Let The Buyouts Begin!

Well, as most of us are aware, it's been one brutal last 6 months within the gold junior sector.  The good news is that the knot that develops in your stomach after looking at the current market value of your gold juniors is about to be untied.

 

Well, as most of us are aware, it's been one brutal last 6 months within the gold junior sector.  The good news is that the knot that develops in your stomach after looking at the current market value of your gold juniors is about to be untied.

 

One reason why it has been such a rough last 6 months is because a good part of Wallstreet/Baystreet are betting on a collapse in the gold price.  This has thus left many junior golds being dumped and or shorted.  As we surpass $1700 in May for the price of gold (IMHO), we should see a whipsaw reaction in the juniors from their depressed valuations.  

 

On Friday Trelawney Mining (TRR) got gobbled up by Iamgold for $608mm or about a 40% premium to Thursday's close.  This is the first of many transactions to come within the gold sector.  Seniors are sitting on record levels of cash and many of them are having difficulties keeping costs down, and are looking for the safest jurisdictions.

 

So where should we look to for potential buyouts?  Logically the higher grade deposits in North or South America should gain an edge.  Iamgold gave a lot of good points in the following article on what they were looking for when considering a company within the junior golds.

 

http://www.theglobeandmail.com/globe-investor/iamgold-acquires-trelawney-mining-in-608-million-deal/article2416039/

 

Now is the time to get into the junior golds based on valuations comparable to 2008.  The buyouts are just starting, and that will lift the tide for all boats.

Community Talk

Re: Let The Buyouts Begin!

Enough is enough. Junior gold stocks are getting ridiculously cheap and we're taking a stand.

It comes down to one simple premise. Central banks are printing copious amounts of paper money - from Europe to the US. Yet, central banks have become net buyers of gold. Even European central banks have become net buyers of gold. The last time this happened was over two decades ago. Central banks are buying gold with money they print. What does that tell you about their confidence in the currency they print?

Do you still believe in gold's value?

Do you believe gold will hold its value over the next couple years?

Will central banks around the world continue to print money in an attempt to save the faltering global economy?

Does the US have an insurmountable debt level that can't be serviced if deflation hits and interest rates rise?

If you answered yes to those questions, which we did, then gold stocks have presented you an opportunity that may not surface again for decades.

It makes sense for us to align ourselves with discoverers (junior gold stocks trading are at historic lows) of real money...gold.

Junior gold stocks provide opportunity no other asset class can touch. If you are positioned in before a junior makes a new gold discovery, the profits can be massive - even in a down market.

Rick Rule, the famed resource investor, recently wrote an article which documented why he is excited about this gold market and junior gold stocks. He stated "As experienced junior gold speculators know, nothing adds to share value like discovery. Speculators will fondly remember hundredfold profits from discoveries like Diamond Fields and Arequipa. We are now truly in a discovery cycle, one fueled by sustained capital investments in unprecedented amounts."

We are taking a stand at these levels. When the vast majority of investors give in to gold, much like central banks have already done (net-buyers of gold), and faith in the dollar and other fiat currencies erode further, a broad based rally in junior gold stocks will erupt. The fact that junior gold stocks are receiving near record-low valuations will come to light as inflation destroys currency values. A flood of fiat money will enter the gold sector. It is our plan to be ahead of that money.

Understand that more quantitative easing is coming and that inflation is the only way out.

We all know how quickly sentiment can change. Where do you want to be when investors get bullish on junior gold stocks once again?

We will be announcing our new Featured Gold Company on Sunday morning. Our exclusive research report will be delivered to you via email upon its completion.

All the best with your investments,

PINNACLEDIGEST.COM

Sharing ideas, being frank with crticism, seeing another's pt. of view, and researching for an edge in a co. and its sector are key to success and don't ignore Mngt's Credentials good or bad play a big part in a successful outcome. Pull the pin  o

Re: Let The Buyouts Begin!

Buy Out Target First Quantam ...... In First Quantum's Q1 results, total copper production of 65.9kt was down 2% QoQ from 67.3kt as a result of lower grades and recoveries at Kansanshi, as well as an estimated 2.7kt of lost copper production due to two strikes in the quarter. Kansanshi copper production was down 4% to 56.6kt vs. 59.2kt in 4Q11.

Total copper cash costs were $1.59/lb Cu, up 4% QoQ and modestly higher than guidance due to the lower than expected production. Cash costs at Kansanshi were up 2% to $1.54/lb Cu while costs at Guelb were up 13% to $1.84/lb on a 30% QoQ drop in gold sales. Meanwhile, nickel production at Ravensthorpe was in lin

e at 8.6kt and cash costs of $5.69/lb Ni were below expectations of $7.20/lb Ni due to one-time savings from low-cost acid inventory and reduced mining costs during the ramp.

We reiterate that, in addition to potential NPI supply growth, this year should see the first real impact of production from the long-awaited non-Chinese nickel greenfield projects (including Ravensthorpe).

These projects should add over 100kt of nickel supply in 2012.

Sharing ideas, being frank with crticism, seeing another's pt. of view, and researching for an edge in a co. and its sector are key to success and don't ignore Mngt's Credentials good or bad play a big part in a successful outcome. Pull the pin  o

Re: Let The Buyouts Begin!

Opportunities in Copper Miners

Copper financing • In today’s article we discuss the decreasing availability of copper stocks on the London Metal Exchange, which we expect is now being driven by a large increase in copper being financed in off-exchange warehouses.

In our view these deals have limited impact on the outright price of copper; however they are likely to keep physical copper premiums high and the copper curve in a backwardation (where forward prices trade at a discount to spot).

We expect the financing deals are unlikely to continue beyond 4Q 2012, based on forward prices.

Sharing ideas, being frank with crticism, seeing another's pt. of view, and researching for an edge in a co. and its sector are key to success and don't ignore Mngt's Credentials good or bad play a big part in a successful outcome. Pull the pin  o

Re: Let The Buyouts Begin!

Where did I say   mega projects have less chance of production ? Your taking  my comments wrong, and Pebble has an enormous open pit as well as an underground operation  planned.Investors have to try and distinguish between resources and reserves. All I was pointing out was that  there are many well run Gold &Silver mining operations, out there right now ,selling for  half their networth or less. With buys or aquisitions like that ,I simply believe something in production TODAY or near term  is  a better bargain ,than years down the line .Finding money is not easy,even for Intermediates.I would admit ,mega projects in Canada or the U.S.  are a lot better than anywhere else,due to the stability of the democracies.  Generally large past/current producing mines have  large resources  waiting to be discovered ,with infrastructure in place . AUQ has 2   Young Davidson and Kemess, past or present  mines that have  huge new reserves and resources in place with  infrastructure that will keep costs for both mines reopening (YD,just opened), a lot less than 1 billion.,with more than 6 million oz's.  disclosure ; not a shareholder of AUQ ,just a fan of that type of business plan.

Re: Let The Buyouts Begin!

TRR until recently was one of my top picks, but my strategy on the Venture is to seek out the GRAND SLAMS and TRR looked more like a base hit and management must have agreed with this assumption. I missed out on the 25% spike with my early exit but with no regrets.

Re: Let The Buyouts Begin!

southpen I disagree with you that just because a project is considered 'mega' lessens its chance of production. Yes the cost to put in production is vital. But location is key. Pebble is in pristine alaska with much fresh water near by. ANd much of it is under ground.  I do no what you mean tho. Smaller projects, cheaper project, under explored have much upside for majors.

 

Re: Let The Buyouts Begin!

Another M&A Opportunity right under your Nose Thinker! Get Busy on your tire kicking finally, nothing to lose but another opportunity. Just goes to prove that Pinnacle can lead us horses to water but they can't force/encourage but a fraction of us to drink!.  Pinnacle is bang on  here and candidates for RDK if their 43-101 checks out has to be a host of big miners starting potentially with their neightbors likeL  FreePort McMoran, RIO TINTO, BHP, ASARCO, Newmont- who originally owned SanManuel- Kalamazoo and  why not major players  especially those having issues in South America - Africa-Asia enter  players in no particular order such as  Teck, Anglo American, Xastra, Codelco, Hindalco, Goldcorp, Barrick, Summitomo, Oz Minerals and a host of others in the World Top 30 Copper/Gold/ Base Metal Players List given energy concerns just in Chile and Peru. It is only logical for competition to get keener in safer jurisdictions like Arizona. Get reading  the problems in South america below amongst other jewels provided below. OR NOT...SNOOZE & YOU WILL LOSE AGAIN!

   http://www.pinnacledigest.com/articles/redhawk-resources-executive-chairman-stephen-barley-interviewed-james-west

Go to the head of the class re energy being the great limitation  re mining expansion  of existinig operations or new projects coming onstream Thinker but you haven't done your homework  on a gem  laid right on our doorstep by Pinnacle RDK Redhawl Resources. Power , right aways, environmental already solved in SanManuel County, Arizona or the rest of "Copper Alley , Arizona" for that matter. You missed Trelwany and now here's your last chance right under your nose and so eloghently laid out in Pinnacle's intial introduction report as their 1st pick of 2012. 

I'll bet on Teck being a serious tire kicker  of RDK. See below

LOCATION,LOCATION,LOCATION! OOPs what about the Damn Power?!

ALL EYES OF MAJOR PLAYERS IN CHILE WILL CAST THEIR EYES to PRIOJECTS IN ARIZONA..enter Redhawk!

April 25 (Bloomberg) -- The biggest-ever pipeline of copper projects is under threat as Chile, the world’s top producer, struggles to contain rising opposition to new power plants. At least 5,000 megawatts of capacity, including a $5 billion coal-fired plant proposed by Brazilian billionaire Eike Batista, are facing delays or have been shelved as companies including BHP Billiton Ltd. and Anglo American Plc spend as much as $100 billion on copper and metals projects in Chile.

The country, struck by a power blackout as recently as this week, needs to boost capacity by 47 percent within 8 years to keep pace with consumption. Protesters from fishermen to university students oppose the plants, prompting miners to consider their own projects to help meet China’s copper demand.  “Chile will have to shelve many of the country’s mining investments due to the high cost and scarcity of electricity,” Joaquin Villarino, president of mining lobby group Consejo Minero, said in Santiago on April 19. Delays will jeopardize a “significant” part of the proposed mine investments, he said.

BHP Billiton, the world’s largest mining company, may solicit offers to build a power station in northern Chile, Peter Beaven, head of the Melbourne-based company’s base metals unit, said April 10. Teck is in talks with energy providers to build a power station in the Atacama Desert to supply its Quebrada Blanca mine, Santiago newspaper La Tercera reported April 21. Chile needs to add 8,000 megawatts to its 17,000-megawatt power system by 2020, according to National Energy Commission estimates. The mining industry accounts for about a fifth of the country’s energy demands.

Earthquake

Transmission lines damaged by an 8.8-magnitude earthquake on Feb. 27, 2010 also need investment. The grid will be prone to blackouts for years to come, Chile’s former energy minister Rodrigo Alvarez said Feb. 17. The latest blackout struck this week as supply was cut from the capital Santiago to the southern region of Los Lagos on April 23.  Power prices on Chile’s central grid rose from about $100 a megawatt hour at the start of 2010 to more than $150 a megawatt hour at the end of 2011, according to the Energy Ministry. “It is a challenge that the government is well aware of - the need to ensure that economic growth is not constrained by a lack of power,” John MacKenzie, head of Anglo’s copper business, said in an April 10 interview in the Chilean capital.  Alvarez resigned after a conflict related to fuel subsidies in the southern region of Aysen. President Sebastian Pinera then appointed Jorge Bunster on April 3 as his fifth energy minister in two years.

Environmental Opposition

Opposition from environmentalists and community groups are slowing construction of power projects, including HidroAysen in Patagonia that would become the country’s biggest power generator, according to Villarino.  HidroAysen, which is being developed by Colbun SA and Empresa Nacional de Electricidad SA, would generate 2,750 megawatts for Chile’s central grid. State-owned Codelco, the world’s largest copper producer, operates three mines in that region of the country. Last year’s approval of the project sparked protests that led to hundreds of arrests and millions of dollars in damage in public infrastructure. HidroAysen still requires approval to build a 1,900- kilometer (1,180-mile) transmission line.

MPX Energia SA, controlled by Batista, faces delays to its project after fishermen won an injunction to halt its development. The plant will provide power to new mines proposed by Freeport McMoRan Copper & Gold Inc. and Teck Resources Ltd.

GDF Suez

In 2010 Pinera asked GDF Suez SA, Europe’s largest natural- gas network operator, to scrap plans to build a 540-megawatt coal-fired power plant on the coastal site of Barrancones after environmental opposition. Xstrata Plc has partnered with Australia’s Origin Energy Ltd. to develop its Energia Austral hydroelectric project in southern Chile. “Energy risk is significant and we need to ensure that the risks are properly mitigated,” Charlie Sartain, the head of Xstrata’s copper business, said in an April 17 interview. Liquefied natural gas imports can be increased to Chile through the two LNG terminals already operating in the country, BHP’s Beaven said.

The government is taking a more prominent role in taking decisions to improve power supply in Chile, Codelco’s Chief Executive Officer Diego Hernandez said in an April 18 interview in Santiago. Previously, the government limited itself to regulating the sector, he said.

Economic Growth: Pinera aims to achieve average economic growth of 6 percent during his four-year term as part of a goal for Chile to become a developed nation by 2018. That plan is contingent on approving power projects, according to a Feb. 28 speech. “If we don’t win this battle to have cheap, clean and safe energy, we won’t become a developed country,” Pinera said.

Chile will seek to “substantially” increase hydroelectric generation to solve the country’s shortages, Juan Manuel Contreras, executive secretary of the National Energy Commission said April 19. Chile has 9,000 megawatts of untapped hydroelectric power generating capacity, he said.

Chile’s gross domestic product expanded 6 percent last year and 6.1 percent in 2010, the fastest in more than a decade. Economic growth will slow this year to 4.1 percent as the Euro- zone crisis reduces demand for exports, according to the median estimate of economists surveyed by Bloomberg.

The South American country can reduce consumption by 12 percent through power-saving measures, according to Deputy Energy Minister Sergio del Campo.

Renewable Energies: The country is considering a law that would set Latin America’s highest renewable energy goal and spur $10 billion of investments in clean power projects. Dozens of companies have applied to the environment regulator to build solar farms in the Atacama Desert, the driest place on earth.   The extra yield, or spread, investors demand to hold Chile’s bonds due in 2021 has fallen to 94 basis points from 116 basis points at the end of 2011. The country’s credit-default swap, a measure of the cost of insuring against default for five years, fell to 97 basis points from 132 basis points on Dec. 30. The benchmark equity index has gained 9.3 percent this year.

Mining companies are considering $100 billion of projects in Chile, home to the world’s largest copper reserves, according to data compiled by mining association Sonami. Peru, the world’s third-largest copper producer, may get $50 billion in mining investments over the next decade, according to the country’s energy and mines ministry.

Lower Quality Ore: More energy is needed as mining companies develop deposits with lower quality ore, as they need to move more earth to extract the same amount of copper.  Chile’s copper output has slumped this year due to declining ore at mines including Codelco’s flagship Chuquicamata that is a century old. Codelco needs to spend more than $20 billion to boost output to 2.1 million metric tons by 2020 from about 1.7 million now, Hernandez said. Without those investments, Codelco’s output will slump to 800,000 tons a year in that timeframe as the company exhausts profitable ore at its mines.

China’s copper demand will probably grow more than 8 percent annually in the next five years, Andrew Harding, the head of Rio Tinto Group’s copper division, said in an April 17 interview. This is good background on why I personally like RDK. In the end I’m counting on a lot of things lining up and hopefully collectively we’ve all done a lot of homework that we can continue to share.  Analyst comments at very bottom of email are insightful.  http://www.financialpost.com/todays-paper/Cheaper+Teck+growth+than+build+analyst+says/6489116/story.html

TECK CORP  and its copper focus and issues facing it

More Comment:  Power Projects take time to Build...good luck  over the next 5-7 yearsa in Chile...HELLO ARIZONA!!!!

Protests threaten energy-hungry Chile mines

By Alexandra Ulmer and Fabian Cambero  TOTORAL, Chile | Mon Apr 16, 2012 10:29am EDT

 (Reuters) - It took just a handful of fishermen and artisans from this tiny village in northern Chile to threaten a $5 billion coal-fired thermoelectric plant desperately needed by nearby copper mines. The remote, verdant village of Totoral's bid to block Brazilian billionaire Eike Batista's huge Central Castilla power project on environmental grounds is now in the hands of the Supreme Court. The plant aims to provide power to major mining projects in the Atacama desert region, but residents say its emissions will harm air quality and that the temperature of water released back into the ocean will hurt fish and marine life. Their case is seen as a litmus test for a string of other potential flashpoints in Chile, the world's top copper producer.

Protest groups are challenging high inequality in Chile - for long Latin America's poster child economy - and demanding that the benefits of its long mining boom be spread more widely. They also want stricter environmental protections across Chile, from the Atacama desert in the north to Patagonia in the south, and the challenges have put major projects at risk.

Chile's shaky energy grid needs significant new investment after years of neglect, exacerbated by a devastating 2010 earthquake and droughts. But the mounting opposition to hydro-power, coal-fired thermoelectric plants and wind farm projects is worrying investors. "There's a very significant supply problem so if investment is delayed ... we could have a very sharp energy crisis in the coming years," said Jorge Rodriguez, president of electric firm Guacolda.  (Writing on the wall, its delayed)

A former mining minister and board president of the state-owned mining giant Codelco, Rodriguez said protests against energy projects could cause serious damage to the economy and push mining firms to look elsewhere for their next projects. "These appeals appear excessive to me. They're lengthening processes and this will end up prejudicing people."

Mining executives say they already face soaring energy prices and even steeper future costs as supply lags demand. "With delays in some energy projects, the situation is much tighter.  To Quote the title and opening lines of of a famous Eric Burdon & The Animals Song, "We Gotta Get Out of ths Place If It's the Last thing we Ever Do ."

The government needs to take swift decisions so this doesn't brake future economic growth," said John MacKenzie, head of copper at the Anglo American mining firm, which has huge projects in Chile.

PROTESTS: Batista's MPX Energia and giant German utility E.ON set up Central Castilla with a goal of providing 2,100 megawatts to mining firms in Atacama. These could include Antofagasta Minerals' Los Pelambres mine, the Cerro Casale project owned by Barrick Gold and Kinross , and Lumina Copper's Caserones mine. But villagers fought against the project roughly 25 km away from Totoral and won a key battle at an appeals court. "They thought we wouldn't be able to defend ourselves," said Elena Marin, an outspoken Totoral artisan of indigenous descent who makes olive oil and rosemary-based soaps. "At first, we thought we were lost. But then we leaped to defend ourselves."

The chipped walls of makeshift wooden houses are draped with posters advocating a nature-first lifestyle while school children used rocks to spell out 'No to Castilla' on a barren hill looming over the village. Residents pluck figs from orchards, grow bulrush and catch shellfish in the Pacific Ocean but they aren't even connected to Chile's energy grid, instead relying on a handful of solar panels. The humble but fertile village is nestled in Atacama's arid hills miles from other villages.

It is broadly made up of four families, with residents moving in and out of each other's houses without knocking. Much of the younger generation has for the nearby town of Copiapo, and clusters of middle-aged women are the most common sight on Totoral's sun-bathed streets.

Lucio Cuenca, the director of environmental group OLCA, which advises Totoral in its legal battle, said the appeals court decision it its favor reflects a "new kind of thinking".  "They aren't insensitive to what's happening to many of these communities," he said of the courts and referring to energy blackouts and water supply cuts.  MPX declined to comment for this article.

It is not the only company facing serious challenges.

Goldcorp, Canada's No. 2 gold miner, had its environmental permit for the $3.9 billion El Morro copper project struck down in February at the request of an indigenous agricultural community, and the case is now also in Supreme Court hands.  An environmental impact study for expansion plans to potentially double output at Collahuasi, the world's No.3 copper mine owned jointly by Anglo American and Xstrata, is also seen at risk from local opposition when it is presented in May. Potential new mines or expansions of current ones to access better ore grades, which many old mines in northern Chile need to remain efficient, are also at risk of challenges from residents upset over their own scarce water and energy supply.

 SHORT ON JUICE: Chile aims to boost copper output from last year's 5.24 million tones to over 7 million tones by 2020, but it needs to ensure mines have enough electricity. Without that, it could lose ground to rivals like Peru or Mongolia, although Peru - the world's No. 2 producer of copper, zinc and silver - has similar problems of ensuring power supplies compounded by stiff environmental opposition to new transmission lines and generation plants.

Chile's power matrix has a capacity of 17,000 megawatts and the government aims to add another 8,000 megawatts by 2020. But only about 2,296 megawatts of environmentally-approved energy projects since 2003 are currently being built, according to Central Energia, a Chilean portal on energy, suggesting delays due in part to long, costly legal procedures. Should the Castilla project be struck down, Chile would lose more than a quarter of the extra power the government is hoping to bring on line in the next eight years.

Mines consume 38 percent of Chile's energy supply and are already battling dwindling ore grades, freak weather and an uptick in strikes brought on by high global prices for copper.  Chile has about 28 percent of world copper reserves and needs to avoid blackouts like one in September 2011 that hit major mines and cost Codelco over 1,400 tones in lost output. If energy supplies aren't beefed up, the country could lose between 2 and 3 million tones of potential production a year from 2015, said Juan Ignacio Guzman, mining professor at the Universidad Catolica in Santiago.  "The mining sector will just stop growing if there isn't more energy," he said.

***"HELLO ARIZONA EVERYONE..TIMING IS EVERYTHING FOR REDHAWK RIGHT PLACE RIGHT TIME IF THEIR iminent 43-101 is indeed more than 5 BILLION LBS.  BELIEIVE IT!***

Some see unsolved energy woes in mining powerhouse South Africa as a cautionary tale. Its national grid nearly collapsed in early 2008, forcing mines and smelters to shut for days, and some firms have begun to expand elsewhere in the continent to minimize their dependence on South Africa.  BHP Billiton base metals president Peter Beaven says Chile's costly energy and fragile electricity grid could hurt investment although BHP is sticking to its plans and may consider building the approved Kelar thermoelectric plant, a project shelved amid the 2007-2009 financial crisis, as it seeks energy alternatives. Other miners have already made similar moves. Codelco and French energy giant GDF Suez jointly run an LNG terminal in Mejillones in northern Chile. Codelco, which provides 11 percent of world copper, said its direct cash costs jumped 11 percent to $1.16 per pound of copper in 2011, mainly on higher fuel and energy costs.

POLITICAL PRESSURE: Chile's central-southern grid is supplied by hydroelectric and thermal generation, and is seen as more vulnerable than the northern grid which runs almost entirely on thermal generation. President Sebastian Pinera has promised to overhaul the network, which will likely include building a transmission line to link the two grids, but concrete measures have not yet been taken. Political turnover is part of the problem with Jorge Bunster recently becoming the fifth energy minister of Pinera's two-year administration.

While Chile grew 6 percent last year, it was rated the most economically unequal country of the 34-member state Organization for Economic Cooperation and Development, or OECD.  Social discontent has become more vocal under Pinera, a conservative billionaire who is the most unpopular president since Gen. Augusto Pinochet's dictatorship ended in 1990.

A series of often violent street protests over the high cost of education rocked the country last year, and a spike in unrest also hit the mining industry. Output from Escondida, the world's largest copper mine, plummeted 24.6 percent in 2011 to its lowest level in nearly a decade on sinking ore grades and a two-week strike.  *(*SURE CAN"T HURT RDK's chances being in th eright place at apparently the tight time) 

Until recently, environmental demands against major projects rarely went far but more are now making it to the Supreme Court.

Earlier this year, it paralyzed a wind farm project on the remote island of Chiloe because the company failed to acknowledge indigenous communities' complaints that the park was to be built on an ancient tribal cemetery.

Two weeks ago, the Supreme Court rejected appeals against the $3.5 billion HidroAysen hydro-power project, which involves damming two major rivers and building five power stations in the wild Patagonia region.

The 2,750 megawatt project, a joint venture between leading generator Endesa Chile and partner Colbun, still needs environmental approval for a 1,250-mile (2,000-km) planned transmission line to channel power to Santiago.

No one doubts that major projects face greater environmental scrutiny and legal challenges.

"There are more suits than there were five or 10 years ago," said Joaquin Villarino, head of the country's Mining Council that represents the biggest miners in Chile. "There's absolutely no doubt that the way communities express themselves is changing. You can agree or disagree, but it's happening."

 ANALYST RECENT COMMENT Besdiers James West's bullish comments since PDAC! 

Edited down in size

 

The Gold Report: You are an analyst and a geologist. Can you explain the fundamentals behind investing in base metals compared to precious metals?

Vishal Gupta: The fundamental difference is that base metals can be fairly straightforward in quantification when it comes to supply-demand balances. The world needs a certain amount of base metals to keep up its growth rate. Growing economies like India and China require base metals for their industrialization initiatives. For instance, copper would be required in electrical wiring and zinc would be required in steel galvanization. There is a specific purpose for base metals in industry.

Gold is valued more from a currency standpoint. There are actually very few uses for gold. That is why it is difficult to quantify the supply-demand balances for gold. This leads to the turmoil we see in the gold market. Any material piece of macroeconomic information that hits newswires will have some sort of an effect on the gold price because it is traded as a currency.

TGR: You have talked about how even when there is a downturn in global economies, jewelry demand remains. Why is that?

VG: I am originally from India and I lived in that country for about 16 years before moving to Canada. India is by far the biggest retail market for gold. The Indian wedding season, which runs from September to December, is typically the high time for gold markets. The reason for this traditional demand for gold in India goes back to what I said about gold being used as a currency. People in India treat gold as a commodity that holds its value better than paper currency. So when they give gifts of gold jewelry, it is because they want to invest in something that is going to hold its value. The result is that in lean times, when the markets are down and unemployment is high, people have that reserve in gold that they can take to the market and sell.

TGR: When North Americans think of investing in gold, we think of investing in maple leaves, gold bars, coins or other physical forms of gold. But in India, they think of purchasing a necklace, bracelet or gold earrings. Is it the same investment dynamic in a different package?

VG: That's absolutely right. Gold has held its value better than paper currency in the past, especially relative to Indian currency. The Indian rupee has devalued significantly over the last few decades, so people put their faith in a physical commodity, such as gold, rather than the paper currency.

TGR: We've seen a lot of volatility in the U.S. stock market. We haven't seen a whole lot of industrial growth, but the price of copper seems to be holding up right around where it is today at $3.74. Turning to the base metals, what is your outlook on the supply and demand fundamentals for copper going into Q212 and through next year?

VG: I always view copper as the leader of the pack when it comes to base metals. You'll see in the past, whenever the base metals markets have turned around, copper is the one that has led the charge. We are going into a lean time for commodities right now. However, when the commodity markets do turn around in the next five to six months, driven by the traditional surge in demand for commodities during September/October, I would expect copper to again lead the charge for base metals. Copper is the London Metal Exchange's flagship metal. Whenever we talk about base metals, we first talk about copper and then we talk about everything else.

TGR: What are the copper equities that most interest you? ...( He names  a selection of Gold, Silver and Copper co’s including RDK...forour purposes below are his thoughts on RDK)

 

VG: There are a couple of companies that I visited down in Arizona about a month or so ago. One is Redhawk Resources (RDK:TSX; QF7:FSE; RHWKF:OTCQX). It has about 3.5 billion pounds (Blb) of copper in the ground currently at its flagship Copper Creek deposit at a grade of about 1% copper. Management is expected to release a new resource estimate in the next couple of weeks that could push the total resource to about 5 Blb copper. That would put Redhawk on the radar screens of all the consolidators operating in the region.

Arizona is prime copper country. Freeport-McMoRan Copper & Gold Inc. (FCX:NYSE) has five operations there. In the adjoining state of New Mexico, it has another couple of operations. ASARCO LLC (AR:NYSE) has two to three operations in that area as well. BHP Billiton Ltd. (BHP:NYSE; BHPLF:OTCPK), Rio Tinto (RIO:NYSE; RIO:ASX) and Quadra FNX Mining Ltd. (QUX:TSX), now KGHM International Ltd.—all of these players are in the area. They are all looking for sizable copper deposits and, at 5 Blb in-situ copper, Redhawk meets this criteria. I think the mineability of it has to be determined by a major and not by Redhawk itself. I don't think a junior like Redhawk will be the one to actually put Copper Creek into production because the capex requirements for something like this would be well in excess of $1B.

TGR: But couldn't one of the existing players in the area just truck the ore to its smelter because some operate already in the area.

VG: That's absolutely right. That would save a lot of capex requirements and one of the reasons Redhawk is a prime acquisition target for a consolidator in the area that can take advantage of operational synergies.

TGR: Do you think permitting will be a problem? Augusta Resource Group (AZC:TSX; AZC:NYSE.A; A5R:FSE) has had trouble getting its Rosemont mine in Arizona permitted. Does Redhawk have aquifer permits in place, for instance?

VG: Yes, Redhawk does have this permit. And, Augusta has had permitting issues in the past, but recently received a key environmental permit—the Aquifer Protection Permit—for its Rosemont development project. Permitting could be an issue in any jurisdiction. You have to take things on a case-by-case basis.

As a jurisdiction, Arizona is full of open-pit copper mines. That says to me that it is a favorable jurisdiction for copper mining. There could be an odd blip here or there, but the overall scenario in Arizona is very mining friendly.

TGR: You're an unusual analyst in that you're bullish on gold and silver and copper. Do you have any other names in the junior space that are interesting to you?

TGR: ................Any final words of wisdom about investing in today's volatile markets?

VG: I know that the commodity markets have been in great turmoil. People say, oh, gold has fallen from $1,750/ounce (oz) down to about $1,670/oz and the commodities have started coming off now. That is not the case. If you compare where the commodity markets were in 2008–2009 and where the commodity markets are now, we've gone through a huge growth spurt. We have found a level where things have stabilized. $1,500/oz gold is ideal for a lot of companies and could lead to a lot more production coming online. Anything over $1,500/oz gold to me is beautiful. When you're looking to invest in the commodity markets, it helps to have a longer term view. If you have a solid, longer term view on gold, copper or silver, you should make a lot of money.

TGR: Thank you so much, Vishal.

Vishal Gupta is an equity research analyst for Fraser Mackenzie, covering resource exploration companies in the base metals and precious metals space. He holds a Master of Science degree in geology from the University of Toronto. Prior to joining Fraser Mackenzie, he worked in the resource exploration industry as a consulting geologist with Noront Resources, Northern Gold Mining and Nuinsco Resources. Gupta entered the financial community in 2009 with Desjardins Securities as a base metals equity research associate, followed by a brief stay in mining corporate finance at Cormark Securities. Most recently, he held the position of equity research analyst at Dundee Capital Markets covering junior mining companies in the precious metals, base metals and uranium space.

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Vol 251 RDK Overview, lots of CIBC World Mkts info which had RDK as # 12 of 50 Junior Copper M& A List  http://www.pinnacledigest.com/articles/vol-251-our-new-featured-copper-c...

Vol 251 RDK Overview, lots of CIBC World Mkts info which had RDK as # 12 of 50 Junior Copper M& A List

http://www.pinnacledigest.com/articles/vol-251-our-new-featured-copper-c...

When you go back to RDK Hub and click on last release of March 26th, ask yourself how much bigger than 3.4 Bn lbs have they become to be now providing color on 50,000 to 100,000 tons per day processing.

http://www.pinnacledigest.com/articles/redhawk-resources-announces-frame...

Sharing ideas, being frank with crticism, seeing another's pt. of view, and researching for an edge in a co. and its sector are key to success and don't ignore Mngt's Credentials good or bad play a big part in a successful outcome. Pull the pin  o

Re: Let The Buyouts Begin!

Missed out on another one. Trelawney has been on my buy list for many months, never could seem to find the capital to take a position. IAm Gold itself is on my buy list and they are J/V partners with a number of other juniors I hold, so maybe it will be better luck next time. I agree that 2012 will very likely be a record year for mergers and buyouts, have already experienced a number of quite profitable consolidations that should flourish once the market makes a decisive turn.

thinker70

Re: Let The Buyouts Begin!

I'm not familiar with the deposit Schiff,but 100/oz in the ground seems cheap.,however  a billion dollars to  get to production sounds like a lot.,for a deposit that size. I think companies with operating mines in gold and silver are the best buys,especially if they have  access to more exploration potential nearby.A billion dollars can buy a lot of marginal mines with potential to be a lot more. I think mega  deposits are getting ahead of themselves. Look at the Pebble project,lol