Nobody likes resource companies these days. Heck, nobody likes the markets at all.
But I think it's time for anybody with a sense of reality to once again consider looking at resource plays as a way to reap the incredible opportunities that this market has in store for risk-tolerant and patient investors.
Since last year, I am sure that all of your senses have gravitated towards the sentiment that the resource sector, especially the juniors of the Canadian exchanges, will not last another year. I am sure you have heard that many are stuck with projects that are too big for their companies to handle. I am sure you have seen corporations go belly up right under your nose. I have too. I speak with these companies each and every day.
But have you heard the other side of the story?
Traditional sources of financing have been near impossible for corporations. Remember the days when banks would force upon you every possible loan available? I do. That was last year. But things are different now. Banks have undergone a dramatic overhaul and are now terrified to even mention the word loan.
For most corporations, it doesn't matter how good your cash flow, revenue, forecasts, or your balance sheet might be. It doesn't matter if you have been in business for 50 years and have never missed a loan payment. Even the billions upon billions of government bailout funds and depressed central bank rates all across the world are not enough to get the credit flowing again. And you know what? It doesn't seem to be that big of a deal.
Not to the resource companies, anyway.
In the past few months, natural-resource players have raised well over $40 - $45 billion from outside the regular banking system. Most of the funds, from private investors and investment banks, have been accumulated through private placement bought deals and these astronomical financing figures are still pouring into both the smallest of the small caps and the largest of the large caps.
Need proof?
In February, Kinross raised $400 million (bought deal), then used $150 million to buy 20% of Harry Winston Diamond Corp. Cameco raised $460 million (bought deal) and BHP Billiton creatively raised $3.25 billion through corporate bonds. The list goes on. Even Gold Wheaton, a company trading at less than $0.25 has raised $200 million in the last few months.
Early February, practically every mining junior corporation I spoke with were worried about raising cash. Now many of them have held successful fundraisers over the last 60 days. In less time to follow a full season of your favourite sitcom, the one industry everyone shunned is now at the forefront of cash infusion from private lenders and big time investment players.
The money being poured into the resource sector is obviously coming from the successful and notably wealthy players of our markets. No doubt they see the natural resource sector as the goose that lays the golden eggs and as a force field to deflect the dangers against the battalion of the U.S Treasury's printing presses.
It's not only the big investment players coming out to swing their bats. Let's not forget the biggest player of them all: China.
Over the last few months, China has been buying up everything natural resource from Copper and Iron miners to Canadian Oil Sands.
According to a statement on their central government's Web site from Commerce Minister Chen Deming, China will send more commercial missions overseas to make purchases and investments this year. During a recent purchasing tour in February to Germany, Switzerland, Spain and the U.K., Chinese companies spent more than $13 billion. According to the 21st Century Business Herald, the US is the next stop as the Chinese ministry sends a business group on a buying trip to the U.S. later this month.
These investments may not all be in the form of resource-specific plays, but the underlying tones based on their recent actions suggests to me that resource is a big part of their focus.
The big players in the investment business have all come to play ball on the resource sector's home court. Do you want to be sitting in the nosebleeds when the game begins or do you want a spot in the starting line up?
Best regards,
Ivan Lo
Equedia Network Corporation
www.equedia.com
Sunday, April 5, 2009
Playing Ball with Resources
Friday, April 3, 2009
Thursday, April 2, 2009
Proved and Probable 10% NPV exceeds $1 Billion
Bankers Petroleum Ltd. ("Bankers" or the "Company") (TSX: BNK, AIM: BNK) is pleased to announce that it has filed its 2008 Reserves disclosure information with the applicable securities regulatory authorities. The NI 51-101 disclosure documents consist of the F1 - Statement of Reserves Data and Other Oil and Gas Information, the F2 - Report of Independent Qualified Reserves Evaluator and the F3 - Report of Management and Directors on Oil and Gas Disclosure.
The evaluations of the Albanian properties were conducted by RPS Energy Canada Ltd. (Patos Marinza oilfield) and by DeGolyer and MacNaughton Canada Limited (Kucova oilfield). At December 31, 2008, the reserves have increased in all three categories (proved, probable and possible), along with the corresponding valuations, as shown below. On a Proved plus Probable basis, the 2008 finding and development costs for the Albanian properties represented $5.55 per barrel, inclusive of the 2008 expenditures and change in future capital.
Subsequent to the Company's February 13, 2009 News Release announcing the preliminary reserve amounts, the final assessment for the Patos Marinza oilfield increased slightly, primarily in the "Proved" and the "Proved plus Probable plus Possible" categories. The combined "Proved plus Probable" category has remained consistent at 180 million barrels having an after-tax 10%-discounted valuation of $1 billion.
In the Patos Marinza oilfield, the original-oil-in-place resource estimate increased 140% to 4.7 billion barrels. The reserves growth is primarily attributable to increased resource levels, improved well performance and the Company's 2008 vertical and horizontal development drilling successes. All of Patos Marinza's 2008 reserves estimates are from primary recovery methods.
The Kucova oilfield, acquired in 2008, has an original-oil-in-place resource estimate of 300 million barrels. This property is currently in the evaluation stage that will lead to creation of a development plan.
CRO Being Accumulated- This will run to.20 cents soon
- The drill program which comprised our 253 million dollar property is open at depth and further drilling could significantly increase the resource. Some of our strongest results were on outer edges of the drill zone. De-watering of the 2500 meter mine shaft will allow them to get at these areas. The intersection I speak of is the 7% nickel over 5 meters that intersection comes from the end of the drill core. Further exploration could offer up amazing results. 0 summer 2008 drill results out, any significant finds in mine ready atikocan or kenora/dryden properties will lift stock.
- The company has contractual agreements with Opiwica explorations (OPW) on the TSX.V to mill there major gold and copper find with in close proximity of Canadian Arrows Planned site. Mining could begin on both projects in early 2010. This represents earnings and is a good partnership for a company seeking to be the next significant Nickel Copper producer in Canada.
- Canadian Arrow has the ability to produce nickel in its mine at 3.47 per pound nickel. That kind of number is unheard of in comparison to other mines. With production scheduled for early 2010 (around the same time our economy should be significantly rebounding) what if nickel prices return back to 15 dollars per pound? This site will look like a gem to any investor! (plus the property would be worth about 400mil at 15 dollars per pound nickel.
This is just a few of the key points that I believe make this company look attractive. If my predictions are correct we will see a significant rebound to normal multiples over the course of the next couple of months and with any significant news pertaining to my points and our sp and volume will be sent soaring. JV with cash on the books and abilitiy to help put project into production will send our sp back to .50 if not higher! I am Bull on Canadian Arrow mines.
