Eastern Canada, notably the past producing East Sullivan Mine in Quebec province. It’s a copper/gold/lead/zinc property with an indicated resource of 400,000 tonnes grading 5.07 gpt gold. It’s worth pointing out here that a ‘resource’ is not necessarily an economic calculation of gold. It still needs to be nudged into the ‘reserve’ category with feasibility studies. However, past producers with calculated resources are getting scarce, and the good ones are going at a premium.

For its part, Century Mining (CMM.TSX-V) has a decent portfolio of past and presently producing gold mines in Canada and Peru. It has a market capitalization of $75 million Cdn and now trades near its 52 week low of $0.51 Cdn per share.

If I were a Sulliden shareholder I’d hold onto my new Century shares. There’s a bigger upside there which is not reflected in the current price (now at book value!) due largely to market conditions. They’re currrently mining gold at the Sigma Mine in Quebec and the San Juan in Peru, and reported TTM (trailing twelve month) earnings of $0.06 per share. Their price earnings ratio is at 9.0, which is more than respectable.

If you’re still seeking a little more exposure to gold I think Century is definitely worth serious consideration.

And if you subscribe to The BarkerLetter I’ll tell you when to sell.

Be careful out there.

Kb