Almaden Minerals Ltd. (AMM:TSX; AAU:NYSE 1.63) continues to advance its Ixtaca project in Mexico, and is on track for a prefeasibility study (PFS) by year-end. We expect improved economics from the earlier economic studies. Drilling continues to see attractive intercepts; the company is well financed with almost $14 million in cash. A favorable PFS could start to see interest in the project as an acquisition. We are holding; the stock has jumped from under $1.30 in the last week, and there’s no need to chase it.
Almadex Minerals Inc. (AMX:TSX.V 1.01) is the exploration spin off from Almaden. It has seen exploration success recently with a good hole at the El Cobre property, a large, though low-grade deposit. It also has a strong balance sheet. The stock shot up after the drill hole referred to above was released, moving from 40 cents at the end of July; it was under 20 cents at the beginning of the year. We like the management team, the business plan, the balance sheet and the range of properties, and consider this exploration company to have as strong a shot at success as any. However, given the strong stock move and the valuation, over $40 million market cap, we are holding but not buying at this level.
Lack of strong news makes these holds
Cartier Resources Inc. (ECR:TSX.V 0.155 x 0.18) has achieved some positive property acquisitions and exploration results, but the ongoing dilution at low prices make it difficult for the stock to move. We are holding.
Reservoir Capital Corp. (REO:TSX.V 0.085 x 0.10) has replaced its president, and announced delays in completing its annual financial statements, a disturbing sign given recent developments and lack of cash. Reservoir had a letter of intent with an Italian company to sell its Brodarevo hydro project in Serbia, but the acquiring company failed to complete its due diligence during its exclusive period. The LOI has now expired and Reservoir said it was now working with other companies that had expressed interested. We are holding—an acquisition or other deal would see a multiple on the stock price—but the company essentially has no cash and needs to complete some transaction in the near term. Worst case is that Reservoir becomes a shell, with a strong share registry and a management looking for a project. We are holding but absent news are not buying.
Adrian Day, London-born and a graduate of the London School of Economics, heads the money management firm Adrian Day Asset Management, where he manages discretionary accounts in both global and resource areas. Day is also sub-adviser to the EuroPacific Gold Fund (EPGFX). His latest book is "Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks."
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1) Adrian Day: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Cartier Resources Inc. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Funds controlled by Adrian Day Asset Management hold shares of the following companies mentioned in this article: Almaden Minerals Ltd., Almadex Minerals Inc, Cartier Resources Inc. and Reservoir Capital Corp. I determined which companies would be included in this article based on my research and understanding of the sector.
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