The BarkerLetter

February 25, 2008

Greetings investors!

Here’s a cheapie, Wave Mobile, trading as symbol NWWV on the pink sheets (www.pinksheets).

Now before you go all stiff and formal on me, let me tell you that the pinks are not just a home for extremely speculative and in some cases downright suspicious equities. Walmart Mexico trades on the pinks, and so does Air France.

About 18 months I got involved in a pair of pink sheets deals, Playstar - which was a kind of a cell-phone, text-messaging tech play, and Pluristem, a biotech. Both delivered returns in spades. In fact  I bought Playstar for an eighth of a cent per share and it went to $0.18 within 12 weeks.

You like the math there? So do I.

Welcome to the topsy turvy world of the North American grey markets, people!

Anyway, Playstar got bought out late last year by Wave Mobile which was trying to sell lottery tickets by cellphone.  They’ve since applied for an OTC BB listing and changed the business plan to mining. Wave has about 237 million shares issued and trades at a cent a share. They’re not planning a roll back, which is kind of interesting. The stock price has doubled in recent sessions.

The company has recently recruited an exploration geologist with experience in Nicaragua to develop its newly-acquired La Curva gold property comprising approx 2,000 acres in the Bonanza mining district of the so-called Golden Triangle.  La Curva has never been exploited commercially but there are some artisanal workings there, and it neighbours a producing gold mine.

Nicaragua has just recently come onto my radar screen as a viable mining destination, now that the new government has sorted out its mining code. Also the staking costs are quite cheap compared with Mexico and Peru.

Kb

February 6, 2008

Dateline: Santa Maria del Oro, Nayarit, Mexico - Today I’m wrapping up a three day tour of Rochester Resources’ Mina Real/Santa Fe gold and silver play located a few hours drive from Puerto Vallarta, Mexico.

To summarize: It’s an advanced property on which the owner has personally invested over US$3 million to fund the initial, high-risk exploration and development. These include over 1,500 meters of mine development involving five separate drifts at different  elevations.

The owner, a local geologist named Alfredo Parra, is the current president of Rochester and in every respect a poster boy for mining in Mexico. He’s articulate, savvy, and extremely proficient. He built the current 200 tpd million complex on the property and it runs like a top, with peak efficiency of 300 tpd achievable by April of this year. It currently produces in excess of $1 million worth of gold/silver concentrate per month.

Exploration wise, Rochester is drilling 7,000 meters to test depth and grades of the various epithermal vein systems discovered on properties located an hour’s drive from the mill site. There are 24 separate veins within three systems at Sante Fe (the Jonas, Clavellino, and Tajitos), all sub parallel and measuring 40 meters over four kilometers of  strike at surface. Ultimately they hope to have a geological model for all the recoverable gold completed by this July, at which time they may have a preliminary tally of all the mineable ounces on the property.

At press time, the company was midway through its second hole on the Clavellino, and was continuing to discover additional veins from surface sampling.  If and when the company hits an expected silver rich zone at the  the optimum depth of 1160 meters on the third hole, I’d advise backing up the truck. They’ve already encountered grades of 1,330 Ag per tonne from sampling at the Tajos Cuates area located on the adjacent Minas Real property, which also hosts the mine.

It’s also worth noting the presence of another precious metals explorer called Galena Capital Corp. (FYI.TSX-V) which is active in this region of Mexico and also in Peru. Galena has an ambitious business model which involves finding and taking large projects to production while spinning off lesser but still economic plays into separate vehicles.

* * *

So the only real question left is, what does Rochester have in the ground? Considering the high grades recovered from sampling, the fact that the vein systems are visible at surface over four kilometers, and the mill is already processing ore for concentrate, I’d say things look extremely good.

By ‘good’, do I mean 20-million-recoverable-ounces-of-gold-equivalent good?  Well let me put it to you this way -  there is always a little exposure, and there’s always a little luck, both good and bad. So the question investors have to ask themselves before picking up the phone and calling their broker is this: ‘do I feel lucky?’

Well, do you?

Don’t forget to subscribe to my paid newsletter so I can tell you when to sell. 

Rochester (RCT.TSX-V) trades around  $2.20 Cdn per share and has an approx. $72 million market cap.

Careful out there.

Kb

January 28, 2008.

Greetings investors.

Friends of this column know I’m determined to get ahead of the world’s next big gold discovery.

The search has led me of late to Mexico’s southern Sierra Madre mountains, and a very aggressive junior there called Rochester Resources Ltd., trading under the symbol RCT  on Canada’s TSX venture exchange (RCT.TSX-V).

Before I launch into a description of RCT and its Santa Fe project in Mexico’s Nayarit State, I want to make a couple of points about how to make the really big money as a mining investor. Basically you need to buy a stock that has a world-class, company-making project while it’s still trading for pennies or at least under $5 per share. There are literally hundreds of these so the question becomes, which one really has what it takes - in the ground - to become a major gold story?

That`s the only question worth asking in the current market. If you answer it correctly you will never need to ask another.

The conventional wisdom is to buy a basket of juniors and hope one of them will take you over the top. I don’t follow this investing strategy.  My approach is to research them all but buy only three - the right three - and ride them all the way!

I don’t want to double or even triple my money. That was last year. The drills have been turning all over the world for several years now and we are absolutely due for one or maybe even two major discoveries. By major I mean + 20 million ounces of recoverable gold which is mineable at a cost of $250 /$350 per ounce.  In 2008 I want cumulative profits in the percentile of thousands, not hundreds. I want quadruple or preferably quintuple digit gains!

Finding these projects takes patience, yes, but mostly it just requires a lot of faith. I’m tired of buying the Dia Mets and the Diamond Fields and the Aurelians and selling a few months later for a mere 100% profit, only to watch the stock go on doubling and tripling for the next 18 months without me!

I repeat -  I am not playing the odds this year. I’m not offering dozens of stock tips to my readers in the hopes of averaging  out ahead at the end of the year. I only want to buy three gold stocks - the right three - and I want to ride them right to the end and retire a rich man!

So, how do we find them …

It’s been my observation that truly world-class projects are discovered in one of two ways: Either the early going is really, really tough and tests the resources, patience, and faith of the company to the max (like Hemlo for example), or it’s an absolute cake walk like Voisey’s Bay. Surface showings, maybe a bit of trenching and an aeromag flyby, a handful of drill holes, and presto … huge discovery! Bingo, bango, bongo! 

In either case there is usually an element of extraordinary luck, either good or bad, and lots of serendipity.

Tune in tomorrow for more about that …

(Cont …)

December 13, 2007

Greetings investors!

We can expect to see some seasonal selling of our favourite mining stocks going into the Christmas holiday season.  Investors typically need to divert a little investment capital into buying presents and winter vacations this time of year, so they`ll be taking some of that off the table in the days to come.

The question in my mind is whether Christmas week will be a good time to average down. Stock prices often plunge in late December , and as quickly snap back up. But not always.  In fact I`ve seen some real smokin` hot market rallies occur over the last few days of the year.

In either case, it`s a real good idea to watch for dips and rallies just before and after Christmas Day. There could be an opportunity to make some quick capital gains.

Meanwhile, I`m watching Canada`s bellwether (for metals) Toronto Stock Exchange (TSX) index for clues, and especially the composite index for the venture board, where many of my junior miners are located. After last August`s sell off I rather hoped to see the CDNX test its high for the year, and though it made some impressive gains through October we didn`t hit record territory for the year. The index is treading water at present, having given back more than half of those gains in the past five weeks.

However, my favourite indicator - the MACD - remains mildly bullish so I`d say we`re in for a rally of sorts early in the New Year. The juniors are still under accumulation as well.

The one ominous thing is the relative quiet from the majors. Last year at this time practically all of the world`s biggest gold mining companies were publicly predicting a banner year for gold in 2007, which has certainly been the case. But I haven`t heard a peep so far about 2008.

We`ll find out soon enough though.

Careful out there.

Kb

December 6, 2007

Greetings investors!

In recent issues I’ve invoked the infamous Hemlo word a few times in connection with a gold discovery by Kodiak Exploration, listed on Canada’s TSX Venture exchange.

I want to provide a little more background on Kodiak and what it has cooking in the Hercules claim group outside Thunder Bay in northwestern Ontario.

But first I’d like to explain what Hemlo was (and is!)

The world-class Hemlo deposit was the major gold discovery in Canada during the 1980’s, and is still responsible for almost one third of Canada’s annual gold production.  As a mineral resource, it contains 22 million ounces of gold. The average gold grade for the main deposit is 7.7 grams per tonne.  Almost twenty years after its discovery, there is still no consensus on its genesis. 

Hemlo is located in north-central Ontario, Canada, near northern Lake Superior, approximately 260 km east of Thunder Bay. Kodiak’s Hercules property comprises 300 square kilometers, about 120 kilometres to the northeast.

The Hemlo deposit was discovered by a company called International Corona and a Vancouver mining promoter named Murray Pezim, or ‘the Pez’ as many including myself knew him.

Pezim was an on-again, off-again winner/loser on the wild and woolly Vancouver Stock Exchange until Hemlo put him over the top for good.

The true value of the Hemlo gold deposit eluded early prospectors. It was finally discovered in 1981 after prolonged exploration of the area since 1944 and of the entire region since the 1890’s.  Poor surface expression and a general lack of geophysical signature were the main reasons for exploration difficulties.  Furthermore, early drill holes punched into a barren section between eastern and western segments. 

It was a rough ride for the early investors in International Corona, because the majors were not interested in them after drilling on several showings returned poor results. Moreover, the property had an atypical geological setting which did not conform to the conventional quartz-vein-type gold deposits exploited in the past.

Pezim ignored the skeptics and continued to promote Corona and raise funds for a drill program outlined by geologist David Bell. The industry finally took notice after 76 drill holes and an exploration expenditure of $2 million returned some grades. Boy, what a cliff hanger of a story! 

Corona eventually secured Teck Corporation as a partner in developing the David Bell mine. Teck also backed Corona’s legal battle with Lac Minerals for ownership of an adjacent property. It was generally thought that Corona had little chance of success, but, in August of 1989, Teck and Corona were awarded control of the rich Williams mine that Lac had built in the Hemlo camp.

Although Pezim eventually lost control of Corona, the Hemlo camp continues to provide economic benefits for the people of Canada; the three gold mines there account for the bulk of Canada’s gold production.

I`ve always believed that other gold deposits on the scale of Hemlo existed in the region, and would eventually be discovered. The only reason they haven`t been found was the lack of sufficiently high gold prices to drive extended and widescale mineral exploration of the region.

Cont.

November 30, 2007

Greetings investors!

Shares in Kodiak Exporation are on a tear again today, rising better than 20% to almost $4 1/2 Cdn per share in afternoon trading.

Yesterday the stock was halted pending drilling news from the company’s wholly-owned Golden Mile project in Ontario’s Geraldton Gold Camp.

The news, when it came, reported gold intersections of ‘mineable widths’ from multiple new drill holes, expanding the mineralized zone to depth and along strike.

The Golden Mile vein system is now at a vertical depth of 130 meters, which is double the previously known depth extent, and remains open.  The intersections from recent drilling are small, under 5 meters in fact, but numerous, and in proximity to each other.

Kodiac is calling Golden Mile an ’extensive new gold discovery’, and I have no problem with that description.

Gosh, maybe it’s another Hemlo!

Wouldn’t that be nice?

Watch this space for more information on Kodiak and Golden Mile, as it becomes available. I’m going to follow this puppy closely!

Careful out there.

Kb

November 29. 2007

Greetings investors!

We’ve seen a nice run on Kodiak Exploration Limited (KXL.TSX Venture Board) since the middle of last month. The stock is up some 500%.

Kodiak has an interesting mix of base and precious metals properties in some of Canada’s richest mineral regions, and they’re all wholly-owned.

Their property of note lately is the Golden Mile prospect, on its Hercules property in Ontario’s Geraldton Gold Belt. Kodiak has reported extremely good grades from drilling there, including a 3.6 meter intercept grading 358.56 grams per tonne, or better than 10 ounces. Wow!

Of course all of those high grade intercepts are extremely short,  no more than 4 meters in fact. But more assays are pending.  The company has planned 60,000 metres of drilling to expand the known extent of the system and, at the same time, work towards building a resource in the zones of known high grade mineralization. 

The time to get into this play was last September, when the stock was at $0.50 Cdn - it’s over $3 per share now and traded as high at $5 per share in late October.

However, it may prove worthwhile taking a look at Sage Gold Inc, also trading on Canada’s junior venture exchange under the symbol SGX.TSX-V.  Sage’s stock price has followed Kodiak’s very closely over the past few months, and spiked $0.13 Cdn today (Thursday) to close at $0.57 per share on very heavy volume.

Sage raised $5 million Cdn earlier this month from a financing priced at $0.50.

There was no news release accompanying the big volume and subsequent spike in price today. However, the company is drilling its Jacobus property adjacent to Kodiak’s Golden Mile discovery, with assays expected in early December.

I’d be a seller in Sage is I held any; but I don’t.  So in that case I’m looking seriously at getting a position in the coming days, just in case there’s more to the pre-assay release hype than just  … well, hype.

Careful out there.

Kb

November 27, 2007

Greetings investors!

Uh uh …

First there was this proposed BHP Billiton/Rio Tinto Ltd. merger to create the world’s largest integrated mining company. Now the world’s second largest zinc producer is warning of lower earnings.

Am I the only one who thinks we’ve been too long at the trough?

Zinifex Ltd. of Australia has warned investors that rising costs, the strong Australian dollar and lower zinc prices could hold back earnings this year.  Net profit is still ontrack to exceed last year’s record result, but I think this is a harbinger of leaner times ahead.

I don’t like to be the skeleton at the feast, but higher costs and inflated currency values have created an artificially expensive operating climate for mineral explorers and producers.  A downtick or (heaven forbid) prolonged dip in metals prices could be disasterous.

Look, it’s the reverse scenario of a few years ago. After a prolonged bear market for copper, nickel, and precious metals (closer to a nuclear winter in fact), producers had wrenched down operatings costs so far that any upward moving in pricing sent profits and share valuations sky high.

In this reverse scenario, we’ll see it all go the other way.

Personally, I think BHP and Rio are both looking to their future survival, rather than a way to expand profits over the short term. They’re already planning into the next bear market. 

The only way to stay in business when aluminum and steel return to ’90s prices is to be the world’s largest volume producer with the thinnest margin.

But it’s always profitable to buy the right penny explorers, if you can get them cheap. Nobody ever went broke finding minerals, merely from producing metals at costs that were too high to sustain profitability in a dwindling commodities market.

Be real careful out there.

Kb