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See also: PDAC 2001, PDAC 2003, and PDAC 2004
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Photo 01
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We're ba-a-a-ack! Hey, boys and girls, remember what a great time we had last year at the Prospectors and Developers Association of Canada Convention at the Metro Toronto Convention Centre? Wasn't it thrilling and educational to meet some of Canada's junior mining companies exploring for minerals all over the world and find out about those penny stocks that people speculate on? Wasn't it cool to dress up and mingle with men in suits who thrive on money and adventure (but mostly money)? What do you mean, you didn't understand it? What do you mean, you don't have any money to buy stocks? I'll kick your ass, you bohemian slacker! We're going to this feckin' convention, okay, because I go every year, okay? If you don't learn this stuff, how are you going to make money? Now get this straight, punkie, we are capitalists in this country, and capitalists rule, not peckerhead socialists who teach political science at the University of Toronto. Believe me, mining people are the best people you'll ever meet. Now get your butt in gear and let's go!
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Photo 02
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Yeah, I know it doesn't look very crowded. But at least there are no feckin' Tamils in this neighborhood! Geez, I could probably fire a cannon and not hit anyone. The junior mining sector has been in a slump for the past five years, and the general public is just not turning out for this event the way they used to. Anyway, this is downstairs. Let's walk upstairs to the Investors Exchange, where lonely companies desperately want to meet us.
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Photo 03
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Well...it looks a teensy bit perkier than last year. At least there's a good story this year. Every year there has to be a story to get people excited. It could be gold, nickel, diamonds, platinum, or an area play, or both. Last year, as you'll remember, the story was platinum and palladium. That story cooled off. Then right at the end of 2001, there was some big news about diamonds in Quebec. So that's what people want this year: a piece of the Quebec diamond play. Actually, there was another story, and I walked right by it, oblivious. Ivanhoe Mines had big news about their gold property in Mongolia, but when I saw the word "Mongolia" on their display, I tuned out. You can check out IVN on the TSE.
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Photo 04
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These are the guys who started the whole thing. Ashton (ACA:TSE) has been mucking around all over Canada looking for diamonds, and just before New Year's 2002, while I'm asleep at the switch, they break the news about their Quebec discovery, and their stock goes up like a rocket! If you want to go to their website, it's ashton.ca. They're on my shopping list for the end of 2002.
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Photo 05
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The way these "area plays" work, as soon as one company makes a significant discovery, lots of other companies rush in to try to stake as much good land as possible close to the original discovery. All these stocks will rise -- at least temporarily. Majescor, which trades on the Canadian Venture Exchange (MAJ:CDNX), looks like one of the more promising exploration companies. But bear in mind that finding a few diamonds is one thing; "proving up" an economic deposit is another thing. Of all categories of mineral exploration, diamonds are the highest risk. Of course, the speculator knows that you can make money on any stock if your timing is right. We are not betting that a particular company will have a mineral deposit. We are only looking to catch a wave and get off with a profit.
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Photo 06
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Canabrava is another diamond explorer, with projects in Quebec, Ontario, and Brazil. I might possibly buy this stock toward the end of '02 if it gets cheap like a classic "bottom fish." I'd be more interested if they ditched Brazil and concentrated on Ontario and Quebec. Brazil is not the most honest country to try to do business in. (Venezuela's even worse.) From the standpoints of geology and political climate, Quebec ranks as one of the most desirable places in the world for miners. Ontario is almost as good. (Instant death: British Columbia.) Canabrava is CNB on the CDNX. Their parent company is Southwestern Resources Corp. (SWG:TSE).
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Photo 07
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I mentioned Twin Mining last year. These guys have one diamond exploration project in Quebec and another in Nunavut (formerly part of the Northwest Territories). This one trades as TWG on the TSE. The stock is actively traded, which is a necessary condition for speculation. (You want to avoid what we call "illiquid" stocks.) Twin has to be considered one of the better speculations in the Canadian junior mining sector. Another one I neglected to take a picture of is Diamondex (DSP:CDNX), run by Randy Turner, who hit paydirt with his previous company, Winspear, and sold it to a major mining company. Diamondex contains the rest of Winspear's exploration portfolio. What makes a good speculation? A serious company that spends its dollars on field work, not stock promotion. Yes, promotion is necessary to get the story out. You just have to avoid companies that go through the motions of exploring while their promoters "pump and dump" the stock. Don't invest in companies that have former NHL hockey players on their boards.
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Photo 08
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Hey, Wayne, this one's for you! Wayne Shaw of Platinum Group in Vancouver is one of the promoters for Pacific North West Capital, which has a joint venture with a big South African mining company on a platinum/palladium exploration property in northern Ontario. I made good money on this stock last year, but the trading volume has since dropped off, so I don't know whether to get on the next wave or not. Anyway, check it out (PFN:TSE).
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Photo 09
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I mentioned Starfield last year, and I underestimated them at the time. SRU has been one of the most briskly traded issues on the CDNX. Their Ferguson Lake project in Nunavut started out as a base metals project, then morphed into a platinum/palladium project. The tray in the foreground holds core samples from drilling. It takes a LOT of drilling, assaying, and interpretation to figure out in three dimensions what Mother Nature put in the ground millions of years ago. The vast majority of exploration properties fizzle out, sometimes after millions of dollars of work has been done. But if you don't explore, you don't find, get it? A schematic of the Ferguson Lake project appears below.
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Ferguson Lake Map
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Oh, yeah, did I mention that mineral deposits sometimes extend under a body of water? (Diamond-bearing kimberlites are frequently stuck under lakes.) Mother Nature loves to present engineers with interesting problems. Basically, a deposit has to achieve a certain critical mass before you can make money with a mine. The more you learn about mining, the more you come to respect miners. They are in the toughest business in the world -- even tougher than the oil and gas business, in my opinion. (Not shown on the schematic: Joe Iglaloolik and his band of lard-assed, alcoholic, welfare-dependent aboriginals, just waiting for the right moment to ride up on their snowmobiles and scream about the exploitation of "their" land. Feckin' Indians! I'm tempted to go on a long rant here, but I'll save it for a future column.)
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Photo 11
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Would you invest in anything in Vietnam? I wouldn't. Nevertheless, there are people who take Tiberon seriously. It's TBR on the CDNX.
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Photo 12
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Five years ago I recommended Holmer to my friend Dave, who trusted me and lost money. Now he thinks I'm an idiot. What can I say? I'm sorry. I was inexperienced then. But at least I never bought Bre-X! Which is more than a lot of mutual fund managers can say. Holmer is developing the first silver mine in Cuba. Five years ago the president assured me they'd be in production by the end of the year. (Never trust a wog.) You can look up HGM on the CDNX. Last time I looked, it was 22¢ a share, probably more than it's worth.
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Photo 13
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Ha-r-r-r-r, Jim lad! If it's booty ye be wantin', come aboard Captain Crad's pirate ship and we'll go down to Uganda and steal all their vermiculite, ha-r-r-r-r! (YIB:CDNX).
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Photo 14
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She can't figure out what happened to NAP's stock, which was way up in the early part of '01 and then just died. Hey, it's a stock market out there. These things happen, even to companies with actual mines in production. Fortunately, I bailed out on this one at just the right time and did really well, thank you. (PDL:TSE).
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Photo 15
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In this rare optical illusion, one person in the photo appears fat, while the other does not. Science is unable to explain this. Hope you dig my power tie. I got it at the local East Indian bargain store. Placer Dome, boys and girls, is one of the world's biggest gold miners, and I have made decent money on it by selling calls and puts. My stock has been called away, so I'm back in cash and will sell puts until the stock is put to me again. This is the easiest way to make money in the market: option-selling. The next time you're surfing the 'net, boys and girls, learn about this stuff at cboe.com and 888options.com so that you will be fit to walk among white people who know things.
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Photo 16
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Great American gold mining company, and my first trade in 2002. On January 2nd, I sold four Newmont June 17½ Puts at a premium of $1.50 U.S. and collected $559 U.S. afer commission. Please note: I didn't have to buy first and sell later; I just sold, and the money was in my account automatically. At the prevailing exchange rate, $559 U.S. would be worth about $885 CDN, which, I can assure you, is more than the average Canadian literary wanker earns in royalties in a year. Okay, so the photo sucks, but if you look closely at that brownish blob in the lower left, you can see, uh...like, uh...places where gold and stuff is, okay?
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Photo 17
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These guys know what mining is all about. They only have the one mine these days, but they're milking it for all it's worth. (This is what creates jobs and feeds families, not all those environmental buttholes running around screaming about endangered species.) Agnico is thought of as a gold miner, although their name is derived from the chemical symbols for silver (Ag), nickel (Ni), and cobalt (Co). I sold some puts on this one, too. It's AGE on the TSE, and the options trade on Montreal.
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Photo 18
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Freewest trades as FWR on the CDNX and is a highly liquid stock. I made a bit of money on it last year, but I could have made more. I might get back in if it gets cheap (like under 30¢) during bottom-fishing season this year. Freewest has one of the best diversified portfolios of exploration properties in Canada. Their main one is a gold project called Clarence Stream in New Brunswick. You should definitely check this one out.
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Photo 19
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What's missing from this photo? My heart-throb Marie-Claude Poitras, who is too busy with two children to work for Virginia any more. I sold my shares because I only owned them in order to be able to flirt with her. However, I wouldn't discourage you from picking up this stock. It's VIA on Toronto.
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Photo 20
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Here's my new heart-throb, the lovely and talented Penny Gould of Mindoro, an Edmonton-based company. Actually, I met her years ago at the "other" mining convention, sponsored by Cambridge House, but when that one switched its venue to Calgary, Mindoro stopped coming to Toronto. So I was thrilled to find Penny and Mindoro at the PDAC. Air Canada lost the display, and she had to improvise what you see here. As for the stock, I regret to say that it is very illiquid, mainly because their exploration properties are in the Philippines. That country isn't too popular with investors these days, and who can blame them? Anyway, MIO is on the CDNX. I hope lots of readers e-mail Penny@Mindoro.com and tell her how sweet she looks in the photo.
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Photo 21
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Wasn't that fun boys and girls? Sure, it was. Well, time to say goodbye to the PDAC Convention until next year. One thing I really like about this event is that it gives me an excuse to dress up. People treat me like I'm a somebody, and nobody has to know that I live in a drab little room with no air conditioning. You can have a quick peek, if you like....
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Photo 22
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I said a quick peek, not a long, awestruck gape! Now feck off, you little monsters!
For those who want to learn more about Canadian mining and mining stocks, here are the most useful websites:
pdac.ca -- Prospectors and Developers Association of Canada
NorthernMiner.com -- Website of The Northern Miner newspaper, which covers the entire mining sector. Excellent reference source for listed stocks.
tse-cdnx.com/ -- Canadian Venture Exchange
tse.com -- Toronto Stock Exchange
me.org -- The Montreal Exchange is Canada's exclusive option exchange.
GlobeInvestor.com -- My favorite financial website. Excellent reference source for all U.S. and Canadian listed stocks. The charts are wonderful.
A Brief Explanation of Bottom-Fishing
Bottom-fishing is my preferred approach to speculating in the junior mining sector. A classic bottom-fish chart shows a peak early in the year and a drop-off leading to a bottom in late November or early December. What's happening is that those who paid too much early in the year are selling out in November and December to take capital losses for tax purposes. This seasonal phenomenon drags down the good and the bad alike. If you have your shopping list ready, you just wait till November and December and try to get your stocks dirt-cheap. After year-end these stocks should be trending up. A popular rule-of-thumb among speculators is to "sell half on a double" to get back your original investment and then enjoy the rest of the ride without worry. However, it doesn't always work that neatly. Treat such speculations as entertainment. Don't spend money you can't afford to lose. Divide your "mad money" among several stocks rather than risking all on just one. And remember: somebody's making money on these penny stocks. Why shouldn't it be you?
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(Postscript: Since this piece was written, Crad now thinks the junior golds are the best play for November/December bottom-fishing. The market is now paying more attention to gold than diamonds.)
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